The Hindu Business Line : Query Corner

I purchased FDC at Rs 50.75 and Centurion Bank at Rs 19. Please advise whether to hold or sell these shares from a short-term perspective. — Rekha Ravindra

FDC (Rs 47): There short-term outlook is positive and a move to the Rs 52-53 range appears likely. The stock enjoys strong support at Rs 44-45 range.

Investors willing to take risk may consider long positions with a stop-loss at Rs 43 and an exit price of Rs 53.

Though the risk-reward in this trade may not appear impressive, the ratio could get better if the entry is made closer to the support zone.

From a relatively longer-term perspective, investors may get opportunities to exit at the Rs 62-65 levels. Long-term investors may settle for a stop-loss at Rs 40.

Centurion Bank (Rs 18.7): The outlook is bullish and a move to the Rs 21-22 range appears likely in the short-term.

The positive view would be in force as long as the stock holds above Rs 16.

Remain invested with a stop-loss at Rs 16. Fresh buying may be avoided. A trailing stop-loss may be employed in the event of a rally beyond the target zone.

What is the outlook for Sail bought at Rs 58? — Z. Nabidulla

Sail (Rs 54): The stock has managed to hold above the crucial support level at Rs 47-48. A break below this level would have resulted in the completion of a bearish "double top" pattern.

The stock held ground at this support level and staged a recovery over the past couple of trading days. A move to Rs 58-60 appears likely in the near term.

A close above this range would push the stock to the next target zone at the Rs 65-67 band. Hold with a stop-loss at Rs 47. Fresh exposures may be considered on weakness, with a stop-loss at Rs 47.

Kindly advise about my holdings in SRF at Rs 320 and Vijaya Bank at Rs 69. — Shah Hetal, C.N. Sivaraman

SRF (Rs 252): There is a possibility of a rally to the Rs 275-280 range as long as the stock holds above Rs 220. Hold with a stop-loss at Rs 220. Fresh exposures may also be considered on weakness, with a stop-loss at Rs 220.

Long positions taken now should be viewed as a short-term trading opportunity and profits should be taken on the evidence of resistance at the target zone.

Vijaya Bank (Rs 53.2): The short-term outlook is positive and a move to Rs 61-62 appears likely. Remain invested with a stop-loss at Rs 50.

A close below this level would result in a drop to the Rs 41-42 band. A close Rs 63 would push the stock to the next target zone at Rs 71-72.

I would like to know the long-term outlook for Hindustan Construction and Shivalik Bimetal. Is it advisable to enter these stocks now? — Srigopal Bang

Hindustan Construction (Rs 954): Though the long-term outlook is positive, it is not clear whether the stock would get into a downward corrective phase before resuming the uptrend.

A close below Rs 850 would indicate that the stock has some ground to be covered on the downside before the long-term uptrend reasserts itself. The problem with the stock (from a trading perspective) is the wide stop-loss that is warranted for long positions.

As the average intra-day range is quite wide, the stop-loss tends to be too wide for comfort from a money-management perspective.

This is, however, unavoidable and those with risk tolerance may take long positions with a stop-loss at Rs 850. Partial profit-booking may be considered on a rally to Rs 1,100-1,150.

Shivalik Bimetal (Rs 23.9): Long positions may be avoided for the moment as there are no signs of the reversal of the recent bearish trend.

A close below Rs 21.5 would indicate that the stock is headed towards lower levels of Rs 18-19.

Shareholders may remain invested with a stop-loss at Rs 21.5. A portion of the holding may be sold on the evidence of resistance at the Rs 26-27 band.

I am planning to take long positions in Maruti Udyog and MphasiS BFL from a short-term trading perspective. Is it advisable to do so? — Sarath.

Maruti (Rs 543): There is a possibility of a short-term bearish trend that could push the stock to the Rs 510-515 range. Long positions may be considered on such declines, with a stop-loss at Rs 500.

A close above Rs 556 would be a sign of strength. Long positions with a stop-loss at Rs 534 may be considered on a close above Rs 556.

The stock appears to be headed towards the Rs 575-580 range in the near-term.

The positive outlook would be valid as long as the stop-loss at Rs 500 holds.

MphasiS BFL (Rs 258): The price movement has been devoid of any particular trend in the recent months.

There is no point taking a long position unless there is evidence to suggest that a new uptrend has commenced.

A close above Rs 275 would be an indicator of the start of a short-term uptrend.

Long positions may be considered subsequently, with a stop-loss at Rs 239.

For the moment, we do not see a trading opportunity in this stock.

Please advise whether it is advisable to hold Choksi Labs bought at Rs 76? — Krishna

Choksi Labs (Rs 40.3): Even at the cost of sounding repetitive, we would urge investors to always have a stop- loss and exit price in mind before making an investment decision. Even if one finds it difficult to arrive at a logical stop-loss level based on price charts, a money-based stop may be employed.

Based on the risk tolerance, investors may settle for a stop-loss that could be a certain fixed percentage of the entry price.

Coming to Choksi Labs, it would be better to look for an exit avenue, as the stock is unlikely to get back to your entry price in the near term.

Though there is a possibility of a relief rally to the recent fall, the recovery may not go beyond the resistance level at the Rs 51-52 range. Hold with a stop-loss at Rs 36. Those willing to take risk may consider long positions with a stop-loss at Rs 36 and a target price of Rs 52.

Kindly let me know the prospect of Sterlite Optical and Timken India. — Gajanan Upadhyay

Sterlite Optical (Rs 77.3): There are no signs of the reversal of the recent downtrend. A drop to the support level at Rs 58-60 appears likely.

An effort to move up may find resistance at Rs 84-85. Hold with a stop-loss at Rs 72 and reduce exposures if the stock moves up. A trailing stop-loss may be used if the stock moves beyond the resistance zone.

Timken India (Rs 126): The near-term outlook is negative and a drop to the Rs 95-100 range appears likely. On the upside, there is resistance at Rs 135-140. Hold with a stop-loss at Rs 119. Fresh exposures may be avoided.

I bought IDBI at Rs.130 and ITC at Rs.138. Shall I hold or sell these stocks? — Pallavi

IDBI (Rs 89): There is a possibility of a short-term uptrend that could push the stock to the Rs 102-105 range.

Investors may hold with a stop-loss at Rs 82. Short-term traders may consider fresh exposures on price weakness, with a stop-loss at Rs 82. Book partial profit on a move to the target zone.

ITC (Rs 125): The long-term trend is bullish and there is a possibility of the stock moving to the Rs 145-150 range.

Hold with a stop-loss at Rs 110. Fresh exposures may also be considered by short-term traders with a stop-loss at Rs 110. A close below Rs 110 would warrant dilution of long positions.

I hold Nagarjuna Construction's bought at Rs 160 and Bharti Tele at Rs 298. What is the outlook and target levels for these stocks? — Paresh Maru

Nagarjuna Construction (Rs 207): Taking into account your entry price and the positive outlook, it would be advisable to remain invested with a stop-loss at Rs 175.

The stock is likely to move to the Rs 245-250 range. Partial profit-booking may be considered once the stock moves to the target zone.

Bharti Tele (Rs 329.5): The outlook is positive. A close above the immediate resistance level at Rs 340 would impart further bullish momentum and a rally to the Rs 365-370 range may materialise subsequently.

There is a strong support at the Rs 312-315 range. Long positions may be considered with a stop-loss at Rs 303. Short-term traders may wait for price weakness before taking long positions. Stop-loss for fresh long positions may also be placed at Rs 303.

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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)