Your Stock Portfolio: Rule Britannia? Perhaps in the long run

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

I bought Britannia Industries at ₹2,888 and Force Motors at ₹2,870. What are the prospects for these stocks?

Umasankar Periyasamy

Britannia Industries (₹2,935.5): The stock of Britannia Industries is on a long-term uptrend. However, after recording new high at ₹3,435 levels in early August, the stock started to move sideways.

Since then it has been in a medium-term sideways consolidation phase in the wide band between ₹2,850 and ₹3,350.

The stock has breached its 21- and 50-day moving averages and trades well below them. The indicators on the weekly and monthly charts show signs of weakness.

The stock can decline further and test its lower boundary at ₹2,850 in the coming weeks. An emphatic breach of this level implies that the medium-term trend has reversed downwards. In such a scenario, the stock can decline to the next support range between ₹2,400 and ₹2,500. Further fall can find supports at ₹2,150 and ₹2,000 levels. You can consider exiting the stock at current levels and re-entering at lower levels with a stop-loss at ₹2,000 levels. A strong rally above ₹3,075 can push the stock higher to ₹3,300 and then to ₹3,400 in the medium term.

Force Motors (₹3,170): The stock has surged 39 per cent from our last review in September, when it traded at ₹2,275. After registering an all-time high at ₹3,785 in late October, the stock has been gradually declining. The near-term trend is down.

The stock is currently testing an immediate support at ₹3,150 levels.

A decisive fall below this base level will have bearish implications and pull the stock down to ₹2,650 and ₹2,200 levels in the short to medium term.

Further decline can alter the intermediate-term downtrend and drag the stock down to ₹2,000 or even to ₹1,700 levels in the medium term.

Therefore, you can consider booking partial or full profits at this juncture and re-entering at lower levels.

As long as the stock trades above the significant long-term support level of ₹1,500, its outlook will be bullish. Investors with a long-term view can stay invested with a stop-loss at ₹1,500 levels. Continuation of the uptrend can take the stock higher to ₹3,400, ₹3,700 and then to ₹4,000 in the long rum.

I hold Kaveri Seed bought at ₹800. What is your outlook?

Sai Naveen

Kaveri Seed Company (₹404): The stock of Kaveri Seed Company (KSCL) encountered a key long-term resistance in the range between ₹1,000 and ₹1,050 in February this year.

Subsequently, the stock changed direction and has been on a medium-term downtrend which worsened in August. The short-term trend is also down.

The stock now tests an immediate support at ₹400.

A strong breach of this support will strengthen the short-term downtrend and pull the stock down to ₹330 or ₹300 in the short to medium term.

Next supports are pegged at ₹280 and ₹230. Therefore, you can wait and consider averaging at lower levels with a stop-loss at the level of ₹230. An upward reversal from these support levels can take the stock northwards to ₹460 and ₹540 levels.

On a conclusive breakthrough of ₹540, the stock can rally to ₹600 or ₹650 levels.

A strong rally above ₹730 is needed to alter the medium-term downtrend and take the stock higher to the resistance levels of ₹800 or ₹950 in the long term.

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