At what level can I buy ITC for the long-term?

Anish

ITC (Rs 320): ITC is in a strong uptrend and it is not surprising that investors are looking for entry points in the stock. There is a reliable support at Rs 285. The correction since July has been attempting to find a foothold at this level. Investors can buy the stock in declines to this level, with stop-loss at Rs 250.

Sideways movement in the range between Rs 285 and Rs 370 is a positive from a long-term perspective. It will mean that the stock can break out to Rs 428 over the long-term. Decline below Rs 250 can drag the stock to Rs 220.

Please let me know the long-term prospects of Elecon Engineering?

V. H. Rao

Elecon Engineering (Rs 29): The long-term trend in Elecon Engineering is down. The recovery in 2009 halted at Rs 111 and the stock is slipping lower since then. The stock has long-term support in the band between Rs 20 and Rs 24 where it bottomed in March 2009. The stock is once again reversing from this zone after forming a low at Rs 19 in August 2013.

Investors can hold the stock as long as it trades above Rs 18. But it would be best to divest your holding on a breach of this level, since the stock could decline below Rs 10.

Medium-term resistances are placed at Rs 52 and Rs 75. The long-term view will improve only on a strong close above Rs 110.

I have purchased Divi’s Laboratories at Rs 1,003. What is the medium-term view on this stock?

Guntha Ramesh

Divi’s Laboratories (Rs 1,152): Divi’s Laboratories has key long-term support in the band between Rs 900 and Rs 965. As long as the stock manages to hold above Rs 900, the long-term view remains positive.

Investors with a medium-term perspective can, therefore, hold the stock with stop-loss at Rs 900. The stock will face immediate resistance around Rs 1,200. Inability to move beyond this level can result in the stock vacillating between Rs 900 and Rs 1,200 for a few more months.

But long-term target on strong move above Rs 1,200 is Rs 1,431.

If the stock moves below Rs 900, next long-term supports will be at Rs 807 and then Rs 700.

I am holding NCC purchased at Rs 25. Please give a two-year view for the stock.

Ramesh R.

NCC (Rs 25): The long- as well as medium-term trends are down for NCC. The stock has moved below its key long-term support band between Rs 29 and Rs 35. It is currently attempting to hold above Rs 20. But the move up needs to cover a lot more ground before we can assume that a sustainable uptrend is underway.

The first requisite to signal a reversal in the short-term downtrend is a close above Rs 60. Investors with a short- to medium-term horizon can exit the stock at current juncture and consider re-investing on a move above Rs 60. Subsequent targets are Rs 87, Rs 130 and Rs 153.

I have purchased Shree Renuka Sugars at Rs 24. What is the outlook for this stock?

G Namasivayam

Shree Renuka Sugars (Rs 20): Shree Renuka Sugars has long-term support at Rs 13, where the stock formed significant troughs in November 2005 and March 2007. Therefore, long-term investors who are still holding the stock can use Rs 13 as the stop-loss level.

But it is hard to envisage a run away rally in this stock just yet. Immediate resistance for the stock is at Rs 24. Inability to move above this level will keep the stock in the range between Rs 14 and Rs 24 for a few more months. The stock needs to record a weekly close above Rs 30 to make the medium-term view positive. Long-term view can be salvaged only once the stock records a strong close above Rs 40.

I bought Astral Poly Technik at Rs 250 and VA Tech Wabag at Rs 550. Can I continue to hold or exit?

Arun

Astral Poly Technik (Rs 250): Astral Poly Technik is in a strong uptrend since December 2011 and this uptrend continues to be in force. You can hold the stock as long as it trades above Rs 200. A weekly close below Rs 200 will denote that the medium-term trend has reversed lower and can drag the stock down to Rs 160 or Rs 125 over the medium-term. Long-term trend in this stock will reverse only on a close below Rs 125.

If Astral Poly Technik manages to hold above Rs 200, it can spend a few months moving in the range between Rs 200 and Rs 320 before breaking higher. Target on a break above Rs 320 is Rs 392.

VA Tech Wabag (Rs 530): This stock has critical support at Rs 393 and strong resistance at Rs 551. VA Tech Wabag is stuck between these two levels since February 2012. Investors can hold the stock as long as it trades above Rs 393. But it will continue to face strong hurdle in the zone between Rs 550 and Rs 590.

Therefore, investors with short- to medium-term investment horizon should exit the stock in this band. Strong move beyond Rs 589 is needed to propel the stock to its previous high at Rs 722. Conversely, decline below Rs 394 will mean that the stock is heading towards its previous life-time low at Rs 270.

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(This article was published on November 30, 2013)
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