Technical Analysis

Your Stock Portfolio: Axis Bank continues to rally

Yoganand D | Updated on January 18, 2018 Published on July 31, 2016

People walk past a branch of Axis Bank Ltd. on Mahatma Gandhi Road in Gangtok, India, on Tuesday, May 3, 2016. Year-on-year growth in Asia's third-largest economy accelerated in the first three months of 2016 to 7.9 percent. Photographer: Prashanth Vishwanathan/Bloomberg   -  Bloomberg




The stock’s uptrend has been in place since taking support at ₹160 in August 2013

Here are answers to readers’ queries on the performance of their stock holdings.

I hold shares of Idea at ₹170 and Axis Bank at ₹565. Please discuss the technical outlook of these two stocks.

G Suneeta

Idea Cellular (₹104.5): One leg of the long-term uptrend in the stock of Idea Cellular came to an end in April 2015 when it registered an all-time high at ₹203. Subsequently, the stock reversed direction and has been on an intermediate-term downtrend. Following a sharp fall in January, the stock price found support at a significant long-term base level of ₹100 in February.

Since then, the stock has been on a sideway movement in the band between ₹100 and ₹120. It hovers at a crucial long-term trend-deciding level of ₹100. Conclusive tumble below ₹100 will strengthen the downtrend. On the other hand, it will mitigate the long-term uptrend and pull the stock down to ₹88 and then to ₹75 in the short to medium-term. Investors with a long-term perspective can hold the stock with a stop-loss at ₹95. A decisive fall below ₹100 will be a cue for exiting the stock and re-entering at lower levels.

Decisive breakout on either side of the current sideways movement will decide the next medium-term trend for the stock. Strong upward breakthrough of ₹120 can push it northwards to ₹130 and further to ₹142 in the medium term.

Strong rally beyond ₹150 will alter the intermediate-term downtrend and push the stock higher to ₹165 and ₹175 levels in the long run. You can consider averaging the stock on a strong rally beyond ₹120 with a stop-loss at ₹100.

Axis Bank (₹546): After testing a key long-term support at ₹380 between mid-January and late February 2016, the stock price of Axis Bank did a turnaround. Since then, it has been on a medium-term uptrend, forming higher peaks and troughs. The stock has resumed its long-term uptrend that has been in place since taking support at ₹160 in August 2013.

Although the short-term trend is up, the stock is experiencing selling pressure ahead of the vital resistance at ₹580 levels.

The daily price rate of change indicator features in the negative territory, backing the selling pressure. A decisive fall below the immediate key support at ₹520 can pull the stock down to ₹500 or even to ₹480 in the short term, which could be a corrective decline.

Only a strong fall below the significant support at ₹460 will upset the medium-term uptrend and pull the stock down to ₹420 and then to ₹400.

However, an upward reversal from the key immediate supports at ₹520 and ₹500 can take the stock higher to ₹580 levels.

You can make use of corrective declines to average the stock while maintaining a stop-loss at ₹450 levels.

An emphatic breakthrough of the resistance level of ₹580 is required to strengthen the primary uptrend and take the stock up to ₹620 and ₹650 in the medium to long term.

I bought shares of Aban Offshore at ₹390. Should I hold?

TVS Prakash Rao

Aban offshore (₹220.9): The stock of Aban offshore is still in a long-term downtrend. However, after recording a multi-year low at ₹142 in this February, the stock has been on a corrective up-move. The stock breached its moving average compression at around ₹205 in late June.

In the last two weeks, it has moved in a narrow range-bound manner between 220 and ₹235. Immediate key support is in the band between ₹200 and ₹205. A decisive fall below this band will be a threat to the corrective up-move and drag the stock down to ₹170 and then to ₹150 in the medium term.

On the other hand, strong break-out of the resistance at ₹250 will strengthen the bullish momentum and take the stock up to ₹280 and ₹300 in the medium term. Further rally can take the stock northwards to ₹350 and then to ₹400 levels in the long term. Hold and accumulate the stock with a stop-loss at ₹170.

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Published on July 31, 2016
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