The Hindu Business Line : Query corner

A segment of this corrective phase appears to have ended at the latest low of Rs 71.3 recorded a few days ago. There is a scope for a rally, which would essentially be a corrective move in relation to the earlier fall from Rs 135.

A move to the Rs 95-100 range appears likely. Remain invested with a stop-loss at Rs 68.

Fresh exposures may also be considered at prevailing levels and on price weakness, with a stop-loss at Rs 68.

Stop-loss may be tightened once the stock moves closer to the first resistance zone at Rs 95-100.

I would like to know the outlook for Tourism Finance Corporation and Mysore Cements. — S. Prashanth

Tourism Finance (Rs 17): The recent downward move does not appear complete. A drop to the Rs 12-13 range appears likely.

Taking into account the recent price action, it appears unlikely that the stock has the potential to recover towards your entry level.

It would be safer to stay away from the stock, as the outlook appears bearish.

Mysore Cements (Rs 28): The share price has moved closer to the stop-loss level of Rs 26 mentioned a few weeks ago.

The recent price patterns suggest that this stop-loss level would be breached.

In that event, there is a possibility of a drop to the Rs 21-22 range.

Investors may reduce exposures, as the scope for recovery appears remote in the near term.

We seek your opinion Bell Ceramics bought at Rs 41.3 and Engineers India at Rs 445. — Arvind S. Sandanshive

Bell Ceramics (Rs 34): The near-term outlook does not appear positive. A close below Rs 33 would result in a drop to the Rs 26-27 band.

As the near-term trend is bearish, investors may look for exit opportunities. Price recovery may be used to pare exposures.

Engineers India (Rs 593): Though the short-term outlook appears weak, the long-term trend is bullish.

The stock is likely to move upwards on completion of the short-term bearish phase that it is currently confined to.

A close below Rs 543 would be minimum requirement to warrant a reassessment of the long-term bullish view.

Hold with a stop-loss at Rs 543. Fresh exposures may be considered on declines, with a stop-loss at Rs 543.

The stock could get back to the recent high Rs 680-690.

What is your view on ING Vysya Bank? — B.N. Rajagopal

ING Vysya Bank (Rs 177): Hold with a stop-loss at Rs 165. The downside risk appears marginal if the recent price patterns are any indication.

There is a possibility of a rally to the Rs 205-210 range.

This, however, is subject to the stock holding above the stop-loss level at Rs 170.

A trailing stop-loss may be employed in the event of a move past the target zone.

What is the outlook and target for Subex Systems bought at Rs 615? — V. Sridhar

Subex Systems (Rs 573): The recent drop has pushed the stock closer to the support level of Rs 560.

There is a possibility of the stock resuming its uptrend provided the support at Rs 560 is not broken.

Remain invested with a stop-loss at Rs 560. A close this level would result in the stock dropping to the next support band at the Rs 525-530 range. Hold with a stop-loss at Rs 560 and look to reduce exposures once the investment turns profitable.

Please let me have your views on Gammon India bought at Rs 285. — Ratan Gupta

Gammon India (Rs 345): The share price could see a short-term bounce. Use this rally to reduce exposures as the recent downward move does not appear complete.

A test of the Rs 290-300 range appears likely after the completion of the anticipated short-term bounce.

Hold with a stop-loss at Rs 328 and use rally to reduce exposures.

Please guide me about the future prospects of Gujarat Gas purchased at Rs 1,000 and Century Enka at Rs 240. — P.P.S. Bhasin

Gujarat Gas (Rs 1118): It would be advisable to get cautious as there has been a series of negative divergence between the price action and the 14-day RSI.

The stock is receding after having moved into an overbought zone. This corrective phase does not appear complete.

In terms of the overall pattern, too, there is a case for the continuation of the recent downward corrective move. Hold with a stop-loss at Rs 1,100 and reduce exposures on upswings.

A drop below Rs 1,100 may push the stock to the Rs 950-975 range.

Century Enka (Rs 226): The recent downward trend is likely to persist for a while and a drop to the Rs 200-205 range appears likely.

The share price could, however, stage a recovery on completion of the downtrend. Given your entry price and the short-term outlook, it would be safer to reduce exposures at prevailing levels.

Have a stop-loss at Rs 215 for the balance. A trailing stop-loss may be used if the stock keeps moving up.

Please advise whether to hold or sell 3M India bought at Rs 850. — Gnanasekaran

3M India (Rs 786): The outlook does not appear positive. The stock could drop to the Rs 700-720 range. The recent downtrend that commenced in mid-September does not appear complete.

As the stock has already declined by about 10 per cent from your purchase price and there is also a chance of further decline, it would advisable to sell a portion of the holdings at prevailing levels.

As the logical stop-loss of Rs 700 is far off from the prevailing level, we would advise investors to settle for fixed percentage-based stop, which may be arrived at on the basis of the risk tolerance of the individual concerned.

What is the outlook for Shipping Corporation purchased at Rs 169.4? — S. Aravind, G. Krishna Kousik

Shipping Corporation (Rs 152): The recent price patterns do not throw up convincing signals about the near-term trend.

Investors may hold with a stop-loss at Rs 135. A break of this level would result in a slide to the Rs 100-110 range.

If the stop-loss appears too wide for comfort, investors may sell a portion of the holdings at prevailing levels and have a stop-loss at Rs 135 for the balance.

Please let me know whether should I hold or sell Gujrat Heavy Chemicals purchased at Rs 125. — Rajkumar Keyal

Gujarat Heavy Chemicals (Rs 92): Considering that the stock has already dropped sharply by about 25 per cent from your entry price, there is no point holding on the investment. Look to reduce holdings now and on price rally. Stop-loss for long positions may be placed at Rs 86. A close below Rs 86 would have further negative consequence and a drop to the Rs 72-75 range is not ruled out subsequently.

Shall I hold or sell Reliance Energy and Reliance Capital bought at Rs 611 and Rs 400 respectively? — R. Kalyanasundaram

Reliance Energy (Rs 535): The outlook is weak and a drop to the Rs 480-490 range appears likely.

It would take quite an effort and time for the stock to rebound to your entry levels.

Look to reduce exposures. Have a stop-loss at Rs 525 for long positions.

Reliance Capital (Rs 362): There is a scope for a short-term relief rally to the Rs 395-400 range.

Such a view would be valid as long as the stock holds above Rs 339.

Reduce exposures on an uptrend, as the stock could resume the downtrend on the completion of the expected short-term bounce.

I bought GTC Industries at Rs 95 and Crest Animation at Rs 245. Should I hold or sell these shares? — Srini, Roma

GTC Industries (Rs 105): There appears to be no respite to the stock's recent slide. The stock appears to be on course to move to the support zone at the Rs 95-100 band. The downside risk would be more if the recent completion of the "head-and-shoulder" pattern is taken into account. If the pattern is valid, the stock could see a sustained drop towards the Rs 75-80 range.

The bearish view would be negated if the stock closes above Rs 130.

Crest Animation (Rs 154): The stock would struggle to get back towards your entry price in the near term. Such a possibility appears remote if the recent price patterns are any indication.

Though there could be a corrective rally, it may not run the distance towards the levels at which you had taken exposures. Sell a portion of the holding now and look to reduce exposures on uptrend.

(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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