The Hindu Business Line : Query Corner

Sundaram Fasteners (Rs 62.9): The up move that commenced in 2001 in this stock ended in May 2006. The stock has been in a long-term bear phase since.

The correction of this move can make the stock move in the range between Rs 50 and Rs 95 for six to 12 months before the stock breaks-out upwards again. Long-term investors can hold the stock with a stop at Rs 50. Fall below this level will drag the stock to Rs 40.

Though the long-term outlook is positive, the stock could continue to witness volatility in the immediate term. The area around Rs 74 will be a strong hurdle over the next three months.

A close above this level is required to signal that the stock is on the road to recovery again. Investors with a shorter horizon can exit in this area.

I have been allotted 80 Shares of Power Finance at Rs 85. Please let me know the future prospect of this stock. Should I hold or exit at these level. Manoj Kumar Garg

Power Finance Corporation (Rs 144.4): This stock made a peak at Rs 167 in May and has been sliding lower since then. The correction has halted at Rs 140.

That is the first support for the stock. A slide below this level will take the stock to Rs 134 or Rs 126.

The up-trend in the stock will be terminated only on a fall below Rs 126. Hold the stock with a stop at Rs 120.

If the stock manages to stay above Rs 140, it would denote strength. The stock can then consolidate between Rs 140 and Rs 170 for a few months before moving higher to Rs 180 and then to Rs 247.

I have purchased 1,000 shares of Nucleus Software at the average price of Rs 750 and Igarashi Motors at Rs 105. I can hold them for five years. Kindly give the target price for both these stocks. Rajleen Singh

Nucleus Software (Rs 1,013.1): Nucleus Software had a spectacular run from the June 2006 low of Rs 245 to Rs 1,199 in February 2007. The stock is currently charting a triangle that is a continuation pattern.

The long-term uptrend in the stock seems set to continue after this congestion phase. There is a strong support in the band between Rs 850 and Rs 900.

If the stock manages to hold above this support, it can move higher to Rs 1,450 over the next one year. Hold with a stop at Rs 840. Use dips to add to your holdings with the same stop.

Igarashi Motors (Rs 90.4): This stock has launched in to structural downtrend after recording a triple top around Rs 230. The long-term supports have been shattered in this stock.

It is also trading below its long-term averages. A close above Rs 140 is required to indicate that the fall has been stemmed and the stock can move higher to Rs 165.

We recommend an exit at current levels. Re-entry can be considered once the stock closes above Rs 140.

Please give the long-term and short-term outlook for Vardhaman Textiles bought at an average of Rs 283 per share and Finolex Cables purchased at Rs 98 per share. Dr M. Ratnakar Shet

Vardhaman Textiles (Rs 185.5): Vardhaman Textile is halting at the long-term support of Rs 180. A reversal from this zone can make the stock move up towards Rs 330 over the next one year.

Long-term investors can hold the stock with a stop at Rs 165.

The short-term targets for the stock are Rs 246 and Rs 272. Investors with a near-term perspective can exit the stock at the first target. Stop for short-term would also be at Rs 165.

Finolex Cables (Rs 91.7): This stock is consolidating in the band between Rs 80 and Rs 110 since January 2007. This move is correcting the sharp surge recorded post June 2006.

If the correction does not make the stock fall below Rs 80, it will be construed a positive sign for the long-term. In this event, we can expect the stock to move higher to Rs 122 over the next one year.

A fall below Rs 80 will take the stock to Rs 69. Long-term investors can be sanguine as long as the support at Rs 69 holds.

Short-term investors can hold the stock with a shallower stop at Rs 78.

Short-term target for the stock is Rs 98.

I would like your advice on Transgene Biotek bought at Rs 265 per share and K Sera Sera purchased at Rs 98 per share. Siddhartha Raizada

Transgene Biotek (Rs 72.4): Vertical up-moves accompanied by sharp surge in volumes are a perilous combination denoting manipulative action.

This stock zoomed upward with a sharp surge in volumes in December 2005 and January 2006.

There was a lull thereafter as the stock went in to a tailspin falling from Rs 320 to Rs 60 in six months.

Chart patterns imply that the run-up in December 2005 and January 2006 was akin to a bubble and hence the level of Rs 265 will be extremely difficult to re-attain.

However, there can be short-term rallies to Rs 120 or Rs 165, which can be used to dispose off your holding. Till then, hold with a strict stop at Rs 44.

K Sera Sera Productions (Rs 18.4): This stock too is in a vicious downtrend. The stock will struggle to surpass Rs 50 over the next one year.

We suggest switching from this stock, as the bottom is not in sight.

I am holding GIPCL purchased at Rs 70. Please tell me the future of this stock. Can I buy more at current levels? Mahesh Patel

Gujarat Industries Power Company (Rs 64.6): The long-term bear phase that commenced in August 2005 in GIPCL remains in force. The lacklustre performance of the stock in the second half of 2006 underlines this fact.

Though the stock has made a steady progress since the June 2006 trough of Rs 45, a close above Rs 78 is required to make the long-term outlook neutral again.

You can add to your holding beyond Rs 78 with a target of Rs 98.

The stop loss for your present holding can be just below the long-term trend line at Rs 55.

I am holding shares of Karnataka Bank at Rs 170. Shall I hold it for the long term or exit? Please suggest. Mahendra

Karnataka Bank (Rs 169.9): The chart of Karnataka Bank is displaying strength. Movement between Rs 150 and Rs 190 can precede a breakout to Rs 227. You can hold the stock with a stop at Rs 150.

Partial profit can be booked near the previous peak of Rs 192.

What is the short-term target of Gitanjali Gems bought at Rs 217? May I keep it for the long term or sell them after a 20 per cent gain? P. Narayana

Gitanjali Gems (Rs 190.4): Insufficient history makes long-term forecasting difficult in this stock. Gitanjali Gems has strong support at Rs 165.

If the stock bounces off this support, it can head higher to Rs 226 or Rs 258. Hold with a stop at Rs 164.

I have bought Dabur Pharma at Rs 69. Let me know the technical forecast for this scrip. R. Mohan

Dabur Pharma (Rs 78.6): Dabur Pharma has reversed upward from the intermediate term support at Rs 61. Investors can hold the stock till it remains above this level on a closing basis. The breakout witnessed last week has made the stock breach the resistance at Rs 77.

The subsequent targets for the stock are Rs 86 and then Rs 102. Hold with a stop at Rs 74.

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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.

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