I am holding shares of HCL Infosystems at an average price of Rs 100. Should I hold or sell?
HCL Infosystems (Rs 40.2): This stock is in long-term downtrend since the November 2008 peak of Rs 300. It also breached the long-term trough at Rs 64 in November 2011 and is currently trading 37 per cent below this level.
Investors can take heart from the fact that the stock is moving in a sideways range between Rs 38 and Rs 52 since December 2011. It is possible that the stock reverses higher from these levels. Investors can, therefore, hold the stock with stop at Rs 33. It would, however, be best for investors to divest their holding on decline below this level since the stock can then halve further.
Medium-term resistances will be at Rs 95 and Rs 130. The long-term view on the stock will turn positive only on a close above Rs 140.
What is your view on GAIL (purchased at Rs 485) and Greaves Cotton (bought at Rs 100). Should I book loss at this point or wait longer?
GAIL (Rs 374.2): GAIL formed the trough at Rs 303 in May this year and is in a short-term uptrend since then. Since the stock has critical long-term support at Rs 300, which occurs at 61.8 per cent retracement of the previous rally from 2008 trough, it would not be right to divest your holdings at this juncture.
A long-term trough is possible at Rs 300 that can take the stock up to Rs 448 or Rs 536. If the stock struggles to move beyond Rs 392, investors with short- to medium-term perspective should divest their holdings. That will imply that the stock can remain volatile in the range between Rs 300 and Rs 400 for a few more months.
Greaves Cotton (Rs 67): You have purchased Greaves Cotton also close to its highs. But this stock is also attempting to halt at long-term support at 50 per cent retracement of its previous rally. The stock is currently attempting to hold the support at Rs 60. This can act as stop-loss for investors with short- to medium-term perspective. Long-term investors can hold the stock with deeper stop loss at Rs 48.
Medium-term resistances for the stock will be at Rs 80 and Rs 92. Investors, who do not want to stay with this stock for long, can exit the stock on rallies to these levels. Long-term trend will turn positive on a close above Rs 92. Next target would be Rs 112.
Could you please advise on the outlook for Marico?
Anil Kumar Ray
Marico (Rs 198): Marico is in a strong structural uptrend. The rally that began at Rs 46.5 in October 2008 continues to be in force. If we consider the retracement supports of this long-term uptrend, we get the first support at Rs 160 and the next support at Rs 134.
Long-term investors can hold the stock as long as it trades above the second support. The stock can also be accumulated in declines with the same stop-loss. The point of concern is that the stock is currently close to its long-term target at Rs 220.
Investors should stay on their guard as long as the stock trades around or below this level. Target on a strong move above Rs 220 is Rs 270.
What is your advise on VIP Industries?
VIP Industries (Rs 84.1): VIP Industries took a sharp tumble in November and December last year, when it fell from Rs 175 to Rs 72. But the stock is attempting to steady itself since then. The fact that the stock has long-term support in the band between Rs 70 and Rs 85 also bodes well for this stock. Long-term investors can hold the stock with stop-loss at Rs 65.
Short-term targets for the stock are at Rs 105 and Rs 130. Medium-term view will turn positive only on a strong close above Rs 130. Subsequent targets are Rs 138 and Rs 154. That said, it would be best if investors do not make fresh purchases on decline below Rs 70.
I am interested in buying Power Finance Corporation. Please advise the price at which I can buy the shares.
Power Finance Corporation (Rs 166.4): Power Finance Corporation has critical long-term support in the zone between Rs 70 and Rs 80. The stock is attempting to reverse from the long-term support zone between Rs 125 and Rs 130. You can buy the stock at current levels with a stop-loss at Rs 124.
The view on the stock will turn negative only on close below this level. But PFC might not immediately shoot higher. The stock faces resistance at Rs 230. This level needs to be crossed to make the medium-term view positive. Next hurdles will be at Rs 258 and Rs 298.