I have purchased shares of Bata India at an average purchase price of ₹1,825. What is the outlook for this stock? My investment horizon is two years.
P V Ramana, Guntur
Bata India (₹1,678): Structurally the stock has been in an uptrend with intermediate correction. The price has been falling over the last one year. There is room for Bata India share prices to fall more from here. A strong trendline as well as the 200-week moving average support is at ₹1,560. Below that, ₹1,460 is the next strong trendline support. The chances are high for Bata India to reverse higher from ₹1,560 itself. The price action over the last three years is in the form of a bull channel and the level of ₹1,560 is the lower end of the channel. This makes it a very strong support and difficult to break.
As such the expected rally from around ₹1,560 will have potential to take the prices up to ₹2,500 over the next couple of years. You can consider buying more at ₹1,580 and also at ₹1,480 in case the fall extends beyond ₹1,560. Keep a stop-loss at ₹1,420. Trail the stop-loss up to ₹1,935 as soon as the stock moves up to ₹2,120. Move the stop-loss further up to ₹2,240 when Bata India price touches ₹2,420. Exit the stock at ₹2,480.
I have shares of PC Jeweller. What is the outlook for this stock?
PC Jeweller (₹80): The stock has begun to move up since July this year after being stuck in a narrow movement for more than two years. However, the outlook is not convincingly bullish. On the daily chart, a rounding top pattern formation is visible. This is a bearish pattern. On the weekly chart, the sharp fall over the last three weeks indicates that the stock lacks strong fresh buyers at higher levels. Although there is a support at ₹72 – the 21-week moving average, the overall picture is still weak. The stock will have to sustain above ₹72 and break above ₹105 in order to strengthen the bullish case.
Since you have not mentioned your buy price, it is difficult to give a proper advice. However, considering the price movement and the less chances for the stock to see a convincingly strong rally, we suggest you exit the stock even if it is in a loss. You can consider reinvesting the sale proceeds in some other good stock that looks very strong on the charts. May be you can consider buying Bata India and follow the strategy as explained in the previous question.
I hold shares of Sequent Scientific Ltd. My average price is ₹162. Should I hold the stocks or exit with a loss? Please advise.
Sequent Scientific (₹92): The stock is in a strong downtrend since July last year. The downtrend is intact. There is room for the stock to fall further from here. However, on the long-term charts, strong supports are coming up. A moving average support is at ₹70.40, and a long-term trend line support is at ₹65.50. The chances are very high for the current downtrend to find a bottom at either of the two support levels mentioned above. A fresh rally either from around ₹70.40 or ₹65.5 will have potential to revisit ₹300 levels over the next two-three years.
Assuming that you are a long-term investor, we suggest you hold the stock. Accumulate more at ₹73 and at ₹67. However, a prolonged sideways consolidation and a base formation between ₹70 and ₹130 is a possibility before a strong rally happens. So, you will need to have patience. Keep the stop-loss at ₹59. Revise the stop-loss up to ₹110 as soon as the stock moves up to ₹145. Move the stop-loss further up to ₹210 as soon as the stock touches ₹270. Book profits at ₹305.