The Hindu Business Line : Query Corner

Is it the right time to buy the shares of Gateway Distriparks and Bharat Earth Movers? What are their short term and long-term prospects? Amirthalingam

Bharat Earth Movers (Rs. 936.2): BEML has long-term support at Rs 750. The stock bounced off this support in June 2006. Since then, the price has been moving in a sideways range between Rs 800 and Rs 1,000. This could be a long drawn consolidation phase before the price breaks out on the upper side.

There has been a pick-up in volume on this counter since August 2006, which is a very positive sign. We recommend accumulating this stock in the range between Rs 800 and Rs 900 with a stop at Rs 750. Medium term targets on the upside are Rs 1,200 and then Rs 1,400.

Gateway Distriparks (Rs 164.2): This stock has been in a vicious down trend since January 2006. The bounce back in June 2006 from Rs 144 to Rs 232 has been entirely reversed in the subsequent fall. The immediate support for the stock is at Rs 145. If this support is breached, it can fall to Rs 130. The trend in this stock is extremely weak. Do not try to bottom fish here. Buying is recommended in this stock only on a close above Rs 195.

What are the prospects of Shri Digvijay Cement bought between Rs 30 and Rs 35? Kamlesh, Vijay Jain

Shri Digvijay Cement (Rs 33.3): Shri Digvijay Cement has already gained 68 per cent from the low of Rs 21.4 touched in July 2006. The price is consolidating between Rs 31 and Rs 36 over the last two weeks. This consolidation phase has been accompanied by a surge in volumes. Hold the stock with a stop at Rs 30. The upward targets on a breakout above Rs 36 are Rs 38 and then Rs 41. Fresh positions in this stock can also be considered for trading purpose with a stop at Rs 30.

I am holder of Omax Auto bought at Rs 97.15. What should I do with this stock? Philip T.A., C. Rathinasabapathy

Omax Auto (Rs 102.2): Omax Auto has taken a steep cut since January 2006, losing a steep 67 per cent from its peak of Rs 174. The recovery from the June lows has been gradual and appears promising. This stock faces short-term resistance in the zone between Rs 112 and Rs 115. If this zone is surpassed, there can be a rally to Rs 128. Hold with a stop at Rs 90.

Please suggest some good books for beginners in technical study and day trading. Pankaj Mahajan, Raashid, Nirmal Jeet, Shailendra Awasthi

Those desiring to learn technical analysis can begin their study with the following books: `Technical Analysis from A to Z' by Steven B. Achelis; `Candle Stick Charting' explained by Gregory L. Morris; Martin Pring on `Market Momentum', and `Elliott Wave Explained' by Robert C. Beckman. Books on day trading are: `A Beginner's Guide to Day Trading Online' and `A Beginner's Guide to short term trading' by Toni Turner.

I am holding the shares of Deccan Aviation. What is the short-term prospect for this stock? Should I hold it or book loss? Chaudhuri R, J. Bhaskar Patnaik

Deccan Aviation (Rs 102.8): Deccan Aviation has seen a sharp spurt in September 2006. The stock is currently moving sideways after hitting a high of Rs 121 on September 14th. The price has support at Rs 99 and then at Rs 85. Short-term resistance is at Rs 116. Exit this stock if it fails to rise above Rs 116. If it closes above Rs 116, it can rise to Rs 131. Stop can be placed at Rs 98.

What are the short and long-term targets for Alstom Projects and Honeywell Automation? I hold 150 shares in each. Pinto Jain

Alstom Project (Rs 350.8): Alstom Projects broke out last week with very good volumes. The break out has come after a long drawn consolidation phase that has been on for about a month. The stock will face some resistance in the zone between Rs 350 and Rs 360. Once this zone is surpassed, there can be a rally to Rs 404 and then Rs 421. Hold with a stop at Rs 327. Fresh buying can also be done with the same stop.

Honeywell Automation (Rs 1,520.4): The short term and the medium term trend for this stock are up. The price is moving in an upward moving channel since August 2006. Some resistance exists in the zone between Rs 1,500 and Rs 1,550. If this zone is crossed, the price can rally to Rs 1,620 and then Rs 1,675. Hold with a stop at Rs 1,380.

