Please provide technical guidance on SRF and EID Parry both of which are currently trading at 52-week lows.

Ajit

SRF (Rs 199.7): You are right in stating that SRF is trading at a 52-week low. The stock is in a medium-term down-trend since the peak of Rs 444 recorded in November 2010. But it is halting at the key long-term support at Rs 200. This level occurs at 61.8 per cent retracement of the stock’s up-move from February 2009 low.

We can give the stock leeway up to Rs 180. That is long-term investors can hold the stock as long as it trades above Rs 180. But decline below this level will drag the stock to Rs 98 or even further to Rs 62.

Medium-term resistances for the stock would be at Rs 290, Rs 320 and Rs 350. The stock needs to record a strong close above Rs 350 to pave the way for a rally to Rs 444.

EID Parry (Rs 172.7): EID Parry is also declining since last August and is currently placed at its lowest level in a year. But the stock has strong long-term supports at Rs 173 and Rs 146. Investors can hold the stock as long as it trades above the second support. Fresh purchases are, however, not recommended on a decline below this level since next supports are well below at Rs 110 and Rs 58.

Medium-term resistances for the stock are at Rs 210, Rs 225 and Rs 240. Medium-term view will turn positive only on a strong close above this level. Next target for the stock would be Rs 283.

Please advise on the long-term prospects of Navneet Publication and Federal Bank. Can I enter these stocks at current levels?

Rohit

Navneet Publications (Rs 57.7): The long-term trend in Navneet Publications is up. The stock has retraced only 38.2 per cent of its prior up-move from the October 2008 low. The stock has strong support in the band between Rs 50 and Rs 52. Investors can hold the stock with stop-loss at Rs 49. The more adventurous can also accumulate the stock at current levels with the same stop.

But decline below Rs 49 can result in the stock declining to Rs 45 or even Rs 37.

Medium-term resistances will be at Rs 67 and then Rs 75. If the stock manages to hold above Rs 49, it will be positive from a long-term perspective. Long-term target for the stock will then be at Rs 85.

Federal Bank (Rs 438): The long-term uptrend that began from the bear market low of Rs 110.5 halted at Rs 501 in November 2010 and the stock is moving sideways in the range between Rs 320 and Rs 500 since then.

The stock appears to have strong support around Rs 325. It has bounced from this level thrice since February last year. Investors can therefore buy this stock on declines with stop at Rs 300.

Support on a breach of Rs 300 will be at Rs 260. Long-term outlook on the stock will turn negative only on close below this level.

Medium-term resistances will be at Rs 460 and then Rs 501. The stock could find it difficult to move beyond Rs 500 just yet. But target on a break-out above Rs 500 is Rs 712.

I have bought TTK Health Care at Rs 450. Should I sell at current levels?

N. Gopalakrishnan

TTK Healthcare (Rs 351.8): This stock zoomed from Rs 400 to Rs 670 in July 2011 and then hurtled back to Rs 400 in the succeeding month. It has been very volatile since then and recorded the low of Rs 330 recently.

Despite these gyrations, the long-term trend in TTK Healthcare continues to be up. It has long-term support around Rs 350, where it is currently attempting to stabilise itself. This level occurs at 50 per cent retracement of its prior up-move.

But break below this level will pull the stock down to the next long-term support at Rs 270. Investors can divest their holding on move below this level. Fresh purchases are not advised on a weekly close below this level.

Medium-term resistances for the stock would be at Rs 465 and Rs 550. It is hard to envisage a move beyond Rs 550. But if it does so, it can move on to Rs 670.

I hold Kaveri Seed Company purchased at Rs 586. Please advice on the medium and long-term outlook for this stock.

Murugesan

Kaveri Seed Company (Rs 777): This stock is in a spectacular uptrend since its February 2009 trough at Rs 117. It recorded a record high at Rs 795 last week proving that the long-term outlook stays gung-ho for this stock. Medium-term supports for this stock are at Rs 650 and then Rs 556.

Key long-term support would be at Rs 535. Investors can hold the stock as long as this support holds. Fresh purchases can also be made in declines with the same stop-loss. But target on a decline below Rs 537 would be Rs 460 and Rs 378.

Upward target on a strong break above Rs 800 is Rs 1,080.

Can you please advice on prospects of NIIT Technologies based on technicals?

S.K. Kataria

NIIT Technologies (Rs 282): This stock recorded a multi-year high at Rs 317 in May and is currently trading close to this peak. The stock has long-term resistance in the band between Rs 280 and Rs 320.

The stock needs to record a clean break beyond this zone to indicate the possibility of a break-out to the 2007 peak at Rs 399.

Conversely, if the stock closes below Rs 235 in the coming months, it will mean that an extended decline to Rs 180 or Rs 147 would be on the cards. Investors with short- to medium-term perspective can book some profit at these levels and hold the rest with stop at Rs 210.

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(This article was published on June 23, 2012)
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