I have purchased shares of Karnataka Bank at ₹144. Should I hold or exit?
T Selvam, Nagercoil
Karnataka Bank (₹143.80): The stock of Karnataka Bank has been oscillating in a wide range for more than a decade. The stock has been moving up and down between ₹34 and ₹170 since March 2008. Within this range, Karnataka Bank made a high of ₹168.50 in December last year and has come off slightly. It has been consolidating between ₹128 and ₹168 since then. Broadly, the overall range seems to remain intact. As such, the chances are high for the stock to come down towards ₹100 and lower in the coming months.
A sustained break below ₹128 can trigger this fall. It will also leave the chances high for the stock to see a steep fall to ₹50 and even ₹35 – the lower end of the range over the long term. Since you have entered the stock at the top of the range, we suggest to exit the stock at current levels. The stock has to breach ₹170 decisively to negate the fall and rise further. That looks less likely.
I hold shares of Lupin. My average purchase price is ₹997. What is the outlook? Should I hold or exit the stock with loss?
Muthubasavan, Hosur
Lupin (₹670.05): The stock has been in a strong downtrend since October 2015. However, there is a strong long-term trend supports at ₹610 and ₹550. The stock has to necessarily sustain above ₹550 to avoid further steep fall. In the short term, the chances are high for the stock to fall to ₹610. It will have to be seen if the downside is extending up to ₹550 or not. If the stock manages to sustain above ₹610/₹550 and bounces back, there are chances for a recovery rally to ₹950 over the next two-three quarters.
A break above ₹950 will indicate a trend reversal and take the Lupin share prices up to ₹1,300 thereafter. From the charts, we expect the stock to hold above ₹550 and see a rise. So, you can accumulate at ₹630 and then at ₹570. Keep a stop-loss at ₹490. Move the stop-loss up to ₹780 when the stock rises to ₹930. Move the stop-loss further up to ₹930 when the stock touches ₹1,100. Exit at ₹1,300. If the stock breaks below ₹550, an extended fall to ₹400-350 can be seen.
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