Your Stock Portfolio. Tata Steel continues to lose ground

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

I purchased shares of Tata Steel at an average price of ₹407. At what price can I average the stock and stop-loss.

Murugesan, N Raman

Tata Steel (₹265.1): The stock’s strong rally from the second half of 2013 to the first half of 2014 met with key resistance at around ₹575 between June and July 2014. Subsequently, the stock reversed direction and has been on an intermediate-term downtrend since then.

Moreover, medium and short-term trends are also down for Tata Steel. Last week, the stock tumbled 6.8 per cent and decisively broke below a key immediate support at ₹280.

The indicators and oscillators in the daily as well as weekly chart feature in the bearish territory.

The stock hovers way below its 50- and 200-day moving averages. The medium-term outlook for the stock is bearish with the potential of breaking the key support level of ₹250 and then declining to ₹200.

Therefore, investors with a long-term perspective can wait for such declines and consider averaging around ₹200 with a stop-loss at ₹180.

An upward reversal from the long-term support level of ₹200 can take the stock higher to ₹300 and then to ₹350.

But if the stock slumps still further below ₹200, it will keep the long-term downtrend intact. It can drag the stock down to ₹150, which is also a significant support level to watch.

Short-term supports are at ₹250, ₹240 and ₹230. Resistances are placed at ₹280 and ₹300. Strong rally beyond ₹400 is required to bring back bullish momentum and take the stock upwards to ₹450 and ₹500 levels. However, to alter the long-term downtrend, the stock must surge beyond ₹575 levels.

I have shares of Hindalco Industries bought at an average price of ₹142. Will it be wise to average at current levels of ₹110 per share?

Sree Devi

Hindalco Industries (₹109): The stock of Hindalco Industries is in a downtrend. However, it is receiving support from its long-term base zone between ₹100 and ₹110.

The stock has not yet completely reversed upwards, so there is a possibility of it declining below the psychological level of ₹100 in the short to medium-term. Therefore, investors with a long-term view can wait for a move below ₹100 to average the stock with a stop-loss at ₹85 levels. An upward reversal from ₹100 or ₹90 can take the stock higher to ₹125 in the medium term. Next significant long-term resistance is pegged at ₹140.

An emphatic move above this level is needed to alter the medium-term downtrend and take the stock northwards to ₹160 or ₹170 levels.

On the downside, if the stock plunges below ₹90, there are chances for the stock to decline to around ₹70.

I have bought shares of Accelya Kale Solutions at ₹952. I can hold the shares for the long term. What are the prospects? Can I add more at the current price?

Syed Mohammed

Accelya Kale Solutions (₹1,001): Accelya Kale Solutions is a small-cap software sector company, trading with very low volumes. Since last December, the stock has been in a sideways consolidation phase in a wide range between ₹900 and ₹1,100. Taking support from the lower boundary, the stock bounced up in February and March.

But it tested the upper boundary in April and June and failed to move further.

With these volatile movements, the bigger picture for the stock is biased downwards. So, consider taking profits, even if small, off the table at this juncture and switch to a quality blue-chip software stock. The stock can bounce back smartly if any declines are seen.

Such declines can be used to average the stock also. A decisive fall below ₹900 can pull the stock down to ₹800 and then to ₹650 in the long run. Key resistance at ₹1,100 has to be decisively breached to register new highs.

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