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B. Krishnakumar

I have purchased IndusInd Bank at Rs 58.You had indicated stop-loss at Rs 55. The stock has now dropped below Rs 55. With the ongoing correction, shall I hold or book loss? I purchased Nava Bharat Ferro at Rs 382. Please confirm whether to hold for the long-term or book profit now & buy again at lower levels. — C.N. Karambelkar & J. Anupama

IndusInd Bank (Rs 53.6): The stock has dropped below the first stop-loss level of Rs 55. Investors should have sold the stock by now as the stop-loss has been triggered. Considering that you have not yet sold, you may as well take risk by placing a stop-loss at Rs 50, which was the level mentioned was shareholders who had entered at lower levels. The long-term outlook remains bullish and the stock could move to the earlier mentioned target level of Rs 100. If the stop-loss at Rs 50 is triggered, investors may consider re-entry on evidence of support at the Rs 41-43 range. The long-term positive outlook would be negated only of the share price declines below Rs 36.

Nava Bharat Ferro (Rs 416.15): A move above the immediate resistance level at the Rs 435-440 range would impart bullish momentum. This would help the stock reach the target range of Rs 485-490. Remain invested with a stop-loss at Rs 380. Fresh exposures may also be considered on price weakness with a stop-loss at Rs 380.

What is the outlook for Mahavir Spinning bought at Rs 310 and Padmalaya Telefilms at Rs 67? — P. Ramaya Krishnan

Mahavir Spinning (Rs 275.8): After moving to a high of Rs 314 in November 2004, the stock has been in an extended phase of consolidation. This move is likely to be completed shortly and the stock is likely to resume the upward trend subsequently. A move above Rs 296 would confirm that the stock is headed towards the target range of Rs 365-370 range. Remain invested with a stop-loss at Rs 260.

Padmalaya Telefilms (Rs 42.5): There are no signs of reversal of the prevailing downward. Hold with a stop-loss at Rs 41 and look to reduce exposures on price upswings. Fresh exposures may be contemplated on a close above Rs 50.

Shall I hold or sell Prism Cement bought at Rs 27? — K. Shiva Chandar, Sreekumar

Prism Cement (Rs 22.85): The long-term trend is positive and the price is likely to move past Rs 30 shortly. The positive view would lose its validity if the stock drops below the stop-loss level of Rs 20. Remain invested with a stop-loss at Rs 20. Fresh exposures may be considered on a move past Rs 24, with a close stop-loss in place.

I bought Shanthi Gears at Rs 42 and Tata Teleservices at Rs 34. Kindly advise whether to sell or hold these stocks. M. Sebastian Joseph, M.S. Perumal, Shama Prasad

Shanti Gears (Rs 38.3): The recent price action indicates that the upward momentum appears to be losing steam. Sell a portion of the holding at prevailing rate and hold the balance with a stop-loss at Rs 35.5. Look to trim holdings or employ a trailing stop-loss in the event of a steady upward move.

Tata Teleservices (Rs 27.9): The stock has breached crucial support levels. This had negated our earlier bullish view. The trend would turn bullish when the share price closes above Rs 30. Look to reduce exposures. Fresh buying may be considered on a close above Rs 30. Investors willing to take risk and those who have entered at fairly lower levels may hold a portion of the exposures with a stop-loss at Rs 25.5.

In the edition dated February 13, you had recommended partial profit booking in Aban Lloyd on evidence of resistance in the Rs 1600-1700 range. The stock has moved past this level and there is no sign of resistance either. What is the revised target and stop-loss for the stock? I would also like to have your opinion on G.E.Shipping. — Uday Padgaokar, Mayur Joshi

Aban Lloyd (Rs 2040): Despite the recent surge in price, the stock appears to have upside potential. A move to the Rs 2450-2500 range appears likely. Remain invested with a stop-loss at Rs 1900. Use a trailing stop-loss when the share price reaches the target zone. There is no reason to sell the stock now.

G.E.Shipping (Rs 165.5): The stock appears to have downside risk that may extend to the Rs 145-150 range. Hold with a stop-loss at Rs 160. If the stop-loss gets triggered, fresh exposures may be considered on a subsequent move above Rs 175.

What is the outlook for South Indian Bank bought at Rs 71 and MRPL at Rs 63? — Seema Dudhe, Akbar & Indira

South Indian Bank (Rs 68.9): The stock has been confined to a narrow trading zone for a few weeks now. There are no signs of emergence of a strong bullish momentum. Hold with a stop-loss at Rs 60. Look for opportunities to exit while fresh buying may be avoided.

MRPL (Rs 49.7): The price movement has been devoid of any significant trend. There is no point in remaining invested in such stocks, as the funds do not yield any returns when the stock is in an extended phase of consolidation or sideways movement. It would be better to exit at least a portion of the holding and switch to stocks that are in a trending mode.

I bought Indian Acrylics at Rs 10 and Lloyd Steel at Rs 25.35 during their IPO. What is the outlook of these two companies? — T. Albons

Indian Acrylics (Rs 15.2): Hold with a stop-loss at Rs 13.7 and look to book profits on price upmoves. The stock does not display promise in terms of upside potential. As you are holding a profitable position, it would be advisable to sell a portion of the holding now and place a stop-loss at Rs 13.7 for the rest.

Lloyd Steel (Rs 19): The recent positive sentiment towards steel sector stocks has rubbed off positively on this stock as well. There appears to be upside potential that extends to the Rs 24-25 range. Hold with a stop-loss at Rs 15.5. Fresh exposures may also be considered with a stop-loss at Rs 15.5.— B. Krishnakumar

In your reply to a query last week, you have stated that "... .even if you are willing to hold for two years, it would be advisable to take profits periodically and explore opportunities to re-enter at declines". I had a bad experience adopting such an approach in Reliance Industries stock two years ago. I sold the RIL at Rs 320 hoping to buy at lower levels. The stock has never declined to that level. What do we do in such instances? Secondly, is it advisable to invest in stocks covered in the `Q & A column as the replies or recommendations tend to be reader-specific? — K. Peter.

Planning a trade is the crucial element behind any stock market transaction. Before committing funds, investors should be clear about the entry, exit and stop-loss levels. When the stock reaches the exit or target price, at least a portion of the stock should be sold.

Once a portion of the holding is liquidated at the profit objective, there would be no inconsistency if you buy the same stock at higher or lower levels if there is a valid reason to do so. In the case of Reliance Industries for instance, you have written that you never found an opportunity to buy back at lower levels after having sold it at Rs 320.

Such situations would crop up and there will always be an "opportunity loss" in such cases. Investors must always have a cut-off point beyond which the original view would be invalidated. Exposures would have to be considered on fresh "buy" triggers; the earlier you realize the change in environment; the lower would be the "opportunity loss".

Though such opportunity losses are unavoidable, this is a better position to be in than suffer erosion in capital. As we have mentioned earlier, it is not advisable to sell the entire holding at one go. By holding back a portion of the portfolio, you would have a chance to participate in the rally even if you fail to get opportunity to buy back at lower levels.

As far as the second part of the question is concerned, replies to queries typically tend to be applicable to the person who has asked the question. In quite a few instances, we also clearly mention that investors may consider fresh exposures. Such replies would be applicable to all readers and not just person who raised the question.

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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