The Hindu Business Line : Query Corner

The price has been confined to a tight trading range. It has neither moved past the bullish trigger price of Rs 70 nor dipped below the stop-loss level at Rs 56.

As observed earlier, the trend would turn bearish on a close below Rs 56 and could push the stock down to Rs 46-48 range.

Remain invested with a stop-loss at Rs 56. Long positions may be reduced by investors who feel that the potential risk in the event of the stop-loss being triggered is not within acceptable levels.

Will it be advisable to buy Arvind Mills at prevailing levels? — R. Ravi Shankar

Arvind Mills (Rs 133): The long-term uptrend is intact. The stock is in an extended period of correction, which has taken shape of a sideways consolidation pattern.

Typically, such sideways correction tends to be a time consuming affair.

The uptrend would continue on the completion of the present consolidation phase.

As there are no signs of the completion of correction, it would be worthwhile to defer any investment decision.

Exposures may be considered on a close above Rs 150, as this would be a confirmation that the correction is over.

Shareholders may remain invested with a stop-loss at Rs 125.

A close below this level would have bearish implications and would delay the commencement of the next leg of the upward move.

What is your view on Alstom? — M.L. Mongia

Alstom (Rs 292): The recent uptrend does not appear complete.

This would resume on the completion of a short-term correction.

The start of the next upward move would get delayed if the stock closes below the stop-loss level of Rs 245.

Investors who have entered at fairly lower levels and those with a relatively low risk tolerance may consider partial profit-booking.

The rest may settle for Rs 245 as their stop-loss. Fresh exposures may be considered on price weakness or on a close above Rs 325. The stock could move to the long-term target of Rs 365-370 range.

Kindly advise whether to hold or sell Orient Abrasives bought at Rs 40.5. — S. Saraswathy

Orient Abrasive (Rs 33): The recent downtrend does not appear complete. A close below Rs 31 would impart further weakness, leading to a drop to Rs 25-26 range.

It does not appear that the stock has potential to get past your entry price.

It would be safer to exit and look for other investment opportunities, as the stock has already dropped by about 20 per cent from your cost price.

What is the outlook for Noida Toll Bridge and Manali Petro? — K. Sivakumar

Noida Toll (Rs 37): A move to the short-term target range of Rs 42-44 appears likely. Taking into account your entry price and short-term positive outlook, it would advisable to hold with a stop-loss at Rs 33. At least partial profit-booking may be contemplated on a move to the target zone.

Manali Petro (Rs 22): There is a strong resistance in the Rs 24-26 range. A drop below Rs 21 would indicate that the stock is headed to lower levels of Rs 17-18.

Fresh exposures may be avoided while shareholders may hold with stop-loss at Rs 21.

A trailing stop-loss may be used in the event of a rally towards the resistance zone.

Shall I hold or exit from ITI bought at Rs 71 and GTL at Rs 127? — S. Gayathri

ITI (Rs 71): After touching a high of Rs 95, the stock has been in a corrective phase in the last couple of months.

The correction appears complete. Price patterns suggest that the next leg of the upward move is underway.

A recovery towards Rs 91-92 range appears likely. Remain invested with a stop-loss at Rs 62.

Fresh exposures may be also be considered on weakness with stop-loss at Rs 62.

GTL (Rs 123): A close below Rs 110 would have bearish implications and could push the stock down to Rs 90-92 range. On the upside, the stock would face resistance at Rs 130-135 range. Hold with a stop-loss at Rs 110. Fresh exposures may be avoided.

Please let me have your views on Chemplast Sanmar bought at Rs 103.75. — Manoj

Chemplast Sanmar (Rs 86): The recent downward correction is about to be completed any time now.

The stock is likely to resume the uptrend on the completion of this correction. The positive view of a rally to Rs 125-130 range would be valid as long as the stock does not breach the stop-loss level of Rs 75.

Remain invested with a stop-loss at Rs 75. Fresh exposures may also be considered with the same stop-loss level. Partial profit- booking may be contemplated on a move to the target zone.

Is it advisable to buy Voltas at prevailing levels? — Kousalya Subramaniam

Voltas (Rs 459): As the long-term trend is bullish, investors may look for opportunities to buy this stock. Exposures may however be deferred as there is a possibility of a drop to the support zone at Rs 425-430 range. Price dips may be used to take exposures with a stop-loss at Rs 390.

The stock is likely to head towards the long-term target of Rs 550-560 range in the next leg of the upward move.

What is the outlook for Varun Shipping bought at Rs 62.65 and Balrampur Chini at Rs 90? — N. Sundarraj

Varun Shipping (Rs 62): As there is a possibility of a rally to Rs 72-75 range, it would be advisable to hold with a stop loss at Rs 55. Fresh exposures may be considered on weakness, with a stop-loss at Rs 55 and a target price of Rs 72-75. A close below the stop-loss level would necessitate dilution of exposures.

Balrampur Chini (Rs 88): The stock has the potential to move to Rs 120-125 range. There is no reason to exit at prevailing levels.

Stop-loss for existing holdings may be placed at Rs 79.

Investors with a relatively lower risk tolerance may settle for a slightly higher stop-loss at Rs 84. Fresh long positions may also be considered on weakness, with a stop-loss at Rs 79.

What is your view on Orient Information bought at Rs 45? — Suhas Pai

Orient Info (Rs 39): The stock has seen a sharp fall in the recent weeks. There appears to further downside risk. Taking into account your holding size, it would be advisable to reduce exposures. Stop-loss for the residual holding may be placed at Rs 36. Exposures may be pared in the event of a recovery in price, as there is a possibility of a drop to Rs 28-30 range.

Should I hold or sell Indian Card Clothing bought at Rs 330.50? — Veena Menon

Indian Card (Rs 300): As the long-term outlook is still bullish, shareholders may remain invested with a stop-loss at Rs 260. The stock appears to have the potential to move to Rs 360-370 range. Exposures may be trimmed on a move to the target zone. The positive view would be negated on a close below the stop-loss zone.

Is there any upside potential in Sakthi Sugars? — S.S.N.Murthy

Sakthi Sugar (Rs 86): The recent slide has resulted in the breach of quite a few support levels. We would reverse our earlier positive outlook if the stock closes below the crucial support level at Rs 80.

It would be worthwhile to wait for price action to evolve in the next few days. There is a fair chance of the stock completing the downward move shortly. At least a relief rally towards the Rs 98-100 range would materialise.

Look to reduce exposures if the stock faces resistance at this zone.

I have exposures in MphasiS BFL and Hindustan Lever. What are the prospects for the two companies? — Makam Rajesh, G. Sanjeevkumar

MphasiS BFL (Rs 256): There is a scope for a rally to Rs 295-300 range in the near-term.

Investors may either tighten the stop-loss or consider partial profit taking once the stock moves to this target zone. The positive outlook would be valid as long as the stock holds above the stop-loss level of Rs 230. A close below Rs 230 would warrant dilution of exposures.

Hindustan Lever (Rs 180): We continue to favour a long-term bullish view for the stock. A move to the target zone of Rs 225-230 range appears likely. A close above the immediate resistance at the Rs 185-190 range would impart strength. On the contrary, a close below Rs 164 would be a sign of weakness. Hold with a stop-loss at Rs 164. Fresh exposures may be contemplated at lower levels with stop-loss at Rs 164.

(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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