Financial Daily from THE HINDU group of publications
Sunday, Dec 12, 2004
Markets - Technical Analysis
What is the outlook for Rolta India bought at Rs 76 and Welspun Gujarat at Rs 42? S.L. Kumar
Rolta India (Rs 79): The share price could move to Rs 88-Rs 90 range.
The bullish outlook would be in force till such time the stock holds above Rs 73. A drop below this level would negate the positive outlook and would warrant dilution of holdings in the stock.
Those with an appetite for risk may consider fresh long positions on a move past Rs 82, with a stop loss at Rs 76.
Welspun Gujarat (Rs 40.3): The stock could seek lower levels in the near term. A drop to Rs 36-Rs 37 range appears likely. The share price is, however, likely to resume the next leg of the uptrend on the completion of the expected short-term correction. Hold with a stop-loss at Rs 36.5. Fresh buying may be considered on a move past Rs 42, with a close stop loss in place.
I bought Praj Industries at Rs 287 and Aarti Drugs at Rs 154. Kindly advise whether to hold or sell these stocks. M. Nageswara Rao
Praj Industries (Rs 288.3): Hold on to your exposures as the stock has upside potential. A move to Rs 330-Rs 340 range appears likely. A drop below Rs 252 would negate the positive outlook. Hold with a stop-loss at Rs 265 for a portion of the holding and at Rs 252 for the balance. Aggressive traders may consider fresh long positions on a move above Rs 297, with a stop loss at Rs 274. A drop below Rs 252 would negate the positive outlook and would warrant dilution of holdings.
Aarti Drugs (Rs 160.8): Though there is a possibility of a rally to Rs 168-Rs 170 range, it would be safer to exercise caution in this stock. After the expected upward move, there is a possibility of a drop to Rs 140-Rs 145 range.
At the moment, only a move past Rs 180 would impart bullish trend. Hold with a stop loss at Rs 148. Use price rally to either tighten the stop loss or liquidate a portion of the holding on evidence of resistance or weakness at the Rs 168-Rs 170 zone. Fresh buying may be considered with a close stop-loss when the stock moves past Rs 180.
I bought Videocon International at Rs 75 and India Cements at Rs 42. What is the outlook for these stocks? M.S. Das, Mahalakshmi, Babulal Jain
Videocon International (Rs 68.1): There is a possibility of the stock moving to the immediate resistance level at Rs 82-Rs 85 range.
This view would be in force as long as the stock trades above the negative trigger level of Rs 62. Hold with a stop loss at Rs 62. A move past Rs 90 would impart further strength and could pave way for a rally to Rs 102-Rs 105 range.
India Cements (Rs 42.8): The trend would turn bullish once the share price moves past Rs 44. The stock has the potential to move to Rs 58-Rs 60 range. This view would be negated if the share price declines below Rs 37. Hold with a stop-loss at Rs 37. Fresh exposures may be considered on a move past Rs 44, with a stop-loss at Rs 41.
Shall I hold or sell Sonata Software bought at Rs 15.75? Babulal Jain
Sonata Software (Rs 17): Taking into account your acquisition price and the positive outlook, it would be safer to hold on to the stock. The stock could move to Rs 21-Rs 22 range.
The positive outlook would be negated if the stock drops below Rs 14. Hold with a stop loss at Rs 14. A move past Rs 18 may be used to take exposures with a stop-loss at Rs 16.
I purchased Amtek Auto at Rs 180. Please indicate the technical outlook for the stock. I also bought Berger Paints at Rs 34. Kindly suggest the future course of action in this stock. Jasbir Singh
Amtek Auto (Rs 168): The stock is in a corrective phase. Though the long-term outlook is positive, the stock is likely to seek lower levels in the near-term. Hold with a stop loss at Rs 150. Those uncomfortable with this stop loss may sell a portion of the holding at the prevailing rates and place the stop-loss at Rs 150 for the balance.
A move past Rs 185 would impart strength. Those who sell exposures now may consider fresh exposures on a move past Rs 185.
