I have been accumulating the shares of Tech Mahindra. My average purchase price is ₹1,208. I can remain invested for two-three years. Please suggest whether I can accumulate more at lower levels. What is the outlook for this stock?
Purushottam Pandit
Tech Mahindra (₹1,126.55): The downtrend that has been in place since January this year seems to have ended. The bounce from the June low of ₹930.57 gives an early sign of trend reversal. Importantly, the bounce from the June low has happened from a long-term trendline support. Resistance is now in the ₹1,170-1,210 region. A strong break above it will confirm the trend reversal. Inability to breach ₹1,210 can keep the stock in the range of ₹950-1,200 for a few months.
Thereafter, an eventual break above ₹1,200 will open doors for a rally to ₹1,900 over the next four-six quarters. You can accumulate at current levels and also at ₹980 if a dip is seen. Keep a stop-loss at ₹840. Move the stop-loss up to ₹980 when the stock moves up to ₹1,300. Move the stop-loss further up to ₹1,350 when the stock touches ₹1,650 on the upside. Exit the stock at ₹1,870.
I have bought the shares of Divi’s Laboratories at ₹722. What is the technical outlook for this stock? Can I hold it for the long term?
Manoj K Bhat
Divi’s Laboratories (₹3,601.55): The stock has been in a strong downtrend since November 2021. Strong resistances are at ₹4,000 and ₹4,200. As long as the stock remains below ₹4,200, the downtrend will remain intact. Immediate support is at ₹3,460. A decisive break below this support can drag the stock further down to ₹2,900 and even ₹2,750. This can happen in the next three-six months. Thereafter, a fresh leg of rally might begin. Since you have bought the stock at a very lower level, it is important to protect your profits at this point of time.
Rather than waiting for this stock to go back to ₹5,000 levels again, it is better that you exit and book profits at current levels. You can reinvest the sale proceeds of this stock in some other shares. Maybe you can consider buying Tech Mahindra as explained in the previous query, which is looking bullish from a long-term perspective.
I have bought shares of IDFC First Bank. My average purchase price is ₹47.25. What is the long-term outlook for this stock?
Jasmeet Singh
IDFC First Bank (₹50.50): The downtrend that was in place since March 2021 has got reversed. The stock made a low of ₹28.95 in June and has risen sharply from there. The rally from this low is strong. The current uptrend is likely to remain intact. Immediate support is at ₹49. A much lower and the next strong support is at ₹42. The current up-move has the potential to target ₹60 and ₹64 over the next three months or little more than that. If the stock manages to breach ₹64, the upside can extend up to ₹69. The levels of ₹64 and ₹69 are strong resistances.
The stock has been struggling to breach ₹69 decisively for many years. So, you may have to exit most of your holdings when the stock moves up towards that level. For now, keep a stop-loss at ₹41. Trail the stop-loss up to ₹49 as soon as the stock moves up to ₹56. Move the stop-loss further up to ₹61 when the stock touches ₹64 on the upside. Exit 80 per cent of your holding at ₹68. Hold the balance to see a break above ₹69 happens or not. But keep a very tight stop-loss of ₹66 for the balance holdings. In case the stock fails to breach ₹69 and reverses lower, you have to exit them at ₹66.