Technical Analysis

Stock query: Petronet LNG in a corrective phase

Yoganand D | Updated on August 30, 2020

The stock has a significant support band between ₹235 and ₹245

Here are the answers to readers’ queries on the performance of their stock holdings.

I had bought Petronet LNG stock at ₹268. Shall I hold the stocks or exit?

Prahlad S

Petronet LNG (₹249.1): The stock of Petronet LNG had been on an intermediate-term uptrend since recording a 52-week low at ₹170 in late March 2020. But it had encountered a key resistance at around ₹275 in early July and started to decline.

Since then, it has been on a short-term corrective decline. A significant support in the band between ₹235 and ₹245 cushioned the stock in late July. On Friday, the stock took support from this base zone and gained 2.3 per cent with good volume.

It now tests the 200-day moving average, and a vital resistance is ahead at ₹275. An emphatic break above ₹275 can take the stock northwards to ₹300 and then to ₹325 over the medium term. The next resistances are at ₹350 and ₹380 levels.

On the other hand, if the stock slumps below the immediate support level of ₹235, it will experience selling interest and drag it down to ₹220. A further fall below ₹220 can pull the stock lower to ₹200. The next support is at ₹175.

You can consider averaging the stock on declines with a fixed stop-loss at ₹220 and book profit if it fails to move beyond ₹300 levels. Investors with a long-term perspective can stay invested with a stop-loss at ₹190 levels.

What is the short- and medium-term outlook for the stock of Bharat Bijlee?

Manjunatha N

Bharat Bijlee (833.5): Since the stock took support at ₹350 in late March 2020, it has been on an intermediate-term uptrend.

Recently, it surpassed the 50- as well as the 200-day moving averages, and trades well above them.

However, a key resistance at ₹900 had limited the upside in late June and mid-August. This key long-term resistance is acting as a crucial barrier for the stock. The stock has been on a near-term corrective decline.

A conclusive break above the aforementioned hurdle will reinforce the bullish momentum and push the stock northwards to ₹925 initially and then to ₹960 over the medium term.

The subsequent vital as well as psychological resistance is at ₹1,000. An emphatic breakthrough of the resistance can pave the way for an upmove to ₹1,100 and then to ₹1,185 over the long run. An immediate support at around ₹775 can cushion the stock in the short term.

Having said that, if the stock slumps below this base, it can decline to ₹750. A further plunge below this level can pull the stock lower to ₹700, which is a crucial medium-term base level.

The supports thereafter are at ₹650 and ₹620.

A strong fall below ₹620 will mar the intermediate-term uptrend and drag the stock lower to ₹600 and ₹550 levels in the medium term.

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Published on August 30, 2020

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