I have shares of Tata Consultancy Services (TCS). My average purchase price is ₹3,725. Can I continue to hold the stock? What is the medium and long-term outlook and targets?
TCS (₹2,982.80): The stock has been in a strong downtrend ever since it made a high of ₹4,045.5 in January this year. There is no sign of a reversal. The chances of seeing more fall from here are high. The next support is at ₹2,800-2,750. Below that ₹2,580 and ₹2,470 are the lower important supports. The price action around ₹2,800-2,750 will need a close watch to see if a reversal is happening or not. Inability to bounce from there can drag it to ₹2,580 and ₹2,470. It is better to exit the stock at current levels with a loss.
However, you can consider entering the stock again in tranches in the future. Buy 30 per cent of what you intend to buy at ₹2,810. Another 30 per cent can be bought at ₹2,610 and the balance at ₹2,485. So, the average entry will be at ₹2,620. Keep a stop-loss at ₹2,110. A fresh rally from ₹2,580 or ₹2,470 will have the potential to take TCS up to ₹4,000 and higher levels over the long term.
What is the technical outlook for the stock of Indian Railway Catering and Tourism Corporation (IRCTC)? I hold that stock at an average price of ₹707.
IRCTC (₹685.75): The upmove from the July low of ₹557 gives an initial sign that the downtrend that was in place since October 2021 has ended. Although there is no confirmed signal for a trend reversal yet, the price action leaves the bias towards bullishness. Strong supports are at ₹655, ₹610 and ₹585. The stock will have to fall below ₹585 to come under pressure again. But that looks less likely.
The price action over the last few weeks indicates that the stock lacks strong sellers to drag it lower. Resistance is at ₹760. A strong break above it will open doors to test ₹900 again. A decisive break above ₹900 will then take the stock higher towards ₹1,100-1,200 over the long term. You can accumulate the stock at current levels. Keep a stop-loss at ₹545. Trail the stop-loss up to ₹740 as soon as the stock moves up to ₹880. Move the stop-loss further up to ₹970 when the stock touches ₹1,040. Book profits at ₹1,100.
I want to buy the stock of CEAT Ltd. What is a good level to enter this stock?
CEAT (₹1,538.55): The stock has strong resistances at ₹1,620 and ₹1,810. Both are holding very well especially the latter. A strong and sustained break above ₹1,810 is needed for the stock to rise from here. But that looks less likely. The price action indicates that there is a strong likelihood of seeing a corrective fall from here. So, this is not a right time to buy this stock now. Immediate support is at ₹1,525. Next support is at ₹1,460. A break below these supports can drag the stock down to ₹1,200-1,100 in the next two-three months. From a bigger-picture perspective, the actual strong support is around ₹900. This is the level at which this stock will become a convincing buy.
If you are desperate to buy this stock, then you should buy in tranches at ₹1,200 and then near ₹900. In that case, you can keep a stop-loss at ₹740 and hold it for the target of ₹1,800. However, instead of waiting for a fall to buy this stock, you can look out for some other stock that has potential to move up without seeing much fall from here. You can consider IRCTC and buy that stock as explained in the previous query.