The Hindu Business Line : Query Corner

Devaki Hospitals (Rs 17.8): This stock is moving in a band between Rs 15 and Rs 20 since July. The stock is currently moving along the long-term trend line. The stock needs to stay above Rs 15 to keep the long-term outlook positive. Hold the stock with a stop at Rs 12.5. Breakout above Rs 22 will take the price to Rs 26.

What is medium and long-term outlook for SKF? K.K. Mukherjee

SKF (Rs 286.2): SKF appears to have made a long-term peak at Rs 377 in April. The stock can move in a broad band between Rs 200 and Rs 400 over the long term. The long-term outlook for the stock will turn negative only if there is a fall below Rs 250. Long-term investors can enter in to this stock in the band between Rs 200 and Rs 250.

Short-term investors should hold the stock with a stop at Rs 258. Fall below Rs 258 can take the price lower to Rs 210. Fresh positions for the short-term should be initiated only on a close above Rs 300.

I brought the shares of Saregama India at Rs 352 and Ador Welding at Rs 352. Kindly give your outlook for these stocks. What strategy should be adopted for recovering loss on such stocks? Shashikala B.B.

Saregama (Rs 197): This stock is trying to recover from the steep fall it witnessed in June that made the price touch a low of Rs 123. The price is currently struggling to rise above Rs 235. Rally above this level is required to take the price to Rs 276. Since, the price is unable to retrace even 50 per cent of the fall it underwent in May, there is a possibility of the stock weakening further to test its July lows again. Hold with a tight stop at Rs 165.

The movement of a stock price is not in our hands.

The only recourse is to exit a loss making position and invest the money in a better stock.

Ador Welding (Rs 241): The trend on this stock is down along all-time frames, short, medium and long.

The sharp slide witnessed since November makes the short-term outlook negative. Long-term support for the stock exists in the zone between Rs 200 and Rs 215. Wait for a reversal from this zone by keeping a stop at Rs 200.

We would advocate exiting this stock if there is a fall below Rs 200.

Please let me have your views on the future prospects for JP Hydro and Piramyd bought at Rs 33 and Rs 133, respectively, a year ago. M. Aniruddha

JP Hydro (Rs 29.4): JP Hydro reversed from a recent high of Rs 35.5 in November. If this fall extends below Rs 27, there is a possibility of the price falling all the way to the June low of Rs 21.

Hold with a stop at Rs 26. Exit the stock if the price is unable to rally above Rs 31 over the next few weeks.

Piramyd Retail (Rs 99.8): This stock is meandering sideways in a narrow range between Rs 85 and Rs 120 since July.

A breakout beyond Rs 120 will take the price to Rs 140. Hold the stock with a stop below its recent low at Rs 68. Try to exit as the stock nears your cost price.

With reference to the scrips recommended under `Chart Focus' in respect of short-term trading. If the price reaches the first target level mentioned, during intra-day and subsequently if it falls, whether one may re-enter again at lower levels if the stop loss is not breached. That is to say, whether the first and second target prices would continue to be valid. Also it may please be clarified whether it is necessary to have a trailing stop loss after reaching the first target price or the earlier stop loss is valid for the second target price also. S. Uma Maheshwari

The answer to both your questions is, yes. It has been noted often that the stocks recommended in chart focus hit the first target in the first hour of trading on Monday and then come down rapidly. Entry can be made later in the day, after the initial excitement has cooled down, with the same short-term stop loss. The short-term targets will continue to be valid.

Having a trailing stop loss once a target has been hit is an excellent idea especially for short-term traders. After all, short-term trading is all about making small profits on a consistent basis. The trailing stop can be 0.5 per cent or 1 per cent depending on the volatility of the stock.

Kindly express your outlook on Gateway Distriparks bought at Rs 182. Amit Rao

Gateway Distriparks (Rs 185.3): In our last review of Gateway Distriparks, we had stated that the trend in the stock was weak and that buying is recommended only on a close above Rs 195. The stock is continuing to move in a narrow range between Rs 145 and Rs 195 since our last review in October.

But this sideways move can be a base building at lower levels before the stock reverses upwards. So, hold your position with a stop at Rs 140. Fresh purchases should, however, be made only a close above Rs 205. If the stock crosses Rs 205, it can head towards Rs 240.

What is the outlook for Teledata Informatics purchased at higher levels? Ratna Sahasrabuddhe, Priyanka B. R., Sunil Kumar Agrawal

Teledata Informatics (Rs 21.8): This stock has been battered out of shape since April 2005. In our last review of this stock in October, the stock had been exhibiting great weakness, struggling below its long-term averages.

The short-term picture has improved since then and the price is now moving in an upward sloping trend channel, which has the upper boundary at Rs 22. A breakout past Rs 22 will take the price to Rs 28 in the short term. Hold with a stop at Rs 15. Fresh purchases can be made on a breakout past Rs 22.

I am holding shares of BPCL and of HPCL bought in 2002 at Rs 249 and Rs 267, respectively. Should I hold or exit? D. M. Raju

BPCL (Rs 325.2): This stock is currently positioned on its long-term trend line. In other words, the long-term outlook is still positive. But a fall below Rs 290 will make the long-term outlook negative for this stock and will open the way for a fall to Rs 250 or Rs 216. Hold with a stop at Rs 285. Book profits the next time that the price crosses Rs 450.

HPCL (Rs 273.7): HPCL looks the weaker of the two from a technical viewpoint. The long-term bull market has ended in this stock. A weekly close above Rs 362 is required to remove the bearish bias from the short-term. Hold with a stop at Rs 240 and exit in the zone between Rs 320 and Rs 330.

Please comment on the medium- and long-term prospects of Lok Housing and Constructions. Prabudda Kumar B, Krishna Kumar

Lok Housing (Rs 316.9): The medium-term prospects of Lok Housing will stay positive as long as the price stays above Rs 225. That is the stop, which medium-term investors should keep for their holdings. Fresh purchases can also be made with the same stop. The targets for this stock over the next one year is Rs 450.

I am holding Omax Auto at Rs 117 since May 2006. I can hold it for one more year. What is the future outlook? Satish Chandra Jha

Omax Auto (Rs 86): The post-June rally in Omax Auto has lacked strength. The price is currently moving lower after hitting a high of Rs 112. The zone between Rs 110 and Rs 115 is expected to rein in the prices over the next few months. Hold with a stop at Rs 85. Fall below Rs 85 can take the price to Rs 58 once more.

I have purchased Helios and Matheson at Rs 198. How long do I have to wait before the stock gets to my purchase price? Perin Devi

Helios and Matheson (Rs 135): The sharp slide in the price of Helios and Matheson since November underlines the long-term weakness in this stock.

Since long-term support lies at the level where the chart made a low in June at Rs 105, we expect a broad based sideways move between Rs 100 and Rs 185 over the next one year. Exit near Rs 180 if the price reverses from this zone again.

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