The Hindu Business Line : Query corner

I have been holding Hindustan Construction for quite a while now. Will it be advisable to sell or hold for further gains? Please also let me have your views on TCS. — M.L. Hittinhalli

Hindustan Construction (Rs 1,070): Taking into account the long-term positive outlook and the fact that you have been holding the stock for many years, it would be better to stay invested.

After a short-term correction, the stock is likely to move to the Rs 1,350-1,400 range. The long-term uptrend would be intact as long as the price holds above the stop-loss level of Rs 940.

TCS (Rs 1,483): The lack of adequate historical data makes it impossible to arrive at a long-term outlook for the stock. From a short-term trading perspective, the trend would remain positive till such time the stop-loss level at Rs 1,380 is not breached. The share price could move to the short-term target of Rs 1575-1600.

Kindly advise about my holding in SpiceJet at Rs 107 and Melstar Information at Rs 30. — K.Ramachandra Rao, V.Rajesh

SpiceJet (Rs 77.4): The outlook is bearish and a drop to the Rs 60-65 range appears likely. Only a close above Rs 95 would reinstate bullishness. Remain invested with a stop-loss at Rs 75.

Fresh exposures may be avoided. Evidence of support at the Rs 60-65 range may be used to take exposures in small lots.

Melstar Information (Rs 22.5): The share price has breached quite a few critical support levels. This has forced us to revise our earlier bullish stance. Investors may look for opportunities to exit.

A technical pull back towards Rs 26-27 appears likely. Look to reduce exposures on such pull backs. A drop below Rs 21 would impart further weakness and would warrant dilution of holdings.

What is the outlook for Andhra Sugar bought at Rs 165 and G.E.Shipping at Rs 218? — N.Ramesh, Altaf Hussain, Antony R Costa

Andhra Sugar (Rs 150): The recent downward move does not appear complete. After a move to the Rs 165-168 range, the stock is likely to seek lower levels. Remain invested with a stop-loss at Rs 142 and look to reduce exposures on a rally to Rs 165-168. As the long-term trend is positive, investors may look to take exposures at lower levels of the Rs 125-130 range.

G.E.Shipping (Rs 199.4): Though the long-term outlook appears bullish, there is uncertainty as far as the short-term trend is concerned. A weekly close below Rs 190 would impart short-term weakness and the price could drop to the Rs 160-165 range subsequently.

On the other hand, a move past Rs 210 would impart strength and the stock could move to Rs 225-230 subsequently. Investors may hold with a stop-loss at Rs 190.

Is there any upside potential in Amtek India, purchased at Rs 112? — M.K. Jain

Amtek India (Rs 91.7): The recent price pattern does not indicate the completion of the downtrend that started a few days ago. A close above Rs 115 would be a prerequisite to impart bullishness. Remain invested with a stop-loss at Rs 89. Fresh exposures may be avoided.

Exposures may be reduced either on price rally or on the breach of the support level. Long positions may be considered on a weekly close above Rs 115.

Should I hold or sell Reliance Industrial Infrastructure bought at Rs 90 and NEPC at Rs 50? — K.Guha

Reliance Industrial Infrastructure (Rs 288.6): The stock has been on a sharp uptrend during September. It has got into a corrective mode over the past few days. The long-term uptrend is intact and would resume on the completion of the short-term corrective phase. The stock could move to the Rs 355-360 range on the completion of the ongoing correction.

NEPC (Rs 40.2): The price pattern traced out by the company does not portray a positive picture of the near-term trend. As the trend is bearish and the prevailing price is below your entry price, it would be better to reduce holdings. Sell a major portion of the holdings on a close below Rs 38.

I bought Deepak Fertilisers at Rs 102 and KCP at Rs 128. What is the outlook for these stocks? — G.V.Rao, Shubham

Deepak Fertilisers (Rs 89.4): The short-term trend is bearish and the stock appears to be heading towards the short-term support at the Rs 74-76 range. Remain invested with a stop-loss at Rs 85 and reduce exposures on an uptrend. The trend would turn positive if the stock manages to close above Rs 102. Till such time, it would be advisable to reduce exposures on rally or employ a trailing stop-loss to reduce risk.

