The Hindu Business Line : Query corner

Sanghvi Movers (Rs 640.9): This stock has had a spectacular run from the low of Rs 19 in March 2004 to Rs 913 in May 2006. The stock has been moving in a broad sideways range between Rs 900 and Rs 600 since then. This move can be construed as a consolidation phase and is positive from a long-term perspective. The immediate support for the stock exists at Rs 560, where the low was formed in July 2006. Medium term investors can hold the stock with a stop just below this level.

Medium term resistance for the stock exists in the zone between Rs 700 and Rs 725. Partial profit can be booked if the stock struggles to rise above this level. A close above Rs 725 can take the stock to the next resistance at Rs 800.

Aridhi Hi-tech Industries (Rs 8.7): The steep drop in this stock in February leads us to assume that the run-up in late January was purely speculation driven. Any short-term rallies will face resistance from Rs 11. It would be prudent to exit the stock if such rallies occur. Supports in the short term would be available at Rs 7. Exit the stock if the price dips below this support.

Please highlight the prospects of Geometric Software acquired between Rs 100 and Rs 140. B. D. Sen

Geometric Software (Rs 101): In our last review of this stock, we had pointed out that Geometric Software had made three attempts to get past Rs 130, making this level a formidable resistance. We had advised initiating fresh position only on a close above Rs 140.

The stock has reversed after briefly flirting with the Rs 140 level in January. However, the long- term outlook for this stock remains positive. Currently, it is consolidating in a range between Rs 80 and Rs 130. Long-term investors can stay invested as long as the stock stays above Rs 80. If the stock dips below Rs 80, it can head towards Rs 70.

In the near-term, the stock can slide lower. The short-term risk will be mitigated only if the stock manages a firm close above Rs 115.

I have purchased MRPL at Rs 54. Can I hold the stock or purchase some more? Sudheer V, Shanbhag

MRPL (Rs 33.5): Investors in MRPL would have had a trying time over the last three years as the stock went absolutely nowhere though Sensex kept notching new highs. The price is confined within Rs 60 and Rs 30 since 2004.

The stock price is currently inching towards its long-term support at Rs 30. A bounce is possible from here that takes the stock to Rs 50 again. Hold with a stop at Rs 28. Exit the stock the next time it nears your cost price. Purchasing additional quantity is not recommended in this stock.

Please give your advice on Nocil purchased at Rs 21 two years back. Deenadayalu

Nocil (Rs 21.7): This stock has been in a downtrend over the last couple of years, registering successive lower peaks and troughs. The long-term trend line present at Rs 21 should support this stock in the near term. A fall below this level will take the stock to the June 2006 low of Rs 17. Hold the stock with a stop at Rs 17.

There can be a bounce to Rs 25 or Rs 27 where you can exit the stock.

Kindly give your advice on 50 shares of Paper Products purchased at Rs 420. A. R. Bhatt

Paper Products (Rs 341.1): This stock has reversed sharply from the peak of Rs 415 formed in February. Since the rally that preceded this peak was rather laboured, this fall seems like the continuation of the downward move that commenced from March 2006.

The short-term outlook is rather bleak as there is no meaningful recovery in sight yet. However, long-term support for the stock exists at Rs 276 and then at Rs 250. Long-term investors can hold the stock as long as it sustains above Rs 250.

Resistances in the immediate future will be at Rs 350 and then at Rs 375. A close beyond Rs 375 is required to signal that the long-term up trend has resumed in the stock.

I bought Four Software at Rs 86 and Indoco Remedies at Rs 380. Please advise whether I should hold or sell the stocks at current level? Divesh Rathod

Four Software (Rs 59.1): The stock has strong intermediate term support at Rs 55. If the stock manages to sustain above this level, we can see another rally that takes the stock upwards to Rs 89 and then to Rs 109. Hold the stock with a stop at Rs 54. A dip below Rs 55 can take the stock to Rs 46.

Indoco Remedies (Rs 273.6): This stock has been oscillating in a wide range between Rs 200 and Rs 400 over the last two years. The intermediate-term resistance for the stock exists at Rs 360. Inability to cross this level will keep the stock stuck to the range between Rs 200 and Rs 360 for a few more months. Hold the stock with a stop at Rs 220. Try to exit as the stock nears your cost price.

I am holding 170 shares Peninsula Land purchased at Rs 524 and 150 shares of Nagarjuna Constructions purchased at Rs 190. Give me the outlook for these stocks. Sai Gautham, Suresh Kumar Yadav, Swaraj Sundar

Peninsula Land (Rs 344.2): The stock gained a whopping 163 per cent from the July 2006 low that made the stock hit a high of Rs 755 in December 2006. It has since then wiped out the entire gains and is back to its July lows.

It has also breached the long-term trend line and can slip towards Rs 234 in the next three months.

We need to see a close above Rs 485 before the short-term outlook turns positive. The stock can then head towards its next intermediate term target of Rs 585. Hold with a stop at Rs 270 and exit the stock as it rallies to Rs 485.

Nagarjuna Constructions (Rs 157.0): The steep fall witnessed in this stock since February has halted near the intermediate-term support of Rs 150. The stock is trying to build a base in the zone between Rs 140 and Rs 170.

But the upward move in the stock can face strong resistance at Rs 180. A close above Rs 180 can take the stock to the medium term targets of Rs 190 and then Rs 200.

Hold with a stop at Rs 140. Exit part of your holdings if the stock fails to overcome the hurdle at Rs 180.

Let me know whether I can hold Canara bank and Cipla? Ravi Kumar Ranga Samy, Manjiri Karkare

Canara Bank (Rs 187.3): This stock has wiped off the entire gains that it recorded in the second part of 2006. It is currently poised on its long-term trend line that is positioned at Rs 176.

If the stock moves any lower, there is a strong long-term support in the zone between Rs 158 and Rs 165. Long-term investors can hold the stock with a stop at Rs 155.

However, the short-term outlook is rather weak for this stock. The stock might be unable to rally above Rs 240 over the next six months.

A breakout beyond this level is required to signal that the long-term trend has turned up again. Short-term investors can use rallies to exit the stock.

Cipla (Rs 232.4): In our review of Cipla in November 2006, we had noticed a rounding top formation that was expected to pull the stock price lower to Rs 240. The stock has fallen below Rs 240 to record a low of Rs 215 in March. This is an important intermediate term support. Investors can hold the stock with a stop at Rs 210. A reversal from these levels can take the stock up to Rs 275 and then Rs 300 over the next one year.

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