Can I purchase shares of Educomp Solutions and Adani Enterprises at current price? What is the long-term trend of these shares?


Educomp Solutions (Rs 161.4): Educomp Solutions, which has been repeatedly bludgeoned since January 2009, is currently down 84 per cent from this peak.

The stock is also well below its 2009 low of Rs 266 implying that the stock is in a vicious long-term downward spiral.

Immediate support on the long-term chart is at Rs 126. The stock bounced off this level in June. But we cannot infer that will turn in to a long-term support for the stock. Only those investors with greater penchant for risk can buy the stock at current level with stop at Rs 125. Strong close below this level will result in the stock falling all the way down to the next support zone between Rs 58 and Rs 65.

Medium-term resistances are at Rs 210 and Rs 265. Risk averse investors can buy the stock once it moves above the second resistance. Long-term resistances are pegged at Rs 466, Rs 570 and Rs 676.

Adani Enterprises (Rs 177.4): Adani Enterprises is also in a deep relentless fall since this January. There is, however, no sign of rebound in the stock and the short- as well as the medium-term trends in the stock continue to be down.

There are no strong supports in the vicinity on the long-term chart and the stock could head lower to its 2009 trough at Rs 120 over the medium-term. Investors wanting to buy the stock can do so on a strong reversal from this buttress.

Medium-term resistances for the stock are at Rs 280 and Rs 348. Investors with lower penchant for risk can wait for a strong weekly close above Rs 280 before purchasing the stock.

We would not recommend buying the stock at these levels as that would be akin to catching a falling knife.

Long-term resistances are at Rs 400 and Rs 540. Inability to move beyond Rs 400 will imply that the stock will continue to be in a long-term downtrend.

What is your view on IOC and Rolta India?

R.N.B. Rao

Indian Oil Corporation (Rs 250.2): This stock has long-term resistance in the zone between Rs 400 and Rs 450.

The long-term downtrend that began from this zone in September 2010 continues to be in force. Breach of the recent low at Rs 239 can drag the stock down to Rs 185 or Rs 150 over the medium-term.

Short-term resistance for IOC is at Rs 285. Fresh purchases are advised only if the stock manages a strong weekly close above this level.

Key medium-term trend decider is, however, at Rs 324. Strong break above this level is required to push the stock higher to Rs 350 or Rs 375.

Rolta India (Rs 66.1): Rolta has long-term support between Rs 40 and Rs 50 where it bottomed in 2009 and again in December 2011.

The current downtrend from the March peak of Rs 108 appears to be pulling the stock lower towards this base. Investors can, therefore, hang on to the stock as long as it trades above Rs 40.

Short-term resistances will be at Rs 110 and Rs 150. Investors with short- to medium-term perspective should divest their holdings if the stock reverses lower from either of these levels.

Key medium-term resistance zone for the stock lies between Rs 175 and Rs 210. It is possible that the stock continues to vacillate in a wide band between Rs 40 and Rs 220 for a few more years.

Long-term trend will, however, turn positive only if the stock goes on to close above Rs 260.

I would like to invest in Shree Renuka Sugars. Please suggest the levels at which I can buy the stock.

M.C. Kalmath

Shree Renuka Sugars (Rs 32.2): This stock is also in dire straits since December 2010. It is, however, attempting to stabilise itself since last December, oscillating in the band between Rs 20 and Rs 40. Since the stock is currently in a short-term downtrend, investors can wait for the stock to decline to Rs 25 or Rs 23 before buying the stock.

Fresh purchases are, however, not advised on close below Rs 20. Next target would be the 2007 low at Rs 13.

Medium-term resistances for the stock would be at Rs 44 and Rs 56.

Long-term investors can wait for a close above Rs 43 before buying the stock.

Key long-term barrier for Shree Renuka Sugars would be at Rs 62. This level needs to be surpassed before the stock moves on to Rs 74 or Rs 86.

Kindly advise me on the technical view on TTK Prestige.

Rajeev Singal

TTK Prestige (Rs 3,738.7): TTK Prestige has put up a scintillating show so far this year. Though it initially plunged to a low of Rs 2,151, it reversed from there to recoup all the losses made in 2011. The stock is currently trading 17 per cent above its 2011 peak.

This peak at Rs 3,200 will be the key medium-term support for the stock now. Investors with short- to medium-term perspective can hold the stock as long as it trades above this level. Stop-loss for long-term investors can be at Rs 2,650. Next long-term support is at Rs 2,150.

Target on a strong move above Rs 3,700 is Rs 4,154.

(Readers can send in their queries, on not more than two companies, to Queries can also be sent by post to: Tech Trail, 859/860 Kasturi Buildings, Anna Salai, Chennai 600002. We would endeavour to answer as many queries as possible.

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(This article was published on August 11, 2012)
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