Should You Exit or Average Up on CDSL?

CDSL, a solid stock, has experienced a remarkable surge in value over the past year, moving from around 200 levels to well over 1500 on multiple occasions. Currently, the stock is in correction mode, which raises questions about whether it's time to exit the investment or to average it up.

Technical Analysis of CDSL

The technical analysis of CDSL presents a mixed picture. Recently, the stock price has moved below its 21-day Moving Average (DMA), a trend that hasn't been seen in a long time. Additionally, the Relative Strength Index (RSI) is currently at 47, indicating a potential oversold level. Based on these technical indicators, here are some key suggestions: Only buy when the stock closes above its 21-day DMA again. Consider buying the next day if the stock crosses above the high, providing a breakout confirmation. If the stock does not follow through, it may drift towards the 1000-level range. Remember to buy during strength and sell during weakness.

Fundamental Analysis of CDSL

From a fundamental standpoint, CDSL's Price-to-Earnings-to-Growth (PEG) ratio stands at 2.4, suggesting that the stock's price is significantly ahead of its growth rate. The median Price-to-Earnings (PE) ratio is 28, while the stock is currently trading at 60, further indicating an overvalued position.

The fundamentals do not support the current valuation of CDSL, which is mostly driven by strong momentum and the prevailing bull market. Based on technicals, it's advisable to enter the stock only above its 21-day DMA. There's a high likelihood of a period of consolidation until earnings catch up. Holding on is an option, but if the stock breaks the 1000-level support, it may be prudent to exit the position.

Buy CDSL After Years of Ownership

If you have been holding CDSL for 8 to 10 years, you might be wondering when you'll get your happiest moment. The stock, having corrected, is expected to bounce back around the 1100 level before aiming for a first target around 1333. You can look for buying opportunities on dips below 1100.

Consult a Financial Advisor for Guidance

Averaging up and holding is a viable strategy. Given the current dynamics, it's generally advisable not to exit the position since re-entering at a lower price is unlikely. However, consulting a financial advisor is always a good idea to get personalized advice tailored to your financial situation.

Staying informed and making well-rounded decisions based on both technical and fundamental analysis can help manage risks and maximize potential gains.