The Hindu Business Line : Query Corner

I bought Financial Technologies at Rs 1,960 per share. I am willing to wait for two to three years if I would get any positive returns. Is there any scope for the price to reach my purchase price? Madavan Viswanathan

Financial Technologies (Rs 1,600.6): This stock had a steep fall in May from the high of Rs 2,050 to the low of Rs 988. What is heartening is the fact that the price has already gained 86 per cent from this low. Over the next two to three years, the price is headed towards Rs 2,259 and then Rs 3,038.

But there can be short-term correction to about Rs 1,400 levels.

Exit the stock if the price falls below Rs 1,400. You can re-enter again as the price stabilises and rises above Rs 1,500 once more.

Can you tell me the long- and medium-term prospects of IDFC shares, which are currently trading at around Rs 71? What is the right price to take exposure? Saahir Ekhlas, Subur S. Basha

IDFC (Rs 75.9): There has been a breakout in this chart on Friday after a two-week consolidation. The targets for this upward move are Rs 80 and then Rs 86. It would be hard to comment on the long-term outlook for this stock due to paucity of data.

A dip to Rs 64 would be an ideal place for initiating fresh position from a long-term perspective. Trading longs can be initiated if the price closes above Rs 78, with a stop at Rs 75.

I had purchased some shares of HDFC long back. The share price has increased rapidly over the last 15 days. Should I hold on or book profit or shall I accumulate more at this moment? Kindly advise. Chinni Krishna

HDFC (Rs 1,459.3): This stock has made a double top at Rs 1,550, which is a long-term trend reversal signal. The medium-term outlook will stay positive only if the price stays above Rs 1,370. A fall below Rs 1,370 will take the price to Rs 1,340 or Rs 1,240.

Book partial profits at current levels and hold the rest with a stop at Rs 1,330. Accumulate this scrip on a dip to Rs 1,250. The long-term price target is Rs 1,652 and then Rs 2,108.

I have been holding shares of Polyplex Corporation for the last one year. Kindly let me know its prospects. D.S. Rao

Polyplex Corporation (Rs 124): This stock has been in a long-term down trend since December 2004. Though it is trying to rally from the low of Rs 92 formed in July, the recovery lacks strength. The price would have to rise above Rs 150 to mitigate some of the current bearishness.

Exit the stock at current levels. The capital that is unlocked can be invested in some other stock with better prospects.

I am holding Pricol bought at Rs 60 and Mercator Lines at Rs 65. Kindly outline the prospects for this scrip over the short-term. Abhay Kulkarni

Premier Instrumentation and Control (Rs 38.6): This stock is consolidating between Rs 36 and Rs 42 since August 2006. The chart is not exhibiting any strength as its participation in the post-June rally has been lukewarm. The price has great resistance at Rs 42. Exit this stock if the price does not manage to break out beyond Rs 42 in the next three months. Till then, hold with a tight stop at Rs 35.

Mercator Lines (Rs 40.8): The movement of this stock is identical to that of Pricol. It has not participated in the mid-cap rally seen since June 2006. That is a question mark on the ability of this scrip to move further from these levels. There is strong resistance at Rs 45. This level needs to be crossed if the price has to proceed to Rs 49 or Rs 54. Exit part of your holding at current levels. Hold the rest with a stop at Rs 37.

I would like to enter Zicom Electronics. What are the future prospects for this stock? Anita Pednekar

Zicom Electronics (Rs 205.5): This stock is in a strong intermediate term uptrend. But, it is currently facing resistance from the zone around Rs 205. Initiate fresh positions in this stock only if it breaks out above Rs 220. The target would then be Rs 262.

What is the outlook for IBP bought at Rs 580 per share? Om Swaminathan

IBP (Rs 525.3): This stock is in an intermediate term uptrend since June 2006. The movement of this chart is identical to that of Indian Oil Corporation, with which IBP is going to be merged. Both charts are halting at their 50-day moving averages. Hold the stock with a stop at Rs 480 as the charts of both IOC and IBP are in a strong intermediate term up trend.

What are the prospects of Ranbaxy bought at Rs 372 for the next six months? Also let me know the prospects of Century Textiles bought at Rs 491. Aravind

Ranbaxy Labs (Rs 404.3): This scrip is currently moving down after hitting a high of Rs 441 on September 29. If the current correction halts above Rs 395, we can see the price rising higher to Rs 450 or Rs 480 over the next six months.

If you are a short-term investor, book some profits now and hold the rest with a stop at Rs 395.

Century Textiles (Rs 528): This stock is consolidating in a narrow range between Rs 490 and Rs 520 since the beginning of October. The target on a breakout is Rs 608 and then Rs 680.

Hold the stock with a stop at Rs 475. Fresh buys can also be initiated with the same stop.

Is it prudent to buy Maruti for the medium term? B. Anindita, Vimal Bhatia

Maruti Udyog Ltd. (Rs 966.6): MUL is consolidating after hitting a new all time high of Rs 985. The move that began from the low of Rs 691 is still intact. The scrip can rise to Rs 1,100 in the short-term.

However, if you plan to buy the stock for the medium-term, then wait for a dip to the zone between Rs 850 and Rs 880 before investing in this stock.

I bought Sterling Biotech for Rs 132.45 and Tulip IT for Rs 360, on seeing the huge volumes. What shall I do with the stock, hold or exit? S. Krishnamoorthy

Buying stocks based on their volume action does not always work. Of the two stocks cited by you, it worked in Tulip IT, while it did not work in Sterling Biotech. It would be best to consider other technical factors in conjunction with volume action while selecting stock for investment.

Sterling Biotech (Rs 121.3): This stock has the habit of recording high volumes when the price is peaking out. This is called the distribution phase in technical analysis parlance.

The volumes reached record levels in September and October 2005, when the price made a peak of Rs 190. It again spurted in September 2006 and was followed by a sharp slide in prices.

The price is, however, taking support just above its long-term averages. It can try to recover to Rs 132 or Rs 140 over the next few weeks. Exit the stock if it fails to cross the Rs 132 level.

Tulip IT (Rs 370.7): The recent correction in Tulip IT was a mild sideways moving one, as opposed to the violent down move in Sterling Biotech.

The intermediate term uptrend is still intact in this stock. Once the price gets past Rs 380, it can head towards its previous top at Rs 406. Hold with a stop at Rs 330.

I hold Bank of Rajasthan at Rs 63 per share. Let me know if I can exit this stock with a reasonable gain. B. N. Rajagopal

Bank of Rajasthan (Rs 41.4): This stock has recovered from a low of Rs 25 in June to the present levels. There can be dip in the medium-term to Rs 38 or Rs 33.

If the price stabilises and consolidates above Rs 38, it can move up again to Rs 52 or Rs 58 levels. Hold with a stop at Rs 38. Try to exit as close to your cost as possible.

I hold shares of Teledata Informatics. I request you to let me know when I can exit. N. R. Balakrishna, Tejpal Sharma

Teledata Informatics (Rs 14.9): This stock is in a vicious down trend. It is currently trying to climb out from the abysmal level of Rs 9.8 it hit in September. The price faces serious resistance from Rs 15 and then from Rs 17 in the short-term. It would be best to switch from this stock at this point.

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.

More Stories on : Technical Analysis | Stock Markets

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