Here are answers to readers’ queries on the performance of their stock holdings.
I bought shares of BHEL at ₹267 and Sun Pharma at ₹920. Can I sell them and book losses or should I hold them?
The stock resumed its downtrend and has been trending lower since then. However, after taking support in the range between ₹90 and ₹100 in February 2016, the stock started to trend upwards and has been on a corrective medium-term uptrend.
The stock is currently well-poised to breach its moving average compression (21, 50 and 200-day moving average) at around ₹140. An emphatic breach of this as well as immediate resistance at ₹150 will strengthen the bullish momentum and take the stock higher to ₹175 and then to ₹200 in the medium to long term.
You can consider averaging at current levels with a stop-loss at ₹120. Further rally beyond ₹200 can take the stock higher to ₹230 and ₹255 levels. Next significant resistances are at ₹300 and ₹350.
Only an emphatic break-out of ₹350 will alter the long-term downtrend. Inability to move past ₹150 can keep the stock wavering in the band between ₹120 and ₹150 for a while. But a slump below the immediate support can drag the stock down to test the key long-term support band between ₹90 and ₹100 once again.
Sun Pharmaceutical Industries (₹782.7): The long-term trend continues to be up for the stock of Sun Pharma despite its decline from the all-time high recorded at ₹1,200 in April 2015. Key support at around ₹710 cushioned the stock’s fall in November 2015 and again in June this year.
Encountering an immediate resistance at ₹850, the stock has been declining over the last two weeks. It currently trades just above a key support at ₹770.
A slump below this level can pull the stock down to the ₹700-710 zone in the short term with a minor halt at around ₹740. The stock can again take support at around ₹710 and rebound. You can make use of the corrective declines to average the stock with a stop-loss at ₹690. Resumption of the uptrend can take the stock higher to ₹850.
Decisive breakthrough of ₹850 will pave way for an up move to ₹900 and then to ₹950 in the medium to long term. Long-term uptrend will remain intact as long as the stock trades above the significant support level at ₹650.
Investors with a long-term perspective can hold the stock with a stop-loss at ₹640. Key resistances above ₹950 are placed at ₹1,000 and ₹1,500.
What is the outlook for United Spirits bought at ₹3,100. Should I sell or average it?
Srinivasan Narain
United Spirits (₹2261.2): Since recording an all-time high at ₹4,080 in March 2015, the stock has been on an intermediate-term downtrend, forming lower peaks and troughs.
The stock tests a key support at ₹2,250 after retracing 50 per cent fibonacci retracement level of its prior uptrend. Moreover, it currently tests a key trend-deciding band between ₹2,150 and ₹2,250.
A conclusive slump below this band will alter the long-term uptrend and drag the stock down to ₹2,000 and ₹1,700 levels in the medium term. In such a scenario, consider exiting the stock.
The stock has been on a medium-term sideways consolidation phase in the range between ₹2,250 and ₹2,700 from this February. An upward reversal from the current support zone can take the stock northwards to the upper boundary at ₹2,700 in the short to medium term. Conclusive breakthrough of ₹2,700 can push the stock higher to ₹3,000 and then to ₹3,300. Strong rally beyond ₹3,300 is required to alter the intermediate-term downtrend and take the stock up to ₹3,600 and ₹3,800. Consider averaging on a rally beyond ₹2,700 levels with a stop-loss at ₹2,300.
Send your queries to techtrail@thehindu.co.in