Technical Analysis

Stock query: SBI Cards on a medium-term uptrend

Yoganand D | Updated on July 12, 2020 Published on July 12, 2020

The stock now tests a key resistance at ₹700; a break above this can take it to ₹750

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

Please advise on the stock of SBI Cards, bought at ₹755, and JK Paper at ₹97. Should I hold or sell them?


SBI Cards and Payment Services (₹703): The stock of SBI Cards and Payment Services got listed in mid-March this year.

Following an initial rally, the stock recorded a 52-week high at ₹769 on March 18 and subsequently began trending downwards until late May.

The stock registered a 52-week low at ₹495 on May 22 and changed direction thereafter.

Since then, it has been on a medium-term uptrend, forming higher peaks and higher troughs. Also, it has been on a short-term uptrend over the past two weeks.

While trending up, the stock emphatically breached a key resistance in the band between ₹600 and ₹625 in late June.

Moreover, the stock trades well above its 21- and 50-day moving averages. But it currently tests a key psychological resistance at ₹700. The daily relative strength index (RSI) features in the bullish zone and the weekly RSI is charting upwards in the neutral region.

Further, both the daily and weekly price rate of change indicator are hovering in the positive terrain, implying buying interest. A decisive break above the key resistance level of ₹700 can take the stock higher to ₹750 and then to ₹800 over the medium term.

Inability to move beyond ₹700 can pull the stock down to ₹650 and then to ₹625. A vital support in the band between ₹600 and ₹625 can provide base. The medium-term uptrend will remain intact as long as the stock trades above ₹600. You can consider averaging the stock if it witnesses a corrective decline with a stop-loss at ₹580.

The key supports below ₹600 are placed at ₹550 and ₹500.

JK Paper (₹101.4): The stock of JK Paper has been testing a key resistance at ₹105 over the past three weeks. Previously, it had tested this resistance in late April this year and failed to surpass it. A strong break above ₹105 is needed to strengthen the medium-term uptrend that has been in place since the stock’s March low of ₹62. Such a breakthrough will take the stock northwards to ₹115 and then to ₹130 over the medium term.

Having said that, if the stock fails to move beyond ₹105 once again, it will keep consolidating sideways in the range between ₹86 and ₹105 for a while. The immediate supports are at ₹93 and ₹90. A decisive fall below ₹86 can weaken the uptrend and pull the stock down to ₹77 and then to ₹67 over the medium term.

You can consider averaging the stock on a strong rally above ₹105 with a stop-loss at ₹93.

A further rally above ₹130 can pave the way for an upmove to ₹140 levels.

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Published on July 12, 2020
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