Technical Analysis

Tech query: Is Hero MotoCorp a long-term buy?

| Updated on April 10, 2021

I bought Hero MotoCorp shares at ₹3,548. What is the long-term outlook for the stock?

Sankari Murugan

Hero MotoCorp (₹2,912.9): The stock of Hero MotoCorp bottomed out from the low of ₹1,475 in March 2020. Since then, it had been in an intermediate-term uptrend. However, it encountered a key resistance at around ₹3,600 in mid-February this year and was in a short-term downtrend. In late March, the stock decisively breached a key support at ₹3,000 and its 200-day moving average. It continues to trend below this base level, which has now turned into a key short-term resistance level. Also, the stock trades well below the 50- and 200-day moving averages. There has been decrease in volume over the past five weeks.

The stock can extend the downtrend and has potential to test the immediate support at ₹2,800 over the short term. An emphatic downward breakthrough of this base level can strengthen the on-going downtrend and pull the stock down to ₹2,600 levels initially. A further decline can drag it lower to the next significant long-term support level of ₹2,400 over the medium term. That said, if the stock finds support at ₹2,800, it can move sideways between ₹2,800 and ₹3,200 levels. A strong rally above ₹3,200 can bring back bullish momentum and take the stock northwards to ₹3,350 and then to ₹3,600 over the medium term. Next resistances are at ₹3,800 and ₹4,000. You can average the stock at lower levels with a long-term stop-loss at ₹2,300 levels.

Please comment on the prospects of Snowman Logistics from a technical perspective.

Anish Jose

Snowman Logistics (₹49.8): The stock of Snowman Logistics encountered a key resistance at ₹70 in early and late December 2020. Thereafter it started to decline and has been in a medium term downtrend since late December. But it found support at ₹45 in mid-February this year and bounced up but failed to sustain the up-move. Recently, it again took support at ₹45 and has begun to trend upwards.

On Friday, the stock gained 6.3 per cent with above average volume, surpassing the 21-day moving average. It faces a key resistance ahead at ₹51 and then at ₹56. A conclusive break-out of ₹56 will alter the medium-term downtrend and take the stock higher to ₹60 and then to ₹65. Subsequent resistance above ₹65 is placed at ₹70. A strong break above this long-term resistance is needed to reinforce the bullish momentum and take the stock northwards to ₹80 over the medium term.

Conversely, if the stock falls below ₹45 it can decline to ₹40 and then to ₹35 levels. Investors with a long-term perspective can stay invested with a stop-loss at ₹37. Next support below ₹35 is at ₹30.

Published on April 10, 2021

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