The Hindu Business Line : Query Corner

In the near term, a move to Rs 270-Rs 275 range appears likely. Remain invested with a stop loss at Rs 255. Investors need to be on guard to sell at least a portion of holdings if the stock faces resistance near the Rs 275-Rs 280 range.

Vardhman Spinning (Rs 160.9): The outlook appears positive and the stock could move to the Rs 175-Rs 180 range. There is no reason to sell at prevailing price levels, as the stock appears to have more ground to be covered on the upside.

Hold with a stop loss at Rs 133. A trailing stop loss may be used if the stock moves past Rs 175.

Kindly let me know the technical outlook for IDBI bought at Rs 74 and Moser Baer at Rs 270. — Shivakumar

IDBI (Rs 48.8): The stock could seek higher levels in the near term. A move to the Rs 58-Rs 60 range appears likely. The stock could find it difficult to move past the strong resistance zone close to the Rs 60 mark.

Remain invested with a stop loss at Rs 39. Push the stop loss closer to the prevailing market price if the stock moves nearer to Rs 60.

Moser Baer (Rs 179.7): The outlook for the company was covered a few weeks ago (edition dated June 13, 2004) under the "Focus of the Week" section. The stock has since turned weak from the level of Rs 202 and has moved down in line with expectations. The view mentioned earlier remains unchanged. A drop to Rs 150-Rs 160 range appears likely.

This view would be confirmed once the share price declines below Rs 174. Investors may look to reduce holdings. Fresh buying may be avoided.

I purchased Bharti Televentures at Rs 150 and Lyka Labs at Rs 80. Could you tell me the outlook for these stocks and whether I should hold or sell them? — J.D'souza

Bharti Televentures (Rs 156.8): The outlook for the stock was covered earlier (edition dated June 9, 2004) in this column.

The stock has managed to rule above the crucial support range at Rs 125. Though it dropped below Rs 125 during intra-day trading, it managed to close above it. The threat from a prospective "Head and Shoulder" pattern still looms large.

This pattern would be complete if the share price drops below Rs 123. Remain invested with a stop loss at Rs 142 and keep trailing the stop loss in the event of a steady uptrend.

Recent price pattern indicates that the stock could drop to lower levels after the completion of the present uptrend. Only a close above Rs 180 would reinstate the positive outlook.

Lyka Labs (Rs 43): The chances of an upmove towards your purchase price appear remote. The stock is in a downtrend that is not complete as yet.

After a short-term bounce, the stock is likely to resume the downtrend towards Rs 32-Rs 35 range. Remain invested with a stop loss at Rs 39.

Exposure may be reduced if the stock faces resistance at the Rs 45-Rs 46 range. A trailing stop loss may also be used in the price were to seek higher levels.

I have purchased shares of Monsanto India at Rs 1,450 about six months ago. I would like to know the prospects of the company from a medium-term perspective. — Preeti Joshi

Monsanto India (Rs 1,374.5): After peaking at Rs 1,600 in December 2003, the stock has been in a corrective phase to the earlier uptrend.

The corrective phase that has lasted for about six months appears complete. The stock appears to be in the early stages of the next upward move. If the stock has indeed completed its corrective phase, the share price could well move past the earlier high at Rs 1,600. Remain invested with a stop loss at Rs 1,240. A drop below this level would warrant dilution of holdings.

What is the outlook of Divi's Lab bought at Rs 1,453 and Suven Life at Rs 109? — G. Vikram Srivathsav

Divi's Labs (Rs 1,187.4): As the stock got listed recently, there is inadequate price history to arrive at a long-term view. Based on the price movement in the recent weeks, it appears that the recent downtrend is likely to be arrested shortly. The stock could see a basing pattern and at least a sharp short-term bounce may materialise.

Remain invested and liquidate exposures on price up moves. Only a drop below Rs 1,050 would be a cause of concern and would prolong the downtrend as well as the subsequent recovery.

