I bought Reliance Power at Rs 65 and Vijaya Bank for Rs 54. I can wait for 2-3 years. Should I hold or sell or add more when the price falls?
Reliance Power (Rs 64): This stock appears quite powerless at this juncture, trading close to its life-time low. But before you decide to dump it, here is the good news. It is having strong long-term support in the zone between Rs 60 and Rs 70. The stock rebounded from here in December 2012. It has now drawn close to the trough formed in March 2013.
That said, there are no signs of reversal in the charts yet. If the stock declines below Rs 60, it would not be possible to identify where the next halt would be since the stock has limited trading history.
You can hold the stock with the stop-loss at Rs 55. It can move higher to Rs 83 or Rs 91 in the months ahead. Medium-term view will turn positive only on close above Rs 91. Subsequent resistances are placed at Rs 110 and Rs 140. Key long-term resistance is placed in the zone between Rs 135 and Rs 140.
Vijaya Bank (Rs 45): Vijaya Bank is in a structural downtrend since the peak of Rs 115 recorded in November 2010.
The stock breached its key Fibonacci retracement support at Rs 57 during this fall. But it is attempting to find its feet around the next support at Rs 45.
The stock has bounced from this level in January and August 2012. It is once again approaching this level.
You can hold the stock as long as it trades above Rs 40. The fall can get quite steep once this level is breached. Key medium-term hurdle for the stock is placed in the range from Rs 68-70.
You can divest your holding if the stock is unable to move beyond this level.
Targets on move above Rs 70 are Rs 80 and Rs 88.
Please advise me the medium-term outlook for Manappuram Finance and Asian Paints.
Manappuram Finance (Rs 10.6): This stock is also plumbing its life-time low level. The trend along all time-frames, short-, medium- and long term are currently down in the stock. Since there are no reversal signals in the stock yet, it is not recommended to buy the stock at this juncture. It is hard to identify the place where the stock can halt next since it has limited trading history.
Investors holding the stock can consider switching out of this stock. Re-entry can be considered once it moves back above Rs 20. Next medium-term impediments would be at Rs 32 and Rs 46. Long-term view for Manappuram will turn positive only on close above Rs 46.
Asian Paints (Rs 4,630): Asian Paints is in a stellar uptrend since the trough recorded in March 2009, recording over six-fold returns in this period. A fresh leg of this uptrend appears to have commenced from the January 2012 trough at Rs 2,550. Though there is a halt in this up-move since March this year, the medium-term trend has not yet reversed lower in the stock.
It needs to record a close below Rs 4,080 to signal that further fall is likely. Investors with short- to medium-term investment perspective can, therefore, hold the stock with stop-loss at Rs 4,050. Reversal above this level will result in the stock moving higher to Rs 5,545 or Rs 6,500 over the long-term.
Conversely decline below Rs 4,080 will mean that the stock can move lower to the support zone from Rs 3,390 to Rs 3,500. Stop-loss for long-term investors is at Rs 3,500.
I am holding shares of Renuka Sugars bought at Rs 78. What are the prospects of the company?
Shree Renuka Sugars (Rs 16): Shree Renuka Sugars is currently trading at a multi-year low and the short- as well as the medium-term view looks weak for the stock. The silver lining from a technical view-point exists in the form of key long-term support around Rs 15. The stock took support at this level in November 2005 and in March 2007 again. This level could cushion the current decline as well.
Investors could, therefore, hold the stock with stop-loss at Rs 13. It can move up to Rs 25 or Rs 32 over the medium-term where investors can consider exiting. Long-term view will turn positive only on close above Rs 42. That will pave the way for a rally to the next resistance zone from Rs 50 to Rs 56.
What is your advise regarding medium- and long-term outlook on Tata Global Beverages? Can this stock be bought at the current level?
Tata Global Beverages (Rs 134): The third leg of the structural uptrend in Tata Global Beverages appears to be unfolding from the November 2011 trough formed at Rs 80. This move has not yet ended and a strong close below Rs 120 is needed to signal the end of this move.
If Tata Global Beverages reverses above the support around Rs 120, investors can look forward to a rally to Rs 180 or Rs 220 over the medium-term.
Breach of the support around Rs 120 would mean that the stock can decline further to Rs 112 or Rs 95 over the long-term.
Readers can send in their queries, on not more than two companies, to email@example.com 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. However, constraints of space will limit the responses featured under this column.