The Hindu Business Line : Query Corner

I am holding shares of Tata Tele Maharashtra bought at Rs 21.65. What are the future prospects of this share in the next one-year? Dr Sudhir Tyagi

Tata Tele Maharashtra (Rs 21.8): We had not expected Tata Tele Maharashtra to surpass the resistance at Rs 24. But the stock moved well beyond this level in February 2007 to record a high of Rs 28.2.

However, this turned out to be a false breakout as the stock sustained above Rs 24 for only three weeks.

The stock has moved below the downward sloping long-term trend line again. That makes the long-term outlook negative for this stock.

We expect the stock to move in a range between Rs 17 and Rs 26 over the next one year. Long-term investors can hold the stock as long as it stays above Rs 17.

In the short term, the stock can slip down towards Rs 17 again. A firm close above Rs 26 is required to take the stock to Rs 29.

I have 300 Talbros Auto shares purchased in the IPO at Rs 102. I have averaged and brought down the price to Rs 65. Shall I exit or hold. Sanjay

Talbros Auto (Rs 50.8): Talbros Auto is in a long-term bear phase. Any attempt at rallying is being met by fresh bouts of selling. The stock has also moved below the long-term trend deciding level of Rs 65.

It is currently nearing the June 2006 low. Any further slide can make the stock head to the congestion zone between Rs 15 and Rs 25. Exit this stock if it moves below Rs 44. If it holds above Rs 44, try to exit as the stock rallies towards your average price.

Kindly give your medium term outlook for Godawari Power and Ispat bought at Rs 102 and Dr Reddy's Lab bought at the rate of Rs 695. Narendra Palnitkar

Godawari Power and Ispat (Rs 111.8): Godawari Power and Ispat dropped more than 64 per cent from its all-time high to register a low of Rs 46 in June 2006. Though the recovery from this low has been gradual, it has been very steady.

The move since this low can be encased within an upward moving channel that gives the stock the medium term target of Rs 127. Breakout beyond Rs 127 will signal the beginning of a fresh intermediate term up-move in this stock.

The medium term support for the stock exists at Rs 93. Hold the stock with a stop at Rs 92. Additional quantities can also be purchased in this stock with the same stop.

Dr Reddy's Lab (Rs 713.1): This stock made a significant long term low in May 2005 at Rs 306. This long-term up-move continues to be intact. The movement since May 2006 mimics a long-term consolidation.

This consolidation is making the stock move in a broad band between Rs 600 and Rs 900. Even if the going deteriorates significantly, we do not expect Dr Reddy's Lab to fall below Rs 520. Long-term investors can utilise dips to the zone between Rs 550 and Rs 650 to make fresh purchases with a stop at Rs 520.

Medium term resistance for the stock exists at Rs 750. Medium term investors can book profits if the stock struggles to rally above this resistance. Rally past Rs 750 will take the stock to Rs 830.

I have purchased 400 shares of Bartronics at the average price of Rs 120 per share and 500 shares of Batliboi at average price of Rs 115 per share.

Please let me know the short-term as well as the long-term targets of both these shares. Altaf Hussain Mithayi

Bartronics (Rs 122.3): Bartronics tried to get past Rs 140 thrice in January and February making a classic triple top in the process. The reversal from this resistance has made the stock fall halfway towards the June 2006 trough.

A short term up trend is currently underway from the recent low of Rs 93. If this support holds, the stock can rally to Rs 150 and then to Rs 187 over the long term. Long-term investors can hold this stock with a stop at Rs 88. Short-term targets for the stock are Rs 122 and then Rs 140.

Batliboi (Rs 102.8): The long-term outlook for this stock is negative. A rally beyond Rs 145 is required to make the long-term outlook positive for this stock.

Since strong long-term support exists at Rs 70, the stock could move sideways between Rs 70 and Rs 145 for a year or two. Long-term investors can hold the stock with a stop at Rs 68.

Strong resistance in the short term exists at Rs 119. Partial profits can be booked if the stock struggles to overcome this resistance.

Kindly advise the outlook for Britannia. B. M. Lal

Britannia (Rs 1,245.4): Britannia Industries under performed the rest of the markets after May 2006. This stock could not stop sliding until July 2006 when it finally bottomed at Rs 1,030. The movement since then has been confined between Rs 1,030 and Rs 1,300.

Despite the lackadaisical movement in the recent past, Britannia Industries is interesting from a long-term viewpoint. The long-term support for the stock exists at Rs 1,100. Investors who are willing to hold the stock for more than two years can buy the stock in the band between Rs 1,000 and Rs 1,300 with a stop at Rs 950. A target of Rs 1,600 is possible in the long term.

But the medium term can be trifle vexing, as the stock will find a strong hurdle at Rs 1,400.

This hurdle has to be overcome before the medium term outlook turns positive for this stock.

Kindly explain the future prospects of Essar Steel. Komaragiri Bala Bhaskar

Essar Steel (Rs 40.5): This stock is in a long term down trend since March 2005.

The volumes in this counter have diminished significantly since the slide started in 2005. Since many of the investors have entered this stock at higher levels, they seem to be booking profit every time the stock tries to rally, thus not allowing the stock to record a sustained up-trend.

Essar Steel is currently positioned on its long-term trend line.

Any move below this support will see the stock moving lower to the next support zone that exists at Rs 19. Rallies will face difficulty surpassing Rs 57 over the next one year.

It would be prudent to book some profit at this level and hold the rest with a stop at Rs 29.

Kindly give your medium-term outlook for Hindustan Zinc. Gautam Chand Nahar

Hindustan Zinc (Rs 672.5): The stock price of Hindustan Zinc closely follows the zinc price movement on the London Metals Exchange. The zinc prices on LME peaked in October 2006 and are currently ruling more than 20 per cent below this peak.

Hindustan Zinc made a high of Rs 1,020 in November 2006 and is currently trading at more than 30 per cent below this high.

Short-term resistance for the stock exists at Rs 728. If the stock is unable to rally past this resistance, it can oscillate in the band between Rs 550 and Rs 728 for three to six months. Breakout beyond Rs 728 will take the stock to Rs 840.

Short-term investors can book profits in the band between Rs 720 and Rs 750. Investors with a longer time frame can hold with a stop at Rs 540.

Readers can send in their queries, on not more than two companies, to

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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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