Technical Analysis

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

What is the technical outlook for the stock of Infosys?

Mohammed Hanif

Infosys (₹1,503.35): The stock was stuck inside a sideways range of ₹1,650 and ₹1,950 since September 2021. It broke this range on the downside last month and has been falling since then. The current trend is down. Immediate support is at ₹1,491 – the 21-Month Moving Average. If the stock manages to bounce from here, it can face resistance at ₹1,600 and ₹1,650. As such, the upside is likely to be capped at ₹1,600-₹1,650 for now. A break below ₹1,491 can drag Infosys down to ₹1,400 – the 38.2 per cent Fibonacci retracement support level.  

Whether the stock will manage to bounce from ₹1,400 or not will be very crucial. A bounce from ₹1,400 can take Infosys up to ₹1,600. It could also be an initial sign of a trend reversal. However, the stock must rise past ₹1,650 decisively to confirm a trend reversal. In case Infosys breaks below ₹1,400, a much steeper fall to ₹1,250-₹1,200 can be seen. If you are intending to buy the stock, you should wait. See if the stock is bouncing back from ₹1,400 or extending the fall to ₹1,200 and then decide accordingly. For now, one can stay out of this stock.

I have bought shares of REC at ₹120.5. Can I hold it for 6 months? What is the outlook?

Sidhanth

REC (₹114.05): The current trend is down. From a bigger picture, the stock of REC has been broadly range-bound between ₹70 and ₹225 for more than a decade now. Within this trend, it made a high of ₹168.7 in October and has been coming down since then. Strong resistance now is in the ₹130-₹135 region. The chances are high for the stock to fall towards ₹80 over the next two-three months. Thereafter a fresh rally can begin anywhere from the ₹80-₹70 region, which can take REC up to ₹170 again.

A strong break above ₹170 will then take the stock up to ₹200-₹220 – the upper end of the long-term range. You can exit the stock with minimum loss now. Wait for the fall and buy the stock again at ₹83. Accumulate more at ₹76. Keep a stop-loss at ₹67. Move the stop-loss up to ₹90 as soon as the stock moves up to ₹140. Book partial profits, say, for 40 per cent of your holding at ₹168. Then move the stop-loss for the rest of the holdings to ₹125. Exit the remaining at ₹210.

I am holding shares of Mahanagar Gas. Should I exit the stock and book loss now or should I wait?

Indraneel Mukherjee

Mahanagar Gas (₹740.95): The stock is under pressure. The bounce from the February low of ₹680.2 failed to breach ₹800 decisively. The stock made a high of ₹862 in April and has come off sharply again.

A very crucial support level is at ₹670. If the stock manages to sustain above this support, a fresh rally to ₹1,150-₹1,200 is possible over the long term. But if it breaks below ₹670, a steeper fall to ₹510-₹500 is possible. Since you have not mentioned your purchase prices, it becomes difficult to advise. If you have the risk appetite to digest more loss, then hold the stock with a stop-loss at ₹640. Buy more when the stock falls to ₹680. If the stock starts to rise from ₹670, move the stop-loss up to ₹780 as soon as the price goes above ₹880. Move the stop-loss further up to ₹1,020. when the stock touches ₹1,100. Exit at ₹1,180.

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Published on May 14, 2022