I have shares of Muthoot Finance. My average holding price is ₹1,386. Should I continue to hold this stock or exit with a loss? What is the outlook? I can hold the stock for one year.

Naveneet Dwivedi

Muthoot Finance (₹1,059.75): The trend is down since November 2021. The stock made a low of ₹911.40 in March this year and has risen back from there. However, this rise is not giving any strong sign of a trend reversal. Resistances are at ₹1,110 and ₹1,180. Muthoot Finance share price has to rise above ₹1,180 to confirm a trend reversal. Only in that case, the outlook will turn bullish and a rise to ₹1,400 and ₹1,600 will come into the picture again.

On the other hand, a reversal again from either ₹1,110 itself or ₹1,180 will keep the overall downtrend intact. In that case, the stock can fall to ₹920-890 in the coming months. Thereafter, a fresh rally is possible. But a fall below ₹890 will intensify the selling pressure. In that case, the stock price can tumble towards ₹800 and even ₹750. Even if you accumulate at current levels, it might take time for the share price to rise beyond the resistance at ₹1,180. So, it is better to accept the loss and exit at current levels. You may consider reinvesting the sale proceeds in some other stock that looks promising to enter now.

I am holding shares of Morepen Laboratories at an average price of ₹72. I am in huge loss now. However, I can hold it for long term. What is the long-term outlook? Can I hold the stock?

Debmalya Sinha

Morepen Laboratories (₹27.03): Two important things. First, you must have a stop-loss right at the time of entering any stock. Exiting at the desired stop-loss level will help minimise the loss and avoid situations like this. Second, the question is whether you have decided to hold the stock for long term because you are in a huge loss or you entered the stock with an intention to hold it for long term. If the latter is the case, then you should have had a strategy to accumulate at lower levels right at the time of entering the stock.

But if you have decided to hold it for long term because the prices have fallen, then it is completely wrong. On the charts, the trend is still down. There is room for the stock to fall to ₹17 or even ₹11-10. Resistances are at ₹37-38 and then at ₹52. The stock has to rise past ₹52 decisively to become convincingly bullish and reach your buy price. That is not happening now as seen from the charts. So, exit the stock at current levels and accept the loss.

I hold shares of Force Motors, bought at ₹1,895. Shall I hold or sell the stock? What is the outlook?

Anand, Hyderabad

Force Motors (₹1,369.75): The stock was in a strong downtrend since April 2017. This downtrend seems to have ended in 2020. The price action since April 2020 has not yet given a confirmation of a trend reversal. However, it gives a signal that the worst could be over. Strong support is in the ₹1,100-1,000 region. Resistance is around ₹1,650. The stock can test this resistance in the next couple of months. A strong break above ₹1,650 can take the price up to ₹2,100-2,200.

Such a move will confirm the trend reversal. Thereafter, a subsequent rise past ₹2,200 will clear the way for a fresh rally to ₹3,200 over the long term. This bullish outlook will go wrong only if the Force Motors share price declines below ₹1,000. In that case, a steep fall to ₹600 is possible. Hold on to the stock. If possible, accumulate on dips at ₹1,100. Keep a stop-loss at ₹950. Move the stop-loss up to ₹1,620 when the price crosses ₹1,800. Move the stop-loss further up to ₹2,150 when the price touches ₹2,600. Exit at ₹3,200.

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