The Hindu Business Line : Query Corner

I hold Vardhman Holdings at Rs 300. Please tell me about the short-term and medium-term prospects for the company. Should I cut the loss and exit now? Rakesh Sharma

Vardhman Holdings (Rs 268.1): This stock is in a long-term down trend since May 2006. The sideways move between Rs 325 and Rs 425 seen in the second half of 2006 preceded another downward move that has taken the stock to the recent low of Rs 278.

Long-term support for the stock exists at Rs 300. Since the stock has already breached this support, it can now head towards the next long-term support that exists at Rs 230.

Exit at current levels and re-enter once there is a close above Rs 375.

Please give your medium term technical view for SRF.

Can one buy at the current price of Rs 117 for holding period of six to 12 months? Venkatraman .J

SRF (Rs 126.6): In our last review of SRF in November 2006, we had given the medium-term target of Rs 284 for this stock.

We had also written that the stock can have trouble crossing this level over the next few months.

The stock reversed from a peak of Rs 260 in the same month.

The stock has moved below the long-term support of Rs 140 since then. There are no signs of strength visible in this stock yet. Buying at this juncture can prove to be a risky bet.

Wait for a close above Rs 175 before making fresh purchases. Rally past Rs 175 can take the stock towards Rs 210 and then Rs 240.

I am a long-term investor. I am holding shares of Voltas at Rs 120 and Hind Oil Explorations at Rs 102.

Please advice whether I can buy more at current levels? Ganesh

Voltas (Rs 86.5): You have purchased the stock near its all-time highs. But the long-term prospects of this stock have not deteriorated too much yet.

The long-term support for Voltas exists at Rs 75. If the stock price stabilises above this level, we can see the stock making a new high over the next one year.

However, a fall below Rs 75 can see the stock reaching the July 2006 low of Rs 63. Hold with a stop at Rs 60. You can buy more on dips with the same stop.

Hindustan Oil Exploration (Rs 65.1): The long-term support for HOEC exists at Rs 80. We had advised investors to keep their stops just below this level in our last review of this stock.

But the stock price has now moved below this support. The next long-term trend line is present at Rs 56. Investing in this stock at current levels is not advisable as the stock can lose further ground.

Buy if there is a strong reversal from Rs 56. Else wait for a close above Rs 90.

A firm close above Rs 90 can trigger a medium-term up trend that can take the stock price to Rs 108 and then Rs 122.

I have purchased HDFC at Rs 1,650. I am a long-term investor. How long should I wait before I can get Rs 2,200? What is the long/medium term price target for Hindustan Motors? Venkat

HDFC (Rs 1,594.4): HDFC is in a medium-term down trend since February 7. This down move is correcting the six-month rally witnessed since July 2006. The subsequent retracement targets fall at Rs 1,400 and then Rs 1,300. The long-term outlook will not be threatened unless there is a fall below Rs 1,300.

The stock will face resistance at Rs 1,621 and then at Rs 1,681 in the short term. A close beyond Rs 1,681 is required to signal that the stock is heading towards a new high. Hold with a stop at Rs 1,380.

Hindustan Motors (Rs 34.6): Hindustan Motors has strong intermediate term resistance at Rs 47. The stock has been moving between Rs 25 and Rs 47 over the last seven months. This range can continue to rein in the stock price for a few more months. Profit-booking is recommended as the price nears Rs 47.

Long-term support for the stock exists in the band between Rs 25 and Rs 28. Long-term investors should exit the stock if the price moves below Rs 25. Rs 47 is a strong resistance for the long term as well.

I am deeply worried over the fate of Powersoft Global Solutions and Birla Power Solutions. I purchased the above two scripts through IPO. Kindly advise me whether I should hold or dispose of. I wish to know the special reasons if any, for the present disaster. S. Rajasekharan Nair

Powersoft Global Solutions (Rs 10.9): This was one of the IPOs that were listed just before the crash of May 2006. The high of Rs 26.7 made on the day of its listing has not been visited since. The trend in the stock is very weak.

The price will struggle to rally past Rs 17 over the next few months. Support exists at the July 2006 low of Rs 7.6. Utilise any short-term rally to exit this stock.

Birla Power (Rs 26.3): In our last review of this stock on August 13, 2006, we had recommended exiting the stock if there is a rally to Rs 30. The stop loss was suggested at Rs 17.

The stock made a high of Rs 40 in October 2006 and has been consolidating since then.

The long-term trend continues to be down and it will turn positive only if the stock price closes firmly above Rs 52. But the fight-back seen since the June 2006 lows is promising.

If the stock sustains above Rs 24 over the next month, we can see an upward move that takes the price to the resistance zone between Rs 48 and Rs 52.

Exit your holding if the stock is unable to move past Rs 52. The stop loss can continue to be at Rs 17.

I bought Reliance Communications at Rs 470. This stock has fallen a lot. I'm a medium-term investor, I can hold up to six months. What is the future of this company? Satish Babu Samayamantula

Reliance Communications (Rs 425.5): Reliance Communications has begun a bounce back last week along with the rest of the large-cap stocks. The short-term resistances exist at Rs 438 and then at Rs 465. A rally past Rs 465 will signal that the stock is heading for a new high at Rs 576.

The retracement of the upward move from the low made in June 2006 gives us support at Rs 353 and then at Rs 315. Long-term reversal will be signalled only if the stock price dips below Rs 315. Since the long term 200-day moving average is positioned at Rs 350, the stock is likely to reverse its intermediate-term down move above this level. Hold your shares with a stop at Rs 345. A reversal from this level will provide an opportunity for investors to make fresh purchases.

Your valuable comments are solicited on Media Video purchased at Rs 51. I want to know whether I can buy more, hold or sell. S. Haja Najeemudeen

Media Video (Rs 42.0): The short-term support for the stock exists in the zone between Rs 39 and Rs 40. If the stock manages to stay above this level, we can see the resumption of the up trend that can take the stock price up towards Rs 65 and above that to Rs 81. Hold the stock with a stop at Rs 38. You can add to your position if a reversal is observed from the support zone mentioned above.

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