Technical Analysis

Tech Query: Is it a good time to buy Tata Power?

BL Research Bureau |Gurumurthy K | Updated on: Jul 02, 2022

We zoom in on its prospects, as also that of two other stocks: Pidilite Industries and Aurobindo Pharma

Can I buy Tata Power now? What is the technical outlook for the stock?

T S Karthik

Tata Power (₹207): No, this might not be the right time to buy the stock of Tata Power. The strong run-up in prices since 2020 is ripe for a correction. The stock has been struggling to breach ₹250 decisively over the last few months. The 38.2 per cent Fibonacci retracement support is at ₹194. But the price action on the charts leaves the chances high for the stock to break below this support. Such a break can drag the price down to ₹165-160 or ₹150 over the next couple months. A fall beyond ₹150 is less probable. So, wait for a fall to enter this stock.

Buy at ₹170 and accumulate more at ₹155. Keep the stop-loss at ₹115. There are chances of the stock to run into a prolonged sideways move between ₹150 and ₹250 after that. The stock will have to breach ₹250 to surge to new highs. So, trail the stop-loss to ₹170 as soon as the stock moves up to ₹210. Move the stop-loss further up to ₹210, as soon as the stock touches ₹245 on the upside. If the stock does not break above ₹250, you may have to exit at ₹210 as the stop-loss can get hit. If the stock manages to break ₹250, exit 50 per cent of your holding at ₹330 and move the stop-loss up for the rest of the position to ₹280 and hold it for long term.

I have bought shares of Pidilite Industries at ₹2,400. I am a long-term investor. What is the outlook for this stock?

P V Ramana

Pidilite Industries (₹2,158.75): Structurally this stock has been on an uptrend. However, currently it is in a correction phase within the broad uptrend. The short-term outlook is bearish. A head and shoulder pattern strengthens the bearish case. Strong resistance will now be in the ₹2,200-2,300 region. As long as the stock trades below this resistance zone, a fall to ₹1,950-1,900 can be seen initially. It will have to be seen if the stock can bounce from the ₹1,950-1,900 support zone or not. That bounce will have to take the stock above ₹2,300 to become bullish. If the stock breaks below ₹1,900, the price can tumble towards ₹1,700-1,650 over the next three-six months. This steeper fall will be a good buying opportunity. Investors who wish to buy this stock afresh can buy at ₹1,750 and ₹1,680 with a stop-loss at ₹1,480.

A fresh bounce from the ₹1,700-1,650 zone will have the potential to take the stock back to ₹2,500-2,600 and even higher levels. You can consider two options. One, you can exit the stock with a loss and then buy again as mentioned above at ₹1,750 and ₹1,680. Secondly, if you can withstand the loss, wait for a fall to ₹1,700-1,650 and accumulate more in this zone with a stop-loss at ₹1,480.

I am holding shares of Aurobindo Pharma bought at ₹698. What is the medium- and long-term outlook for this stock?

S Rekha

Aurobindo Pharma (₹522.55): The stock is in a strong downtrend. There is room to fall further towards ₹370-360 or even ₹310-300. This fall can happen in the next four to six months. The current downtrend can end either at ₹370-360 itself or at ₹310-300. A fall beyond ₹300 is unlikely. Considering the long-term picture, you can accumulate this stock at ₹380 and at ₹320 if the fall extends below ₹360. Keep a stop-loss at ₹270 and hold it.

A fresh rally from ₹370-360 itself or from ₹310-300 can take the stock up to ₹1,100-1,150 thereafter in the next two years. Move the stop-loss up to ₹530 when the stock rises to ₹730. Revise the stop-loss further up to ₹850 when the price reaches ₹1,000. Exit the stock at ₹1,100.

Published on July 02, 2022
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