I have shares of Wipro. My average purchase price is ₹453.15. What is the outlook for this stock?
Wipro (₹376.45): The stock has been stuck in a sideways range since September last year. ₹370-420 has been the range of trade. The level of ₹370 is a crucial long-term trend support. Below that ₹350 is the next key support. Considering the strong fall since January 2022, the downside is likely to be limited to either ₹370 itself or ₹350. A fall below ₹350 could be less likely. If you intend to hold Wipro for long term, then buy more at current levels. Keep a stop-loss at ₹340. As long as the stock trades above ₹370/₹350, the chances are high to see a break above ₹420.
Such a break will indicate a trend reversal and take Wipro share price up to ₹460 and ₹500-520 initially. Exit 30 per cent of your holding at ₹520. Move the stop-loss up to ₹435 for the balance holding. Revise the stop-loss further up to ₹510 when Wipro touches ₹570. Exit the holding at ₹600. In case Wipro share price breaks below the support at ₹350, it can fall to ₹310-300. So, in that case you have to exit at the stop-loss level mentioned above.
I have bought shares of Kotak Mahindra Bank at ₹1,740. What is the short-term outlook for this stock? My holding period is one month.
H K Joshi, Pune
Kotak Mahindra Bank (₹1,691.20): The stock has been oscillating in a sideways range since mid-December last year. An immediate support is at ₹1,690 – the 200-Day Moving Average. Below that, a crucial trendline support is at ₹1,618. A strong bounce from around ₹1,618 will keep the sideways range intact. In that case, a rise to ₹1,850 and even ₹2,000 is possible. But this rise can take about two months. You can buy more at current levels. Keep a stop-loss at ₹1,605. Move the stop-loss up to ₹1,740 when the stock moves up to ₹1,780. Move the stop-loss further up to ₹1,810 when Kotak Mahindra Bank share price touches ₹1,880. Exit the long positions at ₹1,950.
If the stock falls below ₹1,618, the downside pressure will increase. That can then drag the price lower to ₹1,500. Such a fall will confirm a head and shoulder reversal pattern on the charts. So, that will be very bearish from a long-term perspective. In that case, a fall to ₹1,400 and even ₹1,300 cannot be ruled out. The price action around ₹1,618 will need a close watch.
What is the outlook for the stock of Reliance Power?
Jacob J, Kochi
Reliance Power (₹10.68): The stock has been moving up gradually since 2020. But the price action since June 2021 indicates a broad sideways range. Barring the spike to ₹25 in September last year, ₹8 to ₹20 has been the trading range. For now, the stock has been holding well above ₹8. Intermediate resistance is at ₹12. A break above it can take the price up to ₹14-15. A further break above ₹15 will then open the doors to target ₹20 – the upper end of the range.
But in case Reliance Power breaks below ₹8, it can fall to ₹5. Stocks with very low price might be very tempting to buy. The mind set of people will be that one can buy large number of shares with less capital. But the chances are very high that one can get trapped in such stock as the price movement may get stuck in a very thin range. So, it is better to avoid taking any positions in these kind of stocks.
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