Slips below a support
The stock of Gujarat Narmada valley Fertilizers and Chemicals (GNFC) has been in a downtrend since April after facing resistance at around ₹900. A fortnight ago, it slipped below a key support level of ₹560, thus turning the outlook weak. Although the stock saw its price appreciate last week, it is likely to be a corrective move.
Note that there is a chance for the price to rise further, possibly to ₹630. But at this level, a falling trendline resistance is likely to cap the upside resulting in the resumption of the downtrend. So, traders can go short on the stock at the current level and add shorts on a rally to ₹630. Keep initial stop-loss at ₹680. When the stock falls below ₹480, revise the stop-loss down to ₹530. When the price touches ₹420, tighten the stop-loss further to ₹460. Exit all the shorts at ₹400.
Set to resume the rally
The stock of Redington, which broke out of a key resistance at ₹175 towards the end of November, rallied to hit a high of ₹202.3 by mid-December. However, it could not extend the upside and has declined to the current level of ₹180. Even though there is chance for the decline to extend up to ₹160, we see that this move could just be a corrective decline.
As such, we expect the script to resume the rally eventually. On the upside, the stock has the potential to surpass the ₹200-mark and hit ₹220 in about three months. Hence, one can buy the stock now and on a dip to ₹160. Place stop-loss at ₹148 at first. When the stock moves above ₹190, revise the stop-loss up to ₹175. When price goes above ₹200, alter the stop-loss to ₹190. Exit the longs at ₹215.
Solar Industries (₹4,384.6)
Breaks out of a range
Since early October, the stock of Solar Industries has been trading in a range between ₹3,800 and ₹4,220. But last week, it broke out of the range, turning the outlook bullish. Although we might see a corrective decline to ₹4,150, the stock will eventually resume the rally. We forecast the stock to appreciate towards the potential resistance band of ₹4,900-5,000.
Considering the above factors, we suggest traders to go long at the current level of ₹4,384 and add more shares to your holdings when price dips to ₹4,150. Place initial stop-loss at ₹3,950. When the stock rallies past ₹4,600, move the stop-loss up to ₹4,375. On a rally above ₹4,750, tighten the stop-loss further to ₹4,580. Liquidate all your holdings at ₹4,900 because the stock can reverse the trend anywhere between ₹4,900 and ₹5,000.