State of Real Estate Stocks

In this article, I have reviewed charts of 3 most liquid stocks in real estate space to gauge their position.

DLF = Weakness setting in

DLF has conclusively broken very important support level of 50 dma which it has been holding pretty well since mid July. But now since the level has been broken, the stock is set for decline to 200 dma, atleast theoretically. Remember, when a stock breaks a level which it has been defending - it leads to sharp decline as traders who were defending that level start to exit the stock.

Technically, over period of time, stock is set to decline to first - 350 [horizontal support line] and then 200 dma. On any rally, the stock may find more sellers than buyers. The stock now has created strong resistance at 50 dma i.e. 417

Source: ChartAlert [www.chartalert.com]

The stock may regain its strength only when it climbs and sustains above 50 dma which means one should look to buy the stock only when it moves above 50 dma, and then pulls back to 50 dma for trending up move. Till that happens, stock may find sellers on rally.

Investment Buy: The stock may become investment buy if for some reason it declines to 200 dma.

Unitech: Weakest Chart

Unitech is very weak on charts. The stock has seen a one way decline from 110 levels to 80 in just 8 sessions. It only tells us the low conviction institutions have in the stock. Fundamentally, BNP Paribas in its 29 Sep report came out with extremely bearish report and target price of Rs. 50 on the stock. Well, Technically - 200 dma target seems highly probable over next few weeks.

As of now, the stock seems oversold and a pullback to 90-92 is probable on the stock but eventually stock is headed down.

Source: ChartAlert [www.chartalert.com]

Sell on rally trend will reverse only when stock climbs above 50 dma and sustain above it, which looks quite far fetched.

HDIL: Strongest Chart

HDIL is the only liquid real estate stock which is still trading above 50 dma. Hence, at current juncture it offers best risk reward ratio with well defined stop loss below 319.

If broader market holds up the current levels, HDIL will rally pretty well.

Source: ChartAlert [www.chartalert.com]

As always, please note the above stocks are not trading recommendations.