Financial Daily from THE HINDU group of publications
Sunday, Jul 04, 2004
Markets - Technical Analysis
I bought MphasiS BFL bought at Rs 375 and Tamil Nadu Petro at Rs 17. Should I hold on or exit from these stocks?
MphasiS BFL (Rs 273): Though the stock could rule firm in the near term, there is a risk of a drop to the Rs 190-195 range.
A decline below Rs 245 would accentuate this risk. The stock has already moved to the resistance zone at Rs 270-275.
It would be safer to stay invested with a stop-loss at Rs 255. A trailing stop-loss may be employed if the price moves up further.
After a base-building process at the target zone of Rs 190-195, the stock is likely to resume the uptrend.
Tamil Nadu Petro (Rs 19.6): There is no discernible trend in this stock. The recent price pattern does not provide an indication about the likely price action in the near term. Remain invested with a stop-loss at Rs 17.5 and trail the stop-loss in the event of an upward move.
Let us know the stop-loss and re-entry levels for Gail and Reliance Energy. We bought these stocks at Rs 325 and Rs 980 levels respectively. Arun Tewary & Vikas Sharma
Gail (Rs 169.5): The stock has been stuck in a range over the recent weeks. Only a breakout from this range would provide meaningful momentum.
Going by the recent price action, a breakout on the downside may materialise. A decline below Rs 155 would have bearish implications and could result in a test of the earlier low at the Rs 120-125 range. Remain invested with a stop-loss at Rs 155.
The stop-loss may be trailed to higher levels in the event of a sustained upward trend in prices. Evidence of support at the Rs 120-125 range may be used to re-enter the stock.
Reliance Energy (Rs 568.2): Though a move to Rs 580-590 appears likely, there appears to be little upside potential in the short term.
In any case, the chances of the stock moving anywhere close to your entry price appears remote. Remain invested with a stop-loss at Rs 550 and look to reduce exposures on intermittent price upswings.
I have substantial investments in Bongaigaon Refineries at an average price of around Rs 70. Please advise on the future of this scrip. Srivatsan
Bongaigaon Refineries (Rs 62.3): Though the stock has a downside risk of a drop to the Rs 42-45 range, the long-term trend appears positive.
In the near term, a move to the Rs 70-72 range appears likely. However, the stock could drop to the Rs 42-45 range after the expected move to the Rs 70-72 range. Remain invested with a stop-loss at Rs 55 and use upward moves to pare exposures. Fresh buying may be considered on evidence of support at the Rs 40-42 range.
What is outlook for VSNL purchased at Rs 165 and Samtel Colour at Rs 44? Ritam & Pulak Nanda.
VSNL (Rs 173.5): The scope for any significant upside move appears limited in the short-term. There is a strong overhead resistance at the Rs 205-210 band. Only a move above this zone would impart positive trend.
Remain invested with a stop-loss at Rs 168 and use price rallies to take partial profits. Fresh buying may be considered on evidence of support at the Rs120-125 range. A move past Rs 190 would trigger a buy signal if the stock moves past this level after hitting the stop loss at Rs 168.
Samtel Colour (Rs 50.4): The stock enjoys a strong support at the Rs 37-38 range. The outlook would be positive as long as the stock trades above this support range. Hold with a stop-loss at Rs 42 and sell a portion of the holding on evidence of weakness at the resistance level of Rs 60. A drop below Rs 37 would warrant dilution of holdings.
I bought a huge chunk of Syndicate Bank shares at Rs 50. What is the outlook and should I hold or exit?
Syndicate Bank (Rs 33.6): The share price could seek higher levels. A move to the Rs 42-45 range appears likely. Remain invested with a stop-loss at Rs 30 for a portion of the holdings and at Rs 27 for the balance. A move towards Rs 45 would warrant tightening of stop-loss, as the stock is likely to face resistance at this range. Exposures may be reduced on the evidence of weakness at this level.
I have large holdings in IFCI bought at Rs 16 and Rain Calcining at Rs 27. Kindly advise what should I do with these stocks? Avinash Kamat & J. Vikram
IFCI (Rs 8.4): Taking into account your purchase price and the short-term outlook, there is no reason to exit from the stock at current market price.
