The Hindu Business Line : Query corner

GNFC (Rs 99.7): The stock has been moving in a range between Rs 80 and Rs 100 since mid-June. A breakout beyond Rs 100 is required to take the price to Rs 109 levels.

Exit the stock between Rs 108 and Rs 110 if the price has difficulty crossing above this level. Till then hold with a stop-loss at Rs 85.

IVRCL Infrastructure (Rs 225.1): The price made a recent low at Rs 164 on July 24 and is showing good momentum since then. It is also above its long-term averages, which is a good sign.

Hold the stock with a stop-loss at Rs 180. The price has the potential to test Rs 240 and then Rs 265 in the next few months, where you can exit.

Kindly express your opinion on Polyplex and Novartis bought at Rs 127 and s 424 respectively. Amit A .Rao

Polyplex (Rs 104.5): The chart of Polyplex is looking extremely weak along all time frames. It is also below its long-term supports.

Exit the stock if you get a rally to near your purchase price and shift to another stock. Till then hold with a stop-loss at Rs 85.

Novartis (Rs 422): The price has long-term support at Rs 400 levels. Significant down fall from these levels is not foreseen.

In fact this might be a good idea to accumulate this stock between Rs 380 and Rs 450 with a two-three years perspective with a stop-loss at Rs 350.

Please tell me the trend of Birla Power and Patel Engineering allotted during FPO. Manish Siroya

What are the prospects of Patel Engineering bought at 440? Ravisankar

Patel Engineering (Rs 323): The price rose steeply from a low of Rs 220 in October 2005 to a high of Rs 635 on May 12. This entire rise has now been corrected and the price is taking support at Rs 200 once more. Hold the stock with a stop-loss at Rs 180.

Price can rally to the zone between Rs 360 to Rs 380, where price can face some resistance. This level needs to be crossed if the price has to rise to Rs 430 or Rs 480.

Birla Power (Rs 24.50): This chart has been in a downtrend since July 2005. Any spike in prices is likely to meet with fresh supplies.

It is best to exit this stock if there is a rally to Rs 30. Till then hold with a stop-loss at Rs 17.

I had purchased 150 shares of Reliance Energy at Rs 804 a year ago. Please let me know what to do? Arun

Reliance Energy (Rs 474): The chart is in an intermediate term up trend since the low of Rs 362 formed on June 8.

Price faces immediate resistance at Rs 480 and then from Rs 520. These levels need to be surpassed if the price has to rally to your cost price.

Since you seem to be a long-term investor, you can hold the stock with a stop-loss at Rs 350.

What is the outlook for Adani Exports purchased Rs 190 & India Cements purchased Rs 211. Babu Krishnamoorthy

Adani Exports (Rs 133): The price broke out on Thursday and moved up.

Immediate resistance is at Rs 148 levels and then at Rs 162.

You can exit part of your holding if price reverses from these levels.

Stop-loss for long-term investors can be at Rs 95.

India Cements (Rs 188): The chart is in a strong intermediate term up trend since the low of Rs 103 hit on June 14.

The momentum on the stock is good and it has the potential to rally to its May 2006 high of Rs 240 again.

Hold the stock with a stop-loss at Rs 155 if you are a short-term investor.

If you are a long-term investor, then the stop-loss can be at Rs 135.

I have 100 shares of Gujarat Flurochemicals Ltd at Rs 580. What is the future prospect of this company? Jayant Darade

Gujarat Flurochemicals Ltd (Rs 498): The price broke out this week to a high of Rs 515. Immediate upward targets are Rs 560 and then Rs 597.

Exit at Rs 560 if price has difficulty rising above this level. If Rs 560 is crossed strongly, then wait for Rs 597 to exit.

Hold the stock with a stop-loss at Rs 270 if you are a long-term investor.

Please advise whether I should hold Hyderabad Industries bought at Rs 383. Rajesh Nair

Hyderabad Industries (Rs 318): The price is in a long-term downtrend since the high of Rs 628 hit on August 19, 2005.

