Technical Analysis

Tech Query: Wait for United Breweries to surpass ₹1,500

Yoganand D BL Research Bureau | Updated on July 17, 2021

Please give the technical outlook for the stock of United Breweries.

Ashish Pathrabe

United Breweries (₹1,447.8): The stock of United Breweries gained 3.7 per cent with above-average volume on Friday and has bounced up from a vital base level of ₹1,400. Since the stock took support at ₹1,051 in early April this year, it has been in a medium-term uptrend. In the short term, it has been in a sideways movement between ₹1,350 and ₹1,500 over the past one month. The stock’s recent up-move has surpassed the 21-day moving average and it now tests resistance at ₹1,450 within the sideways range. A rally above this can take the stock higher to the upper boundary at ₹1,500, which is also a vital long-term resistance. A further break above ₹1,500 will reinforce the bullish momentum and take the stock northwards to ₹1,600 and then to ₹1,700 in short to medium-term horizon.

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Nevertheless, if the stock declines below the lower boundary at ₹1,350, it can be pulled to ₹1,300 in the short term. If the medium-term support at ₹1,300 provides base, the stock can continue to trend upwards. But a plunge below ₹1,300 will undermine the medium-term uptrend and pull the stock down to ₹1,200 and then to ₹1,100 levels over the medium term. Investors with a long-term horizon can buy the stock on declines with a stop-loss at ₹1,200 levels.

I have shares of Natural Capsules at ₹139. What is the outlook?

Sankari Murugan

Natural Capsules (₹174.6): The stock of Natural Capsules has been in a long-term uptrend since it took support at ₹32.6 in March 2020. In February this year, the stock broke through a key barrier at ₹100 and continued to trend upwards. Both medium and short-term trend are up for the stock. Last week, the stock gained 17 per cent, accompanied by extraordinary volume and breached a key long-term hurdle at ₹160. The stock trades well above the 21- and 50-day moving averages. The daily and the weekly relative strength indices are approaching the overbought territory. Following every sharp rally, the stock tends to witness a corrective decline. Therefore, you can consider booking profit at this juncture and exit the stock.

On the downside, an emphatic downward break of the significant base level of ₹160 will alter the short-term uptrend and pull the stock down to ₹140 and then to ₹120 levels over the medium term. Key resistances above ₹185 are placed at ₹200 and ₹210.

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Published on July 17, 2021

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