I hold shares of Divi’s Laboratories. My average purchase price is ₹4,347. What is the outlook for this stock? Can I continue to hold the stock or exit with a loss? I can hold the stock for two years.
Divi’s Laboratories (₹3,350): The trend is down since November 2021 and is yet to find a bottom. There is room for Divi’s Laboratories to fall further from the current levels. However, strong support is in the ₹3,000-2,900 region which can halt the current downtrend. We expect Divi’s Laboratories to find a bottom anywhere in the ₹3,000-2,900 region. This could happen in the first half of this year. Key resistance is in the ₹3,600-3,800 region.
A decisive monthly close above ₹3,800 will confirm a trend reversal. That will open doors for a long-term rally targeting ₹4,500-5,000 levels again over the next couple of years. Since your investment time-frame is two years, buy more near ₹3,000. Keep a stop-loss at ₹2,850. Move the stop-loss up to ₹3,500 when Divi’s Laboratories moves up to ₹3,900. Move the stop-loss further up to ₹4,200 when the stock touches ₹4,600. You can consider exiting the stock at ₹5,200.
What is the short- and medium-term outlook for the stock of Usha Martin?
Usha Martin (₹182.45): The stock is in a strong uptrend since June 2020. Within this uptrend, there was a consolidation between April and November last year. This consolidation was in the form of a triangle pattern. This is a continuation pattern indicating a temporary pause within the broader trend. Usha Martin broke out of this triangle pattern in December last year, thereby resuming the overall uptrend. This leg of upmove has potential to target ₹250-270 in the coming months. Cluster of supports are there in the broad ₹155-140 region. Intermediate dips to this support zone, if seen, will be a good buying opportunity.
If you intend to invest in this stock for medium term, buy 50 per cent of the intended amount at the current levels. If you get a dip, then buy the balance 50 per cent at ₹155. If you don’t get that dip, then keep only the 50 per cent holding. Keep a stop-loss at ₹132. Move the stop-loss up to ₹190 when the Usha Martin moves up to ₹220. Move the stop-loss further up to ₹230 when the stock moves up to ₹245. Exit the stock at ₹260. To negate the above-mentioned rally to ₹250-270, the stock has to fall below ₹140. But that is unlikely as fresh buyers are likely to come into the market in ₹155-140 support zone and limit the downside.
What is outlook for the stock of Sunflag Iron & Steel Company? I would like to invest in this stock for the short term.
Sunflag Iron & Steel Company (₹129.60): This stock has surged over 40 per cent in just three weeks from around ₹90 to ₹130 now. On the charts, there is not much room left for Sunflag Iron & Steel Company to move up from here. Two strong resistances are coming up at ₹140 and ₹150. Since the stock has risen sharply in a very short span of time, the chances are high for this rally to halt at ₹140 or ₹150. Thereafter, a corrective fall to ₹130-120 cannot be ruled out.
If the fall extends breaking below ₹120, there is a danger of seeing a steeper fall to ₹90 again. Considering the volatility and very limited room left on the upside, we suggest not to enter this stock at the current levels. Stay out of this stock.
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