Exit if you get a rise to Rs 340. The stop-loss for short-term trading positions ought to be at Rs 260.

Kindly advise if I can remain invested in Reliance Communication bought at Rs 300 and Hindalco bought at Rs 220. Deepak Kumar Chopra

Reliance Communications Ltd (Rs. 279.6): The chart looks strong from a short-term as well as medium-term perspective. There is short-term resistance at Rs 290 levels.

If this level is crossed, short-term targets are Rs 330 and then Rs 350. Keep a stop-loss at Rs 260 if you want to trade for short-term. Medium-term investors can keep a stop-loss at Rs 240.

Hindalco (Rs 165.8): The price is consolidating in the band between Rs 140 and Rs 180 since mid-June.

Short-term resistance for this share exists at Rs 180. This level needs to be crossed if the price has to move to Rs 210. If the stock has difficulty crossing Rs 180, you can exit.

Short -term outlook is neutral while the medium-term outlook is negative.

I want to know the long-term outlook of Sonata Software purchased at Rs 33 and Kajaria Ceramics purchased at Rs 48.40. Syed, Bangalore

What is your outlook on Kajaria Ceramics? G.V. Ravikumar

Kajaria Ceramics (Rs 48.8): The price has performed strongly in July, rising from a low of Rs 40.

The immediate resistance for the price would be at Rs 51 and then at Rs 57.

Since the price is showing good momentum keep a trailing stop-loss of Rs 5 from its most recent peak and ride the rally. Long-term outlook is positive for this chart.

Sonata Software (Rs 31.6): The stock has been showing good momentum since its recent low in June 2006.

The short-term resistance is at Rs 33. Exit the stock here if price is unable to rally above this price.

If price gets past Rs 33, it can rise to Rs 38 or Rs 43.

Should I buy Sesa Goa at current level of Rs 925? Jasminebhai S, Mumbai

Sesa Goa (Rs 1,000.9): The chart of Sesa Goa is not displaying any signs of strength.

It is best to invest in some other sector that has the momentum. There can however, be a short-term bounce to Rs 1,060 or Rs 1,180 levels.

I am holding Bank of Rajasthan at Rs 55and Zuari Industries at Rs 325 bought before the market correction. Can we expect a breakout to these levels again? Harinder Dhaliwal

Bank of Rajasthan (Rs 34.8): The price is well below its long-term support. It is moving sideways in the short-term. But any upward move will have problem rising above Rs 38 or Rs 45 over the next few months.

If you are a short-term investor, you can exit at these levels. If you are a long-term investor, hold with a stop-loss at Rs 22.

Zuari Industries (Rs 190.9): The price has lost 63 per cent from its peak of Rs 357 touched in May 2006.

You can exit the stock on any rally to Rs 220 or Rs 250 levels and shift to some other stock.

Based on fundamentals and feed back given by you regarding some stocks, I purchased stocks like Unichem Labs (target price Rs 380), KSB Pumps (target price Rs 720) etc. The price moved up to Rs 330 and Rs 640 respectively and then came down. Under such circumstances, what strategy should be followed? Does long-term upside targets means 12 to 24 months? Abhayakumar Shah

The long-term outlook for both Unichem labs (Rs 237.2) and KSB Pumps (Rs 503.7) remains positive.

You can hold Unichem Labs with a stop-loss at Rs 180 and KSB pumps with a stop - loss at Rs 440.

Whenever a stock is bought the expected return should be mentally defined by the investor.

It can be 10, 20 or 30 per cent. When the price reaches the expected return, stop loss should be moved up to the expected return so that even if the price reverses sharply, the investor is assured of a profit.

Another strategy that can be adopted to protect profits is to keep a trailing stop loss of about 5 per cent from the most recent peak. Long term refers to a 12 to 24 month period.

But the expected return and target price should take precedence over the time period for the investment.

If the target is achieved in one week's time, then it is prudent to book profits and exit rather than to wait for the passage of 12 or 24 months.

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