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B. Krishnakumar

Shall I hold or sell Zandu Pharma bought at Rs 2700 and Monsanto Chemicals at Rs 1100? I am willing to hold these stocks for a year. — N. Ramabhadran

Zandu Pharma (Rs 3362): The stock is on an uptrend and has significant room to be yet covered on the upside. A move to Rs 3700-3800 is not ruled out. Remain invested with a stop loss at Rs 3100. Investors willing to take risk may have a stop loss at a comfortable level that is lower than Rs 3100.

Monsanto Chemicals (Rs 1458): Though the near-term trend appears weak, the stock is likely to resume the uptrend after the completion of the short-term decline. On the downside, a move to the Rs 1250-1300 range is not ruled out. The stock appears to have the potential to move to the Rs 1600-1650 range. Only a drop below Rs 1100 would negate the bullish outlook. Remain invested with a stop loss at Rs 1250. Long-term investors can expect of a return of about 25 per cent from current price levels.

I am holding Tata Steel bought at Rs 391. Should I sell now or wait for a while? — Thomas

Tata Steel (Rs 423.9): There appears to be upside potential from current levels. A move to the Rs 450-460 range appears likely. The stock was covered earlier in the edition dated December 7. The earlier short-term bearish view indicated has been negated by the subsequent price movement. The stock did not drop below the bearish trigger price of Rs 330 that was mentioned earlier. It, however, has moved past the bullish trigger price of Rs 400 mentioned in edition dated December 7. As a result, the earlier short-term bearish view has now been given way to a revised outlook that is bullish.

What is the outlook for Cosmo Films bought at Rs 110? — Sheshadri

Cosmo Films (Rs 108.1): The stock could seek higher levels of Rs 125-130. There is no reason to exit at current levels as the outlook is positive. Only a close below Rs 100 would negate the positive outlook. Remain invested with a stop loss at Rs 99.

I bought MRF at Rs 2444. Should I hold or sell? — Anantha Krishnan

MRF (Rs 2415): The stock appears to have the potential to seek higher levels. A move to the Rs 2650-2700 range appears likely. The positive view would be invalidated if the stock drops below Rs 2250. Remain invested with a stop loss at Rs 2250. Taking into account high volatility and huge daily price moves in the stock, it is quite possible that the stop loss level may be hit and the price may resume the uptrend thereafter. Given this backdrop, long-term investors may remain invested without a stop loss as the long- term trend is bullish.

What is the outlook for Gujarat State Fertilizer Company (GSFC) bought at Rs 60 and Aztec at Rs 35? — R. Ramamurti

GSFC (Rs 52.5): The stock appears to be headed towards the Rs 72-75 band in the near term. Though there could be a short-term correction, the long-term uptrend is likely to resume on the completion of the correction. Remain invested with a stop loss at Rs 47. A drop below Rs 44 would negate the positive outlook.

Aztec Software (Rs 34.2): The share price is stuck in a narrow trading zone at the moment. A breakout of this range would impart strong momentum in the direction of the breakout. Remain invested with a stop loss at Rs 31. A drop below Rs 28.6 would impart weakness.

I bought Hindustan Motors at Rs 17. Is the earlier view of a move to Rs 24-25 still valid? — Pankaj Shirodkar

Hindustan Motors (Rs 18.9): The share price has already moved to earlier mentioned target range of Rs 20-22. The near-term outlook is positive. The earlier view of a move to Rs 24-25 is still valid. Taking into account your entry price, a stop loss may be placed at Rs 17.8. Traders with high-risk appetite could also take long positions at current levels with a stop loss at Rs 17.

Kindly advise on the prospects of Vimta Labs and Solectron Centum. — Paramjit Singh

Vimta Labs (Rs 262.4): Technically, there is no reason to sell this stock as it has upside potential. Considering the low trading volume and sharp price swings, it would be safer to employ a trailing stop loss as long as the stock is in an uptrend. On the upside, a move to Rs 275-280 appears likely. Only a drop below Rs 220 would impart weakness.

