Technical Analysis

Tech query: Should you hold or book profit in Bajaj Electricals at ₹1,064?

| Updated on May 01, 2021

I bought Bajaj Electricals at ₹1,064. Should I hold or book profit?

Sankari Murugan

Bajaj Electricals (₹1,151): The stock of Bajaj Electricals is in an uptrend across all time frames — long, medium and short term. In early January this year, the stock had emphatically breached a key resistance at around ₹630 and continued to trend. Thereafter, a significant resistance at ₹800 was decisively broken in early February accompanied by extraordinary volume. After a minor correction in late February and March, the stock took support at ₹900 and continues to trend upwards in April. It trades well above the 21- and 50-day moving averages.

Both the daily and the weekly relative strength indices are displaying negative divergence, implying that a short to medium-term reversal is on the cards. Moreover, the key resistance at ₹1,200 is now limiting the upside. Therefore, at this juncture, you can consider booking partial profit and re-enter at lower support levels. A strong break above ₹1,200 is needed to strengthen the uptrend and take the stock northwards to ₹1,300 and then to ₹1,400 over the medium term.

A fall below the immediate supports at ₹1,100 and ₹1,060 can drag the stock down to the next support level of ₹1000 and then to ₹900. An empathic downward breakthrough of ₹900 will mar the short-term and medium-term uptrend and pull the stock lower to ₹800 and then to ₹700. Investors with a long-term perspective can stay invested with a stop-loss at ₹680 levels.

I have stocks of SAIL with an average of ₹80. What is the outlook on it?

Pankaj Goel

Steel Authority of India (₹119.4): The stock of Steel Authority of India (SAIL) has gained 6.3 per cent with above-average volume on Friday, reinforcing the bullish momentum. Further, the stock has skyrocketed 28 per cent accompanied by extraordinary volume in the past week, and emphatically broke out of a significant long-term resistance at ₹100. Both medium and the short-term trend are up for the stock. It trades well above the 21- and 50-day moving averages. The daily as well as the weekly relative strength indices are featuring in the bullish zone backing the uptrend. There has been an increase in weekly volume over the past four weeks.

As long as the stock trades above ₹100, the short-term uptrend will remain in place. Medium-term trend will stay positive as the stock trades above ₹80. You can stay invested and accumulate the stock on dips with a stop-loss at ₹97. A conclusive break above the immediate hurdle at ₹120 will underpin the uptrend and take the stock northwards to ₹130 and then to ₹150 levels. Next key barrier is at ₹160. Supports below ₹80 are placed at ₹70 and ₹60.

Published on May 01, 2021

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