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I want to invest in Gail (India) for a short-term horizon. What is the technical outlook for the stock?
S Gopalakrishnan
Gail India (₹155.1) : The stock of Gail took support at ₹81 in October 2020 and began to trend upwards. Since then, it has been in an intermediate-term uptrend. While trending up, it surpassed key resistances at ₹120 in December 2020 and ₹140 in early May this year. However, the stock met with a crucial barrier at ₹170 recently and started to witness selling pressure. Last week, the stock declined 5 per cent and has slipped below the immediate support at ₹160 and closed below the 21-day moving average. However, it is poised above the next support at ₹150 as well as the 50-day moving average. A decisive plunge below this base level will alter the short-term uptrend and pull the stock down to ₹140 initially and then to ₹130 levels over the short to medium-term time frame.
An emphatic downward breakthrough of ₹130 will mar the medium-term uptrend and drag the stock lower to ₹120 and then to ₹100 over the medium term. On the upside, a decisive rally beyond ₹170 is required to reinforce the bullish momentum and take the stock northwards to ₹180 and then to ₹200 over the medium term. You can buy in declines with a stop-loss at ₹120.
I would like to invest in Khaitan Chemicals & Fertilizers for the short term. What is the technical outlook?
Ashish Pathrabe
Khaitan Chemicals & Fertilizers (₹50.75): The stock of Khaitan Chemicals & Fertilizers has been in a long-term uptrend since bottoming out from the March 2020 low at around ₹5. But the stock met with a key resistance at ₹30 in January this year and was on a corrective decline until taking support at around ₹20 in late April this year. Subsequently the stock continued to trend upwards and has been in a medium-term uptrend. It had emphatically breached a key resistance at ₹30 in early May and extended the uptrend. Recently, it accelerated and encountered resistance at ₹50, and tests this barrier. Last week, the stock had gained 11.6 per cent. Both the daily and the weekly relative strength indices are hovering in the overbought territory. The daily indicators and oscillators are displaying negative divergence, implying trend reversal is on the cards. A fall below the immediate support level of ₹45 can confirm the trend reversal and pull the stock down to the next support level at ₹40 and then to ₹35 over the short term. A further decline below ₹35 can test the significant medium-term support at ₹30. Therefore, you can wait for correction and consider buying the stock at lower levels with a fixed stop-loss at ₹25. An upward reversal from either ₹35 or ₹30 can take the stock higher. A clear breakthrough of the resistance at ₹50 can pave the way for an up-move to ₹55 and then to ₹60 levels over the short term. Vital supports below ₹30 are placed at ₹25 and ₹20.
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