I have bought Infibeam Avenues at an average price of ₹39. What is the long-term outlook for this stock? Should I exit or wait for a bounce?

Farhan Ali, Salem

Infibeam Avenues (₹31.65): The stock peaked at ₹42.50 in March this year and has come down sharply. The price action on the chart indicates a head and shoulder reversal pattern. This is a bearish pattern. The neckline support of the pattern at ₹33 was broken last week. The price has remained below this level and has failed to rise above ₹33. This gives a confirmation of the bearish reversal pattern. The next support is at ₹29. A break below it can drag Infibeam Avenues share price down to ₹25 and even ₹23 in the coming weeks.

To negate this fall, the stock has to sustain above ₹29 and then rise above ₹33 decisively. Only in that case, the view will turn positive and take the share price up to ₹40 again. But considering the head and shoulder reversal pattern, such a rise looks less probable. So, it is better to accept the loss and exit the stock at current levels.  You can consider reinvesting the sale proceeds in some other stock that looks good on the charts. You can even consider Central Bank of India explained in the next query and follow the given strategy.

I have shares of Central Bank of India bought at ₹50. Can I continue to hold this stock or exit? Please advise.

S Gayathri, Chennai

Central Bank of India (₹65.79): The long-term outlook is bullish for Central Bank of India. There is a resistance near ₹74, which is holding well for now. At the same time, significant support is also around ₹54. The sideways consolidation between ₹54 and ₹74, which is currently happening, can continue for some more months. But eventually, the stock is expected to break above ₹74. Such a break can take Central Bank of India share price up to ₹115 in the first quarter of next year or earlier than that.

Assuming that you are a long-term investor, hold the stock. Keep a stop-loss for half of your holdings at ₹53. For the remaining, keep a stop-loss at ₹38. If the stock hits the stop-loss at ₹53 and declines further, then buy more at ₹48. Revise the stop-loss up to ₹73 for the entire holding when the stock price reaches ₹83. Move the stop-loss further up to ₹90 when the price touches ₹105. Exit the stock at ₹110.

I have shares of Nazara Technologies. My average purchase price is ₹828. The stock has been falling since the beginning of this year. What should I do? Can the stock fall more or is nearing a bottom? Can I continue to hold the stock?

Kunal Bhatia, Mumbai

Nazara Technologies (₹614.55): As you rightly mentioned in your query, the stock has been in a strong downtrend since the beginning of this year. It made a high of ₹989.55 in January and has tumbled about 38 per cent from there. The downtrend is strong and intact. Negative moving average cross-overs on the weekly chart also strengthen the bearish case. There is a chance of getting a corrective bounce. But the upside will be capped at ₹680 or ₹720-740 maximum.

As long as the stock trades below ₹740, the downside is open for Nazara Technologies to decline further towards ₹470 in the coming months. A break above ₹740 and a subsequent rise past ₹820 is needed to turn the outlook bullish. But to see such a rise, a strong trigger would be needed. That looks unlikely. So, it is better to accept the loss and exit the stock at current levels. You can consider reinvesting the sale proceeds in some other stock that looks good on the charts. You can even consider Central Bank of India explained in the previous query and follow the given strategy.

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