Technical Analysis – Hindalco – 21st Feb 2010
Hindalco Industries (Rs 149.9) – This stock soared merrily in the first half of the week after its North American unit Novelis returned to profit in the third quarter. The stock jumped to an intra-week peak of Rs 154.8 before giving up some gains towards the weekend.
Hindalco retraced 33 per cent of the up-move recorded in 2009 when it declined to the recent low of Rs 133.5. That meets the minimum decline required for a correction. There is another strong support just below at Rs 125 where the 200-day exponential moving average is also positioned. Investors can therefore accumulate the stock in declines with stop at Rs 120. Fresh purchases should however to be avoided on a fall below Rs 120 since subsequent supports are Rs 108 and Rs 91.
Short-term resistances are at Rs 163 and Rs 180 and investors with a trading perspective can take some money off the table at these levels. Reversal from either of these levels can result in the stock moving in a range between Rs 125 and Rs 180 for a month or two before moving higher. Our positive view on this stock will be negated only on a close below Rs 120.
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