Technical Analysis

Stock query: Tech Mahindra in medium-term uptrend

Yoganand D | Updated on December 15, 2019

The uptrend will remain intact as long as the stock trades above ₹700

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

I hold the stocks of Tech Mahindra at ₹757 and Mirza International at ₹82. Kindly let me know when I can exit from these stocks without loss.

Ashok Kulkarni

Tech Mahindra (₹761.4): The stock of Tech Mahindra has been in a long-term uptrend since recording a low of ₹357 in mid-2017.

However, after registering a new high at ₹846 in early May, the stock began to decline. After retracing the 50 per cent retracement of the previous uptrend, the stock found support between ₹600 and ₹610 in August. Subsequently, it changed direction and resumed the uptrend.

Since then, the stock has been in a medium-term uptrend.

But, it encountered a resistance at ₹780 and started to move sideways in early November. The short-term trend is sideways in the range between ₹730 and ₹780.

A strong break above ₹780 will strengthen the uptrend and take the stock northwards to ₹800 initially and then to ₹840 over the medium term.

A further break above ₹840 will reinforce the long-term uptrend and can pave the way for an up-move to ₹880 or even to ₹900 in the long run.

Investors with a long-term perspective can stay invested with a stop-loss at ₹600.

The medium-term uptrend will remain intact as long as the stock trades above ₹700. You can stay invested with a stop-loss at ₹700 and average the stock in declines. Consider booking partial profit if the stock struggles to move beyond ₹800.

A fall below the immediate support level of ₹730 can pull the stock down to the ₹700-710 zone, which can provide base.

Only a fall below ₹700 will alter the medium-term uptrend and drag the stock down. The next supports below ₹700 are placed at ₹670 and ₹640 levels.

Mirza International (₹57.5): The long-term downtrend of the stock came to a halt in February, at around ₹50. Thereafter, it began to consolidate sideways in a wide range between ₹50 and ₹68.

The key support between ₹50 and ₹53 has been consistently providing base for the stock. Last week, it took support from this band and bounced up, gaining 6.4 per cent on Friday.

You can average the stock at the current levels with a stop-loss at ₹48. Consider exiting if it fails to move beyond the long-term resistance in the ₹68-70 zone. However, an emphatic breakthrough of ₹70 will take it higher to ₹80 and then to ₹90 in the long term. On the other hand, if the stock plunges below the lower boundary at ₹50, it will reinforce the downtrend and drag it lower to ₹45 and ₹40 levels. In that case, exit the stock.

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Published on December 15, 2019

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