Technical Outlook- Ahmednagar Forgings, Sesa Sterlite, Brigade, Havells :: Business Line

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Here are answers to readers’ queries on the performance of their stock holdings.

Please give the short and long-term outlook for Havells India.

Anil Dixit, Prabhu

Havells India (₹270.1): The long-term uptrend that began from the early 2009 low of ₹10 (stock split adjusted) appears to have come to a halt, after it marked an all-time high of ₹346 in early December 2014.

The stock subsequently plunged, breaking its key immediate supports at ₹300 and ₹280. The next key support at ₹250 provided base for the stock. But that appears to be weak as well.

The stock trades well below its 21- and 50-day moving averages. The indicators in the weekly and monthly chart signify trend reversal.

A decisive fall below ₹250 can alter the medium-term uptrend and drag the stock down to ₹220 and then to ₹200 in the ensuing months.

As long as the stock trades above ₹175, the long-term uptrend will be in place.

Investors with a long-term perspective can hold the stock with a stop-loss at ₹165 levels. However, an emphatic decline below ₹175 can pull the stock down to ₹150 and then to ₹120 levels in the long run.

Only a conclusive rally above ₹300 can push the stock northwards to ₹330 and ₹350 levels.

Recommend the long-term outlook for Sesa Sterlite.

Panini Deshpande

Sesa Sterlite (₹207.4): Following a 50 per cent fibonacci retracement of the prior downtrend, the stock encountered significant long-term resistance at around ₹310 in June 2014.

It failed to surpass this level and retraced its entire rally that occurred in May.

However, the stock now tests a key support at ₹200. An emphatic fall below this base can pull the stock further down to ₹180 and then to ₹150 levels in the medium term. Next significant long-term base is at ₹120 levels.

The stock first needs to address the ongoing medium-term downtrend. To alter this trend, it needs to decisively breakthrough the important resistance at ₹255 and then at ₹270 for an up move to ₹310 levels.

However, only a conclusive break out of ₹310 will change the long-term trend to bullish and take the stock to ₹340 initially and then to ₹380.

I have shares of Brigade Enterprises. What is the technical outlook for the company?

Ajit Bokdia

Brigade Enterprises (₹141.8): The stock has been struggling to surpass its key long-term resistance band between ₹160 and ₹170 in the last four months. The price action over these months signifies a trend reversal.

Moreover, the indicators and oscillators in the weekly chart also back this trend reversal. Hence, investors sitting on profits can take some off the table at this juncture.

Currently, the stock tests its support at ₹130. A fall below this level can pull it down to ₹115 and then to ₹100 in the medium term. Next significant supports are placed at ₹90, ₹75 and ₹55.

To strengthen the intermediate-term uptrend, the stock needs to break through the long-term resistance band between ₹160 and ₹170.

Investors can re-enter above this band. The stock can trend to ₹187 and then to ₹215 levels in the long term.

I bought shares of Ahmednagar Forgings at ₹458. It has fallen below ₹350. What is your technical outlook?

Arumugasamy

Ahmednagar Forgings (₹338.4): Since the August 2013 low of ₹73, the stock has been on a long-term uptrend.

It decisively broke through the key long-term resistances at ₹200 and ₹300 in May and August 2014.

Nevertheless, after marking an all-time high at ₹519 in late November, the stock reversed direction forming a bearish engulfing candlestick pattern.

The stock has been on a short to medium-term downtrend since then.

While trending down, the stock breached its key supports at ₹410 and ₹370 levels, strengthening its ongoing downtrend. It can extend its fall and test its long-term support at around ₹300 in the coming weeks.

Further fall below ₹300 can drag the stock down to ₹250, which a long-term trend deciding level. Key support below this level is at ₹200.

Therefore, you can consider exiting the stock and re-entering at lower levels.

A strong rally above ₹410 can push the stock higher to ₹450 and ₹500 in the long term.