Financial Daily from THE HINDU group of publications
Sunday, Sep 05, 2004
Markets - Technical Analysis
I hold shares of Asian Hotels and Framotone OEN Connectors. Please advise whether to sell or hold. Pavan Kumar Baheti
Asian Hotels (Rs 193.1): Remain invested with a stop-loss at Rs 173 and use price upmoves to take profits. The stock faces strong resistance at the Rs 210-215 range. The price trend has reversed after hitting this range on three occasions in the recent past. A decline below Rs 145 would result in the completion of a bearish "head and shoulder" pattern. Long- term investors, especially the ones who have entered at lower levels, may take partial profits at prevailing market rates and may consider re-entry if the stock moves past Rs 220.
Framatome OEN Connectors (Rs 205): The stock appears to be headed towards higher levels of Rs 225-230. There is no reason to sell the stock now. Hold with a stop-loss at Rs 185. Holdings may be trimmed if the stock faces resistance at the Rs 228-230 range.
Is it advisable to hold D-Link (purchased at Rs 110) and Tata Metalliks (Rs 100)? Srini Marturi
D-Link (Rs 117.3): The near-term trend appears positive. A move to the Rs 142-145 range appears likely. Remain invested with a stop-loss at Rs 102. A portion of the holdings may be sold if the stock faces resistance close to the Rs 145-mark. Traders willing to take risk may go long on move past Rs 121 with a stop-loss at Rs 110.
Tata Metalliks (Rs 112.6): The stock faces resistance at the previous high of Rs 120. Though the outlook appears positive, the view is subject to the price moving past Rs 120. The stock could see a swift move up once this resistance is broken. Taking into account your entry price and positive outlook, there is no reason to reduce holdings now. Hold with a stop-loss at Rs 103. Investors, who have entered at fairly lower levels and with a higher risk-preference may have the stop-loss at a lower level of Rs 95.
I would like to know the prospects MRPL and Procter &Gamble. Bhavesh
MRPL (Rs 43): The downtrend that commenced at Rs 69 in January 2004 appears to be complete at the recent low of Rs 30.1. The stock appears set for at least a relief rally, which could take the price to the Rs 52-55 range. This view would be negated if the price declines below Rs 38.5. Shareholders may remain invested with a stop-loss at Rs 38. A move past Rs 45.5 may be used to take long positions with a stop-loss at Rs 40.
Procter & Gamble (Rs 488): The stock appears to be headed towards higher levels of Rs 540-550 in the near term. There is no reason to sell this stock. Hold with a stop-loss at Rs 435. A trailing stop-loss may be employed once the price approaches the target zone of Rs 540-550. A move past Rs 550 would impart further strength.
I hold ICICI Bank (Rs 280) and LIC Housing Finance (Rs 155). Please advise whether to hold or sell. S.V. Mohan Rao
ICICI Bank (Rs 263.2): The long-term outlook for the stock is positive. The stock could drop to the Rs 232-235 range in the worst-case scenario. After this decline, the next phase of the bullish trend is likely to commence. It would be worth the risk to hold with a stop-loss at Rs 230. A move past Rs 285 would impart strength and signal the start of a rally towards the Rs 320-325 band.
LIC Housing (Rs 159): The near-term trend appears bullish. A move to the Rs 185-190 range appears likely. Technically, there is no reason to sell the stock now. Hold with a stop-loss at Rs 132. Investors may either take partial profits on a move to the Rs 185-190 range or a trailing stop-loss may be employed to protect unrealised gains.
Please advise on the entry level and outlook for State Bank of India. A.P.S. Chawla
SBI (Rs 462.2): Investors willing to adopt a buy and hold strategy may consider buying this stock now. It appears to have the potential to reach the Rs 545-550 price band. This view would be valid as long as the stock trades above Rs 410. A drop below this level would negate the positive outlook and would warrant dilution of holdings.
Should I hold or sell Canara Bank (Rs 125) and UTI Bank (Rs 120)? N. Jaya Kumar
Canara Bank (Rs 141.4): The near-term target for the stock is the Rs 152-155 range. The next target lies at the Rs 165-170 range. Given the short-term positive outlook, it is better to remain invested with a stop-loss at Rs 119. Signs of weakness at the Rs 165-170 range may be used to reduce exposures.
UTI Bank (Rs 125.1): The outlook is positive and a move to the Rs 142-145 range appears likely. Hold with a stop-loss at Rs 105. A decline to below Rs 105 would have negative implications and would warrant dilution of exposures.
