What is the outlook for Tata Consultancy Service (TCS)? How much can the price fall?
George Varghese, Kochi
TCS (₹3,227.30): The recent pull-back from the high of ₹3,479.65, made on December 1, is a concern for the stock. The rally prior to this fall that had begun in September was showing some sign of a trend reversal. But now it looks like the stock can fall to ₹3,000-2,900 again. However, series of supports are available in the broad ₹3,100-2,900 region. So, the chances are high for TCS to reverse higher anywhere from the ₹3,100-2,900 support zone. A broad sideways range movement between ₹2,900 and ₹3,500 is also a possibility. For TCS to gain bullish momentum, it has to breach ₹3,500 decisively. Such a break can take the stock up to ₹4,000 initially. It will also keep the long-term outlook for TCS very bullish to see ₹5,000 levels in the coming months.
TCS will come under pressure for more fall only if it breaks below ₹2,900. Such a break can drag it to ₹2,750-2,700. But that looks less probable. Investors with a long-term horizon can buy TCS now and also accumulate at ₹3,150. Keep a stop-loss at ₹2,650. Move the stop-loss up to ₹3,420 as soon as the stock moves up to ₹3,750. Move the stop-loss further up to ₹4,150 when TCS touches ₹4,500 on the upside. Exit the stock at ₹4,950.
What is the outlook for the stock of NTPC? I am holding these shares in small numbers though.
Ram Athreya, Bengaluru
NTPC (₹163.15): The overall trend is up for NTPC. There is a strong support at ₹150. Below that the 21-Month Moving Average support is around ₹140. The chances are high for the stock of NTPC to sustain above ₹150 itself. As long as the stock stays above ₹150, the current uptrend will continue to remain intact. In that case, NTPC will have potential to target ₹200-205 over the next three quarters. You have not mentioned your purchase price and also the time frame for which you want to hold the stock. So, it is very difficult to give a clear advice.
However, you can see if the following strategy works for you. Keep a stop-loss at ₹143. Move the stop-loss up to ₹168 as soon as the stock moves up to ₹180. Revise the stop-loss further up to ₹178 when NTPC touches ₹188 on the upside. Exit the stock at ₹195. The stock will come under pressure only if it breaks below ₹140. In that case, a fall to ₹120-110 is possible.
I plan to buy the shares of Madras Fertilizers. What is the short-, medium- and the long-term outlook for this stock?
Madras Fertilizers (₹68.10): The stock has been very volatile over the last couple of months. The fall below ₹75 is very significant. Inability to bounce back above ₹75 can keep the stocks of Madras Fertilizers under pressure. There is room for further fall atleast up to ₹64. A break below ₹64 can trigger a much steeper fall up to ₹57 and even ₹52 in the coming months. Considering the volatility of movement, it is better to stay out of this stock.
Instead, you can consider buying some other stock with less volatility. However, if you are a market participant with a very high-risk appetite, then you can consider buying this stock on dips at ₹58 and ₹52. Keep the stop-loss at ₹45. Trail the stop-loss up to ₹62 when the stock moves up to ₹68. Move the stop-loss further up to ₹67 when the prices touch ₹71 on the upside. Exit the stock at ₹75. We reiterate that this suggestion to buy the stock is only if your risk appetite is very high and if you can digest volatility.