Technical Analysis: HDFC Bank, Gandhar Oil Refinery (India) and CESC

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I bought HDFC Bank shares during the recent fall. But the price is continuing to decline and I am now having a loss of 10 per cent. Should I continue to hold the stock or exit with a loss?

Naveen Kumar

HDFC Bank (₹1,419.90): The stock is now poised at a crucial juncture. An important support is at ₹1,385. This was broken last week, but the price has recovered well from the low of  ₹1,363. It is important to see if the stock is getting a strong follow-through rise from here or not. That will determine the next leg of move from here. Even if there is a strong rise from here, HDFC Bank share price has to rise past ₹1,550 to become convincingly bullish again. Only in that case, the doors will open to revisit ₹1,700-1,800 levels going forward.

As of now, there is no clear sign of a reversal. Bearish moving average cross-overs on the charts leave the big picture negative. So, failure to rise past ₹1,550 and a sustained break below ₹1,385 will increase the selling pressure. In that case, HDFC share price can fall to ₹1,250 and even ₹1,150 in the coming months. Since there is no clarity on whether the stock can sustain above ₹1,385 or not, we suggest you to exit the stock and accept the loss.

Is it a good time to buy Gandhar Oil Refinery (India) shares at current levels?

Shanmugam

Gandhar Oil Refinery (India) (₹262.05): This stock has very limited historical data to do a detailed technical analysis since it got listed in November last year only. However, with the limited data available, we will try to give a short-term outlook. The stock price has been falling consistently since mid-December last year. It made a low of ₹228 and the price has risen back well from there over the last three weeks. The recent price action gives an indication of a trend reversal. Support can now be around ₹250. The chances are looking high for the stock price to go up to ₹300-305 over the next two-three months.

If you want to play this stock for the short term, then buy now at current levels. Accumulate on dips at ₹257. Keep an initial stop-loss at ₹244. Trail the stop-loss up to ₹268 as soon as the stock moves up to ₹275. Move the stop-loss further up to ₹278 when the price touches ₹285. Exit the stock at ₹298. The above-mentioned bullish view will go wrong if the stock declines below ₹248. In that case, the price can fall to ₹240 and lower again.

I have shares of CESC. My purchase price is ₹140. What is the outlook for this stock?

Elango, Coimbatore 

CESC (₹132.15): The stock witnessed some wild swings last week. The share price tumbled to a low of ₹116 and then recovered most of the loss to close the week at ₹132. There is a strong long-term resistance around ₹145, which is holding very well for now. Immediate resistance is at ₹136. A strong weekly close above ₹145 is necessary now to regain the bullish momentum. Only in that case, the doors will open for CESC share price to go up to ₹200 and higher levels. Else, we can get a fall back towards ₹115-110 in the coming weeks.

In such a scenario, CESC share price can oscillate in a wide range of ₹110-145 for some time. The price action on the weekly chart indicates that ₹145 is a strong resistance and a strong trigger might be needed to breach it. So, as seen from the charts, the chances are high for CESC share price to remain below ₹145 and fall to ₹115-110. So, it is better to exit the stock with minimum loss now.

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