The Hindu Business Line : Query Corner

VSNL (Rs 472): The Elliott Wave count for the stock is based on the price action till date. The outlook or the Wave analysis may be subject to revision based on future price action. As we look at it now, the stock appears to be tracing out the explosive Wave 3 of some degree. The high of Rs 445 recorded in August 2005 would mark the end of Wave 1. The subsequent fall to the low of Rs 291 in October 2005 would be Wave 2 and the subsequent rally could be part of the bigger Wave 3 that is in progress.

In this bigger degree Wave 3, VSNL has completed Wave 1 at Rs 430.55 in December 2005 and Wave 2 at Rs 362 a few weeks ago.

The rally from this low is part of Wave 3. The immediate target is Rs 575-600. Investors may buy the stock at prevailing levels and on declines, with a stop-loss at Rs 420. Those who are uncomfortable with this stop-loss may either wait for declines or use a fixed money-based stop-loss instead.

I am holding Deepak Fertiliser and Rico Auto. I would like to know the outlook for these two companies. Nil Desai

Deepak Fertiliser (Rs 99.4): After being confined to a downtrend since early January, the stock has staged a recovery in the last couple of weeks.

The short-term outlook is positive and a move to the immediate target zone at Rs 112-115 appears likely.

A close above Rs .116 would help the stock seek the next target zone of Rs 128-130.

Remain invested with a stop-loss at Rs 90. Fresh exposures may be considered on weakness, by short-term traders, with the same stop-loss.

Rico Auto (Rs 90): The recent downward corrective phase appears to have been completed at the low of Rs 78.5 recorded a couple of weeks ago. The subsequent price action indicates that the stock has commenced the next leg of the long-term uptrend. A move to the immediate target zone at Rs 108-110 appears likely. This view would be valid as long as the stock holds above the stop-loss level at Rs 80.

What are the prospects for Era Constructions purchased at Rs 278 and Ankur Drugs at Rs 168? Raghunathan

Era Constructions (Rs 295): The short-term outlook is positive. A move to Rs 320-325 appears likely. The positive outlook would be negated on a close below Rs 270. Hold with a stop-loss at Rs 270. Fresh exposures may be avoided for the moment.

Ankur Drugs (Rs 140.1): The stock has been in a corrective phase after having recorded a high of Rs 178.1 in December 2005. Though there are no conclusive signs of the completion of this corrective phase, the downside risk is minimal from prevailing levels. Considering that the long-term outlook is bullish and there is a possibility of a rally to Rs 195-200, investors may start accumulating this stock. The positive outlook would be under threat on a close below Rs 108. Stop-loss for long positions may be placed at this level. Fresh exposures may be considered at prevailing levels and may be enhanced on weakness.

Please let me know whether I can hold Noida Toll Bridge bought at Rs 43 and Cipla at Rs 567. G. Raju, P.Rajendran

Noida Toll (Rs 41): Hold with a stop-loss at Rs 36, as the outlook is bullish. A move to Rs 46-47 appears likely in the near term. A close above Rs 48 would help the stock move to the next target zone at Rs 54-56. Fresh exposures may also be considered on declines, with a stop-loss at Rs 36.

Cipla (Rs 662): The stock is in a major long-term uptrend. It could move to the target zone of Rs 725-750. The positive outlook would be valid as long as the stock holds above Rs 600.

A close below this level would push the stock into a corrective phase. Have a stop-loss at Rs 600 for long positions. Stop-loss for fresh long positions may also be placed at the same level.

Should I hold or sell L&T bought at Rs 2,400 and Shriram Transport Finance? Arvind Gupta

L&T (Rs 2,433): There is a possibility of a drop to the immediate support level at Rs 2,350-2,370. Have a stop-loss at Rs 2,320 for long positions. Fresh exposures may be considered on the evidence of support at Rs 2,350-Rs 2,370. The stock could move to Rs 2,750-2,800 on the completion of the expected correction to the support zone.

Shriram Transport Finance (Rs 131): The recent price pattern does not provide clues about the medium term trend. A close above Rs 150 would impart bullish trend; a drop below Rs 113 would push the stock into a bearish orbit. Remain invested with a stop-loss at Rs 110. Fresh exposures may be avoided.

Should I hold or sell my stake in TCS? Sulabh Sharma

TCS (Rs 1,916): The outlook is positive and a move to Rs 2,150-2,200 appears likely. The stock enjoys a strong support at Rs 1,850-1,860.

Long positions may be considered on weakness, preferably at or close to the support zone, with a stop-loss at Rs 1,830. Use a trailing stop-loss a move past the target price of Rs 2,200.

I bought Four Soft at Rs 79. Please advice whether to hold or sell this stock. I. Vidya

Four Soft (Rs 59.2): The stock appears to have completed the downward corrective phase that commenced at Rs 106 in September 2005. The next leg of the upward move appears to have got underway last week.

A move to Rs 78-80 appears likely. Remain invested with a stop-loss at Rs 47. Fresh exposures may also be considered at prevailing levels as well as on declines, with the same stop-loss. A close below Rs 47 would impart weakness while close above Rs 82 would push the stock into a bullish orbit.

What is your view on Aftek Infosys? Riyaz Ahmad Shah, Vincent Robert, R.S. Yadav

Aftek Infosys (Rs 78): After moving to a high of Rs 157.3 in September 2005, the stock has been in a major downtrend. There are no signs of completion of this downtrend. A close above Rs 96 would be an indicator of the resumption of the next leg of uptrend. Investors may hold with a stop-loss at Rs 71. Investors willing to take risk may consider fresh exposures on weakness with the same stop-loss.

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, Kasturi & Sons, 859-860, Anna Salai, Chennai 600 002.

We would endeavour to answer as many queries as possible. However, constraints of space will limit the responses featured in this column.

B. Krishnakumar

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