Technical Analysis

We zoom in on its prospects, as also that of two other stocks

What is the long-term outlook for the stock of Adani Power?

S Jayaraman

Adani Power (₹291.71): This stock had surged over the last few months. It made a new high of ₹312.3 in April and has come-off from there. Resistance is there in the ₹315-325 region. This is holding for now. The stock is now trading in the uncharted territory. So, it is difficult to identify more resistances. This is not the right time to enter this stock at such higher levels. Supports are at ₹225 and ₹200. Next strong support is at ₹170. A test of ₹225 looks possible. But will the fall extend up to ₹200 and ₹170? That is not very clear. So, if you intend to buy this stock, wait for a dip and buy just 30 per cent of what you intend to buy at ₹230.

If there is a fall below ₹225, then buy another 40 per cent at ₹205 and the balance 30 per cent at ₹180. If you get all the above levels to buy, then your average entry will be at ₹205. If you do not get all the three levels to enter, don’t try to jump in, hold on to whatever levels you have entered. Keep the stop-loss at ₹145. Move the stop-loss up to ₹195 as soon as the stock moves up to ₹235. Move the stop-loss further up to ₹255, as soon as the stock touches ₹295 on the upside. Exit the longs at ₹330.

I have purchased shares of Shriram City Union finance at ₹1,250. What is the short- and long-term outlook of this stock? I am a long-term investor.

Ganesan

Shriram City Union Finance (₹1,702.45): The short-term outlook is bearish. The stock made a high of ₹2,600 in September last year and has come-off sharply from there. Resistance is at ₹1,815. Supports are at ₹1,470 and ₹1,400. The chances are high for the stock to break ₹1,400 and fall to ₹1,200. But thereafter a fresh rally from ₹1,200 can begin targeting ₹2,600 levels again over the long term. Since the stock can fall in the short term, we suggest you book partial profits at current levels.

You can consider selling 35 per cent of your total holding. For the same quantum that you sell now, buy the stock again when it falls to ₹1,230. Keep the stop-loss at ₹980. Move the stop-loss up to ₹1,380, when the stock moves up to ₹1,850. Move the stop-loss further up to ₹1,950, when the stock touches ₹2,300 on the upside. Exit all the positions at ₹2,500.

I have bought Thomas Cook (India) at ₹59/. Can I accumulate this stock? If so, where can I buy again? Please give me the long-term outlook.

G Janakiraman

Thomas Cook (I) (₹69.6): The short-term outlook is bearish for this stock. There is room for a fall to ₹60 or ₹55 from the current levels. But that will just be a correction within the overall uptrend. The expected fall now can be limited to ₹60-55. So, you can consider buying more at ₹61 and ₹58. Looking at the monthly chart, the stock has been oscillating up and down between ₹50 and ₹90 for a long time. This sideways oscillation can continue. A break above ₹90 and a subsequent rise pat ₹100 will pave way for a rise to ₹140 over the long term, say may be in the next two years or so.

So, you need to have patience for holding this stock. There will be times that you may feel like exiting the stock. But have patience and hold on to it.  But this might take a long time. Keep a stop-loss at ₹38 and hold the stock for the target of ₹140. The bullish view will get negated if the stock falls below ₹50 decisively. In that case, it can fall to ₹40 initially and may be even lower.

Published on May 07, 2022