Berger Paints (Rs 33.8): The outlook is positive and a move to the immediate target zone of Rs 42-Rs 44 range appears likely. The positive view would be negated if the stock declines below Rs 30. Hold with a stop loss at Rs 30. A move past Rs 36 may be used to take fresh exposures with a stop-loss at Rs 32.
What are the prospects for GE Shipping purchased at Rs 192.5 and Chambal Fertilisers at Rs 23.00? M. Nair, Vijay
G.E. Shipping (Rs 176.6): The outlook does not appear too bullish. The stock appears to have completed a significant upward move at Rs 200 a few weeks ago. It is in a corrective phase to the earlier rally. A drop below Rs 155-Rs 160 range is not ruled out. Only a move past Rs 190 would impart strength. It would be better to sell a portion of the exposures at prevailing rates. Those holding profitable positions may also sell at least a portion of their exposure. Those who have decided to sell now may consider fresh exposures on evidence of support at about Rs 155-Rs 160 range. Alternatively, a move past Rs 190 may be used to take fresh exposures with a close stop loss in place.
Chambal Fertiliser (Rs 25): A move to the target zone of Rs 29-Rs 30 range appears likely. Hold with a stop loss at Rs 23. Either partial profit-booking may be considered on a move to Rs 29-Rs 30 range or stop loss may be tightened to lock-in unrealised gains.
I brought Gujarat NRE Coke at Rs 90. What is the outlook and target for the stock? Neeraj, Abhayakumar Shah
Gujarat NRE (Rs 139.9): Considering your entry price and the possibility of a further rise, there is no reason to sell this stock now. The share price could move to Rs 148-Rs 150 range in the near term. Hold with a stop-loss at Rs 125 for a portion of the holding and at Rs 105 for the balance.
Aggressive traders may consider fresh long positions on a move above Rs 145, with a stop-loss at Rs 134.
What is your view on Thirumalai Chemicals that was bought at Rs 129? Riju Vamadevan
Thirumalai Chemicals (Rs 112): The short-term outlook appears bearish. The stock is likely to slide to Rs 98-Rs 100 range. A drop below Rs 98 would result in the completion of a bearish "head and shoulder" pattern. It would be safer to look for opportunities to reduce exposures. Only a move past Rs 126 would impart strength. Hold with a stop-loss at Rs 108. Those holding a profitable position may sell a portion of the holdings now. Fresh buying may reconsidered on a move past Rs 126.
I have shares of Gujarat Alkalies at the rate of Rs 106. Should I book loss or add to my exposures at present levels? Vallikasi
Gujarat Alkalies (Rs 104.5): There is no reason to sell the stock as it has the potential to move to Rs 128-Rs 130 range.
A move past Rs 109 would impart positive trend and would help the stock move to the target zone.
The positive view would be negated on a drop below Rs 97. Hold with a stop loss at Rs 97. Fresh buying may also be considered on a move past Rs 109, with a stop loss at Rs 97.
I want your advice pertaining to my holding in Indian Oil purchased at Rs 460 and Tata Steel bought at Rs 300. V. Ramachandran, Abhayakumar Shah
Indian Oil (Rs 489.5): The long-term outlook for the stock appears bullish. The stock appears to have commenced the next leg of the upward move.
A rally to Rs 525-Rs 530 range appears likely in the near-term. There is no reason to sell the stock at prevailing prices. Fresh buying maybe considered on price dips, with a stop-loss at Rs 450. Stop loss for existing holdings may also be placed at Rs 450. Those who prefer a closer stop-loss may have it at Rs 462 for a portion of the holding and at Rs 450 for the balance.
Tata Steel (Rs 318.3): Though the stock appears to have upside potential, the recent price pattern does not exude confidence. An upward sloping "wedge" pattern appears to be taking shape in the weekly price chart. A drop below Rs 300, would result in a bearish trend. Hold with a stop loss at Rs 300 and a trailing stop loss may be used in the event of a steady upward move.
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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)
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