The Hindu Business Line : Query corner

I purchased MRPL for Rs 53. Please let me know the outlook for the stock considering the recent sharp upward move. I am a long-term investor and willing to wait for twelve months. — P. Shirodkar

MRPL (Rs 47.2): After a short-term weakness, the stock could seek higher levels.

This view would be negated if the price drops below Rs 40. Remain invested with a stop loss at Rs 43 for a portion of the holding and at Rs 40 for the balance.

The immediate resistance is at Rs 53-Rs 55, followed by Rs 62-Rs 65. Partial profit booking may be considered once the stock moves to Rs 53-Rs 55 range. Exposures may be trimmed further on a move to Rs 60-Rs 62.

As there is risk of a drop to Rs 28-Rs 30 range, investors may reduce exposures when the investment turns out to be profitable.

Is it the right time to enter KEC International and Sesa Goa? — Tarun K.Gupta, Subur Basha Shaikh

KEC International (Rs 78): The recent price pattern does not throw up convincing signs to take exposures at present levels.

We would not advise a "buy" based on recent price patterns. This does not, however, preclude the possibility of an upward move in share price. Those willing to take risk or investors already having long position may have a stop loss at Rs 65.

Sesa Goa (Rs 476): The short-term trend appears positive. The stock could move to Rs 530-Rs 540 range. Long positions may be considered at prevailing levels and on price weakness, with a stop loss at Rs 430.

Investors with a higher risk appetite and those who have entered at lower levels may place the stop at Rs 410. A move past Rs 590 would have positive implications and would push the stock to Rs 700-Rs 710 range. A decline below Rs 410 would be negative trigger and the breach of Rs 370 mark would negate the positive outlook.

Please let me know the prospect of Ucal Fuel bought at Rs 265 and SAIL at Rs 29.4. — T.S.Rajagopal Rao, Krishna R. Kerur, Murthy & Padmapriya

Ucal Fuel (Rs 286): The stock could move to Rs 315-Rs 320 range shortly. A move above Rs 330 would impart further buoyancy. Technically, there is no reason to sell the stock now. Hold with a stop loss at Rs 250. Partial profit taking maybe considered if the upward move stalls at the Rs 315-Rs 320 range.

SAIL (Rs 37.2): Taking into account the positive outlook and considering your entry price, it would be better to remain invested. The stock could move to Rs 42-Rs 43 range in the near-term. Remain invested with a stop loss at Rs 31. A trailing stop loss may be employed once the stock moves closer to the resistance zone at Rs 42-Rs 43.

High risk short-term traders may buy the stock on intra-day weakness, with a stop loss at Rs 33.

What are your views regarding BPCL and IOC? — S. Gopalan

BPCL (Rs 329.8): The stock could move up to Rs 340-Rs 350 range in the near-term. A close above Rs 370 would be a positive trigger and could push the stock to higher levels of Rs 400-Rs 410. Remain invested with a stop loss at Rs 310 and take partial profits when the price nears Rs 345-Rs 350 band. A drop below Rs 300 would be a major negative development and could impart prolonged bearishness.

IOC (Rs 360.7): The stock could rule weak or may remain range-bound in the near-term. After the completion of the anticipated short-term decline, the stock could higher levels of Rs 390-Rs 400. Remain invested with a stop loss at Rs 345.

A move past Rs 368 could be used to take long positions with a stop loss at Rs 345. A decline below Rs 340 would almost negate the positive outlook.

What is the outlook for South Indian Bank? — Subur Basha Shaikh.

South Indian Bank (Rs 48.5): Since the high recorded at Rs 96 in January 2004, the stock has been on a downward trend that is still not complete. A drop to Rs 38-Rs 40 range appears likely. Hold with a stop loss at Rs 45 and use price rises to reduce exposures. If the stop loss is triggered, fresh buying may be considered on evidence of support at lower levels.

I have huge holdings in Reliance Capital at Rs 160 and Tata Teleservices at Rs 24. Should I hold it or sell my holdings? — Sanjay Jain

Reliance Capital (Rs 130.3): The near-term outlook appears bullish. It is likely that you may have an opportunity to exit at Rs 160 or with a nominal profit. Remain invested with a stop loss at Rs 115 for a portion of the holdings.

Employ a trailing stop loss once the stock moves past Rs 150-Rs 153 range. Sell a portion of the holdings on a move past Rs 160. Alternatively, a close stop loss may be used to protect unrealised gains. A drop below Rs 115 would negate the positive outlook.

