Technical Analysis

Stock query: Wipro paused above a key support zone

Yoganand D | Updated on December 01, 2019 Published on December 01, 2019

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

I bought the stock of Wipro at ₹250. Kindly indicate the supports and resistances. Also, advise whether to hold or exit.

TVS Prakash Rao

Wipro (₹237.7): The stock of Wipro has been in a medium-term downtrend since recording a multi-year high at ₹301.5 in June. Following a corrective up-move, the stock encountered resistance at ₹260 in late October and subsequently resumed the downtrend.

Short-term trend is also down for the stock. It has breached the 21- and 50-day moving averages on the downside, and continues to trade well below them. Last week, it fell 1.5 per cent and extended the downtrend.

Moreover, the stock appears to have decisively breached a key long-term support at ₹250, which has turned into a vital resistance now.

The daily relative strength index (RSI) features in the bearish zone and the weekly RSI has entered the bearish zone from the neutral region, implying further weakness. Moreover, both the daily and the weekly price rate of change indicators are hovering in the negative terrain, signifying selling interest.

The long-term uptrend that commenced from the November 2016 low of ₹153 will be under threat if the stock decisively falls below the significant trend-deciding zone of ₹225 and ₹230. Such a fall will underpin the medium-term downtrend and drag the stock down to ₹210 and then to ₹195 levels. A further decline can witness the stock testing subsequent supports at ₹180 and ₹165 in the long run.

Hence, you can consider exiting the stock on a strong fall below ₹230 and buy at lower levels with a long-term stop-loss at ₹165. On the upside, the stock needs to move above ₹250 to alter the short-term downtrend. A decisive break above ₹270 is required to alter the medium-term downtrend and take the stock higher to ₹280 and then to ₹300 levels in the ensuing months.

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Published on December 01, 2019
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