The Hindu Business Line : Query Corner

HPCL (Rs 388.7): The long-term outlook for the chart is positive. A move to Rs 440-450 appears likely. However, the uncertainty relating to divestment of government stake is the hitch. Any development in this front could have an overriding impact on the price trend. While fresh buying may be deferred, existing holders may remain invested with a stop loss at Rs 360.

Maruti Udyog (Rs 354.2): The stock was listed recently and sufficient price history is lacking to make a call on the charts. It would be difficult to assess future outlook based on the limited price history that is available. However, from a short-term trading perspective, a move above Rs 370 could be used to take long positions with a close stop loss in place. Existing holders may remain invested with a stop loss at Rs 310. Risk- averse investors may place the stop loss at a higher level of Rs 335.

I have shares of Timken India and Varun Shipping. Kindly suggest whether to hold or sell? — S. Gopalakrishnan

Timken India (Rs 56.9): The share price could seek higher levels of Rs 68-70 in the near term. The outlook appears positive and there is no reason to sell this stock at current levels. Remain invested with a stop loss at Rs 47. A close above Rs 62 could be used to take long positions with a tight stop loss in place.

Varun Shipping (Rs 24.7): After touching a low of Rs 8, the stock has staged a sharp recovery over the past six months. The outlook for the stock remains positive and a move to the Rs 32-35 range appears likely. The positive view would be negated if the share price declines below Rs 20. Remain invested with a stop loss at Rs 20 while fresh buying may be considered on a close above Rs 27.

Please advise about Federal Bank purchased at Rs 195. — Jaganathan

Federal Bank (Rs 201.4): The stock was covered in the edition dated November 2. It has already moved past the then-mentioned price range of Rs 190-195. The outlook remains bullish and a move to the Rs 230-240 range appears likely. Do not sell the stock now as the outlook remains positive. Remain invested with a stop loss at Rs 180. A drop below Rs 180 would impart weakness and the expected rally to the Rs 230-240 range would stand nullified.

What is the outlook for Zee Telefilms and Flat Product Equipments? — Eswaran Raju

Zee Telefilms (Rs 130.4): While there is a risk of a drop to the Rs 98-100 range in the near term, the long-term outlook is positive. A decline to below Rs 119 would lead to a further downtrend to Rs 98-100. However, a close above Rs 142 could result in an uptrend to the Rs 165-170 range. Remain invested with a stop loss at Rs 119. From long-term investor's point of view, there is no reason to sell this stock in a hurry.

Flat Products (Rs 116.9): The stock is in the midst of a major sideways move. A sharp upmove could materialise on the completion of the ongoing corrective phase. Fresh investments may be avoided for the moment. Existing holders could remain invested with a stop loss at Rs 94. A close above Rs 136 may be used to take long positions.

I bought GIC Housing Finance at Rs 37 and Astra Zeneca at Rs 702. Should I hold or sell? — N. Ramabhadran

GIC Housing (Rs 33.2): A "contracting triangle" pattern appears to be taking shape on the daily price chart. The uptrend that was in evidence until recently would resume upon the completion of this corrective pattern. The stock could move to the price target of the Rs 52-55 range in the near term. A move past Rs 41 would reinstate the positive trend. Only a close below Rs 25 would negate the positive outlook. There is no reason to sell this stock at current levels. Remain invested with a stop loss at Rs 28.

Astra Zeneca (Rs 973.6): The stock has significant upside potential from current levels. There is no reason to sell the stock at current levels. On the upside, a move to the Rs 1150-1200 range appears likely. Only a close below Rs 840 would impart bearishness. However, the uptrend to the target zone would resume after a decline triggered by the breach of the Rs 840 level.

I am holding Tata Steel, which was purchased at Rs 382.5, and Indian Overseas Bank (Rs 31.5). What is the outlook? — Jeevan

Tata Steel (Rs 355.3): The near-term outlook does not appear too positive. A drop below Rs 330 would complete a classic "Head and Shoulder" reversal pattern. This could lead to a drop to the Rs 270-280 range thereafter. Only a close above Rs 400 would reinstate bullishness. Remain invested with a stop loss at Rs 330. Risk-averse investors could sell at current levels and re-enter as and when the stock moves above Rs 400.

Indian Overseas Bank (Rs 29.9): Though there is a possibility of a rally to the Rs 35-36 range, the near-term outlook does not appear positive. A drop below Rs 27 would have negative implications and could push the stock to Rs 22-23 zone. Investors who have relatively a small quantum of exposures could remain invested as there is a possibility of a rally to the Rs 35-36 range. Risk-averse investors and the ones with a relatively large holding could place a stop loss at Rs 27.

What is the outlook for Glenmark and Aurobindo Pharma? — Roma Johari

Glenmark Pharma (Rs 118): The stock is in the midst of a major uptrend. Existing holders need not sell out in a hurry. A move past Rs 200 appears likely. Patient long-term investors are likely to be handsomely rewarded. At the moment, only a drop below Rs 85 would negate the positive outlook. Remain invested with a stop loss at Rs 85. Buying may also be considered with a stop loss at Rs 92.

Aurobindo Pharma (Rs 331): A move to the Rs 430-440 range appears likely in the near term. Only a drop below Rs 270 would invalidate the positive outlook. Remain invested with a stop loss at Rs 283. Buying may be considered on a close above Rs 370.

In the edition dated October 19, it was stated that SAIL appears to be headed towards 58-60 and that stop loss can be placed at 37. It is yet to touch 37 and reached 49 once since then. What is the outlook for SAIL now? I have bought it at Rs 44. — R. Mukundan

SAIL (Rs 40.9): The earlier view of a rally to the Rs 58-60 range is still valid. This view would be negated only if the stock drops below Rs 26. In the near term, the stock is likely to drop below the earlier mentioned stop loss at Rs 37. Risk-averse investors could reduce exposures by selling at current levels. Fresh buying with a close stop loss may be considered on a close above Rs 50. Investors willing to take additional risk could take long positions with a stop loss at Rs 26 on the evidence of support around the Rs 32-33 range.

I am holding Union Bank purchased at Rs 47 and Arvind Mills at Rs 58. I wish to know the future prospects of these shares for medium-term investment. — Thomas Jose

Union Bank (Rs 44.5): The share price has been on a downtrend in the recent weeks. There is a strong support level at the Rs 38-40 range. A breach of this range would lead to a sharp decline. For the moment, only a close above Rs 56 would impart a positive trend. Existing holders may remain invested with a stop loss at Rs 41.

Arvind Mills (Rs 61.2): The stock has upside potential from current levels. Only a drop below Rs 54 would negate the positive outlook. Remain invested with a stop loss at Rs 57. Risk-averse investors could place the stop loss at a slightly higher level of Rs 60.

I would like to know your view on Bongaigon Refinery and Bharti Tele-Ventures. — Jeff

Bongaigon Refinery (Rs 77): The near-term outlook does not appear too positive. A drop to the Rs 64-65 range appears likely. However, the long-term uptrend is likely to resume after this decline. Remain invested with a stop loss at Rs 73. A drop below Rs 73 would warrant reduction of holdings. Fresh buying may be considered once the stock moves above Rs 98. Evidence of support at the Rs 64-65 range could be used to take long positions with a close stop loss in place.

Bharti Tele (Rs 84.5): The stock is in a corrective phase and has been confined to a narrow band in the recent weeks. Only a breach of this range would impart momentum in the direction of the break-out. Remain invested with a stop loss at Rs 77. At the moment, only a close above Rs 96 would reinstate positive trend.

(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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