KCP (Rs 102.7): There is possibility of the stock testing the immediate support zone at the Rs 87-90 range. The long-term bullish trend is likely to resume on the completion of this present leg of the downtrend. Investors who are holding a profitable position may reduce exposures by booking profits. The rest may hold with a stop-loss at Rs 98. Fresh exposures may be considered on the evidence of support at the Rs 87-90 range. Investors with a higher risk tolerance may hold with a stop-loss at Rs 86.

Please advise about my holdings in Rain Calcining bought at Rs 49. — Vani Golla

Rain Calcining (Rs 40.6): A close above the immediate resistance level at Rs 43 is likely to result in a rally to the Rs 50-52 band. The latest price patterns do not support the case for the resumption of the long-term uptrend. The stock is likely to drop to the Rs 32-35 range before the next leg of the rally can resume. A close below Rs 36 would confirm the possibility of a drop to lower levels; a close above Rs 55 would be a pointer to the continuation of the upward trend. Stop-loss for long positions may be placed at Rs 36. Employ a trailing stop-loss in the event of a rally towards the target zone.

What is the outlook for Sonata Software bought at Rs 36? — G. Sai Vignesh

Sonata Software (Rs 30.8): Taking into account the possibility of a short-term weak trend and the sizable quantity that you hold, it would be better to sell a major portion of the holdings at the prevailing levels. Have a stop-loss at Rs 26 for the balance. The chances of the resumption of an uptrend would surface only if the stock closes above Rs 40. There is no point in holding on to a losing position in anticipation of a recovery. It is better to mitigate the damage and consider re-entry if warranted.

Please let me have your views on Macmillan bought at Rs 456. — Ashish, N.Manoharan, M.Elango

Macmillan (Rs 464): The long-term uptrend may commence any time now. The stock could move to the Rs 550-575 range in the next leg of the rally. Investors may have a stop-loss at Rs 410. Though this stop-loss may appear relatively wide from a money management perspective, it would be in order for this stock, owing to low liquidity and higher degree of volatility.

Would you recommend to hold or sell NRB Bearings purchased at Rs 341 and Nava Bharat Ferro purchased at Rs 78.60? — Sunil

NRB Bearings (Rs 309.7): Remain invested with a stop-loss at Rs 275. There is a fair chance that you will get an exit avenue at the Rs 375-380 range. The possibility of the continuation of the uptrend would be negated if the stock closes below Rs 250. As the stop-loss at Rs 250 would be relatively uneconomical from a money management perspective, it would be safer to settle for the next logical stop-loss level at Rs 275.

Nava Bharat Ferro (Rs 70.7): There is a strong support at the Rs 58-62 range. Only a close below Rs 58 would impart a prolonged bearish trend. For the moment, it would be advisable to hold with a stop-loss at Rs 58.

Risk-averse investors may have a stop-loss at Rs 67 for a portion of the holding and at Rs 58 for the balance. A close above Rs 80 would indicate that the next leg of the rally is underway and a move to the Rs 90-95 range may materialise subsequently. .

Is there any upside potential in Aban Loyd and Vindya Telelink? — Rajendra Rana, M.Elango

Aban Loyd (Rs 589.3): After a short-term drop to the Rs 550-560 range, the stock is likely to get into a bullish phase. A move towards the target range of Rs 650-660 appears likely. There is no reason to sell the stock now, as the trend is bullish. Exposures may be trimmed on a close below the stop-loss at Rs 540. Fresh exposures may be considered at lower levels with a stop-loss at Rs 540.

Vindya Telelinks (Rs 180.6): The stock could drop to the Rs 140-145 range if it closes below Rs 170. Though the long-term trend is positive, there are no signs of the reversal of the short-term downtrend. A close above Rs 205 would be an indicator of the resumption of the long-term uptrend. Hold with a stop-loss at Rs 140. Conservative investors may sell a portion of their holdings on a close below Rs 170. Fresh exposures may be taken on price weakness, with a stop-loss at Rs 140 and a target price of Rs 250-255.

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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