Technical view by Nooresh

Shall i buy BHEL – The stock is down 12% ? – Answer – NO !!!



This is the question i got in the morning – Shall i buy BHEL the stock is down 12% – Answer – NO !!



Last year around May – June 2012 when BHEL was trading at 200 levels i had been mentioning about how it could be an investment pick and pullback trade. See the post – BHEL at 5-7 year supports

This flip flop trades from 200 to 225/240 was taken quite a few times. Stoplosses were consistently placed at 190/195 all through.


Last year was bullish at 200 because of the 5-7 year support as shown by arrows in above chart, but a break below 190 in previous months had broken all hopes of a reversal. Technically the breakdown at 200/150 makes the whole long term story of the stock to be finished. We may review only if it is able to cross 160 till then the stock can go anywhere on the downside. Also the sentiment with PSU stocks it can keep surprising on downside.


Does not make any sense to go bottom fishing rather a rise to 140 makes a short feasible with small stoploss.

More importantly given that the stock may be cheap but there are no major reasons for a big reversal in Capital Goods as a sector why should an investor buy a stock where downside now looks unlimited and upside is a few quarters away depending on whether there is reversal in the economy.


Any rise to 140 will see selling pressure where an investor holding the stock should look to exit.


Technically there is no reason for one to buy the stock. Given the sharp drop a short –selling stoploss also is very high but a move to 140 can be a short area.


Disclosure : No trade advised on the stock.



August 31- 1 September 2013  


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{ 6 comments… add one }
  • bijay agrawal August 5, 2013, 13:46

    dear Nooresh ji,
    I bought 4000 wockhardt at an average price Rs 561/- . I know i am in big loss so what to do ?

    • Nooresh August 5, 2013, 14:05


      You need to first decide whether the exposure is very big to the size of your portfolio. If that is the case you have over allocated. I too have a positive view on the stock and advised buying at 550 but a small exposure.

      Need to wait for more clarity on the stock. You can hold on

  • nikhil August 5, 2013, 14:49

    since this is a long term chart, it’d be better if one uses semi-log scale

    • Nooresh August 5, 2013, 20:58

      Well not necessary to use log charts unless we have seen a move which is in times and chart becomes unclear.

  • sivaprakash August 5, 2013, 16:50

    Sir ,
    What is ur view in Financial Technologies now?


    • Nooresh August 5, 2013, 20:59

      No view on Financial Technologies. Might look into MCX when circuit stops.


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