The Hindu Business Line : Query corner

Gitanjali Gems (Rs 196.8): The chart is showing good momentum since the bottom formed in the beginning of August 2006. The stock has the short-term target between Rs 220 and Rs 230. If this level is crossed, the price can go on to the previous high of Rs 270. Hold the stock with a trailing stop-loss of Rs 20 from the most recent peak to take advantage of this rally.

J. P. Hydro (Rs 28): JP Hydro has not been able to recover with any great conviction from the hit it took in May 2006. The price is moving sideways between Rs 21 and Rs 28 since early June. Price will face resistance at Rs 29 and then at Rs 33. Exit at Rs 29 if the price is unable to overcome this resistance level.

I would appreciate your view on Andhra Petrochemicals and Nagarjuna Fertilizers (long term view). Akshaya

Andhra Petrochemicals (Rs 11.4): The Andhra Petrochemicals stock has started moving up since August 2006.

A long-term low seems to have been formed at Rs 7.2 in mid June. The long-term resistance for the price exists at Rs 16. This level needs to be crossed for the price to rally to the previous high of Rs 21. Hold the stock with stop-loss at Rs 7.

Nagarjuna Fertilizers (Rs 12.1): The long-term bull run that began in 2003 has ended in this stock.

However, the slide in the prices of Nagarjuna Ferlilizers has halted near its long-term support at Rs 10.

Hold the stock with a stop-loss at Rs 9. The price can rise to Rs 13.5 and then to Rs 16 over the next one year. Exit can be considered at either of these levels.

I want to know the long-term outlook of Hindustan Construction Company purchased at Rs 176 during March 2006. Is there any sign of recovery? Should I hold or book loss at current levels? Kanchana Srinivasan

Hindustan Construction Company (Rs 108.4): This stock rose from a low of Rs 81 in October 2005 to a high of Rs 196 in March 2006.

The slide since May 2006 has now stopped at Rs 82 and we are seeing a fight back in the price. Good volumes have accompanied the rally since July 2006, which is a positive sign.

You can hold this stock for long term (more than one year) with a stop-loss at Rs 75.

Please advice on the prospects of IDFC (Rs 64.32) and Micro Technologies (Rs 158.06) in a medium-term perspective. Sreejith Menon

IDFC (Rs 59.8): The IDFC stock has had a strong upward move since hitting a low of Rs 44 on July 24. The medium-term prospects of IDFC look good. The immediate resistance for the price is at Rs 65. If this level is crossed, then there can be a rise to the former peak of Rs 78 or beyond. Hold the stock for the medium-term with a stop-loss at Rs 50.

Micro Technologies (Rs 202.4): The price of Micro Technologies is turning down from its immediate resistance of Rs 220.

Hold the stock with a stop-loss at Rs 175 for the medium-term. The target beyond Rs 220 falls at Rs 260.

Should I buy Grasim Industries at current prices? G.P. Dube

Grasim (Rs 2,252.9): The chart of Grasim has been moving sideways with an upward bias since the beginning of August 2006.

The short-term formation indicates inherent strength. Buy at current levels with a stop-loss at Rs 2,170 if you are a trader. Investors should wait for a dip to Rs 1,950 or Rs 1,820 before entering this stock.

Please advise whether I can hold Bongaigaon Refineries purchased at the rate of Rs 99.9. S.Hemachitra

Bongaigaon Refineries (Rs 56.9): The price of Bongaigaon refineries has bounced off its long-term support at Rs 44. You can hold the stock with a stop-loss at Rs 40. This level should support the price in case of a sharp slide in prices. For the next one year, the price will have difficulty rising above Rs 79. This level needs to be crossed if the price has to rally to its previous high of Rs 107.

Kindly, let me know the prospects of Jet Airways purchased at Rs 1,020. Can I purchase additional units at these current prices? Mrs Kavita Narayan

Jet Airways (Rs 538.2): The stock is currently ruling near its all-time low. Due to paucity of adequate historical data, it is not easy to determine the place where the price can halt. So buying additional shares is not recommended. Price can rally to

Rs 700 over the next few months when you can exit this stock. Till then, hold with a stop-loss at Rs 450.

