I have shares of Wipro. My average purchase price is ₹453.15. What is the outlook for this stock?
Vikas Rawat
wipro (₹376.45): The stock has been stuck in a sideways range since September last year. ₹370-420 has been the range of trade. The level of ₹370 is a crucial long-term trend support. Below that ₹350 is the next key support. Considering the strong fall since January 2022, the downside is likely to be limited to either ₹370 itself or ₹350. A fall below ₹350 could be less likely. If you intend to hold Wipro for a long term, then buy more at current levels. Keep a stop-loss at ₹340. As long as the stock trades above ₹370/₹350, the chances are high to see a break above ₹420.
Such a break will indicate a reversal trend and take Wipro share price up to ₹460 and ₹500-520 initially. Exit 30 per cent of your holding at ₹520. Move the stop-loss up to ₹435 for the balance holding. Revise the stop-loss further up to ₹510 when Wipro touches ₹570. Exit the holding at ₹600. In case Wipro share price breaks below the support at ₹350, it can fall to ₹310-300. So, in that case you have to exit at the stop-loss level mentioned above.
I have bought shares of Kotak Mahindra Bank at ₹1,740. What is the short-term outlook for this stock? My holding period is one month.
HK Joshi, Pune
Kotak Mahindra Bank (₹1,691.20): The stock has been oscillating in a sideways range since mid-December last year. An immediate support is at ₹1,690 – the 200-Day Moving Average. Below that, a crucial trendline support is at ₹1,618. A strong bounce from around ₹1,618 will keep the sideways range intact. In that case, a rise to ₹1,850 and even ₹2,000 is possible. But this rise can take about two months. You can buy more at current levels. Keep a stop-loss at ₹1,605. Move the stop-loss up to ₹1,740 when the stock moves up to ₹1,780. Move the stop-loss further up to ₹1,810 when Kotak Mahindra Bank share price touches ₹1,880. Exit the long positions at ₹1,950.
If the stock falls below ₹1,618, the downside pressure will increase. That can then drag the price lower to ₹1,500. Such a fall will confirm a head and shoulder reversal pattern on the charts. So, that will be very bearish from a long-term perspective. In that case, a fall to ₹1,400 and even ₹1,300 cannot be ruled out. The price action around ₹1,618 will need a close watch.
What is the outlook for the stock of Reliance Power?
Jacob J, Kochi
Reliance Power (₹10.68): The stock has been moving up gradually since 2020. But the price action since June 2021 indicates a broad sideways range. Barring the spike to ₹25 in September last year, ₹8 to ₹20 has been the trading range. For now, the stock has been holding well above ₹8. Intermediate resistance is at ₹12. A break above it can take the price up to ₹14-15. A further break above ₹15 will then open the doors to target ₹20 – the upper end of the range.
But in case Reliance Power breaks below ₹8, it can fall to ₹5. Stocks with a very low price might be very tempting to buy. The mind set of people will be that one can buy a large number of shares with less capital. But the chances are very high that one can get trapped in such stock as the price movement may get stuck in a very thin range. So, it is better to avoid taking any positions in these kind of stocks.
Send your questions to techtrail@thehindu.co.in.