The Hindu Business Line : Focus of the week

Aurobindo Pharma (Rs 566): Elliott Wave works like a charm in this stock. An Elliott Wave enthusiast need not look beyond this stock for an understanding the basics of the theory.

The stock completed a major Wave 1 at Rs 425 in January 2000. It went to a sharp corrective phase subsequently, which would qualify as Wave 2. The rally from the low of Rs 68 in September 2001 would mark the start of the third wave.

Within this third wave, Wave 1 was completed at Rs 436 in January 2004, Wave 2 at Rs 273 in April 2005. If this assessment is valid, the stock is in the explosive third wave of Wave 3. Investors willing to wait for a relatively longer time frame may get opportunities to exit at Rs 850-900. The positive outlook would be negated on a close below Rs 440. Long-term investors may accumulate the stock with a target zone of Rs 850-900. Evidence of support at Rs 515-520 range may be used to enhance exposures. Stop-loss for long positions may be placed at Rs 495 for a portion of the holding and at Rs 439 for the balance.

Asahi India (Rs 110): The near-term outlook appears positive. The stock could move to the target zone of Rs 135-140. The bullish view would be valid as long as the stop-loss level at Rs 100 is not violated. Long-term investors who have entered at fairly lower levels may settle for a stop-loss at a relatively lower level at Rs 95. Short-term traders may consider long positions at prevailing levels and on weakness, with a stop-loss at Rs 100.

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