Please share your technical view on Amara Raja Batteries bought at Rs 207.

Kaushalendra Pratap Singh

Amara Raja Batteries (Rs 284.3): Amara Raja Batteries ceased its upward charge in January this year when it reversed lower from the peak at Rs 327. This decline ended after the stock lost 23 per cent from this peak with the bottom at Rs 249.

The significant point to note here is that the stock retraced around 30 per cent of the rally from the February 2011 low, during this correction. The stock has significant long-term support in the zone between Rs 230 and Rs 250. Long-term investors can hold the stock as long as it trades above Rs 230.

Sideways movement in the zone between Rs 230 and Rs 330 is possible for a few more months but this is conducive for the stock’s long-term prospects. It will imply that the stock could move beyond Rs 350 over the long-term.

Long-term supports below Rs 230 are at Rs 200 and Rs 170.

Please advise on the medium- and long-term outlook of Nelco. Can these be bought at current levels?

Anil

Nelco (Rs 42.1): The medium as well as the long-term trend in Nelco are currently down. The stock is, however, halting above key long-term support around Rs 40. Investors with a greater penchant for risk can buy the stock at these levels with stop-loss at Rs 36. Fresh purchases should, however, be avoided on a breach of this level since the target on a breach of this support is quite some way off, at Rs 21.

Key medium-term resistance is placed at Rs 65. Investors can offload part of their holding if the stock is unable to move beyond this level. Medium-term view will turn positive only on a close above Rs 80.

Kindly give your view on Neyveli Lignite Corporation bought at Rs 108 and Development Credit Bank at Rs 52. I can hold the stocks for six months.

P.S.R. Murthy

Neyveli Lignite Corporation (Rs 74.8): The trends along all time-frames are down for Neyveli Lignite Corporation. Investors can, however, draw solace from the fact that the stock is now close to its key support zone around Rs 70. This level has cushioned the stock twice already since November 2011.

Investors can, therefore, hold the stock only as long as it trades above Rs 60.

If the stock breaches this level emphatically and closes below it on a weekly basis, it will imply that the stock is heading lower to the October 2008 trough at Rs 44.

Medium-term resistances are at Rs 90 and Rs 110. The trend along this time-frame will turn positive only on a close above Rs 110.

Failure to do so will imply that the stock will continue to be under pressure. Targets on move above Rs 110 are Rs 124 and Rs 136.

Development Credit Bank (Rs 44.1): This stock is meandering sideways within Rs 30 and Rs 80 since mid-2009. Since this sideways move follows the sharp drop from the 2007 peak at Rs 170, it can be construed as a long-term base-building effort.

But the long-term trend in the stock will reverse higher only on a close above Rs 76.

Long-term supports for the stock are placed at Rs 38 and Rs 30. You can hold the stock with stop at Rs 30. It can move up to Rs 52, Rs 66 or Rs 76 over the medium-term where you can consider divesting your holding.

I have shares of Hero MotoCorp bought at Rs 1,875. Please let me know the short- and medium-term prospects of company.

S.A. Landge

Hero MotoCorp (Rs 1,742.9): Before we get to the short- and medium-term prospects of Hero Motocorp, it is important to understand that the stock is at a key long-term support currently. The stock has been in a long-term correction since the May 2012 peak at Rs 2,279. This correction is halting at Rs 1,650 that occurs at 38.2 per cent retracement of the up-move from the 2008 trough.

Reversal from this level will mean that the long-term trend in the stock continues to be up. Though the stock could spend few more months in the zone between Rs 1,650 and Rs 2,250, the possibility of an upward breakout remains open over the long-term. Such a breakout can take the stock higher to Rs 2,645.

Long-term supports below Rs 1,650 are at Rs 1,450 and then at Rs 1,250. Since the stock is reversing higher from key support levels, investors with short- and medium-term perspective can play long at this point with stop-loss at Rs 1,600. Medium-term targets are Rs 1,873 and Rs 2,027.

I would like to buy Strides Arcolab. Please share your view on this stock.

Naaz

Strides Arcolab (Rs 916.7): This is a good juncture to buy Strides Arcolab. The stock is halting at the key medium-term support at Rs 860. If the stock manages to hold above this level over the next few weeks, it portends well for long-term prospects of the stock.

The stock can then be expected to move beyond its recent peak at Rs 1,225 over the next couple of years to Rs 1,400. But a dive below Rs 860 can pull the stock lower to Rs 750 or Rs 642.

Medium-term resistances will be at Rs 975 and Rs 1,070. Investors with a shorter investment horizon can exit the stock at either of these levels.

(This article was published on March 9, 2013)
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