Technical Analysis

Tech query: SBI Cards and Payment Services tests a crucial support

Yoganand D | Updated on March 20, 2021

What are the prospects of investing in the stocks of SBI Cards and Payment Services, and Orchid Pharma in the short as well as the long term?

Biswajit Das

SBI Cards and Payment Services (₹992): The stock of SBI Cards and Payment Services was listed in mid-March 2020 and witnessed a short-term decline until it found support at ₹495 in last May.

Since recording a 52-week low at ₹495 in late May 2020, the stock has been on an intermediate-term uptrend, forming higher peaks and higher troughs.

The medium-term trend is also up. However, the stock has been experiencing selling interest as it encountered resistance in the band between ₹1,100 and ₹1,150.

The weekly relative strength index (RSI) is displaying negative divergence, indicating potential short-term trend-reversal in the coming weeks. Last week, the stock declined 4 per cent with low volume.

It now trades testing a key base level of ₹1,000. The stock has marginally closed below the 50-day moving average, which is poised at ₹1,015 levels. The daily RSI features in the neutral region with a downward bias, and the weekly RSI is likely to enter the neutral region from the bullish zone.

An emphatic fall below the current support level of ₹1,000 can pull the stock down to ₹950.

The short-term uptrend will be under threat if the stock slumps below ₹950, and it can decline to ₹900 or ₹850 levels. The stock has a significant medium-term support at ₹800 that could provide base, and upward-reversal is possible from the ₹800-850 zone.

On the other hand, a bounce-back from the current support level of ₹1,000 can keep the stock moving sideways in the range between ₹1,000 and ₹1,100 for some time.

A decisive break above ₹1,100 can take the stock northwards to ₹1,200 and then to ₹1,300 over the medium term. Investors with a long-term view can stay invested with a stop-loss at ₹750 levels.

Orchid Pharma (₹1,752): The stock of Orchid Pharma is moving higher from one circuit to another on the upside, which shows huge buying interest.

The volume is low and the stock is illiquid — that won’t provide opportunity to buy or sell it. Therefore, investors should desist investing in these kinds of stocks.

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Published on March 20, 2021

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