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B. Krishnakumar

Shall I hold or sell Cipla (bought at Rs 320) and Mcdowell (Rs 146)? — S. Gomathi

Cipla (Rs 265.7): The outlook for the stock has been covered in recent weeks. The price breached the stop-loss level of Rs 272 (mentioned in edition dated December 19) and resulted in a sharp slide subsequently. The trend has turned bearish and would remain so till such time the stock moves past Rs 300. A drop below Rs 255 could pave the way for a decline to the Rs 225-230 range. Hold with a stop-loss at Rs 255 and look to reduce exposures on price rally. In the event of a drop below Rs 225, a subsequent test of the Rs 185-190 range is not ruled out.

Mcdowell (Rs 104): The stock is in a downward trend as a corrective to the earlier rally that peaked at Rs 151 a few weeks ago. There are no signs of the completion of this downward correction. It is advisable to sell the stock on strength. It would take quite some time for the stock to rise to your entry price. A move past Rs 135 would reinstate bullishness. At the moment, there is no evidence to suggest that the stock has the potential to move above the positive trigger level.

What is the outlook for Bank of India (Rs 99.6) and Uniphos Enterprises (Rs 28.4)? — M.S. Bisht

Bank of India (Rs 83.1): Though the long-term outlook remains bullish, the short-term trend hinges on the price movement in the next few weeks. A drop to the Rs 75-76 range appears likely in the near term. A drop below Rs 74 would impart weakness and would warrant dilution of positions. A breach of Rs 74 would also result in the completion of a bearish "head and shoulders" pattern. Hold with a stop-loss at Rs 74 and use a trialing stop-loss in the event of a sustained upward move. At the moment, only a move past Rs 93 would negate the short-term bearish trend.

Uniphos Enterprises (Rs 28): The price data is not sufficient to arrive at a long-term outlook. From a short-term trading perspective, a drop below Rs 25 would impart weakness. Hold with a stop-loss at Rs 25 and a trailing stop-loss may be used to lock-in unrealised gains.

I bought Havells India at Rs 240 and Karnataka Bank at Rs 210. Should I hold or sell them? — A. Lakshmikanta Setty, K.K. Rao

Havells India (Rs 230): The stock appears to have recently completed a major upward move at Rs 290. The subsequent downward move appears to be a correction to the earlier upward move. Taking into account the momentum of the earlier rally, the corrective phase may be of a protracted nature.

Hold with a stop-loss at Rs 214 and look to reduce exposures on strength. If the stop-loss gets triggered, fresh buying may be considered on a subsequent move above Rs 250.

Karnataka Bank (Rs 101.6): The stock price turned ex-rights a few days ago. A move to the immediate resistance level of the Rs 115-116 range appears likely. A drop below Rs 90 would negate the positive outlook and a slide below Rs 71 would impart prolonged weakness.

Hold a portion of the holding with a stop-loss at Rs 90, and at Rs 71 for the balance. At least partial profit taking may be considered on evidence of resistance at around the Rs 115-116 range.

I purchased a large number of shares in L.G.Balakrishnan Brothers. Kindly advise whether to hold or sell. — S. Abdul Gani, Subur Basha Shaikh

L.G.Balakrishnan (Rs 26.5): Though the long-term outlook remains bullish, there are no signs of short-term trend turning positive.

The recent price pattern indicates that the stock has completed a bearish "double top" pattern around the Rs 31-32 range.

A move above Rs 32 would be a positive trigger and long positions may be considered subsequently.

Till such time, it would be advisable to look for opportunities to reduce exposures. Stop-loss for long positions may be placed at Rs 24. A breach of this level would warrant liquidation of long positions.

Is it advisable to buy Petronet LNG for long-term holding? — M. Nagarajan, M. Nair, Jairam Vishwakarma

Petronet LNG (Rs 43.2): We have received several enquiries pertaining to this stock in the recent weeks. As the stock was listed in the year 2004, the historical data is insufficient to arrive at a long-term outlook. From a short-term trading perspective, long positions may be considered on a move past Rs 45, with a stop-loss at Rs 38. Shareholders may also remain invested with a stop-loss at Rs 38. It is difficult to arrive at a long-term projection or price target owing to inadequate data.

I purchased Andhra Bank at Rs 93 and Mangalam Cement at Rs 45. Is it advisable to hold or sell the stocks? — K. Ramkumar

Andhra Bank (Rs 78.3): The stock appears to have completed the downward trend. A move past Rs 86 would impart positive trend. This would help the stock move to the next target of the Rs 98-100 range. A drop below Rs 69 would result in the continuation of the downtrend. Hold with a stop-loss at Rs 69 and use a trailing stop-loss in the event of a steady move up.

Mangalam Cement (Rs 74.8): The outlook for the stock was covered under the "Focus of the Week" column a few months ago. It has taken several weeks for the stock to move to our earlier mentioned target zone. The long-term outlook remains positive. A move to the Rs 88-90 range appears likely. A move past Rs 80 would be a positive trigger and the stock is likely to resume the uptrend subsequently.

I purchased EID Parry bought at Rs 430. What is the target for the stock and stop-loss for the stock? — Vallikasi

EID Parry (Rs 406): Hold with a stop-loss at Rs 389 as the long-term trend is bullish. A move past Rs 436 would impart bullishness. Fresh long positions may be considered on a move past Rs 436, with a stop-loss at Rs 405.

Kindly let me have your advice about my holdings in Satnam Overseas (Rs 111) and ING Vysya (Rs 675). — S. Laxmi

Satnam Overseas (Rs 88): The outlook does not appear too positive. A drop below Rs 80 might push the stock to the Rs 60-62 range. Taking into account your purchase price and near-term trend, it would be better to look for opportunities to reduce exposures. Remain invested with a stop-loss at Rs 80 and a trailing stop-loss may be employed in the event of a run-up in price. At the moment, only a move past Rs 98 would impart bullishness.

ING Vysya (Rs 610): It is quite likely that the stock may move past your purchase price. Hold with a stop-loss at Rs 580 for a portion of the holding and at Rs 540 for the rest. A decline below Rs 540 would negate the positive outlook.

Kindly let me have your views on Visaka Industries? — S.G.B. Ranga

Visaka Industries (Rs 117.3): The stock was featured in the "Focus of the Week" column a couple of weeks ago. Contrary to expectations, the stock has ruled weak and has also breached the stop-loss level of Rs 129. This has effectively negated the earlier positive outlook.

Based on the queries received, we feel that investors still disregard the importance of the concept of money management. In equity investing, curtailing losses is more important than earning profits. We wish to emphasise that our recommendation on any stock based on technical analysis would lose validity if the stop-loss mentioned is breached.

Before committing funds, investors should be clear about the entry, exit and stop-loss levels. Positions should be ruthlessly cut in any stock if the stop-loss is breached. Exposures in the same stock may be reconsidered only if a fresh "buy" signal emerges. There is nothing wrong (you need not feel uncomfortable either) in taking fresh positions in a stock where you had to exit earlier as the stop-loss had been triggered.

If the investors feel that the stop-loss mentioned along with the recommendation is wide for their comfort, they should refrain from taking a position in the stock. Exposures may be considered when the price moves to levels that pushes the original stop-loss within the comfort zone of the investor concerned. If the stop-loss is breached, at least a major portion of the holding should be liquidated.

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, Chennnai 600 002

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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