The Hindu Business Line : Technical Analysis Q&A

I hold shares of South Indian Bank bought at Rs 66 a huge chunk of IFCI at Rs 42. Shall I hold or exit from these stocks? D. Balasubramanian, Swami

Questions such as these are a pointer that there are investors who have not yet realized the importance of money management and the significance of adherence to stop-loss levels. Having purchased IFCI at Rs 42, one should have exited from the stock long ago as it has been in a major downward trend.

Even at the cost of sounding repetitive, we would urge investors to have a stop-loss for all investments.

If the identification of a logical stop-loss based on technical studies turns out to be a problem, investors may settle for a fixed money-based stop-loss.

Depending upon the risk tolerance levels, investors may arrive at a stop-loss that could either be a fixed amount or a percentage of the entry price. Having a stop-loss and sticking to it is absolutely essential. There is no way that the share price of IFCI can recover to your entry levels.

Look to reduce exposures as the near-term trend remains bearish. A drop to Rs 6-6.5 appears likely.

South Indian Bank (Rs 60): The near-term outlook does not appear positive. A drop to Rs 54-55 appears likely.

Taking into account your entry price and short-term bearish outlook, it would be advisable to reduce exposures. Only a close past Rs 70 would impart bullish momentum.

Please let me have your views on Texmaco purchased at Rs 602. M.A. Chandra Mohan

Texmaco (Rs 837): As the long-term trend is positive, investors may hold with a stop-loss at Rs 770.

Partial profit booking may be considered by those who feel that this stop-loss is too wide for comfort. Fresh exposures may be considered on weakness, with a stop-loss at Rs 770.

The stock is in a short-term corrective phase and it could move to Rs 975-1000 on the completion of this correction.

Shall I hold or sell Alembic Glass bought at Rs 1,200 and what is the outlook for Webel SL Energy? Mahesh Matta

Alembic Glass (Rs 1,600): Taking into account your entry price and short-term weak outlook, it would be advisable to take at least partial profits at prevailing levels.

Fresh exposures may be considered at lower levels.

At the moment, there is a risk of a drop to Rs 1,350-1,400. Stop-loss for long positions may be placed at Rs 1,540.

Webel SL Energy (Rs 262): Fresh exposures may be avoided, as the short-term outlook is bearish. The share price could drop to Rs 225-230.

A close below Rs 210 would impart further weakness and a subsequent test of Rs 160-170 is not ruled out.

The trend would turn positive only a close above Rs 285. Long positions may be considered on a weekly close above Rs 285, with a stop-loss at Rs 245.

What is your view on Narmada Chematur? Umashankar Sharma

Narmada Chematur (Rs 35): The price movement is still confined to a trading zone.

The recent price action portrays a bearish outlook for the stock. There is a strong resistance at Rs 38-39.

There is a possibility of a drop to Rs 30-31. Investors may look to reduce exposures, while fresh buying may also be avoided.

Is it advisable to hold Nagreeka Exports bought at Rs 76? Tejas Shah

Nagreeka Exports (Rs 134): This is one of the stocks that have weathered the bearish onslaught witnessed last week. The long-term outlook is bullish and a move to Rs 165-170 appears likely.

Hold with a stop-loss at Rs 110. Fresh exposures may be considered on declines, with the same stop-loss.

What are the next technical levels for Opto Circuits and FCI OEN Connector Ltd? B. Rahul

Opto Circuits (Rs 421): The stock is in a major uptrend and a move to Rs 485-500 appears likely. Hold with a stop-loss at Rs 375. Those who prefer a tighter stop-loss may have a stop-loss at Rs 390 for a portion of the holding and at Rs 375 for the balance. Fresh buying may be considered on declines, with a stop-loss at Rs 375.

FCI OEN (Rs 455): Hold with a stop-loss at Rs 430. The stock is likely to seek support at Rs 430-435 range and resume the long-term uptrend subsequently. The trend would turn bearish on a weekly close below Rs 430.

How does Mercator Lines look technically? R.K.Shukla, J.R.Rao, Paresh Maru, Milind Babras

Mercator Lines (Rs 41): The short-term outlook does not appear positive. A drop to Rs 35-36 appears likely. A close below Rs 40 would confirm the short-term bearish outlook. Hold with a stop-loss at Rs 40. Avoid fresh exposures until the stock closes above the resistance level at Rs 48.

What is the near-term outlook for Andhra Bank brought at Rs 90 and Bank of Baroda at Rs 230? Rama Raman Padhy, Jaikar

Andhra Bank (Rs .82): The stock could drop to Rs 68-70 in the near term. It is currently hovering pretty close to the support area at Rs 79-81. A close below Rs 79 would confirm the bearish outlook and would push the stock to the target zone mentioned above. Hold with a stop-loss at Rs 79. Fresh exposures may be avoided. Only a weekly close above Rs 90 would impart strength.

Bank of Baroda (Rs 229): As the stock has been an underperformer in the recent months and short-term outlook is also bearish, it would be better to reduce exposures on short-term uptrend. A close below Rs 214 would result in a drop to Rs 185-190. Hold with a stop-loss at Rs 214 and pare exposures on uptrend.

Should I hold Batliboi purchased at Rs 168. Abhishek Mohta

Batliboi (Rs 159): The outlook is not positive. The stock appears to be headed towards Rs 140-145. Shareholders may sell a portion of their holdings at prevailing levels. Fresh exposures may be avoided. The bearish outlook would be negated on a close above Rs 180.

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.

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