Tech Query: Has the downtrend reversed in Tata Communications?

What is the outlook for the stock of Tata Communications?  

Pradeep Kumar Gupta 

Tata Communications (₹1,168.35): The downtrend that was in place since the beginning of this year has been broken. The region between ₹1,070 and ₹1,050 will now be a very good support zone. Below that ₹940 is the next strong support. Immediate resistance is at ₹1,187. A strong monthly close above this resistance will boost the bullish momentum. In that case, the stock can rise to ₹1,500-1,550 over the next six months. Thereafter, a corrective dip to ₹1,300-1,250 cannot be ruled out. An eventual break above ₹1,550 will then open doors for the stock to test ₹1,800 over the next 12 months.

Investors with a one-year horizon can buy the stock at the current levels. Accumulate on dips at ₹1,075. Keep the stop-loss at ₹880. Trail the stop-loss up to ₹1,280 as soon as the stock moves up to ₹1,430. Move the stop-loss further up to ₹1,560 when the stock touches ₹1,720 on the upside. Exit the stock at ₹1,780.

I have bought Suryoday Small Finance Bank at an average price of ₹100. What is the long-term outlook of this stock?

U C Prabhu

Suryoday Small Finance Bank (₹96.50): The stock has been in a downtrend ever since it got listed in March 2021. Important resistances are at ₹105 and ₹110. The stock has to rise past ₹110 to give an initial sign of a trend reversal. Such a break can take it up to ₹140 and ₹150. Only a decisive rise past ₹150 will confirm the trend reversal and indicate that an uptrend has begun. But the rise to ₹140-150, even if that happens, might take a very long time. Support is in the ₹80-75 region. A break below ₹75 will be bearish to see ₹50 on the downside.

You can consider two options. One, exit the stock at the current levels with a minimum loss. Invest the sale proceeds in some other stock that can give better returns rather than waiting for this stock to move up. May be, you can consider Tata Communications which is explained in the previous query. Second, if you prefer to hold this stock, keep a stop-loss at ₹70 and hold it for the target of ₹140. Move the stop-loss up to ₹108 as soon as the stock moves up to ₹118.

I hold shares of Bharat Heavy Electricals Ltd (BHEL) at an average price of ₹58. What is the outlook for this stock? How long can I hold them?

Padma Priya Peravali

BHEL (₹57.85): The stock has been struggling to move up. However, the bias looks positive for the stock from a long-term perspective. There is potential to move up, but you will need a lot of patience to hold this stock. The stock is currently almost at your purchase price. The region between ₹50 and ₹45 will be a good support now. As long as the stock stays above this support zone, a gradual rise to ₹80 looks possible by the end of this year. Inability to breach ₹80 can drag it down to ₹60-55 again. A strong monthly close and a sustained rise thereafter will be very bullish to see ₹150 on the upside. This might take another one year.

Assuming that you are a long-term investor, and you have the patience, we suggest to keep a stop-loss ₹35 and hold the stock. Move the stop-loss up to ₹75 as soon as the stock rises to ₹95. Move the stop-loss further up to ₹110 when the stock touches ₹125 on the upside. Exit the stock at ₹145.

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