Considering that the stock has already dropped by about 50 per cent from your cost of acquisition, there is no point selling the shares now, as there is a possibility of a short-term rally. A move to the Rs 11-12 range appears likely. A break above Rs 12.5 could pave the way for a rally to the Rs 13.5-14 range.
Remain invested with a stop-loss at Rs 6 and be on guard to reduce exposures if the stock faces resistance at Rs 12. A drop below Rs 6 would warrant reduction of holdings.
Rain Calcining (Rs 13.3): There appears to be marginal downside risk from present levels. A move past Rs 14.5 would indicate that the stock is headed towards higher levels of Rs 17-18.
Considering the near-term positive outlook, there is no reason to exit from the stock now. Hold with a stop-loss at Rs 11, a drop below which would warrant dilution of holdings.
I hold Indian Overseas Bank (IOB) purchased through the IPO at Rs 10. Do you advise me to hold or sell the same? R. Charnu
IOB (Rs 43.2): Considering your purchase price and near-term positive trend, there is no reason to sell the stock now. The stock could move to the immediate resistance level at Rs 49-50.
A break above Rs 51 could push the stock to the next resistance at Rs 58-60. Remain invested with a stop-loss at Rs 37.5 and partial profit booking may be considered on signs of weakness at the Rs 52-55 range.
What is the outlook for Tata Infotech bought at Rs 400? J. Vikram
Tata Infotech (Rs 364.2): The stock could seek higher levels in the near term. A move to the Rs 390-400 range appears likely. Remain invested with a stop-loss at Rs 350. Reduce holdings on the evidence of weakness at or near the Rs 400 mark.
Please let me know the prospect of HDFC Bank bought at Rs 360 and Mahavir Spinning at Rs 110. J.K.Mehta & S. Chandini
HDFC Bank (Rs 365): The stock is in a sideways consolidation phase for quite some time now.
It is likely to move to the Rs 400-420 range on the completion of the consolidation phase.
A close below Rs 350 would blunt the positive outlook. Remain invested with a stop-loss at Rs 350 and sell at least a portion of the holdings once the stock nears the Rs 400 mark.
Mahavir Spinning (Rs 131.5): A move towards the Rs 142-145 range appears likely in the short-term. Remain invested with a stop-loss at Rs 118. Take partial profits if the price faces resistance at the Rs 142-145 zone.
I have shares of Tata Power bought at Rs 183. I would like to know the outlook for this stock. Murali
Tata Power (Rs 236.2): There appears to be little downside risk from present levels.
The stock is likely to move to the Rs 255-260 range in the near term. A break past Rs 270 would impart further bullish momentum. Remain invested with a stop-loss at Rs 215. Aggressive traders could take long positions on a move past Rs 242.5, with a stop-loss at Rs 230.
What is the outlook for IndusInd Bank bought at Rs 44 and Torrent Pharma at Rs 367? Is there any chance of Torrent Pharma moving above Rs 400 in the near term? G.V. Venkatesh
IndusInd Bank (Rs 50.3): The outlook for the stock does not appear positive. A drop to the Rs 39-40 range appears likely. A close below Rs 48 would confirm the bearish outlook. Remain invested with a stop-loss at Rs 48. Only a move above Rs 61 would impart buoyancy in the stock. Fresh buying in small lots may be considered if the stop-loss gets triggered and the price moves past the Rs 61 mark subsequently.
Torrent Pharma (Rs 313): The recent price pattern indicates that the stock could drop to lower levels. The chances of a rally to Rs 400 appear remote based on the latest price movement. At least a portion of the holdings may be sold at prevailing market rates and the balance may be retained, with a stop-loss at Rs 300.
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We would endeavour to answer as many queries as possible. However, constraints of space will limit the responses featured under this column.
(The analysis and opinion expressed in these columns are based on the technical analysis of the past price behaviour. Opinion and price targets are based on the Elliott Wave Analysis. The stop-loss level provided with the recommendation is important. The original view would stand negated if the stop loss level is breached. There is a risk of loss in trading)
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