Here are answers to readers’ queries on the performance of their stock holdings.
I have shares of MRF bought at ₹39,900. Should I average it?
An emphatic rally beyond the immediate resistance at ₹40,000 can push the stock up to ₹41,000 and then to ₹43,000. Next long-term target for the stock is at ₹46,000. On the other hand, a strong fall below the key support at ₹34,000 will alter the medium-term uptrend and drag the stock down to ₹31,000. A decisive slump below ₹31,000 will strengthen the , which will also be a threat to the primary uptrend, and pull the stock down to ₹27,500 and then to ₹24,500 in the long term.
I bought shares of VRL Logistics at ₹365. Can I average at current levels? What are the medium and long-term prospects for this stock?
Rajeev
VRL Logistics (₹290.2): Following a sharp nose-dive in late May 2016, the stock of VRL Logistics found support in the band between ₹260 and ₹270.
Later, the stock changed direction, triggered by positive divergence and started to trend upwards. Nevertheless, this uptrend was short-lived as the stock, in late July, encountered a key resistance at ₹365 which also coincides with the 50 per cent fibonacci retracement level of the prior downtrend.
Thereafter, the stock started to continue its intermediate-term downtrend that was in place since the September 2015 peak at ₹478.7. Short-term trend is also down for the stock.
It hovers above the key support band between ₹260 and ₹270. You can wait and consider averaging the stock on an upward reversal from this support zone with a stop-loss placed at the level of ₹250.
But a decisive fall below ₹260 can reinforce the downtrend and pull the stock to new lows. Strong rally above the immediate resistance at ₹307 can push the stock higher to ₹340 and then to ₹365.
The stock needs to conclusively break out of the significant resistance at ₹365 to alter the downtrend and take it higher to ₹400, ₹430 and ₹450 levels in the long run.
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