The Hindu Business Line : Query corner

Marg Constructions (Rs 152.3): In our previous review of this stock in early December 2006, we had expected a rally to Rs 300. The stock peaked at Rs 311 in February 2007 and has lost 50 per cent from this peak. Though, the stock is trying to stabilise in the band between Rs 140 and Rs 190, a close past Rs 200 should be witnessed before the medium-term trend can be pronounced as neutral. Since the long-term support for the stock is present at Rs 120, hold the stock with a stop at Rs 120. The stock could struggle to rally above Rs 245 over the next one year. Exit the stock as it nears this price.

Please give the outlook for Gujarat NRE Coke. Sukumar G. Joshi, K. Bhujonga Nayak, R. Mohan, Khayum Pasha

Gujarat NRE Coke (Rs 61.3): In our last review of Gujarat NRE Coke in April, we had indicated that the stock has the potential to move to Rs 62. The stock has achieved this target. A strong intermediate-term resistance is present at Rs 63. The stock can reverse from here and head back towards Rs 27. Short-term investors can book partial profits around this level and hold the rest with a stop at Rs 48. A breakout beyond Rs 63 will take the stock towards the previous high of Rs 85 again.

Please let me have your view on Indian Overseas Bank bought at Rs 95. K. Srikanth

Indian Overseas Bank (Rs 114.3): The upward move that began from the June 2006 trough continues to be in force in Indian Overseas Bank. The third part of this move seems to have taken off after the correction witnessed in February. This wave has the upward targets of Rs 125 and then Rs 148. Short-term resistance will be encountered at Rs 128. Since the stock is reversing from Rs 126, you can book partial profits around this level. Stop loss for the rest of your holding should be at Rs 88.

I am holding shares of Spicejet purchased at Rs 48. Should I hold these shares or sell them? I also want your advice regarding IFCI purchased at Rs 47. Pavan

Spicejet (Rs 55.8): If you are a short-term investor, we recommend selling Spicejet at these levels since the stock faces strong resistance at Rs 65 in the near term. However, the weekly chart is showing promise. The stock is reversing from the long-term support that exists in the band between Rs 40 and Rs 50. A move past Rs 65 can take the stock to the next target at Rs 85. Investors who can hold for more than six months can do so with a stop at Rs 45.

IFCI (Rs 49.1): IFCI has formed a classic cup and handle formation in the monthly charts between 1998 and 2006. The break-out from this pattern occurred in January 2007, accompanied by very strong volumes. The target for the stock as per this pattern is Rs 50. This target has already been achieved. As per monthly charts, the stock can rally up to Rs 63. The narrow move between Rs 46 and Rs 51 indicates that the stock could be preparing for yet another spurt upwards to Rs 55, Rs 61 and then Rs 67. Hold the stock with a stop at Rs 44. Dips can be utilised to increase the holdings with the same stop.

I hold Mysore Cements bought at Rs 48. I can wait for one year. Please suggest whether I should hold or exit. A. Jeyaprakash

Mysore Cements (Rs 50.7): Mysore Cement has launched in to a long-term bear phase since January. But it has managed to halt at the long-term trend line that is positioned at Rs 38. The outlook for the next one year will not deteriorate further unless the stock closes below this support. You can hold the stock with a stop at Rs 37. The important resistance for the stock over the next one year will be at Rs 52. You can exit your holding if the stock struggles to close above this level. If the stock closes above Rs 52, the subsequent target would be Rs 55 and then Rs 59.

What is the short-term outlook for Great Eastern Shipping? Francis K. A.

Great Eastern Shipping (Rs 342): Great Eastern Shipping witnessed a sharp surge since March 2007 that resulted in a gain of over 70 per cent for the stock. This up trend is not showing any sign of fagging. The shallow corrections imply that buyers are willing to take fresh positions at every dip. The short-term targets for this stock are Rs 314 and then Rs 338. Since the stock has moved beyond these targets, hold with a trailing stop of 10 per cent.

Should I hold or sell Cipla bought at Rs 230 each? A. J. Sundar

Cipla (Rs 209.7): The stock is recording consecutively lower peaks and troughs and is currently ruling below the long-term average lines. This is a sign of short-term weakness in the stock. The stock can drift lower to Rs 188 or Rs 175 over the medium term. If your investment horizon is short, you can exit at current levels and re-enter as the stock closes above Rs 230. Long-term investors need to hold this stock with a stop at Rs 170. The stock will be able to bounce off this support, should there be a drastic fall.

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