The Hindu Business Line : Query corner

Ansal Housing (Rs 114.9): The stock could move to the Rs 135-140 range. Hold with a stop-loss at Rs 95. Partial profit booking may be considered on the evidence of resistance at around the target zone. Short-term traders may take long positions on a close above Rs 127, with a stop-loss at Rs 112.

Vesuvius India (Rs 257.8): Though the long-term outlook is positive, the stock appears to be in a corrective phase now. Investors who have entered at lower levels may sell a portion of their holding. Stop-loss for long positions may be placed at Rs 240. Fresh exposures may be avoided.

Kindly let me know the prospects of Arvind Mills bought at Rs 131. — R.K.Choudhary

Arvind Mills (Rs 138.2): As part of a corrective move, the stock has been confined to a trading range for a while now. There is no evidence of the completion of this corrective phase. The long-term uptrend would resume on the completion of the current corrective phase. Hold with a stop-loss at Rs 120, as the stock could bounce to the Rs 165-170 range.

What is the outlook for Wipro and IFCI? — S. Gayatri

Wipro (Rs 374.3): The volatility in the stock is decreasing, as the stock has been moving in a sideways mode. A strong move may be just round the corner. Taking into account the recent price pattern, the stock could see an upside breakout and a move to the Rs 425-430 range appears likely. Remain invested with a stop-loss at Rs 344. Long positions may also be considered on a move past Rs 389, with a stop-loss at Rs 364.

IFCI (Rs 17): There is a strong resistance at the Rs 19.5-20 range. A bullish phase would commence only on a close above this range. Till such time, the stock is likely to either drift in a sideways mode or drop to lower levels. Investors may hold with a stop-loss at Rs 15. Fresh exposures may be deferred.

Please advise on my holdings in Maral Overseas at Rs 48? — A.K. Pandey

Maral Overseas (Rs 56.9): The outlook is positive and a move to the Rs 78-80 range appears likely. Shareholders may have a stop-loss at Rs 49. Long positions may also be considered on price weakness, with a stop-loss at Rs 49. Exposures may be enhanced on a close above Rs 62.

What is your view on Chambal Fertilisers bought at Rs 36.1? Is ITC a good buy at prevailing prices? — M.K. Jain, J. Vikram

Chambal Fertilisers (Rs 38.4): The stock has an upside potential extending up to the Rs 48-50 range. Sell a portion of the holding when the stock reaches the target zone. Stop-loss for holdings may be placed at Rs 33. Short-term traders may go long on a close above Rs 39.5, with a stop-loss at Rs 36.

ITC (Rs 1732.1): The long-term trend is bullish and investors willing to wait for at least 18 months may consider exposures at prevailing levels. The stock appears to be headed towards the Rs 2200-2300 range (unadjusted for stock split and bonus). Long-term investors may include the stock in their portfolio. The positive view would be negated if the stock closes below Rs 1600.

What is your view on Petron Engineering? — Javed Merchant

Petron Engineering (Rs 233.5): The stock has seen a sharp run-up in the recent years. A move to the Rs 270-275 range appears likely. There is no reason to sell the stock now. The positive outlook would be in force as long as the stock holds above the stop-loss level of Rs 210. Long-term investors may also consider fresh exposures with a stop-loss at Rs 210.

What is the outlook for KRBL and Ispat Industries? — K. Manickam

KRBL (Rs 134): The long-term uptrend would continue on the completion of the sideways consolidation phase that the stock is at present confined to. Investors may hold with a stop-loss at Rs 110. Fresh long positions may be avoided. Investors willing to wait for a while may find opportunities to exit at the Rs 175-180 range.

Ispat Industries (Rs 22.3): After a sharp decline from the high of Rs 32.6 (recorded in March) to a low of Rs 17.1 in July, the recovery appears to be a correction.

The stock is likely to resume the downtrend on the completion of the corrective phase. A close below Rs 20 would indicate the resumption of the downtrend.

Investors may look to reduce exposures as and when the stock moves closer towards the resistance zone of the Rs 26-27 range.

