I have purchased Unitech at Rs 39 and Alok Industries at Rs 10. I want to know about the prospects of these stocks. How long do I have to wait for profit?
Unitech (Rs 17): You might have to wait for at least 12 months before the stock rises to your cost price. But you can take heart from the fact that the stock is attempting to form a base at around Rs 18. It took support from this level multiple times since December 2011 and is moving in a sideways range between Rs 18 and Rs 40 since then.
You can, therefore, hold the stock with a stop-loss at Rs 17. But it will be wrong to expect a rally beyond the upper end of the trading range just yet. Investors with short- to medium-term perspective can sell the stock in rallies to Rs 32 or Rs 40.
The long-term trend will turn positive only on a firm close above Rs 40. Next target for the stock would be at Rs 56.
Alok Industries (Rs 6): The long-term chart of Alok Industries presents a very intriguing picture. The stock has not gone anywhere since 1993, vacillating in a wide band between Rs 10 and Rs 120. The stock hit the lower end of this range in 1998 and again in 2001. It is once again close to the long-term support after recording a peak at Rs 97 in 2008. Since your cost price is quite close to the current price, you can hold the stock with a stop-loss at Rs 4.5. Reversal from the Rs 5 support can take the stock higher to Rs 18 or Rs 28 in the months ahead, where you can exit the stock.
Long-term view will, however, turn positive only on close above Rs 30. Investors should exit the stock if it declines below Rs 4.5 and re-enter on a close above Rs 30. Subsequent target for the stock is at Rs 41.
I am holding Power Finance Corporation bought at an average price of Rs 195. I am a medium-term investor. What should I do now?
Power Finance Corporation (Rs 121): Power Finance Corporation is very precariously poised right now.
It has closed below the long-term support at Rs 131 that was cushioning the stock’s decline since August 2011. Close below this level implies that the decline can drag the stock lower to Rs 100 or even Rs 87.
There is an interim support for the stock at Rs 125, where it is halting currently. You can hold the stock with a stop-loss at Rs 120. Medium-term targets are at Rs 165 and Rs 189.
Long-term trend will turn conducive only on a close above Rs 230.
What is your advise regarding medium- and long-term outlook of Orchid Chemicals and SRF? Can these stocks be bought at current levels?
Orchid Chemicals (Rs 45): This stock is currently wallowing at a multi-year low. The stock last traded below Rs 50 in 2003. Buying the stock at this level is fraught with risk since the trends along all time frames — short, medium and long — are currently down. Since the stock has moved below its 2009 low at Rs 56, next target, according to the long-term chart is at Rs 39.
It would be best to wait for the stock to reverse higher before buying into it.
Those with a greater penchant for risk can buy at current levels with a stop-loss at Rs 38.
An alternate strategy would be to wait for a strong close above Rs 112 before buying the stock. Next resistance is at Rs 160.
The stock faces a strong long-term hurdle around Rs 350 from where it has reversed lower in 2000, 2006 and 2010. This would be the long-term ceiling if the stock gets past the hurdle at Rs 230.
SRF (Rs 138): This stock is in a long-term decline since the peak recorded in November 2010. The long-term support at Rs 207 halted the stock’s decline in 2012 and the stock attempted to hold above this level till the beginning of this calendar year.
But once this support was breached in February, the stock has been sliding lower rapidly. Risk averse investors should wait for a close above Rs 207 before buying the stock again. If the decline continues, the stock could slip to Rs 98 or Rs 62 in the months ahead.
Key long-term resistance is at Rs 257.
The stock might struggle to rally beyond this level over the next 12 months.
Long-term view will turn positive only on a firm close above this level.
I have bought Welspun Corp at Rs 180. Should I exit the stock or hold for the long-term?
Welspun Corp (Rs 41): The stock is trading a long way away from your cost price and is currently trading at a decade low. Those still holding on to the stock can continue to do so with stop-loss at Rs 35. Reversal above this level will result in the stock rising to Rs 86 or Rs 114 over the medium-term.
Failure to move beyond Rs 114 will mean that weakness will persist in the short-term. Sharp move above Rs 114 will take the stock to the key long-term resistance zone between Rs 140 and Rs 160.
Investors with short- to medium-term perspective should exit the stock if it fails to clear the hurdle at Rs 160. This level needs to be cleared to signal an intention to move towards the next long-term targets at Rs 200 and Rs 230.
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