Suven Life (Rs 48.5): The ongoing downward trend does not appear complete. The possibility of the share price moving towards your purchase price appears rather remote. It would be safer to sell a portion of the holdings at the prevailing market rates.

Could you discuss the outlook for IPCL (bought at Rs 180) and Hindustan Zinc (at Rs 72)? — J. Vikram

IPCL (Rs 150.1): Remain invested with a stop loss at Rs 130. The stock could move towards the resistance level of Rs 160-Rs 165 range.

Evidence of weakness at about this range may be used to reduce exposures. A drop below Rs 130 would impart weakness and could open up the possibility of a slide to Rs 100-Rs 105 band. Those holding a profitable position may sell a portion of the holdings at market rates. Evidence of support at the Rs 100-Rs 102 range may be used to take fresh exposures. Only a close above Rs 190 would impart a bullish trend.

Hindustan Zinc (Rs 78.4): There is a strong resistance at the Rs 87-Rs 90 range. A portion of the holdings may be sold if the stock turns weak at or near the Rs 87-Rs 90 range.

A drop below Rs 70 would be a negative development and a decline below Rs 60 would impart further weakness. Remain invested with a stop loss at Rs 69.

I bought D-Link India at Rs 180 and Crompton Greaves at Rs 160. What is the outlook for the two stocks? — R. Johari

D-Link India (Rs 125.9): Though the stock could seek lower levels in the near-term, it is likely to resume the uptrend thereafter. The recent price patterns indicate that you may get an opportunity to sell at higher levels in the future. Those willing to take risk and others who have entered at fairly lower levels may hold with a stop loss at Rs 110. Investors not comfortable with the stop loss at this level may sell a portion of the holdings now with an intention to buy it back at lower rates of Rs 108-Rs 110.A drop below Rs 100 would be a negative development.

Crompton Greaves (Rs 140.5): The near-term trend appears positive. The stock could move to Rs 160-Rs 165 range. A close above Rs 170 would impart further strength.

The positive outlook would be valid as long as the stock trades above Rs 128. A drop below this level would warrant reduction of holdings. Conservative investors and those who have entered at fairly lower levels may sell a portion of their holdings once the stock moves to Rs 160-Rs 165 range.

Please let me have your outlook for SKF Bearings purchased at Rs 104 and Asahi India at Rs 127. — Waheeda

SKF Bearings (Rs 81): The stock appears to be in an uptrend and could move up to Rs 115-Rs 120 range in the near term. Remain invested with a stop loss at Rs 70.

At least partial profit booking may be considered on a move to Rs 115-Rs 120 range. A trailing stop loss may also be used if the stock moves up steadily past Rs 120.

Asahi India (Rs 97.2): The share price could move to higher levels of Rs 108-Rs 110 range. A move above Rs 115 would be a significant positive development. Remain invested with a stop loss at Rs 87.

Risk-seeking traders may take long positions on a move past Rs 102.5, with a stop loss at Rs 93.

What is outlook for Syndicate Bank bought at Rs 36.6 and Bank of India Rs 54? Would you advise me to swap these two stocks for Andhra Bank and Vijaya Bank respectively?

Syndicate Bank (Rs 31.4): There appears to be marginal downside risk from prevailing market rates. In the near-term, a move to Rs 35-Rs 36 range appears likely.

A close above Rs 36 would impart further positive momentum and could push the stock price to Rs 40-Rs 42 range. Remain invested with a stop loss at Rs 28, a drop below which would warrant dilution of holdings. Aggressive traders may also consider short positions with a close stop loss if the share price drops below Rs 29.

Bank of India (Rs 45.3): The stock is likely to seek higher levels in the near-term. A move to Rs 52-Rs 53 range appears likely. Remain invested with a stop loss at Rs 42 and trim holdings on evidence of resistance at Rs 52-Rs 53 range.

As far as the switch to Andhra Bank or Vijaya Bank is concerned, there is hardly any reason to do so as the chart patterns and outlook for the set of stocks mentioned by you are similar. Based on technical analysis, there is no reason to pursue this idea.

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, Chennai 600002.

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. 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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