I have Indian Overseas Bank (IOB) in my portfolio. What is the outlook for this stock?
S Karthikeyan, Pudukkottai
IOB (₹30.85): The stock has moved up well since November last year. However, there is no concrete sign of a reversal yet. A very crucial resistance is at ₹38. IOB has to breach ₹38 decisively to confirm a trend reversal and become bullish. Support is at ₹27.50. Below that, the region between ₹21 and ₹20 is the next important support. Possibility of a bullish moving average cross-over on the weekly chart leaves the bias positive to break above ₹38 eventually.
Such a break can take IOB up to ₹45 initially and then ₹60-70 eventually over the next couple of years. Failure to breach ₹38 now might result in a sideways consolidation between ₹21 and ₹38 for some months. Since you have not mentioned your purchase price, it is difficult to give a correct advice. If you have the patience to hold this stock for two years, then keep a stop-loss at ₹17.5 and hold it. Move the stop-loss up to ₹37 when IOB rises to ₹43. Revise the stop-loss further up to ₹48, when it touches ₹55. Exit the stock at ₹59.
I have purchased the shares of Zee Entertainment Enterprises Ltd (ZEEL) at ₹263. Can I continue to hold this stock, or should I book loss? What is the outlook?
ZEEL (₹222.75): The overall trend is still down. The bounce from the 2020 low of ₹114 seems just to be a correction. There is a very crucial support for ZEEL at ₹218. It has to sustain above this support and rise back above ₹300 decisively to bring in the case of a trend reversal. That might take some time. But the price action on the chart indicates weakness. This leaves the chances high for the stock breaking below ₹218. Such a break can drag it down to ₹195-190.
A decisive monthly close below ₹190 will increase the downside pressure. In that case ZEEL can tumble towards ₹110. As mentioned above, the stock has to breach ₹300 decisively to become bullish. In that case, the doors will open for ZEEL to see a multi-year rally targeting ₹600 on the upside. You can consider keeping a stop-loss at ₹212 and hold the stock. But that is with just a hope that ZEEL will sustain above ₹218. This is one option. But, since the charts are not very strong, our suggestion for you will be to exit ZEEL and accept the loss.
I would like to invest in the stock of Maithan Alloys. What is the outlook for the next two-three years?
Maithan Alloys (₹1,119.45): The downtrend that was in place since April 2022 seems to have ended. The price action on the chart indicates that a fresh leg of rally has begun. Strong support is in the ₹1,000-900 region. The long-term outlook will be bullish as long as the stock trades above ₹900. Maithan Alloys can rise to ₹1,350-1,400 in this quarter or next. Thereafter, an intermediate correction to the ₹1,200-1,100 range is a possibility. However, from a long-term perspective, the overall trend will remain up. So, the chances are high for the stock of Maithan Alloys to resume the uptrend breaking above ₹1,400 eventually.
Such a break will have the potential to target ₹1,800 in the second half next year or earlier than that. So, you can buy the stock now. Accumulate at ₹1,050 if a dip is seen. Keep the stop-loss at ₹870. Move the stop-loss up to ₹1,180 as soon as the stock moves up to ₹1,430. Revise the stop-loss further higher to ₹1,580 when the stock touches ₹1,680. Exit at ₹1,740.