The Hindu Business Line : Query Corner

Gujarat Ambuja Cement (Rs 106): The stock has made an intermediate-term low at Rs 83 in mid-June. This intermediate-term uptrend will continue, as long as the price stays above Rs 92. Buy on dips with a stop at Rs 90. Target beyond Rs 111 is Rs 128.

Please let me know the prospects of JK Cement and MTNL. Krishna Parameshwar, P.N. Vasudevan

JK Cement (Rs 153): The chart is showing promise since the intermediate-term low formed at Rs 108 in June. The stock has a short-term target of Rs 174. If this level is crossed, a rally to Rs 211 is possible. Buy on dips with a stop at Rs 128.

MTNL (Rs 142): The stock has had a steep fall from its peak of Rs 226 formed in early May to the low of Rs 131 formed on three weeks thereafter.

The price has been moving sideways since then in a descending triangle-like formation, which is a bearish pattern. The price should go above Rs 168 before fresh positions in this counter can be initiated.

Long-term support exists at Rs 110, which should support the price in case of any further fall.

I am holding huge quantities of Himachal Futuristic Communications (HFCL) bought at Rs 32 three years ago and Mangalore Chemicals and Fertiliser bought at Rs 20 in September 2005. I shall be grateful if you could give your opinion on the same. Vinod Pawar

HFCL (Rs 26.3): The stock has made an intermediate term low at Rs 18. 60 in mid-June. The price has been moving in a band between Rs 22 and Rs 28 for the short term.

There is a possibility of an upward breakout to Rs 31, where exit is recommended. Till then, hold with a stop at Rs 22.

Mangalore Chemicals and Fertilisers (Rs 11.2): The long-term trend is negative since the high of Rs 22 made in August last year.

Long-term support exists at Rs 10. Hold the stock with a stop at Rs 8. Exit on a rally to Rs 13-14 levels.

What is your outlook for Ranbaxy Labs? Ravishankar, Ananthanarayana

Ranbaxy Labs (Rs 397): The stock is in a short-term uptrend though it will face resistance at higher levels. The immediate target is at Rs 400. If Rs 400 is crossed, a rise to Rs 450 is possible.

Short-term traders can keep a stop at Rs 348. Long-term investors need to hold with a stop at Rs 318.

I have bought Prism Cement (Rs 38) & Rain Calcining (Rs 38). Please let me have your view on these companies. Sami

Prism Cement (Rs 29): The stock is in a positive consolidation move like the rest of the cement pack.

There is a high probability of an upward breakout to Rs 34 and then Rs 38. The target beyond Rs 38 is Rs 48. Exit at Rs 38 if the stock encounters difficulty in breaching this level.

Rain Calcining (Rs 33.8): The price reversed sharply upward this week. Continued momentum can take the price to Rs 37 and then to Rs 43.

Hold with a stop at Rs 28.

Please give your views on Shree Cement and Aban Loyd Chiles for the medium and long term. L. Ramasubramanian

Shree Cement (Rs 950): The outlook for the medium to long term is positive. But the price can move in a broad sideways range before a decisive upward breakout happens. The price has halted at Rs 978, which is a medium-term resistance.

This level needs to be crossed if the price has to rally to Rs 1,190. Hold for the medium term with a stop at Rs 770.

Aban Loyd Chiles (Rs 999): The price has bounced strongly since its intermediate-term low of Rs 644 formed in mid-June.

Short-term targets are Rs 1,150 and then Rs 1,230. Buy on dips with a stop at Rs 840.

What are the prospects of Noida Toll Bridge? Swaminathan, G. S. Suresh, Saptarshi Bhattacharya

Noida Toll Bridge (Rs 39.7): The price of Noida Toll Bridge has had a sharp fall from its peak of Rs 65 hit in early May. Any short-term rally in this stock will face resistance at Rs 45 and then at Rs 53. Long-term support for this stock exists at Rs 29. Hold the stock with a stop at Rs 28.

