Technical Portfolio Guide

SHRIRAM CITY UNION FINANCE LTD                   

CMP : Rs 710            
BSE Code : 532498

I bought 50 shares of SHRIRAMCIT at Rs 715. After my purchase, the stock is trading in range and is hovering around my purchase price. What should I do now?
- Soma Sundaram

EXIT SHRIRAMCIT BELOW RS 690 ON CLOSING BASIS
Shriram City Union Finance Ltd is currently trading at Rs 710. Its 52-week high/low stands at Rs 1,748/Rs 675 made on June 28, 2019 and April 28, 2020 respectively. The stock had formed a reversal hanging man candlestick pattern as on weekend of February 20, 2020 and thereafter, witnessed a correction. The correction was nearly 53 per cent from the higher levels. However, considering the daily time frame, since the last 23 trading sessions, the stock is trading in counter-trend consolidation and formed a bearish flag pattern. Currently, the stock is trading below its long and short-term moving averages. The 200-DMA crossed over 50-DMA around 35 trading sessions ago, popularly called the ‘death crossover’, which is a long-term bearish signal. Among the momentum indicators, the 14-period RSI is in super bearish zone in both the weekly and daily time frame. The weekly MACD stays bearish as it is trading below its zero line and signal line. In case the stock sustains below the lower trendline of bearish flag pattern, which is currently placed at Rs 690, it may extend its downward move. Hence, we recommend you to exit Shriram City Union Finance below Rs 690 on closing basis.

DIVI’S LABORATORIES LTD                           

CMP : Rs 2,274                       
BSE Code : 532488

I have bought the shares of DIVISLAB at Rs 2,050 after breakout. Should I hold or book profits?
- Yash Agrawal

BOOK PROFIT IN DIVISLAB AT CURRENT MARKET PRICE
Divi’s Laboratories Ltd is currently trading at Rs 2,274. Its 52-week high/low stands at Rs 2,473.65/Rs 1,466.95 made on April 21, 2020 and August 14, 2019 respectively. The stock has formed a reversal hammer-like candlestick pattern near the upward sloping trendline support as on weekend of March 20 and thereafter, bounced sharply up to its all-time high level. Considering the weekly time frame, the stock has recently formed a reversal bearish engulfing candlestick pattern. Along with this bearish formation, the stock has also managed to close below its weekly pivot and short-term moving averages, i.e. 13-day EMA and 20-day EMA. Among the momentum indicators, the 14-period daily RSI has cooled off after touching the zone of 68-70 and at present, its reading is 50.91. The RSI is trading below its nine-day average and it is in a falling mode, which indicates further downside momentum. The daily MACD stays bearish as it is trading below its zero line. Considering all the above factors, we recommend you to book profit in Divi’s Laboratories at the current market price.

SH KELKAR & COMPANY LTD                     

CMP : Rs 55.05                     
BSE Code : 539450

SHK is trading near its all-time low. Shall I enter now?
- Sunil Dutt

AVOID BUYING SH KELKAR & COMPANY FOR NOW
S H Kelkar & Company Ltd is currently trading at Rs 55.05. Its 52-week high/low stands at Rs 162/Rs 54.75 made on May 20, 2019 and May 07, 2020 respectively. The stock has givena neckline breakdown of Adam & Adam double-top pattern as on weekend of June 23, 2017 and thereafter, it has marked the sequence of lower tops and lower bottoms. Currently, the stock is trading below its long and short-term moving averages, i.e. 20-week EMA, 50-week EMA, 100-week EMA and 200-week EMA. Its daily chart show that it has been continuously trading below its 200-day EMA level since March 2018. The leading indicator, 14-period weekly RSI, is currently quoting at 22.84 and it is in a super bearish zone. The weekly MACD stays bearish as it is trading below its zero line and signal line. The MACD histogram is suggesting a pickup in downside momentum. Moreover, on the directional index, the bearish strength is higher than the bullish strength as +DI is much below -DI. Considering all the above factors, we recommend you to avoid buying SH Kelkar & Company for now.

ABBOTT INDIA LTD                           

CMP : Rs 17,869                                     
BSE Code : 500488

I have bought Abbott India at Rs 14,800 for the short-term. Should I wait or exit with profits?
- Santosh Chowdhary

HOLD ABBOTT INDIA WITH A STOP-LOSS OF RS 17,000 ON CLOSING BASIS
Abbott India Ltd is currently trading at Rs 17,869. Its 52-week high/low stands at Rs 18,569/Rs 7,150 made on May 4, 2020 and May 16, 2019 respectively. The stock has formed a reversal doji candlestick pattern as on April 9, 2020 and thereafter, witnessed a correction. The correction is halted at 38.2 per cent retracement of its prior upward rally (Rs 12,501.45-Rs 18,500) and coincides with 20-day EMA level. As the stock is trading at an all-time high level, it is above all the short and long-term moving averages. The stock is meeting Mark Minervini’s trend template. It is trading above 40, 30 and 10 weekly averages and all of them are trending up. At the same time, they are in a desired sequence. All the major indicators, in all the time frames, are confirming bullish direction. The 14 period RSI at 70.47 on a weekly chart shows bullish momentum. Moreover, the Average Directional Index (ADX), which shows trend strength, is as high as 34.51 on a daily chart and 41.23 on a weekly chart. Generally, the level above 25 is considered as a strong trend. In both the time frames, the stock is meeting the criteria. Considering all the above factors, we recommend you to hold Abbott India with a stop-loss of Rs 17,000 on closing basis.