Technical Analysis

Your Stock Portfolio

Yoganand D | Updated on January 08, 2018

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

I have shares of Dhanlaxmi Bank and SAIL. Should I hold or sell them?

P Ramakrishna

Dhanlaxmi Bank (₹37.2): The stock of Dhanlaxmi Bank has been on an intermediate-term uptrend since taking support at around ₹17 in early 2016. However, the long-term trend continues to be down for the stock since recording a new high of ₹212 in October 2010. It faces difficulty in going past the key barrier in the ₹43-45 band. A strong break above this resistance zone is needed to strengthen the intermediate-term uptrend and take the stock higher to ₹50 and ₹55.

However, the short-term trend is down and the stock can test support at ₹36. Decisive fall below this base can pull the stock down to ₹33 and ₹30 levels in the medium term. An emphatic fall below ₹30 can alter the intermediate-term uptrend and pull the stock down to ₹26 or ₹25 levels over the long term.

Moreover, this will also strengthen the long-term downtrend. Investors with a short-term view should consider exiting the stock on a decisive fall below ₹33. On the other hand, the prospects will turn bullish only on a strong rally beyond ₹45.

Steel Authority of India Ltd (₹59.1): The stock of Steel Authority of India Ltd (SAIL) has been moving in a downward channel since hitting resistance at ₹68 in early February this year. Key support at around ₹53 cushioned the stock in early October and is on a near-term rally, heading towards the upper boundary of the channel. Strong breach of the immediate resistance at ₹63 is needed to bring back bullish momentum and take the stock higher to ₹68 in the medium term. A conclusive break above ₹68 will strengthen the uptrend and take the stock northwards to ₹75 and ₹80 levels in the medium to long term. Investors with a long-term perspective can stay invested with a stop-loss at ₹50. Decline below ₹50 can pull the stock down to 47 and then to ₹45 levels.

I want to accumulate Monnet Ispat & Energy on every dip. Does the stock hold potential for the long term?

Sabera Begum

Monnet Ispat & Energy (₹29.7): The stock is on a downtrend across all time-frames. It is a small-cap stock that comes with high risk and low volume. This suggests that there is lack of investor interest in this stock. Therefore, it is not suitable for long-term investments.

For the long term, focus must be on large-cap or blue-chip stocks that can deliver good returns over the long term.

Investing in high-risk small-cap stocks can erode the capital. The stock met with resistance at ₹44 in May and again in late June and started to decline. It has been in a medium-term downtrend since then. It now hovers above a key support of ₹28 with negative bias. Strong plunge below this can pull the stock down to ₹26 and ₹24. Next key support is in the ₹20-22 band. On the upside, the stock has key resistances at ₹33 and ₹38. A conclusive rally beyond ₹44 is required to take it up to ₹50 and ₹55 levels.

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Published on October 22, 2017

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