What is the outlook for Tata Power (Rs 276) and Lakshmi Electrical Control (Rs 77)? Ravi Chaudhari
Tata Power (Rs 279.1): The stock appears to be moving up towards the Rs 315-320 range. Remain invested with a stop-loss at Rs 250. Fresh buying may also be considered with a stop-loss at Rs 250. Partial profit taking may be considered if the stock faces resistance at the Rs 315-320 range.
Lakshmi Electrical (Rs 96.2): The outlook for the stock appears bullish. Taking into account your entry price and near- term positive outlook, it would be better to remain invested with a stop-loss at Rs 80. Risk-averse investors may consider partial profit taking if the stock faces resistance around the Rs 115-120 range.
I bought shares of Aban Lloyd Offshore at the average rate of Rs 800 per share. What is the outlook for the stock? Shall I hold or book profit? Srikanth Mathrubai
Aban Lloyd (Rs 1083): The stock has had a dream run in recent weeks. The recent sharp upward move does not appear to be complete. After a consolidation for a brief period, the stock is likely to resume the uptrend. Investors willing to take risk may sell a portion of the holdings at present levels, and place a stop-loss at Rs 940 for the rest. Risk-averse investors may sell a major portion of their holdings at present levels and contemplate fresh buying when the stock moves past Rs 1200. A drop below Rs 940 would warrant dilution of holdings.
Is it advisable to hold on to IDBI and will it cross Rs 100? Koshy Mathew
IDBI (Rs 76.9): As there is a possibility of a move to Rs 100, it would be advisable to hold the stock. A move past Rs 85 would confirm that it is on track to touch the three-figure mark. The stop-loss for long positions may be placed at Rs 64. Fresh long positions may also be considered with a stop-loss at Rs 72 when the stock moves above Rs 80.
What is your opinion on Orchid Chemicals and Wyeth Lederle. Narayan Pai & Anil Palan
Orchid Chemicals (Rs 230.5): After a sharp rise, the stock is in a corrective phase. The next leg of upward move would start on the completion of the ongoing corrective phase. A break above Rs 240 would be a positive trigger and may be used to take long positions with a stop-loss at Rs 217. The stock could move to the Rs 255-260 range in the near term. Shareholders may remain invested with a stop-loss at Rs 215.
Wyeth (Rs 449.7): The outlook for the stock appears positive and a move to the Rs 490-500 range appears likely. Only a drop below Rs 400 would negate the positive outlook. Given the relatively high degree of volatility and low liquidity, it would be better to have a close tab on the price movement in the stock.
I have bought Padmalaya Telefilms (Rs 90) and Solectron Centum (Rs 95). Shall I hold or sell? Ulka Kale & P. Ravindra
Padmalaya Tele (Rs 67.6): There appears to be nominal downside risk from present levels. A bullish trend is likely to prevail after a drop to the Rs 60-62 range in the near term. A drop below Rs 57 would have negative implications and would warrant reduction of holdings. Hold with a stop-loss at Rs 57. On the upside, the stock could move to the Rs 82-85 range.
Solectron Centum (Rs 94.9): The outlook for the stock appears bullish and a move to the Rs 115-120 range appears likely. Remain invested with a stop-loss at Rs 80, and take partial profits if the stock faces resistance at the Rs 115-120 range. B. Krishnakumar
Based on your recommendation a few weeks ago that India Cements will go from Rs 33 to the Rs 42-45 range, I purchased the stock at 37.5. It touched 42, but I did not book profit. Please advise if I should hold or sell. Also I bought Tata Steel at Rs 266 (post-bonus) based on your observation that it may cross Rs 490-500 (pre-bonus). Please advise if I should hold or sell. Ambina Ram & Vivek
India Cements (Rs 40.5): Based on the near-term prospects and the recent chart patterns, the stock appears to have upside potential. Technically, there is no reason to sell the stock now. Hold with a stop-loss at Rs 35. The stock appears to be headed towards the next target zone of Rs 48-50. Risk-averse investors may take partial profits at present levels and have a stop-loss at Rs 35 for the rest. Fresh investment may be considered on a move above Rs 42.
Tata Steel (Rs 250.5): The earlier view that the stock would move towards the recent high of Rs 305-310 (adjusted for bonus) is still valid. There appears to be marginal downside risk. Remain invested with a stop-loss at Rs 223. The stock is likely to move towards the Rs 270-275 range in the near term. Short-term traders may consider long positions if the stock moves past Rs 256, with a stop-loss at Rs 245. At least partial profit booking may be contemplated on evidence of resistance at the Rs 270-275 range.
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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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