After the BIG crash on 21st September there were flash news on popular finance websites that Rakesh Jhunjhunwala has raised his stakes in DHFL after the 57% crash.
If you have the stock in your portfolio the question will be looming inside your RIGHT brain, should you follow his footsteps and average your positions in the stock.
Well after all its your money and you have full rights to take the decision as what to do with that. But before following the Big Bull’s footsteps please take some time and go through this analysis. It won’t cost you more than 3 minutes.
On the chart above you can notice, after the great plunge the stock is spending some time into sideways consolidation. Though the major trend is down. A good weekly support is placed at 264 levels. As long as the stock holds this it will be considered in a safe zone (i.e., will delay any further crash). But as soon as it starts trading below it, in no time it will come to test 163 – 122 levels.
The Daily RSI is deep below 40 and have been resisting the levels! This indicates more selling pressure. The DMIs have crossed over. Just waiting for the ADX to pop up above 25 levels so that the trending may being in the counter.
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So, holding 264 gives you a chance to buy some of it now? The answer is a BIG NO!! We are not interested in catching any falling knives. Real strength in the stock will be witnesses only above 333 levels. So if you wish to grab some of DHFL do it once it moves and sustains above 333 levels.
Now, another question pops up in your RIGHT brain! What am i to do with the stock holding at this juncture! The answer is, if you are not comfortable to book losses keep holding it. And if you are okay in taking home losses, book it and buy some other BLUE CHIP stock. This piece of advice was for investors in the stock and not traders! If you are an active trader and have been holding this stock, hoping for pullback, find some other profession!
Before jumping into the stock with your money I request you o go through the DISCLAIMER here. I may have a position in the stock.
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