Technical Analysis

Tech Query: Can BEML revisit its March 2020 lows?

Gurumurthy K |BL Research Bureau | Updated on: Jun 25, 2022

We zoom in on its prospects, as also that of two other stocks: UPL and BEL

I am holding stocks of BEML at ₹1,370. What is the long-term outlook? Can the stock revisit the March 2020 lows?

Giriraj

BEML (₹1,262.05): The outlook is bearish. The stock had made a clear top at ₹2,084 in December last year. Price action from January to April this year on the monthly chart clearly indicates that there is a lack of strong follow-through buying above ₹1,900. In other words, the stock has got sold every time it crossed ₹1,900 since January this year. Looking at the long-term picture, the stock has been broadly trading in a wide range. Considering that, the chances are very high for BEML to test ₹500-450 from here if not the March 2020 low of ₹369 by the final quarter of the calendar year. In a worst-case scenario, there could be chances of seeing ₹220 on the downside. Supports are at ₹1,050 and ₹910. Short-lived corrective bounces cannot be ruled out. You can consider exiting the stock at current levels with a minimum loss. Wait for the fall and start buying again.

Buy 45 per cent of the intended amount at ₹520. Buy another 40 per cent at ₹480. The balance 15 per cent can be bought at ₹280 in case the stock tumbles below the March 2020 low. Keep a stop-loss at ₹160. A reversal either from ₹500-450 itself or from around ₹220 will take the stock to ₹2,000 again in the next two years.

What is the long-term technical outlook for UPL? I have bought the shares at an average price of ₹743.

Prabhakaran S

UPL (₹640.65): The stock is showing signs of a top. It has been struggling to breach ₹850 decisively since June last year. So, you may have to be cautious in continuing to hold the stock. Supports are at ₹595, ₹575 and ₹560 which can be tested in the next two-three weeks. You can consider two options. One, you can exit the stock at current levels with a minimum loss. Second, if you can withstand this fall and the loss, hold the stock with a stop-loss at ₹530. If the stock breaks below ₹560, it can see a steeper fall to ₹480 and may be even lower. If the stock manages to bounce from any of the above-mentioned three supports, a rise back to ₹800-850 is possible.

In that case, exit the stock at ₹830. But the moving average indicators signalling bearishness. So, a bounce-back to ₹800-850 might not be very easy. Considering all these factors, the most-preferred action that you can take now is to exit the stock at current levels.

I am holding stocks of Bharat Electronics Ltd (BEL) at an average price of ₹175? Should I continue to hold the stock or book profit?

Abhishek

BEL (₹233.6):  The stock might be forming a top. A crucial long-term resistance is at ₹255. A high of ₹259.50 has been made in April and the stock has been struggling to breach ₹250 decisively since then. A sustained rise past ₹255 is necessarily needed to keep intact the overall uptrend. In that case, the stock can test ₹280-300. You need to be cautious in continuing to hold this stock. It is now important for you to protect the profits made. Crucial support is in the ₹215-205 region.

A break of ₹205 and a subsequent fall below ₹200 can drag the stock down to ₹185 initially and then to ₹165. It will also indicate a trend reversal. Exit 50 per cent of your holdings at current levels. Keep a stop-loss at ₹198 for the rest of the positions and hold it. In case the stock manages to bounce from the ₹215-200 support zone and breaks above ₹255, then exit the balance 50 per cent at ₹290.

Published on June 25, 2022
COMMENTS
  1. Comments will be moderated by The Hindu editorial team.
  2. Comments that are abusive, personal, incendiary or irrelevant cannot be published.
  3. Please write complete sentences. Do not type comments in all capital letters, or in all lower case letters, or using abbreviated text. (example: u cannot substitute for you, d is not 'the', n is not 'and').
  4. We may remove hyperlinks within comments.
  5. Please use a genuine email ID and provide your name, to avoid rejection.

You May Also Like

Recommended for you