Technical Analysis

Tata Motors range-bound with positive bias

Yoganand D | Updated on October 20, 2019 Published on October 20, 2019

There has been an increase in daily volume over the past two months

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

I wish to buy the stock of Tata Motors at current levels. What are its prospects?

Shanmukh Swamy

Tata Motors (₹136.7): The stock of Tata Motors is in a downtrend across long- and medium-term time- frames. But in the short term, the stock has been in a sideways consolidation phase in the wide band between ₹110 and ₹140 since mid-August.

Within this range, the stock took base at ₹112 last week and started to trend upwards. The breaching of the key moving average has strengthened the bullish momentum. There has been an increase in daily volume over the past two months.

Witnessing buying interest, the stock jumped 12.7 per cent last week accompanied by good volume. There has been an increase in weekly volume over the past two months. The stock trades well above its 21- and 50-day moving averages.

The daily relative strength index (RSI) has entered the bullish zone from the neutral region. Moreover, the weekly RSI has entered the neutral region from the bearish zone. Other indicators in the daily chart are also charting upwards. The stock now tests a key resistance in the band between ₹140 and ₹150. An emphatic break-out of this barrier will pave way for an up move to ₹170 and then to ₹200 in the medium term. Key resistances beyond ₹200 are at ₹220 and ₹240 levels.

You can consider buying the stock in declines with a long-term stop-loss at ₹110. On the other hand, if the stock fails to move beyond ₹150, it could remain range-bound between ₹110 and ₹150 for a while. Immediate supports are at ₹125 and ₹115. But a plunge below ₹110 can drag the stock to a new multi-year low. The stock has significant long-term resistances beyond ₹240 at ₹300 and ₹350.

What are the prospects of Karur Vysya Bank at the current price, for the next one to two years?

M Kannappan

Karur Vysya Bank (₹56.4): The stock is in a downtrend across all time-frames — long, medium and short term. Since early August, the stock has been in a sideways consolidation phase in the band between ₹54 and ₹64, with a downward bias.

 

 

However, the indicators and oscillators in the daily as well as the weekly charts show signs of positive bias. Therefore, only a break-out of this range on either side will depict the next leg of move for the stock.

Traders/investors should avoid taking fresh positions at this juncture. A fall below ₹54 can pull the stock down to ₹50 and then to ₹45 in the medium term.

On the upside, a strong rally beyond ₹64 can take the stock higher to ₹70 and then to ₹80. Investor with an appetite for low risk appetite can buy above ₹70 levels.

Send your queries to techtrail@thehindu.co.in

Published on October 20, 2019
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