I had purchased Hindustan Copper at Rs 221. Please let me know the short and long-term prospects for the stock.
Hindustan Copper (Rs 142.6): Hindustan Copper has extremely low floating stock, less than 5 per cent. Price discovery is difficult in such stocks since the stock price is too sensitive to the demand and supply forces resulting in large price swings.
This makes the stock a risky proposition for small investors. The stock has been vacillating in the wide range between Rs 80 and Rs 650 over the last five years.
Hindustan Copper has now moved close to its December 2011 low of Rs 146. Investors can hold the stock with the stop just below, at Rs 135. Any further decline will result in the stock moving towards its 2008 trough around Rs 72.
Key medium-term resistances zone would be between Rs 320 and Rs 340. The outlook for the stock will improve only if the stock manages a close above this zone.
Subsequent targets for the stock would be Rs 400 and Rs 450. Risk-averse investors should consider making fresh purchases only if the stock goes on to close above Rs 342.
Please advise on Greaves Cotton bought at Rs 80 and Praj Industries bought at Rs 50.
Greaves Cotton (Rs 76): Greaves Cotton is slipping lower since the July 11 peak at Rs 104.
This slide is halting at Rs 60 that is at the half-way mark of the rally from the 2009 low. The stock has long-term supports at Rs 60 and then at Rs 48 and investors with long-term perspective can continue to hold the stock as long as it trades above the lower support.
Rallies will face resistance at Rs 92 and Rs 112.
The stock could struggle to break out of the zone between Rs 100 and Rs 112 just yet.
Praj Industries (Rs 49.1): Praj Industries is in a secular downtrend since the December 2007 peak at Rs 273.
The recovery in 2009 took the stock up to Rs 122. But it has given up all the gains since then and is back at its 2009 trough at Rs 45. Investors can hold the stock with stop at Rs 38.
The stock is attempting to move up from the recent low at Rs 40, but the uptrend has not gathered pace yet.
The stock will have to close beyond Rs 65 for the medium-term view to turn positive. Subsequent targets are Rs 92 and RS 123. Key long-term resistance zone is between Rs 117 and Rs 130. Inability to move beyond this zone will result in the stock vacillating in the range between Rs 40 and Rs 120 over the next few years.
I am holding shares of J.B. Chemicals purchased at Rs 110. Please give your technical view on the stock’s short, medium and long-term prospects.
J.B. Chemicals & Pharmaceuticals (Rs 85.4): The medium-term correction in J.B. Chemicals that began at the April 2011 peak is attempting to reverse from the long-term support at Rs 58.
The stock formed triple bottom at this level in July and August this year and is attempting to move higher.
Long-term investors can hold the stock with stop-loss at Rs 55. The stock can also be accumulated in declines with the same stop.
The current uptrend will face resistance at Rs 100. Investors with short to medium term perspective should divest their holding if the stock is unable to move beyond this resistance zone. But if it manages to do so, next target would be Rs 123.
What are the long-term prospects of Sobha Developers bought at Rs 335?
Sobha Developers (Rs 377): Sobha Developers was decimated in the 2008 crash as it fell from Rs 1,248 to Rs 61.
But the recovery that began from this bear market low continues to be in force. The stock has key long-term support at Rs 180. It has taken support from this level twice and bounced higher, in April and then in December 2011.
Investors can hold the stock as long as it trades above Rs 175.
That said the stock is currently testing its key long-term ceiling at Rs 400. Inability to move above this level can drag the stock down towards Rs 200 again.
Conversely, move above Rs 400 will take the stock to Rs 530. Investors should therefore consider fresh investment in this stock only on a strong close above Rs 400.
What is the medium term outlook for Bharat Electronics (BEL)? I have purchased this stock in small quantities between Rs 1,600 and Rs 1,145.
Dr Subhasis Saha
Bharat Electronics (Rs 1,180.5): Bharat Electronics has strong resistance in the zone between Rs 2,100 and Rs 2,150.
The stock reversed lower from this zone in December 2007 and again in March 2010. The decline that dragged the stock lower from the 2010 peak at Rs 2,251 is attempting to stabilise around Rs 1,200.
This is a key long-term support for the stock.
But the recovery from this level has been very feeble so far and lacks conviction.
Investors with long-term perspective can hold with stop loss at Rs 1,000. Decline below this level will render the stock very weak.
Key medium-term resistances for the stock would be at Rs 1,566 and Rs 1,830.
Investors with lesser investment horizon can exit the stock at either of these levels.
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