The Hindu Business Line : Query Corner

Essel Propack (Rs 79.2): Essel Propack is moving in a narrow range between Rs 67 and Rs 75 since March 2007. Not much can be concluded from this halt since the stock is moving down after making a double top at Rs 96. The long-term trend can be labelled as sideways in this stock and it can spend the next 12 months in the broad band between Rs 60 and Rs 100. Long-term investors can hold the stock as long as it trades above Rs 60.

A strong resistance exists at Rs 78. But the stock has managed to rally past this impediment last week. The stock has also closed above the long-term average. The subsequent targets for the short term are Rs 82 and then Rs 85. Investors with a narrow time frame ought to book profits and exit if the stock struggles to rally past Rs 85. Those contemplating fresh entry can do so with a stop at Rs 76.

Berger Paints (Rs 39.8): You seem to have purchased the share prior to its bonus issue. Berger Paints is in a severe down trend since the peak of Rs 58 made in October 2006. Though the stock is trying to stabilise around the long-term support at Rs 38, chart pattern does not suggest strength. The fledgling rally that is currently underway faces resistance at Rs 41 and then at Rs 44. You can exit the share if it fails to move beyond Rs 44. Downward supports exist at Rs 35 and then at Rs 32.

I have shares of Hotel Leela at an average price of Rs 67. Please tell me the long-term outlook for this stock. Can I buy more at current levels? Bhupender Singh

Hotel Leela (Rs 53.5): This stock made a long-term peak at Rs 88 in May 2006. The move since this peak mimics a converging triangle. The lower boundary of this triangle present at Rs 50 should support the stock in the event of a fall. On the other hand, close above the upper boundary at Rs 65 is required to make the intermediate-term outlook positive and to take the price higher to Rs 72 or Rs 81.

The long-term support for the stock exists at Rs 46 and then at Rs 41. A recovery from these levels can take the stock higher to Rs 68 and then to Rs 80 over the long term. We expect the stock to be stuck to the broad range between Rs 50 and Rs 90 for the next one year. Long-term investors can accumulate in the band between Rs 45 and Rs 50 with a stop at Rs 38.

I am holding shares of KRBL bought at the average price of Rs 150. Shall I hold it for long term? A. Myilsami

KRBL (Rs 116.4): KRBL had an almost vertical drop from the January peak of Rs 194 and is currently perched on its long-term trend line. The stock needs to reverse from this juncture if the long-term outlook has to stay positive. Move below Rs 99 can drag he stock to Rs 77 again. Hold the stock with a stop at Rs 98. There can be a short-term rally to Rs 135 or Rs 150, which should be used to reduce your holding.

Kindly let me know the short term and long-term outlook of Ansal Properties and Infrastructure purchased at Rs 18.5 and Indiabulls Real Estate purchased at Rs 300. G. K. Jain

Ansal Properties and Infrastructure (Rs 281): This is a volatile stock akin to rest of the real estate pack. The long-term support for this stock exists at Rs 220, where the stock reversed in April. If the stock moves below this support, the next halt can be at the July 2006 trough of Rs 153. Long-term investors can hold the stock till it sustains above Rs 150. Since the stock has the tendency to move swiftly in both direction the target over the next one year can be Rs 430.

The resistance for the short term will be experienced in the zone between Rs 320 and Rs 350. If the stock struggles to surpass this zone some sideways move between Rs 350 and Rs 200 is possible over the next three months. Short-term investors should hold with a stop at Rs 215.

Indiabulls Real Estate (Rs 569.6): Indiabulls Real Estate is in a strong long-term uptrend. This positive outlook will be threatened only if the stock closes below Rs 366. Investors with a long-term timeframe can hold the stock with a stop at Rs 360. A move below this support will take the stock to Rs 315 or even Rs 260.

A short term up trend is in place since April 3. This rally can extend to take the stock to Rs 568 and then Rs 608. Short-term investors can buy in dips with a stop at Rs 445.

Kindly share your views on Accel Frontline. Is it a good share to buy at current levels? T.V Sathish

Accel Frontline (Rs 64.4): Lack of history makes it difficult to give a view on the long-term prospects of this stock. The near-term resistance for Accel Frontline exists at Rs 80. Fresh purchases should be made only if the stock closes above this level, with the intention of booking profits at Rs 95 or Rs 120.

Please tell me the future prospects of BSEL Infrastructure and NCL Industries. I hold BSEL at Rs 88 and the shares of NCL were purchased at Rs 60. What target will I get if I hold for one year? Tushar Ambre, S. Meikanda Vishnu Sathurappan

BSEL Infrastructure Realty (Rs 74.2): The long-term up-trend that began in 2003 is still in force in BSEL Infrastructure Realty. Though the volatility since May 2006 has been intense, a significant long-term low seems to have been formed at the July 2006 low. This up trend is intact despite the fall from Rs 99 in February 2007. The stock can move higher to Rs 100 or Rs 123 over the next one year, provided that the low of Rs 60 holds.

The short-term resistance for the stock is present at Rs 75 and then Rs 85. Inability to rally past Rs 75 in the near term can see the stock moving sideways in the range between Rs 60 and Rs 75 for a few weeks before a clear direction emerges. Hold with a stop at Rs 58. Move below this support will drag the stock to Rs 36 again.

NCL Industries (Rs 38.5): The long-term trend has turned downward in this stock. NCL Industries has strong resistance for the near term in the band between Rs 45 and Rs 48. If the stock price fails to go above this resistance zone, then it can move lower towards the next long-term support of Rs 28. Hold with a tight stop at Rs 35. We do not envisage a movement beyond Rs 50 in the next one year.

It is always seen that once the stock has entered the overbought or oversold area of RSI, it remains there for variable period of time. How can one estimate this period? Or is it better to wait for the breakout to happen and then take a decision? S. V. Kumthekar

It is not possible to predict the period that the Relative Strength Index (RSI) would spend in the overbought or oversold zone. When a stock is in a prolonged up trend or down trend, the RSI can reach the overbought or oversold zone fairly quickly but stay there for an extended period, with out signalling a trend reversal.

It is best to wait for the indicator to move out of these zones and also move above/below the RSI average line before ensuring a buy or sell signal.

Another method of ensuring a trend reversal is waiting for the RSI to move above/below a reading of 55. If the breakout is a false one, the RSI would fail to cross the 55 level and would go back to where it came from.

I have 500 shares of IndusInd Bank at Rs 42.60. What is the short-term outlook for this stock? Ganesh Hegde

Indusind Bank (Rs 47.8): The medium-term trend in this stock is down since the high of Rs 63 made in February. The rally that began last week will face resistance from Rs 53.

A move beyond Rs 53 would make the short-term outlook positive and the stock can then move higher to Rs 63. The long-term trend in this stock is down since August 2005.

A firm weekly close above Rs 65 would be one of the indicators that the long-term outlook in this stock is turning conducive.

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