Your Stock Portfolio. Your Stock Portfolio: Axis Bank starts moving up

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

Please suggest the short, medium and long term targets for Axis Bank.

Sai Srinath

Vamsi

Axis Bank (₹435.9): The stock of Axis Bank has been on an intermediate-term downtrend since registering an all-time high at ₹655 in March 2015. However, key support in the band between ₹370 and ₹380 arrested this downtrend in late January this year.

After wavering sideways between ₹370 and ₹420, the stock has started to trend upwards in March. Last week, the stock surged 5.7 per cent, breaching the upper boundary of this sideways range.

It has gained 16 per cent so far this month. The stock has decisively breached its 21 and 50-day moving averages and trades well above them. Short-term trend is up. The indicators and oscillators in the daily chart have entered the bullish zone and show signs of strengthening.

The short-term outlook is bullish for the stock and it can extend its rally to ₹460 and then to ₹480.

But failure to move above ₹460 can keep the stock in a sideways range for a while. Key supports at ₹420 and ₹400 can provide base on minor declines.

But an emphatic downward break of the support band between ₹370 and ₹380 can strengthen the downtrend and pull the stock down to ₹340 or even to ₹310-₹320 range in the medium term. Investors with a medium to long-term perspective can make use of declines to buy the stock while maintaining a stop-loss at ₹370.

Resistances above ₹480 are pegged at ₹500 and ₹520. Only a conclusive break out of the resistance level ₹520 will alter the intermediate-term downtrend and take the stock northwards to ₹550, ₹580 and ₹600 levels in the long run.

I have shares of SAIL and IFCI. Can I exit of these two stocks or hold? Please discuss the medium to long-term technicals of these two.

Y Subba Reddy

SAIL (₹42.8): In early February 2016, the stock of Steel Authority of India (SAIL) breached a key support at ₹38 and went on to record a multi-year low at ₹33.5. It is in a downtrend across all time frames — long, medium and short-term.

After building a base at around ₹34, the stock started to trend upwards in March. It has conclusively breached its 21 and 50-day moving average and now tests a key resistance in the range of ₹44 and ₹46. There is an increase in daily volume over the past two months.

The indicators in the weekly chart show signs of trend reversal. Strong break above the immediate resistance zone can alter the short-term downtrend and take the stock higher to ₹50 and then to ₹56.

Investors with medium-term view can hold the stock with a stop-loss at ₹38 and exit at ₹56. Further move above ₹56 can take the stock northwards to ₹65 and then to ₹75. To alter the intermediate-term downtrend, the stock requires to decisively move beyond ₹75. In that scenario, the stock can move up to ₹83 and ₹90 levels.

IFCI (₹24.2): Significant long-term support in the band between ₹18 and ₹20 has been providing base for the stock since late 2011. After testing this support in August 2015 and again in February 2016, the stock reversed upwards.

Nevertheless, it now tests a key resistance at ₹25 as well as 200-day moving average. Only a strong breach of this resistance will signify that the short-term trend has altered upwards. In that case, the stock can trend to ₹28 and ₹30.

Subsequent resistances are at ₹34 and ₹38. This stock is very volatile and more suited for trading. Hence, investors with a long-term perspective should exit the stock on rallies with a stop-loss at ₹20. Immediate supports are at ₹22 and ₹20.

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