Tech query: IOC tests a key resistance

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Please let me know your view on IOC. Will it cross ₹100 levels?

Narasingh Mohanty, Vikas Sharma

Indian Oil Corporation (₹93.9): The stock of Indian Oil Corporation has been on a long-term downtrend ever since recording an all-time high at ₹231 in August 2017. In January 2020, it decisively breached a key long-term support at ₹120 and continued to trend downwards.

After a sharp fall in early March, the stock extended the down-move and touched a 52-week low at ₹71 in late May. It retested this base in September and commenced to trend upwards. The support in the band between ₹70 and ₹72 is a vital long-term support area to keep note of.

Since September, the stock has been on a medium-term uptrend. But it appears to have met with a key resistance at ₹95 in the past week and continues to test this resistance with a downward bias. The daily relative strength index has displayed a negative divergence, indicating that a short-term trend-reversal is on the cards.

A decline below the immediate support level of ₹90 can pull the stock down to ₹85 and then to ₹80 in the short term. Subsequent supports below ₹80 are placed at ₹75 and in the ₹70-72 band. On the upside, a strong rally above ₹95 can encounter a hurdle at ₹100, which is another significant long-term resistance. An emphatic break above ₹100 will strengthen the uptrend and take the stock northwards to ₹110 and then to ₹120 over the medium term.

However, a strong breach of the vital long-term barrier at ₹120 is needed to reinforce the bullish momentum and push the stock higher to ₹140 over the long run. You can make use of short-term declines to buy the stock with a stop-loss at ₹75.

I have purchased Bank of Baroda shares at ₹92. What could be the outlook for BOB shares in next three months? Can I hold it for a long term?

Yadu

Bank of Baroda (₹63.1): The stock of Bank of Baroda took support at ₹40 in late September and again in October and reversed direction. Since then, it has been on a short-term uptrend. It conclusively breached a significant resistance at ₹55 in early November and accelerated sharply. However, last week, the stock met with a resistance at ₹67 and started to decline. It declined 3.6 per cent last week.

This corrective decline can extend in the coming weeks and test a support at ₹60. Further decline below ₹60 can pull the stock lower to ₹55, which is the crucial medium-term support.

But a strong break above the resistance level of ₹67 can take the stock higher to ₹80 and then to ₹90 in the medium to long term. A breakthrough of ₹90 can pave the way for an up-move to ₹100 and then to ₹110. You can average the stock on declines with a stop-loss at ₹45 and stay invested for the medium term.

Send your queries to techtrail@thehindu.co.in



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