The Hindu Business Line : Query Corner

I bought Ranbaxy at Rs 1245, with expectations that it would move to Rs 1500. Is there any possibility of the stock moving to this level? — Vidhya

Ranbaxy (Rs 1104.2): Though the outlook appears bullish, it would be premature to comment on the possibility of a rally to your target price. The immediate target for the stock is placed at the Rs 1275-1300 range. Investors with a long-term perspective may consider fresh exposures with a stop-loss at Rs 1000; a drop below this price would invalidate the positive outlook. Shareholders may remain invested with a stop-loss at Rs 1000.

I bought Nava Bharat Ferro at Rs 430 and Voltas at Rs 248. Should I hold these stocks or exit at prevailing levels? — P.N. Giri

Nava Bharat Ferro (Rs 335.1): The outlook does not appear positive. The stock is likely to seek lower levels of the Rs 280-290 range. A close below Rs 330 would confirm the bearish view. Remain invested with a stop-loss at Rs 330. Look for opportunities to reduce exposures. The bearish view would be negated if the stock closes above Rs 390.

Voltas (Rs 228.6): The recent price patterns indicate that the stock is headed to lower levels. The occurrence of a series of `negative divergence' between the highs in the indicator and the price confirms the bearish view. The stock could drop to the Rs 190-200 range in the near term. There appears to be little chance of the stock getting back to your entry levels. Look to reduce exposures.

What is the outlook for Solectron Centum? — Kalpesh Shah

Solectron Centum (Rs 233): The stock is likely to move past the recent high of Rs 255. A close above Rs 238 would confirm the positive view. Remain invested with a stop-loss at Rs 188. Fresh exposures may be considered on a close above Rs 238, with a stop-loss at Rs 204. The positive view would be negated if the stock closes below Rs 188. Investors with a long-term orientation may get opportunities to exit at the Rs 295-300 range.

Kindly advise whether to sell or hold Insilco bought at Rs 29 and Alphageo at Rs 60. — Parvez K. Daruwala

Insilco (Rs 25.9): A close below Rs 23.5 would impart weakness and could push the stock to the Rs 19.5-20 range. The price pattern traced out by the stock does not indicate that the stock could recover to your entry level. It would be advisable to retain a portion of the holding with a stop-loss at Rs 23.5 and look to sell the balance on price rally.

Alphageo (Rs 91.3): The outlook for the stock hinges on the price movement in the next few weeks. A close below Rs 77 would indicate that the stock would seek lower levels; a close above Rs 105 would impart bullishness. Shareholders may remain invested with a stop-loss at Rs 77. Fresh exposures may be considered on move past Rs 105.

I hold KEC International bought at Rs 175. Should I hold from a long- term perspective? — Rajesh Agarwal

KEC International (Rs 208): The share price is ruling close to the crucial support level at Rs 190. A close below this level would impart weakness and could push the stock down to the Rs 150-155 range. The trend would turn bullish if the stock closes above Rs 226, after which a rally to Rs 255-260 may materialise. Considering your entry price, it would be worth the risk to remain invested with a stop-loss at Rs 190. Fresh exposures with a close stop-loss may be considered on a close above Rs 226.

Is it advisable to buy Arvind Mills at prevailing levels? — Sudhakaran, Tarun K. Gupta

Arvind Mills (Rs 131.5): Though the long-term outlook is positive, there is no indication of the completion of the recent downward move. The resistance level at the Rs 138-140 level is likely to stall price recovery. A close above Rs 140 would impart bullish momentum and would push the stock to the Rs 175-180 range. A close below Rs 126 would result in the continuation of the recent downtrend towards the support level at the Rs 118-120 range. Hence, it would be better to wait for a confirmation about the onset of a bullish trend. Fresh exposures may be considered on a close above Rs 140.

I am holding shares of National Aluminium purchased at Rs 170 and Birla Corporation at Rs 190. Should I hold or sell these shares? — Veena Menon, R. Ravishankar

National Aluminium (Rs 144.1): The stock is in a corrective phase that is not yet complete. It appears that the stock could drop to the Rs 105-110 range shortly. It is unlikely that the stock would get back to your entry level in the near term. It would be advisable to offload a portion of the holdings now and retain the balance with a stop-loss at Rs 139. The immediate resistance for the stock is placed at the Rs 158-160 range. Only a close above this zone would impart some strength.

Birla Corporation (Rs 174.3): Considering that long-term trend is bullish, there is no reason to sell the stock now. Remain invested with a stop-loss at Rs 155. A close above Rs 185 would impart strength and would help the stock move to the target zone of Rs 215-220.

What are the prospects for Hindustan Organic Chemical and Carborundum Universal with a time horizon of 12 - 18 months? — Sandeep

Hindustan Organic (Rs 29.7): The near-term trend appears bearish. Investors may look to reduce exposures. The stock faces strong resistance at the Rs 34-36 band. Only a close above Rs 37 would impart bullishness. It would be safer to look for opportunities to reduce exposures. A close below Rs 27 would confirm the bearish outlook and could push the stock to the Rs 21-22 range.

Carborundum Universal (Rs 77.6): Though the long-term outlook is positive, there are no signs of the completion of the short-term corrective phase. Remain invested with a stop-loss at Rs 70. A close above Rs 85 would indicate that the stock has resumed the upward trend and is headed towards the target zone of Rs 92-95 range.

Kindly let me have your views on Sonata Software bought at Rs 30. — R. Sathiyanarayanan

Sonata Software (Rs 28): The long-term uptrend would resume on the completion of the consolidation phase that the stock is now confined to. The drop in volatility and the prolonged sideways action is a harbinger to an impending explosive move. Taking into account the recent price patterns, the stock is likely to see a sharp rally shortly. Hold with a stop-loss at Rs 25. Fresh exposures may be considered on a close above Rs 31, with a stop-loss at Rs 26 and a price target of Rs 40.

I bought Greaves at Rs 156. What is the outlook for a short to medium term? Is it advisable to buy Gujarat Alkalies for six-to-nine month holding period? — C N Rai, Sharadha

Greaves (Rs 156.3): Taking into account your entry level and the near-term positive outlook, it would be advisable to remain invested with a stop-loss at Rs 144. The stock could move to the Rs 178-180 range. Partial profit booking may be considered on evidence of weakness in the vicinity of the target zone. Alternatively, a trailing stop-loss may be used to protect unrealised profits.

Gujarat Alkalies (Rs 123.3): There is no reason to buy this stock, as it is in a downward corrective phase. It could drop to the Rs 102-105 range shortly. Evidence of support at this level may be used to take exposures, with a stop-loss at Rs 80. The immediate resistance is at the Rs 138-140 band. Shareholders may remain invested with a stop-loss at Rs 118 and may consider trimming of holdings if the stock stalls at the resistance zone.

I am holding Karnataka Bank and Havells India. Should I continue to hold or sell? — A.L Setty, T.L.Garg

Karnataka Bank (Rs 92.8): There is no reason to sell the stock, as the long-term outlook is positive and a move to the Rs 125-130 range appears likely. Remain invested with a stop-loss at Rs 80. A close below Rs 80 would warrant liquidation of holdings, as this would impart bearishness. Fresh exposures may be considered on a close above Rs 103, with a stop-loss at Rs 85.

Havells India (Rs 400): The stock has moved to the target zone of Rs 365-375 mentioned earlier (edition dated May 1). Taking into account the recent run-up in price, it would be safer to take profits by selling at least a portion of the holdings. The stop-loss for the residual holding may be placed at Rs 365. Fresh exposures may be avoided for the moment.

(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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