Can we buy Allahabad Bank at the current level from a one-year perspective? M.K. Panda

Allahabad Bank (Rs 64.4): The stock is trying to rally from an intermediate-term low formed at Rs 53. The price can head towards Rs 74 and then to Rs 86 over the next one year. There is important resistance at Rs 86. This level needs to be crossed if the price has to head towards its previous high of Rs 108. Long-term support exists at Rs 53. Buy on dips with a stop at Rs 50.

I have purchased Alok Industries at Rs 67. What are the prospects? Debasish Ghosh

Alok Industries (Rs 59.5): The stock has bounced off its long-term support at Rs 55. The support below Rs 55 falls at Rs 44. As you are a long-term investor, hold the stock with a stop at Rs 42. A level of Rs 72 needs to be crossed for the price to proceed towards Rs 90.

I have Welspun India purchased at Rs 96. What are the prospects of the stock? Should I hold? Jaswinder Singh

Welspun India (Rs 73.2): The price has been in a long-term downtrend since the peak of Rs 155 hit in December last. The price can rally to Rs 90 or Rs 106 over the next few months, which could be your exit price. If you are a long-term investor, then hold with a stop at Rs 60.

I bought shares of Mawana Sugars at Rs 127 and Union Bank at Rs 110. What is the medium- and long-term outlook on them? Vikram J, Jyoti Rao

Mawana Sugar (Rs 67): The stock had an upward breakout this week. Resistance exists at the current price level. If the price moves higher, Rs 86 or Rs 90 can be touched. Hold the stock with a stop at Rs 45.

Union Bank (Rs 101.50): Along with the rest of the banking stocks, this stock, too, has recovered sharply in the last week of July. The short-term target is at Rs 110. Beyond Rs 110, the next target would be Rs 135. Hold with a stop at Rs 88.

I am holding Mahindra Gesco at Rs 525 and Bombay Dyeing at Rs 540. Please advice whether I should hold or sell? Ashish Dwivedi

Mahindra Gesco (Rs 521): The stock is moving in a sideways band since June. A rally to Rs 645 or Rs 730 is possible in the next few months where exit is recommended. Till then hold with a stop at Rs 370.

Bombay Dyeing (Rs 540): The price is in a band between Rs 400 and Rs 620. Try to exit at Rs 620 if the stock faces stiff resistance in breaching this level; if this level is taken out convincingly, the next target to look forward to would be Rs 760. Stop loss can be placed at Rs 450.

I have bought shares of Cranes Software at Rs 110. Can I exit or wait for some more time? J.B. Jayanthi

Cranes Software (Rs 110): The chart is showing strength since it formed a low of Rs 82 in June. An upward breakout can take the stock to Rs 116 and then to Rs 136. Till then hold with a stop at Rs 94.

I have purchased RPG Transmission at Rs 240 in May. But, the price has come down drastically. Please tell what I should do now. Sanjeev, Chandigarh

RPG Transmission (Rs 105): The price has started moving up over the last two weeks. It can go on to Rs 120 or Rs 140 in the short term. Exit at these levels if the price sputters here.

Stocks move in different ranges (low and high) at different points of time. For example, after the recent setback in May 2006, most Indian stocks have made new lows and new highs. Within these new lows and highs, there are support levels and resistance levels. For some of the growth stocks such Bharti Airtel, new lows and new highs are relatively at higher levels. But for some of the stocks, these new lows and highs may be at lower levels. How can we get this information in respect of Sensex and Nifty stocks? K.V. Rao, Bangalore

The point you have made is a valid one. New highs and new lows are being created by charts all the time, every minute of the trading day.

If you are an intra-day trader, you would be looking at lows and tops made during the day and taking them as supports and resistances.

If you are a swing trader with a three-to-five-day perspective, you would be more concerned with the lows and highs made on daily charts.

Investors look at supports and resistances on the weekly chart for entry and exit levels.

The point you are making about Bharti and the rest of the Sensex stocks apply on the weekly charts. End-of-the-day charts are available on several Web sites in India. The most obvious are the BSE and NSE Web sites. You can look at these end-of-the-day charts to determine the supports and resistance to determine the suitable entry and exit levels.

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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)