Tata Teleservices (Rs 19): You have taken exposures right at the resistance level. It would take quite an effort for the stock to get back to those levels. The stock is now stuck in a trading zone in recent weeks. Hold on with a stop loss at Rs 18 and use any strength in price to reduce exposures. Fresh buying may be avoided.

I have a sizeable holding in Reliance Industries and Ranbaxy Laboratories. Shall I hold or sell and will I get an exit price of Rs 600 for Reliance? — Jaggannada Ram

Reliance Industries (Rs 466.2): The long-term outlook for the stock is positive. It is quite likely that you may get an opportunity to exit the stock at Rs 600 in the future. It would, however, be difficult to forecast the time that would be taken to achieve this target.

Those holding profitable positions may reduce exposures once the stock moves to Rs 485-Rs 490 range. A drop below Rs 445 will blunt the positive outlook and would warrant reduction of holdings.

Ranbaxy (Rs 963.5): After a move to Rs 985-Rs 990, the stock is likely to resume its downward trend. Those who have bought the stock at lower levels may use price up moves to reduce exposures. Alternatively, a trailing stop loss may also be used to exit in the event of a reversal in price. Decline below Rs 940 would indicate that the stock is headed towards Rs 800-Rs 820 range.

I purchased Hero Honda at Rs 487 with a medium-term perspective. Should I hold or sell? — Sachin

Hero Honda (Rs 440.4): The stock appears to be on the verge of completing the ongoing downward move. A sizeable retracement of this downward move is likely.

It is possible that the stock could move past your purchase price of Rs 487. Those willing to take risk may hold on with a stop loss at Rs 400. Conservative investors may place the stop loss at Rs 430 and may consider re-entry on evidence of support at the Rs 390-Rs 400 zone.

What is the view on Elder Pharma (bought at Rs 126) and SKF India (at Rs 92)? — Lakshmi Rajesh

Elder Pharma (Rs 131): Remain invested with a stop loss at Rs 120. The stock is likely to move up in the near-term.

A close above Rs 140 would impart a positive trend. Aggressive traders could take long positions on a move past Rs 140, with a stop loss at Rs 122.

Look to reduce exposures on weakness at the Rs 155-Rs 160 range.

SKF India (Rs 94.2): The short-term trend is bullish. A move to Rs 105-Rs 108 range appears likely. Conservative investors may book partial profits when the stock moves above Rs 100. Remain invested with a stop loss at Rs 89 and use price rises to dilute exposures.

In June 2003, when Tata Steel was ruling around Rs 210, you had said the scrip was in the early stages of a major bull run. Since then the scrip climbed to Rs 460 at the peak of last year's bull market and then dropped to Rs 248; it has since recovered to present levels of Rs 340. What is your long-term outlook now? Also please highlight the outlook for Mahindra & Mahindra? — V.V.Sundaram & Sachin

Tata Steel (Rs 365): Despite the recent decline, the long-term trend for the stock is positive. The price is likely to at least retest the recent high of Rs 490-Rs 500 after the completion of the corrective phase.

The stock is now ruling close to the resistance level at Rs 370-Rs 375 range. In the immediate term, the stock could either rule weak or remain stuck in a narrow range. Shareholders who have entered at lower levels may hold with a stop loss at Rs 340 for a portion of the holdings. If the stop loss gets triggered, fresh buying may be considered if there is support at the Rs 320-Rs 325 band. A close above Rs 375 would be a positive trigger; aggressive traders may consider long positions with a close stop loss on a break above Rs 375. Shareholders willing to take risk may have a stop loss at Rs 310.

Mahindra & Mahindra (Rs 440.7): The short-term trend appears positive. A move to Rs 465-Rs 470 range appears likely. There, however, is a risk of a drop to Rs 380-Rs 390 range after the completion of this move. Shareholders who are "in the money" may consider at least partial profit booking if the stock moves to Rs 465-Rs 470 range. Fresh buying may be considered if the share price moves past Rs 550 or if the stock seeks supports at the Rs 370-Rs 380 range. Stop loss for long positions may be placed at Rs 420. A trailing stop loss may be considered in the event of an upward move in the near-term.

Readers can send in their queries, on not more than two companies, to techtrail@thehindu.co.inQueries 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)