Technical Analysis

Tata Motors DVR in a downtrend

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

After a multi-year low at ₹50 two weeks back, the stock took a breather and now shows signs of trend reversal

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

I bought and averaged shares of Tata Motors DVR at an average price of ₹187. Now that the price has come down, can I buy and average or exit at a loss? What is the outlook for this stock?

Dhanam Murugesan

Tata Motors-DVR (₹53.5): The stock of Tata Motors DVR is in a downtrend across time-frames — long, medium and short term. In late 2016, the stock had encountered a key long-term resistance in the ₹370-380 band. Since then, it has been in a long-term downtrend, forming lower peaks and troughs. While trending down, the stock had breached significant long-term supports at ₹210, ₹125 and ₹80. It breached a key support level of ₹80 this June and continued to trend down. It has been in a short-term downtrend since then.

 

 

However, after recording a multi-year low at ₹50.2 two weeks back, the stock began to move sideways, taking a breather. There has been an increase in volumes traded over the past two months.

The daily relative strength index is displaying a positive divergence, implying a potential trend reversal and is likely to enter the neutral region from the bearish zone. Moreover, other daily indicators such as moving average convergence divergence and price rate of change are also displaying positive divergence.

The weekly indicators hover in the oversold territory, indicating that a corrective rally is possible. Therefore, traders with a contrarian view can buy the stock at current levels with a stop-loss at ₹49. You can consider averaging with a stop-loss ₹49. A strong rally above ₹60 will extend the corrective up-move to ₹71. An emphatic break above ₹71 will alter the short-term downtrend and push the Tata Motors-DVR higher to ₹80 in the medium term. A conclusive break above ₹80 will strengthen the up-move and take the stock up to ₹93 and ₹100 in the medium term.

Next key resistance is pegged at ₹113. Inability to move beyond ₹100 will be cue for booking partial profits.

On the downside, a strong fall below ₹50 will reinforce the downtrend and drag the stock down to ₹40 and ₹32 in the medium term. In that case, investors should consider buying at lower levels.

What are the prospects for PTC India?

Anish Jose

PTC India (₹56.4): Since the September 2017 high of ₹130, the stock has been in a long-term downtrend. It breached a significant long-term support in the ₹66-70 band this June and continued to trend down. After registering a 52-week low at ₹53 in early August, the stock began to witness a corrective rally. It has a key support in the ₹53-55 band. A fall below this zone will drag the stock down to ₹50 and ₹45.

 

 

A further decline below this base can pull the stock down to ₹38-40 band in the medium term, while a decisive rally above ₹61 can push it up to ₹65 and ₹70. A strong break through ₹70 will pave the way for an up-move to ₹75 and ₹82 levels over the medium to long term. Next hurdle is at ₹90.

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Published on September 01, 2019
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