I am holding 600 shares of Prism Cements bought at the rate of Rs 25, for the last one year. Can I sell these shares now at the rate of Rs 40? Murali Mohan. N

Prism Cements (Rs 41.5): This stock has been recording successive higher peaks and troughs in the upward move since the low of Rs 25 recorded in July 2006. It would be best to hold this stock with a trailing stop of 20 per cent from the most recent peak and ride this upward move. The upward target over the next two months is Rs 48.

I hold shares of IVRCL. What are the long term and short term supports and targets? U.K. Aravind Kumar, Sunny Chandigarh

IVRCL (Rs 253.6): This stock has moved up strongly from a low of Rs 164 made in July 2006 to the recent high of Rs 265 recorded on September 8th. The price is consolidating sideways since then. IVRCL has the support at Rs 225 and then at Rs 205 in the immediate future.

The short-term outlook for this stock is positive and we expect it to move higher to Rs 296 and then to Rs 335 in the short term. Hold the stock with a stop at Rs 220. Long-term support for this stock exists at Rs 200 and the long-term target on the upside is at Rs 420.

What are the prospects of Tulip IT and ABG Shipyard? Ramachandran, Vivek Rewari

Tulip IT (Rs 330.4): Tulip IT broke out with good volume last Monday. The short-term support for the price would be at Rs 297. The upward momentum would continue in the short term as long as the price stays above Rs 297.

Short-term investors can hold with a stop at Rs 296. Long-term investors can keep a deeper stop at Rs 250. Long-term targets on the upside are Rs 405 and then Rs 462.

ABG Shipyard (Rs 276.8): This stock managed to rise from the low of Rs 199 in July 2006 to the present level. But the momentum is slowing down in the short term as well as the medium term.

There is stiff resistance at Rs 285, which the price is struggling to overcome. Once this level is overcome, there can be a rally to Rs 310. Exit this stock if the price falls below Rs 250.

Can you please outline the prospects of Wipro and MaxIndia? Vivek Bhatia, Anand Shankar

Max India (Rs 800.5): This stock too has picked up momentum in the last one week. The short-term resistance is around Rs 800. If this level is crossed, the price can rise to Rs 835 or Rs 890. If you are a short-term investor, then hold the stock with a stop at Rs 753. Long-term investors can keep a deeper stop at Rs 675.

Wipro (Rs 525.1): The medium term outlook for Wipro is positive. This stock is moving sideways in an upward moving channel since August 2006 in a bullish formation.

The price has the potential to move up to Rs 568 and then to Rs 580 in the short term. Short-term investors can keep a stop at Rs 495 and hold the stock. Some profit booking can be done in the zone between Rs 560 and Rs 580.

I would like to know whether the prices of Ranbaxy & Orchid Chemicals can cross the Rs 500 and Rs 300 barriers in the near future. V.S. Krishnamurthy

Ranbaxy (Rs 439.8): Ranbaxy has been consolidating in a sideways band between Rs 390 and Rs 420 since the beginning of September 2006. Momentum is returning to the short-term. The only concern in this counter is a lack of volumes.

Short-term targets on the upper side are Rs 450 and then Rs 482. There will be stiff resistance in the zone between Rs 450 and Rs 480.

Some profit can be booked here if the price struggles to rally past this level. Supports for the short term are at Rs 406 and then at Rs 400.

Orchid Chemicals (Rs 208.5): Orchid Chemicals has been moving sideways in a band between Rs 200 and Rs 220 since August 16.

If the price manages to get past Rs 220, it will face resistance at Rs 255.

The price might not go beyond Rs 300 in a hurry.

Kindly suggest the short term and long-term prospects of Bajaj Hindusthan. I have purchased 250 shares at the price of Rs 330. G. Rajendiran

Bajaj Hindusthan (Rs 324.5): The long term and medium term trend is down in this stock. Long-term support for this stock exists at Rs 290 and then at Rs 230. Price has short-term resistance at Rs 345.

This level needs to be crossed for the price to proceed towards Rs 386. Exit this stock around Rs 380 if you are a short-term investor. Long-term investor can hold the stock with a stop at Rs 285. Fresh purchases can also be initiated for long term with the same stop.

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.

More Stories on : Technical Analysis | Stock Markets

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page