Technical Analysis

Stock trading call: Buy LIC Housing Finance

Yoganand D | Updated on March 16, 2020 Published on March 15, 2020

Investors with a medium-term perspective and contrarian view can buy the stock of LIC Housing Finance (280.2) at current levels. On Friday, the stock registered a new 52-week low at ₹217 and rebounded strongly.

It managed to gain 9.6 per cent for the session with above average volume.

This rally has resulted in the formation of a bullish engulfing candlestick pattern in the daily chart, which is a bullish reversal pattern. Notably, the stock has a significant long-term support between ₹200 and ₹220. The recent rally has trimmed the stock’s weekly loss to 7.3 per cent.

Further, the stock has formed a hammer candlestick pattern in the weekly chart that is a bullish reversal pattern. Since encountering a key resistance at ₹580 in July 2019, the stock has been in an intermediate-term downtrend. In late February, the stock breached a key support at ₹400 and witnessed a sharp fall in a short span of time. Hence, a corrective rally can’t be ruled out at this juncture.

There has been an increase in weekly volume over the past four weeks. The daily as well as the weekly relative strength indices are featuring in the oversold territory, implying that a price recovery is on the cards.

Similarly, the daily and the weekly price rate of change indicators are hovering in the oversold levels. With the bullish reversal patterns in the daily and the weekly charts, the short-term outlook appears to be bullish for the stock. A strong break above the immediate resistance level of ₹300 will strengthen the bullish momentum and take the stock higher to the medium-term price targets of ₹320 and ₹340 levels, with a minor pause at ₹320.

Investors with a medium-term perspective can buy the stock in dips with a stop-loss at ₹250 levels.

Published on March 15, 2020

A letter from the Editor

Dear Readers,

The coronavirus crisis has changed the world completely in the last few months. All of us have been locked into our homes, economic activity has come to a near standstill. Everyone has been impacted.

Including your favourite business and financial newspaper. Our printing and distribution chains have been severely disrupted across the country, leaving readers without access to newspapers. Newspaper delivery agents have also been unable to service their customers because of multiple restrictions.

In these difficult times, we, at BusinessLine have been working continuously every day so that you are informed about all the developments – whether on the pandemic, on policy responses, or the impact on the world of business and finance. Our team has been working round the clock to keep track of developments so that you – the reader – gets accurate information and actionable insights so that you can protect your jobs, businesses, finances and investments.

We are trying our best to ensure the newspaper reaches your hands every day. We have also ensured that even if your paper is not delivered, you can access BusinessLine in the e-paper format – just as it appears in print. Our website and apps too, are updated every minute, so that you can access the information you want anywhere, anytime.

But all this comes at a heavy cost. As you are aware, the lockdowns have wiped out almost all our entire revenue stream. Sustaining our quality journalism has become extremely challenging. That we have managed so far is thanks to your support. I thank all our subscribers – print and digital – for your support.

I appeal to all or readers to help us navigate these challenging times and help sustain one of the truly independent and credible voices in the world of Indian journalism. Doing so is easy. You can help us enormously simply by subscribing to our digital or e-paper editions. We offer several affordable subscription plans for our website, which includes Portfolio, our investment advisory section that offers rich investment advice from our highly qualified, in-house Research Bureau, the only such team in the Indian newspaper industry.

A little help from you can make a huge difference to the cause of quality journalism!

Support Quality Journalism
This article is closed for comments.
Please Email the Editor
You have read 1 out of 3 free articles for this week. For full access, please subscribe and get unlimited access to all sections.