Solectron Centum (Rs 123.9): The outlook for the stock is positive. It has a lot of room to be covered on the upside. A move past Rs 170 is not ruled out. Remain invested with a stop loss at Rs 104. A drop below Rs 104 would impart weakness and also invalidate the positive view.

I bought Bombay Dyeing bought at Rs 163. I was advised to average my cost by buying at lower prices. Shall I buy at every fall or book losses? — Shankarnarayan Sarode

Bombay Dyeing (Rs 149.9): Though the stock is in a sideways consolidation phase, the long-term outlook is bullish. The uptrend would resume on the completion of the present sideways price action. On the upside, a move to Rs 190-200 is not ruled out in the near term. Only a drop below Rs 125 would negate the positive outlook. The strategy of buying at lower prices to average the overall cost may be avoided. Technically, there is not much reason to buy a stock that is falling. Alternatively, the money may be invested in other stocks that are in an uptrend. As far as Bombay Dyeing is concerned, fresh buying may be considered after it closes above Rs 160.

Shall I exit or hold Arvind Mills bought at Rs 60? — Krishnamurthy Sarode

Arvind Mills (Rs 66.3): The stock is on a long-term uptrend. It could move to the near-term target zone of Rs 72-75 band. Only a drop below Rs 59 would invalidate the bullish outlook. There is no reason to exit this stock in a hurry. Patient investors are likely to be rewarded handsomely. Remain invested with a stop loss at Rs 59.

I bought Novartis at Rs 805 and Timex at Rs 32. Can I recover my cost or should I book losses? — K.V. Ramana

Novartis (Rs 431.5): Remain invested as the stock is in an uptrend. Though it would be too far fetched to comment on the possibility of a move to Rs 805, it would be worthwhile to hold on as the stock could move up in the near term. A move to the Rs 530-550 range appears likely in the near term. There is no reason to liquidate holdings in a hurry. Have a stop loss at Rs 360.

Timex Watches (Rs 18.8): The trend is bullish in the stock and a move to Rs 24-25 appears likely in the near term. The stock could eventually move closer to your acquisition price though it would be difficult to predict the time frame within which it would do so. Remain invested with a stop loss at Rs 14.

I was deeply disturbed by your statement in the edition dated December 14 that the Nifty appears to be headed towards the final stages of the rally that has run for seven months. I would like to know how far down the Nifty can go and does it mean the end of the Bull market? Should we start selling all our holdings to avoid erosion in values and being caught unawares as in the year 2000? I expected you to provide some index levels to enable us to understand the exact implications of your statement. — K. Ganeshan

We wish to emphasise that the stock market is in a long-term bullish phase. But, any bull-run will always be interrupted by a corrective phase. The correction could either be in the form of a sharp decline or a prolonged sideways price action. This, however, does not imply that the bull-run is complete. The long-term uptrend would reassert itself on the completion of the corrective phase.

Typically a lot of churning and distribution amongst the stocks from various sectors would take place during the corrective phase and the next leg of bull-run would begin thereafter. The key market indices in India appear to be heading towards such a corrective phase. It would not be too surprising if the Nifty logs a decline of about 200-250 points during the corrective phase.

Though there is no indication to this effect as yet, a correction has been long overdue. This does not mean that investors have to exit in a hurry. It would always be a prudent to let the market indicate that a correction has commenced. Till such time, it would be better to coast along with the upward momentum. Long-term investors could accumulate stocks of fundamentally sound companies when the corrective phase sets in.

Readers can send in their queries, on not more than two companies, to

techtrail@thehindu.co.in

Queries can also be sent by post to:

Tech Trail, 859/860 Kasturi Buildings, Anna Salai, Chennnai 600 002

We would endeavour to answer as many queries as possible. However, constraints of space will limit the responses featured under this column.

(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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