What is the short-term and medium-term outlook for MSK projects (India) Ltd bought at Rs 128 and Advani (Ramada) Hotel bought at 102? Saibaba

MSK Projects (Rs 70): The price has had a very steep 63 per cent fall from its peak of Rs 138 recorded in May 2006. Since several investors have entered this stock at higher levels, profit booking will be seen at every rally. Price will face stiff resistance between Rs 85 and Rs 90 over the next few months. Exit at these levels and switch to another stock. Till then hold with a stop-loss at Rs 48.

Advani Hotels (Rs 95.6): The price has turned up from its long-term support at Rs 56 and has since gained 68 per cent. There is short-term resistance at Rs 100 from which the price is currently reacting. Exit here is if you are a short-term investor. If your perspective is long-term, then hold the stock with a stop-loss at Rs 70.

Kindly let me know the prospects of Bata India purchased at Rs 247. T.S. Prasad

Bata India (Rs 207.2): Price of this stock has had a sharp 57 per cent fall since its peak of Rs 329 in May 2006. Price is turning down from the near term resistance at Rs 220. The resistance beyond Rs 220 falls at Rs 257. Exit at current levels if you are a short-term investor. If you are a long-term investor, then hold with a stop-loss at Rs 180.

I have purchased 1257 shares of Sterlite Industries at the rate of Rs 405. What is the prospect of this stock? Can I get rebate of STT (Securities Transaction Tax) in income-tax? I am an individual. Kalpesh G. Dasani

Sterlite Industries (Rs 424.5): The price has seen a strong rebound since hitting a low of Rs 255 on June 16. The price has already retraced 50 per cent of the fall from its May 2006 highs. The next target for the scrip is at Rs 475. This level needs to be crossed convincingly if the bear grip has to end on this counter. If you are a short-term investor, book profit and exit at these levels. Long-term investors can accumulate this scrip in the band between Rs 300 and Rs 350.

You can get rebate in respect of securities transaction tax (STT) paid under section 88E introduced by the Finance Act (No 2) of 2004. As per this section, where the total income of an assessee includes any income under the head `Profits and Gains from Business or Profession' arising from taxable securities transaction, he shall be entitled to a rebate from the income tax on such income. The amount of rebate shall be the lower of the amount of STT paid in respect of taxable securities transactions entered into in the course of business during the previous year or the income-tax on above income.

What is the outlook for Mid-day multimedia bought at Rs 90 three months back? Basavaraj

Mid-day Multimedia (Rs 46.4): This stock has wiped out almost the entire gains that were made from the low of Rs 26 in August 2005. Long-term support exists at Rs 25. Hold with a stop-loss at Rs 24. The price will however struggle to get past Rs 66 in the medium-term. Exit at these levels if you are a medium-term investor and switch to some other stock.

What are the short and medium term prospects of Tata Tele Maharashtra? P. Annadurai, Dilip, Subur Basha Sheikh

Tata Tele Maharashtra (Rs 18.9): The recovery in the price since the low of Rs 15.5 recorded on 9 June does not show any conviction. A long-term support exists at Rs 17. A sharp fall below Rs 17 will drag the prices to Rs 14 or Rs 11. Price will struggle to go past Rs 24 over the next few months. This level, if breached can take the price to Rs 29. The outlook is negative for this stock.

Please advise whether I should hold JP associates bought at Rs 577. N. Raghunathan

JP Associates (Rs 427.1): If you are a short-term investor, then exit at current levels as the price has already retraced 50 per cent of its fall since the May 2006 high. The next resistance for the stock is at Rs 490. This level needs to be crossed strongly if the price has to proceed towards your cost price. If you are a long-term investor, then hold with a stop-loss at Rs 340.

What are the prospects of Hind Motors Shares bought at Rs 44.38 per share one year back? Sunil Dasgupta

Hindustan Motors (Rs 39.4): The price has clawed back to Rs 40 levels after being hammered to the lows of Rs 25 in July 2006. The medium-term outlook will stay positive as long as the price stays above Rs 32. You can hold the stock with a stop-loss at that level if you are a long-term investor. Short-term investors can exit at current levels. The price will face considerable resistance from Rs 47 levels over the next few months.

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, 859/860 Kasturi Buildings, Anna Salai, Chennai 600002.

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

Lokeshwarri S.K.

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