What is the technical outlook for Eicher Motors?

Swaroop

Eicher Motors (₹3,346.10): The short-term outlook is negative. The stock has declined sharply from the high of ₹3,746 made in early June this year. Although the stock has bounced back from the low of ₹3,159 last week, the trend remains down. Resistance is at ₹3,420, which is likely to cap the upside from here. A reversal after testing this resistance will have potential to drag Eicher Motors share price down to ₹3,020-3,000 in a month or two. Thereafter, it will have to be seen if a reversal is happening or not. A further decline below ₹3,000 will be bearish to see ₹2,800-2,700 on the downside.

From a big picture, we expect the stock to reverse higher either from around ₹3,000 itself or from the ₹2,800-2,700 support zone. That will have the potential to take Eicher Motors share price up to ₹4,400 over the next one year. If you are a long-term investor, buy this share in two tranches. First at ₹3,080 and the next at ₹2,850. Keep a stop-loss at ₹2,650. Trail the stop-loss up to ₹3,420 when the share price moves above ₹3,720. Move the stop-loss further up to ₹4,050 when the price touches ₹4,250. Exit the shares at ₹4,350.

I had recently accumulated shares of Deepak Nitrite around ₹2,000-levels. I would like to accumulate more and hold this stock for three years. Can you help with the levels where I can accumulate?

Prasad K B, Chennai

Deepak Nitrite (₹1,943.85): The stock has been broadly range bound between ₹1,680 and ₹2,400 since February last year. Within this range, the stock made a high of ₹2,281 last month and has declined sharply from there. The chances are looking high for the stock to come down further towards ₹1,700-1,680, the lower end of the range. It is not clear whether ₹2,000 is your first purchase or you have bought the stock already at a different level. Whatever be the case, since the stock is stuck inside a range, it is not very clear on which side it will breakout.

It may not be worth the wait also to hold the stock hoping for a bullish breakout above ₹2,400. So, you can consider exiting the stock at current levels and accept the loss. But make sure that you reinvest the sale proceeds immediately in some other stock that has potential to ride the current rally in the market. You can even consider the stock of Aarti Drugs, which is looking good on the charts now for a short term of six months. The strategy to follow is explained in the next query.

I have bought shares of Aarti Drugs at ₹470 per share in September last year as a short-term pick. What I should do with this stock now?

V. Subbarao, Mumbai

Aarti Drugs (₹497.95): The recent rise from the March low of ₹310.80 gives an early sign of a trend reversal. A decisive break above ₹530 will confirm the same. Series of supports are poised in the ₹450-415 region. So, the chances are high for the stock to breach ₹530 in the coming weeks. Such a break can take Aarti Drugs share price up to ₹630-650 initially. A further break above ₹650 will have the potential to take the share price up to ₹800 over the long term.

You can keep a stop-loss at ₹410. Investors who want to enter this stock for a short term, say six months, can buy at the current levels and have the same stop-loss mentioned above. Move the stop-loss up to ₹510, when the price moves up to ₹570. Move the stop-loss further up to ₹580, when the price touches ₹610. Exit the shares at ₹630.

Send your questions to techtrail@thehindu.co.in

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