The Hindu Business Line : Query Corner

Hindalco (Rs 143.8): Hindalco is among the few stocks that did not recover from the steep fall witnessed in May 2006. The recovery from the June 2006 lows could not traverse even 50 per cent of this drop in prices. This is a sign of weakness.

The stock has made a double-bottom at Rs 139. Since the long-term trend line is also positioned at Rs 140, this is a good support for the near-term. However, if the stock price dips below Rs 139, it can head towards the next long term support that exists around Rs 125. Since, the minimum target of the C-wave from the May 2006 peak also falls at Rs 122, a long-term low can form between Rs 120 and Rs 125.

Hold with a stop at Rs 137. If your stop is hit, exit the stock and try to re-enter near the Rs 120 area.

I am holding shares of Gammon India purchased at Rs 410. The stock has been tumbling since I purchased it. Should I hold or exit? Suresh Kumar Yadav

Gammon India (Rs 389.8): In our last review of this stock in August 2006, we had written that the stock can get to Rs 430-Rs 450 zone over the next one year. This target has been achieved and the stock is currently on its way down. There is strong intermediate term support at Rs 358. If the price sustains above this level, it can rally beyond your cost to Rs 470 or Rs 500 over the next three months. Hold with a stop at Rs 335.

I am a short-term investor and I am interested in buying Pfizer. Please let me know if this is the right time to enter. Also, please advise on Info Edge. Rajesh. M

Pfizer (Rs 740.4): Pfizer is inappropriate for short-term investors at this juncture. The stock has lost close to Rs 200 in the slide since January 19. We do not have any signs of a short-term reversal yet. Short-term investors should enter this stock only if it rallies past Rs 815 for the short-term targets of Rs 855 and then Rs 900.

But the stock is heading towards its long-term supports that exist in the area between Rs 650 and Rs 700. Long-term investors can consider accumulating this stock in this zone with a stop at Rs 610.

Info Edge (Rs 606.3): We do not do technical analysis on new listings, as the stock does not have sufficient trading history on which technical analysis can be done.

I have a large quantity of Hindustan Zinc bought at the average cost of Rs 825. Please give your views on this stock. Sajid, Saurav Datta

Hindustan Zinc (Rs 619.5): This stock is in the habit of taking investors on a stomach-crunching roller coaster ride. The rallies are as swift as the falls. It has been fluctuating in a broad range between Rs 400 and Rs 1,000 since March 2006. The volume dries up when the stock goes in to a tailspin and picks up as the rallies gain momentum. This ensures that investors get trapped at higher levels with no routes of exit.

The long-term trend in this stock is currently down. There is good long-term support at Rs 510, where investors can watch out for a trend reversal. A fall below Rs 510 will take the stock to the June 2006 low of Rs 415. You can exit this stock at current levels. Re-enter if the stock closes above Rs 775.

Please let me know the prospects of Hindustan Construction and Sunil Hitech. Shantha Parmesh

Hindustan Construction (Rs 113.9): This stock has been in a downward spiral since the high of Rs 172 made in December 2006. The near term support lies in the zone between Rs 110 and Rs 115. But the weak chart pattern suggests that the stock is heading towards Rs 105. Breach of this long-term support will pull the stock price to Rs 85. Short-term investors should hold with a stop at Rs 102. Heavy volumes witnessed in this stock since October 2006 points towards selling pressure emanating at every rally, thus keeping prices subdued for a while.

Sunil Hitech (Rs 85.3): This stock was listed when the stock markets were in an exuberant mood in March 2006. That made it hit an all-time high of Rs 175 on the day it was listed. This level has not been re-visited till date. The stock hit a low of Rs 76 in June 2006 and has been moving in a band between Rs 80 and Rs 120 since then.

This phase of long-term consolidation can continue for a few more months. Short-term resistances are at Rs 105 and Rs 115. But a breakout beyond Rs 138 is required to signal the onset of a fresh long-term up trend. Those who are holding the stock can keep a stop at Rs 70.

Please provide your views on D S Kulkarni purchased at Rs 250 and Anjani PortlandCement at Rs 37. What is the outlook for these stocks over the next two to four months? S. Ravindra

D. S. Kulkarni (Rs 242.4): D. S. Kulkarni has made a perfect double top at Rs 450 and is now spiralling down in a long-term trend reversal. The immediate support for this stock lies at Rs 225. That is where short-term investors need to place their stops. Breach of this support can make the stock hurtle towards Rs 174. A close above Rs 320 is required to make the short-term outlook positive.

Anjani Portland Cement (Rs 30.5): This stock has had a heady four-fold rise from the June 2006 low of Rs 10. But the stock price has been confined to a range between Rs 29 and Rs 41 since October 2006. This move can be construed as a consolidation move prior to the next leg of the bull phase unfolds to take the stock price to Rs 48 or Rs 60. This positive outlook will get negated if the price dips below Rs 25.

I hold 100 shares of Punjab Tractors at Rs 315. Should I hold or sell them? Sulabh Sharma

Punjab Tractors (Rs 316.2): The stock price of Punjab Tractors gained over 40 per cent since the beginning of February. The stock is currently charting a converging triangle that is a bullish consolidation pattern. Hold the stock with a stop at Rs 303. There is potential for another upward breakout in the stock that can take the price to Rs 377. The short-term outlook will turn negative only if the stock price closes below Rs 300.

Kindly give the outlook for Biocon bought at Rs 511 and Ranbaxy bought at Rs 440. Elango

Biocon (Rs 462.4): Biocon is making an attempt to pull itself out of the quagmire that has been sucking this stock lower over the past two years. The short-term resistance for the stock lies at Rs 480. If the stock rallies above this resistance, it can move higher to Rs 530 or Rs 580 over the next six months. But a reversal below Rs 500 will make the stock price fluctuate in a band between Rs 300 and Rs 500 for a few more months. Hold with a stop at Rs 445.

Ranbaxy (Rs 356.4): Please refer to the techtrail of October 1, 2006, in which we had advised booking some profits if the price struggles to get past the resistance band between Rs 450 and Rs 480. The stock could not get past Rs 440 since our last review and is currently in a short term down trend again. The short-term support for the stock exists at Rs 317. The long-term support beneath this level is Rs 290. Exit if the stock price falls below Rs 340 and try to re-enter around Rs 300.

What is your outlook on Fulford purchased at Rs 645? B. A. Reddy

Fulford India (Rs 571.9): Fulford India has had a strong bull run from a low of Rs 51 in April 2003 to a high of Rs 745 in February 2006. It has been consolidating in a sideways band since then. The lower boundary of this band is at Rs 450 and the upper boundary exists at Rs 750. As long as the stock stays above Rs 450, the long term up trend is intact on this counter. Hold with a stop at Rs 530. If the stock price falls below Rs 530, then try to re-enter around Rs 450.

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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