What is the outlook for Hindustan Lever?

Hindustan Lever (Rs 169): After a sharp rise, the stock has been in a corrective phase in the past few weeks. The long-term uptrend would resume on the completion of this corrective phase. A move towards the first target zone of the Rs 195-200 range appears likely. Investors who believe in long-term gains may add this stock to their portfolio. The positive view would be valid as long as the stock holds above the stop-loss level of Rs 150.

I would like to know the prospects for CESC and Escorts. — Vinod

CESC (Rs 235.1): Investors willing to wait for at least six months may find exit opportunities at the Rs 295-300 range, as the long-term outlook is positive. Stop-loss for existing holdings may be placed at Rs 200. Fresh long positions may also be considered on declines, with a stop-loss at Rs 200. Partial profit booking may be considered on the signs of weakness around the target zone.

Escorts (Rs 102.5): The share price could move to the Rs 125-130 range. A close above Rs 110 would confirm the positive outlook; a drop below Rs 90 would have bearish implications. Remain invested with a stop-loss at Rs 90. A close above Rs 110 may be used to add exposures.

What is the outlook for Shri Rama Multitech bought at Rs 18 and S.Kumar's Nationwide bought at Rs 40? — Roma, Rajeshwari Murti, N. Muralimohan

Shri Rama Multitech (Rs 25.2): The outlook is positive and a move to the Rs 32-34 range appears likely. Taking into account the positive outlook, it would be advisable to remain invested with a stop-loss at Rs 18. Investors who prefer a closer stop-loss may settle for Rs 21.

S.Kumar's Nationwide (Rs 50.4): The stock has seen a sharp run-up in price over the past few months.

The outlook remains positive and a move to the Rs 62-65 range appears likely. Hold with a stop-loss at Rs 40.

The move towards the target zone would commence on the completion of the present corrective phase.

Fresh exposures may be considered on price weakness, with a stop at Rs 40.

You had earlier mentioned a target price of Rs 48-49 for Varun Shipping and Rs 545-550 for Subex Systems. Now that the share price of the two companies has comfortably crossed these levels, are they still worth holding and what is the new target price? — S.Priya

Varun Shipping (Rs 55.9): Despite the recent upward move, the stock still has room to be covered on the upside. It could move to the next target zone at Rs 68-70.

Do not exit this stock in a hurry as the long-term trend is bullish. Stop-loss for long positions may be placed at Rs 47.

Subex Systems (Rs 643.8): There is no reason to exit from this stock, as it is in a major uptrend. There is significant upside potential and a move to the Rs 775-800 range is not ruled out.

For investors willing to wait for a year or more, there would be exit avenues at higher levels of the Rs 930-950 range. The positive outlook would be negated on a close below the stop-loss level at Rs 550.

What's your view on the software stocks, VisualSoft in particular? — Shalini, Sudhin Bathija

The chart patterns traced out by the major software companies such as Infosys, Satyam, Wipro and TCS portray a positive outlook. Based on technical analysis, we are bullish on the frontline software stocks and foresee an upside of at least 10 per cent in these stocks in the near term.

Outside of the top companies, the outlook for stocks such as Onward Technolgoies, Subex Systems, Softpro and Melstar Info also appear bullish.

We would like to caution investors to take positions based on their risk tolerance and with an appropriate stop-loss. Trading without a stop-loss is a short cut to capital erosion.

VisualSoft (Rs 193): The stock has already moved past the target zone of Rs 195-200 mentioned last week. The outlook is bullish and a move to the Rs 250-255 range appears likely.

Hold with a stop-loss at Rs 170. Fresh exposures may also be considered on weakness, with a stop-loss at Rs170.

Will the resistance and support level change in the same proportion if a stock turns ex-bonus or ex-stock split? — Sudhin

This is an important question. The stop-loss, resistance, support and target price would change in the same proportion as the bonus or stock split ratio.

As the universe of stock tracked by us is large, we would be unable to provide revised levels for the stock when the stock split or bonus issue takes effect.

We would advise investors to arrive at the revised price levels before considering investment decision.

(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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