Your Stock portfolio. Tech Mahindra continues to move up

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

Please advice on the one-year outlook for NMDC.

D Pandurang, Jose

NMDC (₹127.3): After marking a 52-week high at ₹196 in early June 2014, the stock changed direction and began to decline. Since then, it has been on an intermediate-term downtrend. However, the stock found support around ₹136 in December and has been moving sideways in the range between ₹136 and ₹145 levels.

The significant long-term resistance at ₹145 has restricted the stock from making further gains in January and February this year.

Last week, the stock tumbled 8.6 per cent conclusively breaking through the lower boundary at ₹136 levels. It is now heading towards the next key support level of ₹120. Strong break of this support level will pave the way for a decline to subsequent supports pegged at ₹110 and ₹95.

On the other hand, a strong rally above the key resistance level of ₹145 can push the stock higher to ₹160.

To alter its intermediate-term downtrend, the stock needs to break the trend-deciding level of ₹160. Such a rally can take the stock higher to ₹172 and then to ₹182 and ₹195 in the long term.

Please give your medium and long-term outlook on Tech Mahindra.

Amaresh M

Tech Mahindra (₹2,877.6): The stock of Tech Mahindra is on an uptrend across all time-frames — long, medium and short-term. In June 2014, the stock decisively breached its long-term resistance at ₹1,900 levels and continued its upward journey.

However, one leg of the stock's uptrend that commenced from the April 2014 low of ₹1,677 appears to be nearing its halt as the stock encountered resistance around ₹2,940 in early February this year. The stock is now moving sideways with negative bias.

The indicators in the weekly chart hover in the overbought zone displaying negative divergence. This signifies that the stock’s uptrend is nearing a halt and a short-term trend reversal is on the cards.

For confirmation of a reversal, the stock needs to decisively fall below the immediate support at ₹2,700 levels.

In that scenario, the stock can decline to its next key supports at ₹2,500 and ₹2,250 in the medium term.

As long as the stock trades above ₹2,250, its medium-term uptrend will be in place. Conversely, an emphatic breakthrough of ₹2,940 can take the stock higher to ₹3,000 and then to ₹3,300 levels in the medium term. Investors with a long-term perspective can stay invested with a stop-loss at ₹2,250 levels.

Please give your short, medium, and long term target for Kaveri Seed Company.

Sree Devi, Sai Naveen, Vamsi

Kaveri Seed Company (₹963.8): After a corrective medium-term downtrend from the new high recorded at ₹1,022 in September 2014, the stock found support at a significant base level of ₹700 in early February this year. Subsequently, the stock bounced higher and has been on a short-term uptrend. However, it encountered a key medium-term resistance in the band between ₹960 and ₹1,000 last week.

Moreover, the indicators in the monthly chart feature in the overbought zone and show negative divergence, implying that a trend reversal is likely.

Therefore, investors with a long-term perspective sitting on profits can book half of it at this juncture. A downward reversal from the current resistance band can pull the stock down to ₹800 and back to the significant base level of ₹700. The stock can be in a sideways consolidation phase in the zone between ₹700 and ₹1,000 as long as its key support holds.

A conclusive fall below ₹700 can alter the medium-term uptrend and drag the stock down to ₹600 or even to ₹500 in the coming months. But a strong rally beyond ₹1,000 can take the stock higher to ₹1,050 and then to ₹1,150 levels.

Send your queries to techtrail@thehindu.co.in

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