I had bought shares of Chennai Petroleum Corporation Limited (CPCL) at ₹453 in 2017. The stock had come down sharply since then. What is the outlook for the stock? Should I consider exiting the stock or accumulate at current levels?

Saketh Ram

CPCL (₹115): You had bought this stock almost at the top. Firstly, whether it is an investment or trading, it is always good to enter a stock with a complete strategy. That is accessing the profit potential and accordingly having a stop-loss.

If you are going to hold it for long-term, then what are levels that you are going to accumulate it and then a stop-loss for that accordingly. Figuring out the exit point of an investment or trading position at the time of entry itself is very much important. It looks highly impossible for your position to turn profitable. Yet, the stock is showing a bottom and the chances are high for it to go back to ₹450 levels in the next two-three years. So, you have two options to decide. One, you must accumulate at current levels. Your average buy price then will come down to ₹284 if you buy the same quantum at current levels. Then have a stop-loss at ₹88 and hold it. You must exit at ₹450. But as mentioned above, it will take another two or three years. You must wait patiently, but at the same time, stick to the stop-loss very strictly.

Two, exit this stock now with a loss and buy some other good stock that can give you a better return in the same time span of two-three years. As a good discipline, ideally you have to choose the second option. But that is very tough from a psychological point of view.

I bought shares of Redington (India) Ltd at ₹149. What is the medium to long-term outlook for the stock?

Angeline M Flashya

Redington (I) (₹162.9): The stock has seen a stellar rally from around ₹32 in April 2020 to a high of ₹177 in July 2021. Thereafter, it has been broadly consolidating higher in a sideways range. The trend is still up. Strong supports are at ₹140, ₹132 and ₹118. Resistance is at ₹180. You can consider accumulating the stock at ₹142. From a long-term perspective, you can continue to buy more at ₹133 and ₹120 if the stock breaks and falls below ₹140. Keep a stop-loss at ₹117 and hold it. The stock has the potential to rise towards ₹235-240 where you can consider booking partial profits. Thereafter, move the stop-loss to ₹195 for the balance position. Exit the pending 50 per cent in the ₹265-270 region.