The Hindu Business Line : Query corner

IBP (Rs 544.5): The recent chart pattern indicates that the stock has marginal upside potential. A move to Rs 610-Rs 620 range appears likely. As the long-term trend appears bearish, investors may use price increases to reduce holdings.

A drop below Rs 500 may trigger a decline to the 400-410 range. Remain invested with a stop loss at Rs 500 and trim exposures on signs of weakness in the Rs 620-Rs 625 range.

Alok Industries (Rs 57.2): The price has been moving in a narrow trading range in the past few weeks. It has met with resistance at Rs 61-Rs 64 range on quite a few occasions in the recent past. A breakout above this range is crucial before any meaningful trend can resume. A drop below Rs.50 would impart weakness and may pave the way for a decline to the Rs 43-Rs 45 range. Hold with a stop loss at Rs 54 for a portion of the holding and at Rs 50 for the rest. Fresh buying may be considered if the stock breaches the stop loss, and subsequently moves past Rs 64.

What is the outlook for Adani Exports? — N. Bhiksingh

Adani Exports (Rs 62.5): Despite the recent upward move, there appears to be scope for a further rise. It may move up to the recent high of Rs 74-Rs 75. Shareholders may remain invested with a stop loss at Rs 54.

Partial profit booking may be considered on signs of weakness in the Rs 74-Rs 75 range.

I hold CESC, purchased at Rs 125 and GE Shipping (Rs 156). What is the outlook from a long-term perspective? — Sathianarayanan

CESC (Rs 104.6): The outlook for the stock appears positive. A drop below Rs 94 would, however, negate the positive outlook. Hold with a stop loss at Rs 94, as the stock could move at least to your purchase price. A move above Rs 135 would help the stock move up to Rs 145-Rs 150 range. Short-term traders may take long positions on a move above Rs 109, with a stop loss at Rs 99.

G.E. Shipping (Rs 147.6): The near-term trend appears weak. The stock is likely to resume the uptrend after a short-term decline to Rs 135-Rs 137 range. A drop below Rs 125 would be a negative trigger and would warrant dilution of holdings.

Please let me have your views on MIRC Electronics, bought at Rs 45 and GAIL (Rs 212). — Shuba Gowrishankar

MIRC Electronics (Rs 19): The outlook for the stock does not appear positive. A drop below Rs 15 would have negative implications and could push the stock to Rs 7-Rs 8 range. Based on recent chart patterns, the stock is likely to find it difficult to move closer to your entry price of Rs 45. Look for opportunities to sell at least a portion of the holdings.

GAIL (Rs 179.7): With the stock being confined to a narrow range, there is no discernible trend. A drop below Rs 160 would have negative implications, while a move past Rs 215 would impart a positive trend. It is now difficult to make a call on the likely price direction in the near-term.

What is the outlook for ONGC? — Sunil & Lajwanti

ONGC (Rs 691.1): The near-term outlook for the stock is covered elsewhere on this page. The outlook is weak and only a close above Rs 750 would impart an upward momentum. Fresh buying may be considered in small lots on a break above Rs 750. A drop below Rs 675 would push the stock to Rs 615-Rs 620 range. Taking into account the weak outlook for the major indices and the general market as such, buying may now be avoided. Shareholders may have a stop loss at Rs 625.

I bought Swaraj Engines at Rs 300 and Finolex Industries at Rs 64.5. What is the outlook? — Naveen Thomas

Swaraj Engines (Rs 281.7): The outlook for the stock does not appear positive. A drop below Rs 270 would have negative implications.

The stock has exhibited a high degree of volatility in the recent months. Stop loss tends to be very wide in stocks that have high degree of volatility. This makes holding the stock or investing in the stock from a short-term perspective a highly risky proposition. For stocks of the Swaraj Engines genre, a technical view would be futile. It is better to analyse the fundamentals and invest with a holding period of at least eight to twelve months.

Finolex Industries (Rs 63.8): Hold with a stop loss at Rs 54. The stock faces strong resistance at Rs 83-Rs 84 range. A strong upward trend would emerge only if the share price breaks above this level. A Drop below Rs 54 would have negative implications.

Please let me have your views on SRF bought at Rs 56? — C. Venkatakrishnan

SRF (Rs 38.5): The stock has been locked in a narrow range. A firm trend is not visible in the charts. A move above the resistance area at Rs 45-Rs 46 range would impart a positive trend. A drop below Rs 32 would have negative implications. Hold with a stop loss at Rs 32 and a trailing stop loss may be used in the event of a steady uptrend.

Please advise me on BEML and IPCL? I wish to buy these at current rates.— Roma Johari

BEML (Rs 156.1): There are no indications to suggest that the stock is headed up. A move past Rs 170 would be an indicator of an upward move. Signs of support at Rs 140-Rs 142 range may be used to take long positions in limited quantity, and with a suitable stop loss in place. It would now be better adopt a wait-and-watch approach.

IPCL (Rs 191.3): The outlook for the stock appears positive. A move to Rs 240-Rs 250 range appears likely. A drop below Rs 174 would have negative implications and would warrant partial liquidation of holdings. Fresh exposures may taken on a break above Rs 197, with a stop loss at Rs 170.

Could you please discuss the outlook on Shanti Gears and Ashok Leyland? Can I enter at current levels? — J.Vikram, Prabhu & N.Gopalakrissnan

Shanti Gears (Rs 19.8): The stock has seen a sharp run-up recently. It is likely to move into a corrective phase. It would be better to avoid this stock now. Only a close past Rs 26 would impart positive trend.

Ashok Leyland (Rs 18.3): The stock has taken a knock over the past few days. It appears that the downtrend is not as yet complete. A drop to Rs 12-Rs 13 range appears likely. It would be safer to avoid the stock now. Long positions may be considered once the stock gets into a strong uptrend. Those already holding the stocks may have a stop loss at Rs 14.

What is the outlook for KSB Pumps bought at Rs 105 and Sesa Goa bought at Rs 480? — Vishal Mehta

KSB Pumps (Rs 123): Taking into account your entry price and the positive near-term outlook, remain invested with a stop loss at Rs 112 for a portion of the holding and at Rs 105 for the balance. A trailing stop loss may be used if the stock moves closer to the resistance level at Rs 140-Rs 145 range.

Sesa Goa (Rs 542.4): The long-term outlook appears positive. A move towards the earlier high of Rs 700 appears likely. This is, however, subject to the caveat that the stock price stays above Rs 460. A breach of this level would blunt the positive outlook. Remain invested with a stop loss at Rs 497. Investors who are uncomfortable with such a wide stop loss may sell a portion of their holdings at prevailing rates. Fresh buying may be considered on a move past Rs 585.

Is it the right time to buy Thermax and Balrampur Chini? — Narayan Pai

Thermax (Rs 385): After a sharp rally in 2003, the stock has been confined to a narrow trading band, representing a sideways correction/consolidation phase.

The earlier uptrend would resume on completion of the ongoing sideways pattern. It would be better to wait for the completion of the consolidation phase and buying may be considered after the onset of a bullish phase.

A move past Rs 425, would indicate that the stock has commenced its next wave on the upside. Aggressive traders may buy on evidence of support at Rs 345-Rs 350 range, with a stop loss at Rs 330. Else, buying may be considered on a move past Rs 425.

Balrampur Chini (Rs 404.3): There appears to be marginal downside risk. Long-term investors may consider buy the stock at present levels and on price dips. The positive view for the stock would be negated if the stock declines below Rs 340. A move past Rs 434 would confirm the positive outlook. The stock could move to Rs 550-Rs 600 range if the uptrend continues.

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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.

(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)