Technical Analysis

Bajaj Electricals moves in a sideways range

Yoganand D | Updated on October 13, 2019 Published on October 13, 2019

A break above ₹440 will alter the downtrend and take the stock to ₹500 over the medium term

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

I am a long-term investor and have purchased shares in Bajaj Electricals and KNR Constructions. What is the technical outlook for these two companies?

Ramprasad V

Bajaj Electricals (₹383.4): After a strong rally in 2017 and early 2018, the stock of Bajaj Electricals registered a new high at ₹706 in April 2018. The stock subsequently changed direction and has been on an intermediate-term downtrend since then. The stock tumbled sharply this July breaking below a key long-term support in the band between ₹425 and ₹440. However, it found support at the next crucial long-term base at ₹340 in late July and has been in a medium-term sideways movement in the ₹340-425 range. The stock can continue to move sideways for a while. Investors with a long-term perspective can stay invested with a stop-loss at ₹315.

 

A decisive break above the upper boundary at ₹425 and the resistance at ₹440 will alter the downtrend and take the stock up to ₹470 and ₹500 over the medium term. Subsequent resistances are placed at ₹520, ₹550 and ₹580 levels. To alter the intermediate-term downtrend, the stock needs to conclusively break above the significant long-term resistance at ₹580. Such a break can push the stock higher to ₹600 and then to ₹640 levels in the long run. Key supports below ₹340 are at ₹320 and ₹300.

KNR Constructions (₹225.8): Since recording a 52-week high at ₹303 in late May 2019, the stock has been in a medium-term downtrend. But it found support at ₹210 in late August and has been in a short-term sideways movement. The key support at around ₹210 is providing the base. A strong rally above the immediate resistance level of ₹240 can alter the sideways movement and take the stock up to ₹250 and ₹270 levels. Only a clear break above ₹270 will change the downtrend and take the stock higher to ₹290 and ₹303 over the medium term.

On the other hand, a decisive fall below the immediate support level of ₹210 will strengthen the downtrend and drag the stock lower to ₹190. Subsequent key supports are pegged at ₹180 and ₹165 levels.

What are the medium-term prospects of Strides Pharma Science purchased at ₹475.

Sudhakar Reddy

Strides Pharma Science (₹324.5): Ever since recording a new high at ₹1,371 in late 2015, the stock has been in a long-term downtrend. Both medium and short-term trends are down. However, the stock appears to have found support, registering a 52-week low at ₹288 last week and began to witness a corrective rally. After testing a significant support in the ₹290-300 zone last week, the stock gained almost 5 per cent with good volume. It has an immediate resistance at ₹350.

 

To alter the short-term downtrend, the stock needs to conclusively move beyond ₹370. In such a scenario, it can trend up to ₹400 and ₹435 in the medium term. A further rally above ₹435 will alter the medium-term downtrend and take the stock up to ₹475 and ₹500. Next resistances are at ₹520 and ₹550 levels. You can consider averaging with a stop-loss at ₹285. But a fall below the immediate support zone can drag the stock down to ₹270 and ₹250 levels.

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Published on October 13, 2019
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