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B. Krishnakumar

Shall I hold or sell Tata Motors bought at Rs 440 and Infotech Enterprises at Rs 315? — S. Srinivas

Tata Motors (Rs 410.4): The near-term outlook is weak. The stock could decline to the Rs 365-370 range. Remain invested with a stop-loss at Rs 397, and look for opportunities to reduce exposures.

It is unlikely that you would find opportunities to exit at a price that is higher than your entry level in the near-term. Only a close above Rs 450 would blunt the weak outlook and impart strength.

Infotech Enterprises (Rs 268): The market's dissatisfaction towards Infosys' fourth quarter performance has taken a toll on the prices of technology stocks; Infotech is no exception. The stock appears to be headed towards the Rs 235-240 range. Though the long-term outlook appears bullish, it would be advisable to reduce exposures now. Fresh buying may be considered on the evidence of support at the Rs 235-240 band. A close below Rs 230 would negate the positive outlook and may push the stock to Rs 175-180 range. Remain invested with a stop-loss at Rs 230.

Query:

Shall I hold Punjab National Bank bought at Rs.390? Will it be advisable to buy HDFC Bank at prevailing rates? P.Krishnakumar, Ravindra Singh, Subrat Mandal

Reply:

Punjab National Bank (Rs.379.8): The trend has turned weak since the completion of its public offer, a few weeks ago. There appears to be no sign of a reversal of this downward trend. It would be advisable to trim exposures as the stock could drop to Rs.345-350 range. The bearish view would be valid as long as the stock rules below the positive trigger level of Rs.415. Fresh exposures may be considered if the stock closes above this level.

HDFC Bank (Rs.537): There is no reason to take exposures as the stock could seek lower levels. A drop to Rs.485-490 range appears likely. Shareholders may remain invested with a stop-loss at Rs 520.

What is the outlook for Jindal Drilling bought at Rs 181 and Tata Elxsi at Rs 191? — Eswaran Raju

Jindal Drilling (Rs 171.6): Remain invested with a stop-loss at Rs 160. A breach of this level could push the stock to Rs 135-140 range. The near-term outlook would turn bullish if the stock closes above Rs 185. Till such time, a drop to the Rs 135-140 range cannot be ruled out. Use a trailing stop-loss in the event of an upward move.

Tata Elxsi (Rs 180.8): It would be better to reduce exposures as the stock could drop to Rs 155-160 range. Hold with a stop-loss at Rs 174 and dilute holdings in the event of a recovery in price. A close below Rs 154 would result in a decline to Rs 135-140 band.

Should I hold or sell Glenmark Pharma bought at Rs 497 (cum bonus) and Astra Zeneca at Rs 1,600? — N. Ramabhadran

Glenmark Pharma (Rs 289): The near-term outlook is bearish. A drop to Rs 229-230 range appears likely. Taking into account your entry price and the negative short-term outlook, it would advisable to sell a portion of the holding and have a stop-loss at Rs 270 for the rest. Fresh exposures may be avoided.

Astra Zeneca (Rs 1,705): Sell a portion of the holdings at prevailing levels and have a stop-loss at Rs 1,640 for the balance. A drop below Rs 1,640 would warrant further dilution of holdings, as this would be a negative trigger. A move past Rs 1,810 would impart bullishness. Till such time, the stock would either rule weak or remain confined to a trading range.

I would like to know the prospects of Indo Rama Synthetics and Tata Metalliks? — Vijay

Indo Rama Synthetics (Rs 67.1): The near-term trend appears positive and the stock could rise to Rs 75-77 range. Hold with a stop-loss at Rs 61. Fresh exposures may be avoided for the moment. A trailing stop-loss may be employed in the event of a move past Rs 73-74 band.

Tata Metalliks (Rs 164.1): Though the short-term outlook appears weak, the long-term outlook appears bullish. A drop below Rs 142 would impart weakness and may result in a drop to Rs 110-115 range. Remain invested with a stop-loss at Rs 150. The stock faces resistance at Rs 185-189 range. Look to trim holdings on the evidence of weakness at this zone.

I hold Vesuvius Industries bought for Rs 240 and Kotak Mahindra Bank at Rs 370. Is it advisable to hold these stocks? — Laxmi Subramanian and Durairajan

Vesuvius India (Rs 197): Sell a portion of the holding at prevailing levels and have a stop-loss at Rs 190 for the rest. If the stop-loss gets triggered, fresh exposures may be considered on a subsequent move above Rs 213.

Kotak Mahindra (Rs 312): It is unlikely that the stock would get close to your entry level in the near-term. With no signs of bullishness, it would be better to sell a portion of the holdings now. Have a stop-loss at Rs 300 for the balance. Look to reduce exposures on price increases.

What is the outlook for I bought Bank of Rajasthan bought at Rs 75? — Durairajan

Bank of Rajasthan (Rs 52.7): The stock dropped below the stop-loss level of Rs 50 that was mentioned in the earlier weeks. The recent price pattern does not inspire confidence. The stock could drop to Rs 45-46 range shortly. Look to sell a portion of the holdings and have a stop-loss at Rs 49 for the rest. The stock does not appear to have the potential to get back to your entry level in the near-term.

On January 30, 2005, you had recommended a buy on Shipping Corporation at Rs 158 with a stop-loss of Rs 138. Then on February 6, you said to hold the stock with a stop-loss of Rs 153 and recommended fresh buying at Rs 168 with a stop-loss of Rs 158. I bought the stock at Rs 168. I wish to know why the stop-loss was revised and shall I continue to hold the stock or sell. Also provide your opinion on Asahi India Safety Glass bought at Rs 164. — Altaf Hussain

The stop-loss level is arrived at after taking into account several critical factors. We normally prefer to provide two levels of stop-loss — one for the existing holders and the other for investors who take fresh exposures.

We normally revise the stop-loss when the stock moves past the trigger level mentioned earlier as this is an integral part of money management concept. Once the stock moves in the anticipated direction, it would be advisable to move the stop-loss to higher levels and eventually to the break-even level as early as possible. This would help investors reduce the proportion of losing trades.

More importantly, once the stock moves above the "buy" trigger, the chances of hitting the stop-loss are less. More often than not, investors would get an opportunity to exit with reasonable profits or at break-even levels.

Investors who prefer taking risk may have the stop-loss at two levels. For a portion of the holding, the stop-loss may be fixed at the higher level and at a lower level for the rest.

Shipping Corporation (Rs 148.2): The share price has dropped below the stop-loss level mentioned earlier and appears to be headed towards the next stop-loss level at Rs 138. Investors willing to take risk may hold with a stop-loss at Rs138. The rest may sell a portion of the holdings now and have a stop-loss at Rs 138 for the balance.

A "buy" signal would be triggered on a close above Rs 160. Fresh exposures may be considered on a close past this level.

Asahi India (Rs 158): Reduce exposures as the stock could drop to Rs 142-145 range. Hold with a stop-loss at Rs 153 and use price rally to reduce exposures. Evidence of support at around Rs 140-142 band may be used to take fresh exposures with a suitable stop-loss.

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, Chennai 600002.

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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