What is the technical outlook for the stock of Kotak Mahindra Bank?

Rahul Nangalia

Kotak Mahindra Bank (₹1,776.7): The stock is hovering above a very crucial level. ₹1,720-₹1,700 is an important support zone to watch. The stock has to sustain above this support and rise past ₹1,870 decisively in the coming weeks. Only in that case can the outlook turn convincingly bullish. If that happens, the stock can rise to ₹2,400-₹2,500 over the next six to twelve months. But if it breaks below ₹1,700, the sell-off can intensify. It will confirm a complex head and shoulder reversal pattern on the chart. Such a break can drag the stock down to ₹1,570-₹1,550 initially. Thereafter a corrective rally to ₹1,700 is a possibility.

But the trend will continue to remain down. A fresh fall from ₹1,700 thereafter will have the potential to take the stock down towards ₹1,400 and even ₹1,300. You have to buy on a break above ₹1,870, if that happens immediately. In this case, keep a stop-loss at ₹1,660. Hold it for the target of ₹2,450. If the second scenario of a break below ₹1,700 happens now, then wait for dips and buy for about 30 per cent of your intended amount at ₹1,570. Buy more for another 40 per cent at ₹1,430 and the balance 30 per cent at ₹1,340. Keep a stop-loss of ₹1,120 in this case. Target can be at ₹2,550 which will take a minimum of two years.

I have purchased Avenue Supermarts (DMart) at ₹4,900. What is the outlook for this stock?

P V Ramana

Avenue Supermarts (₹4,082.30): The stock is in a downtrend now. The stock made a high of ₹5,899.90 in October last year and has tumbled 44 per cent from there. Within the downtrend, the stock has been consolidating sideways between ₹3,880 and ₹4,450 since February this year. There is an important support at ₹4,000. A strong rise above ₹4,400 will be needed to indicate a trend reversal. In case it breaks below ₹3,880 from here, a fall to ₹3,700 is possible. A subsequent break below ₹3,700 will see a steeper fall towards ₹3,400. However, the chances are high that the downside could be limited to ₹3,700 from here.

For now, we can expect the current sideways move to continue and then a test of ₹3,700 can happen in the next one-two months. Assuming that you are a long-term investor, accumulate the stock at ₹3,740. Keep a stop-loss at ₹3,540. A fresh rise from around ₹3,700 will have the potential to take the stock up towards ₹6,000 again over the long term.

I am holding the shares of Finolex Industries at an average price of ₹183. Can I accumulate this stock on dips?

Rajesh K

Finolex Industries (₹153.9): The stock has been in a strong downtrend since the last week of October last year. Currently it is consolidating above the key support level of ₹145. The chances are high for the stock to break ₹145 and fall further towards ₹130-₹125. The 61.8 per cent Fibonacci retracement level at ₹137 can be an intermediate support above ₹130. You can wait for the stock to fall further from current levels.

Accumulate the stock at ₹138 and then at ₹128. In case the stock falls further, breaking below ₹128, it can test ₹110 on the downside. If that happens, buy more at ₹113. The fall to ₹125 or ₹110 can happen possibly in the next three months. You have to keep a stop-loss at ₹97. The fall extending beyond ₹110 is unlikely. However, the bias on the charts is that the stock can very well remain above ₹125 itself. A fresh rise either from ₹125 itself or from ₹110 will have the potential to take the stock up to ₹300 over the next two-three years.

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