The Hindu Business Line : Query corner

Hindustan Construction (Rs 77.4): The stock has been stuck in a trading range in the recent weeks. The overall outlook appears positive. The stock is headed towards the critical support level of Rs 75. Risk-averse investors could have a stop loss at Rs 72. A move above Rs 95 would reinstate positive trend. Investors who are "in-the-money" could take partial profits and contemplate re-entry on evidence of support at the Rs 70-72 range.

Finolex Industries (Rs 54.2): There appears to be little downside risk from current levels. The stock could seek higher levels once the ongoing downward correction gets completed. Existing holders could remain invested with a stop loss at Rs 50. Fresh buying may be considered on a move above Rs 64.

Can I buy Blue Dart Express and Natco Pharma at current levels? — D.Mani

Blue Dart (Rs 88.7): The stock is currently stuck in a trading range. A definitive trend would emerge only after the stock breaks out of this range. A close above Rs 100 would impart positive trend while a drop below Rs 80 would have negative implications. Given the overall price pattern, there is no compelling technical reason to take equity exposure in this stock at current levels. A close above Rs 100 could be used to take limited exposure with close stop loss in place.

Natco Pharma (Rs 96): The near-term outlook for the stock appears weak. A drop to the Rs 70-75 range appears likely. Existing holders could reduce exposures while fresh buying may be deferred. Fresh buying may be considered once the bullish trend reasserts itself.

I bought IFCI at Rs 15.65 and Hindustan Motors at Rs 17.00. Please advise me regarding the above stocks. — T. Suresh

IFCI (Rs 13.8): As observed in earlier weeks, the overall outlook appears positive. However, the stock could slide to the Rs 10-12 range in the near term. Fresh buying may be deferred until such time a bullish trend is evident. Risk-averse investors could reduce holdings partially and re-enter on a close above Rs 18. Risk-seeking investors could remain invested with a stop loss at Rs 9.5.

Hindustan Motors (Rs 14): A drop below the stop loss level of Rs 14.4 (mentioned last week) would have warranted dilution of holdings. The stock is heading towards a crucial support level of Rs 12.7. A drop below this level would have negative implications while a close below Rs 11 would negate the earlier view of a rise to the Rs 21-22 range. Existing holders could remain invested with a stop loss at Rs 12.5.

I have entered Alembic at Rs 386 and Gemini Communications at Rs 25. Please advise future price target for the above stocks. — A. Vasudevan

Alembic (Rs 391.1): The stock could seek higher levels of Rs 440-450 in the near term. Only a drop below Rs 340 would negate this view. Investors willing to take risk could remain invested with a stop loss at Rs 340. Risk-averse investors could have a stop loss at Rs 370 and contemplate re-entry on a close above Rs 440.

Gemini Communications (Rs 24.4): Low trading volume and sharp spike in share price makes it difficult to arrive at a technical outlook for the stock. Having a close stop loss or a trailing stop loss in the event of an uptrend would be a defensive approach in such a stock.

I have bought JK Synthetics at Rs 10 and Arvind Mills at Rs 51. Please suggest whether to hold or book losses. — Ram

JK Synthetics (Rs 6.9): The overall outlook for the stock does not appear positive. Though there is a possibility of a short-term rally, it would be safer to reduce exposure on such price upmoves. Existing holders could reduce exposure by booking losses for a significant portion of the holdings. If the share price moves up, the balance holding could be scaled down gradually.

Arvind Mills (Rs 43.9): The stock is ruling close to a critical support level of Rs 38-39. A drop below Rs 38 would have negative implications and would negate the earlier positive outlook. Existing holders could remain invested, as the stock is likely to resume its uptrend shortly. A drop below Rs 38 would warrant dilution of holdings.

What are the prospects of IPCL and MRPL? — Vinay Goyal

IPCL (Rs 157.5): Taking into account the relatively small quantum of holding and the overall outlook, there is no reason to sell this stock at current levels. Conservative investors could use price move to the Rs 170-175 range to reduce holdings and contemplate re-entry on evidence of support at lower levels. Investors willing to take a risk could remain invested with a stop loss at Rs 130. A move past Rs 185-190 could be used to liquidate holdings.

MRPL (Rs 33.8): There is limited downside risk in the stock from current levels. Only a drop below Rs 24.5 would have negative implications. Existing holders could remain invested with a stop loss at Rs 24.5 as the stock could move towards the Rs 38-40 range. Fresh buying may be avoided for the time being.

What is outlook for Arvind Remedies? — Shravan Bafna, Sumit, Mythili, Prasanna

Arvind Remedies (Rs 3.5): Going by the ever-increasing number of queries received, it appears that quite a few investors have invested heavily in this stock. It is always a tricky play as far as low-priced stocks are concerned. Money management is very critical for trading in general and in these kind of low-priced stocks, in particular. It would always be a safe strategy to build exposures as price moves up instead of investing heavily at one go. It would also be critical to take profits at regular intervals.

As far as the technical picture is concerned, there is no point in liquidating holding at current levels as the stock has declined significantly. Investors who are not willing to take further risk could have a stop loss at Rs 2.9, which is the critical support level. For those who are willing to take risk, remain invested as there is a possibility of a rally in the near term.

Kindly advise on the outlook for Torrent Pharma and Indswift. — N. Raghuraman

Torrent Pharma (Rs 365.2): The overall outlook for the stock appears positive. Only a close below Rs 325 would negate the positive outlook. Remain invested with a stop loss at Rs 325. If the stop loss gets triggered, fresh buying may be considered once the stock closes above Rs 390. Conservative investors could have a stop loss at Rs 350. Fresh buying with a close stop loss may be considered on a move past Rs 410.

Indswift Laboratories (Rs 32): The short-term outlook for the stock does not appear positive. A drop to the Rs 26-28 range is not ruled out. Look for opportunities to reduce exposures. A close above Rs 41 could be used to re-enter at a later date.

I purchased 1,000 shares of Prism Cement at Rs 12.5 per share and 1,200 shares of Morepen Laboratories at Rs 10. Can we sell or hold? — Harinath & Kamini

Prism Cement (Rs 8.5): The stock has been extensively covered in earlier weeks. It has managed to move to the earlier projected target zones. The drop below the stop loss level of Rs 10.5 (mentioned a few weeks ago) should have warranted closure of long positions in this stock. For those who still hold shares in this company, it would be worthwhile to remain invested, as the stock appears to have completed the downward retracement for the earlier rally from Rs 3.75 to Rs 15.2. After some consolidation at current levels, the stock could seek an uptrend. Fresh buying may be avoided for the time being.

Morepen Labs (Rs 11.8): The stock is currently in a downtrend, which does not appear complete as yet. Considering that the position is "in-the-money", it would be safer to book profits for a major chunk of the holdings. A close above Rs 15 could be used to re-enter the stock (with a tight stop loss) at a later date.

(Note: The analysis and opinion expressed in these columns are based on the technical analysis of the past price behaviour. Analysis and price targets are based on the Elliott Wave Analysis. There is a risk of loss in trading)

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