Technical Analysis

Stock Query: PFC in medium-term uptrend

Yoganand D | Updated on December 29, 2019 Published on December 29, 2019

Investors with long-term perspective can stay invested with stop-loss at ₹90

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

Please discuss the technicals of PFC and Glenmark Pharmaceuticals stocks for a medium- to long-term horizon.

Rajeswara Reddy

Power Finance Corporation (₹115): The stock of Power Finance Corporation (PFC) has been in a medium-term uptrend since recording a 52-week low at ₹90.5 in early October 2019.

But the stock met with a key resistance at around ₹120 in late November and since been in a corrective decline. The key immediate support at ₹110 and the 50-day moving average cushioned the stock recently.

It surged 3.5 per cent with above-average volume last Friday and closed above the 200-day moving average. The daily as well as weekly indicators are showing positive signs.

A strong break above the immediate resistance level of ₹120 will reinforce the uptrend and accelerate the stock northwards to ₹130 and ₹138 in the medium-to-long term.

A further rally beyond ₹138 will underpin the medium-term uptrend and pave the way for an up-move to ₹150 and then to ₹160 over the long run. On the other hand, the key immediate supports are at ₹110 and ₹105.

An emphatic fall below the second support will be a threat to the medium-term uptrend and drag the stock lower to ₹100 and then to ₹90. A strong plunge below ₹90 will bring back selling pressure and drag the stock lower to ₹84 and then to ₹75 in the long term.

Investors with a long-term perspective can stay invested with a stop-loss at ₹90 and consider accumulating on a strong rally above ₹120 levels.

Glenmark Pharmaceuticals (₹348): Both the long- and medium-term trends are down for the stock of Glenmark Pharmaceuticals. However, in the short term, it has been moving sideways in a narrow range, after a sharp rally in late November 2019.

 

In December 2018, the stock had struggled to break above a key resistance at ₹700, and began to decline instead.

Since then, it has been in an intermediate-term downtrend that got accelerated in August and September 2019.

Nevertheless, the stock found support after marking a multi-year low at ₹267 in November.

The stock is range-bound between ₹320 and ₹370. A strong break above the upper boundary can take the stock higher to ₹400 and then to ₹430 over the medium term.

Only a decisive rally above ₹500 will alter the intermediate-term downtrend and take the stock higher to ₹550 and then to ₹600 over the long term.

On the downside, a fall below ₹320 can pull it lower to ₹300.

A further fall below ₹300 can drag the stock down to the previous low of ₹270.

Investors with a long-term view can buy above ₹370 while maintaining a stop-loss at ₹320.

Consider taking profits if the stock struggles to move beyond ₹500 levels.

Send your queries to techtrail@thehindu.co.in

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Published on December 29, 2019
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