The Hindu Business Line : Query Corner

Ansal Housing (Rs 232.7): Ansal Housing is currently retracing the upward move it recorded from Rs 127 to Rs 397. The stock is halting at the support at Rs 233. A reversal from here has the potential to take the stock up towards Rs 320 and then Rs 400 over the medium term. Hold the stock as long as it trades above Rs 210. If the stock falls below this support, it can then head towards Rs 197 or even to Rs 130.

Liberty Shoes (Rs 137.6): The run-up in Liberty shoes in September and October 2005 was akin to a bubble as the stock gained about 140 per cent in four weeks. The peak of Rs 326 might not be revisited anytime soon. Unfortunately, the v olumes peaked between September and November 2005 while the bubble was forming. Most of the retail investors seem to have hitched on to the stock in this period.

The stock is currently ruling 50 per cent below its October 2005 peak. The long-term support exists at Rs 145 around, which the stock is currently oscillating without showing any signs of strength. Any attempt at rallying will meet resistance at Rs 170 and then Rs 200. Exit the stock once it reaches these levels. Stop loss can be maintained at Rs 120.

I have shares of Richa Knits allotted in the IPO at Rs 30. Should I book the loss now? Also advise whether Lakshmi Machine Works deserves investment at this stage. Dr Biju Govind, A. Pandiaraja

Richa Knits (Rs 18.6): Richa Knits made a trough at Rs 16.3 in December 2006. The stock has tested this level thrice since then. You can continue to hold this stock as long as it trades above Rs 15. There can be intermittent rallies to Rs 25 or Rs 31, where you can exit the stock.

Lakshmi Machine Works (Rs 2,902.9): Lakshmi Machine Works has lost about 32 per cent since the peak of Rs 4,250 recorded in January 2007. The stock is currently trying to stabilise in a narrow band between Rs 2,500 and Rs 2,900. The ne xt intermediate term support for the stock exists at Rs 2,370. We do not expect the stock to fall below Rs 2,370. Investors can buy in the current range with a stop at Rs 2,300.

The short-term resistance for the stock would be at Rs 3,100. Rally past this level would make the short-term outlook neutral and pave the way for a rally to Rs 3,300 and then Rs 3,450 over the next one year.

I hold Alok Industries bought at Rs 60 per share and Balaji Telefilms bought at Rs 245 per share. What are the short term and long term prospects for these two shares? Sankar K

Alok Industries (Rs 58.9): In our last review of this stock in December 2006, we had mentioned that the downside seems limited to Rs 50.Alok Industries has made a low at Rs 50 in March 2007 and is in the process of staging a recovery f rom this level. The stock will continue to face resistance from Rs 70 in the medium term. A firm close beyond this level is required to signal that the stock can move on to the next target at Rs 80.

Since the stock is currently correcting the long-term up-move recorded between 2001 and 2006, the sideways move between Rs 40 and Rs 100 can prolong for a few years before the stock launches in to the next leg of the up-move. Long-term investors can stay invested until the support at Rs 50 holds. Fall below Rs 50 will take the stock to Rs 41. Investors with a shorter time frame can buy near the lower boundary and book profit above Rs 80.

Balaji Telefilms (Rs 231.4): The movement of Balaji Telefilms since 2000 can be enclosed in an upward moving trend channel. The stock has managed to break-out of this channel in May 2007 and is consolidating in a range between Rs 200 a nd Rs 250 since then. This move is conducive to the extension of the move that began from the March 2007 low of Rs 104. Though, Balaji Telefilms can remain in this range for a few more months, the next leg of the up-move will take the stock to Rs 297 or Rs 358.

Investors with a longer time horizon can stay invested in the stock as long as it trades above Rs 200. Short-term investors can book some profits near the upper end of the current range, at Rs 250.

What is the short-term outlook for Jaiprakash Hydro Power and Andhra Petro Chemicals? Shiva Kumar

Jaiprakash Hydro-Power (Rs 36.9): Jaiprakash Hydro has been unable to move beyond the constraining boundaries at Rs 20 and Rs 40 since 2005. The immediate resistance for the stock would come from the February peak of Rs 37. A move beyo nd this peak will take it to the upper end of the long-term trading range, Rs 40.

Since the stock is near the upper boundary of a long-term trading range, a reversal from the current levels can make the stock fall towards Rs 29.

Hold with a stop at Rs 32. Fresh buys are not advised at this point.

Andhra Petro (Rs 21.4): In our last review of this stock is September 2006, we had remarked that a long-term trough had been formed at the June 2006 low of Rs 7.2 and that the stock can rise to Rs 21 if it gets past the resistance at R s 16.

Andhra Petro has moved past the second target this June and has made an all-time high at Rs 23.6. The stock can react in the short-term to Rs 19 or Rs 17.5.

If the support at Rs 17.5 holds, the stock can move on to Rs 29 over the medium term. Medium term investors can hold with a stop at Rs 17. Short-term investors can watch out for buying opportunity in the zone between Rs 17 and Rs 19.

Could you enlighten me on the short to medium term prospects of Reliance Capital. I have bought this stock at Rs 1,100 for medium term. Milan

Reliance Capital (Rs 1,148.6) The vertical move recorded by Reliance Capital since March 2007 leads to the assumption that this is a very strong third of third of the move that commenced in 2003.

Since a five-wave move from the March low is nearing completion, the fourth minor of the third wave can drag the stock to the zone between Rs 920 and Rs 950 before the fifth minor of the third unfolds.

To put it simply, though the stock can move lower in the short-term, the strong up move that commenced in 2003 is far from complete. A sideways move between Rs 900 and Rs 1,200 for a few months is possible before the last leg of the long-term move takes the stock beyond Rs 2,000.

Long-term investors should hold the stock with a stop at Rs 900. Short-term investors can exit here and look for buying opportunities below Rs 1000.

Kindly advise the right entry price for NIIT. T. V. Sathish

NIIT (Rs 1,118.5): Investors who purchased NIIT during the technology bubble of 1999 and 2000, above the price of Rs 3,000, would be getting that faint glimmer of hope, now that the stock has raced past Rs 1,000. But the stock has not provided too many entry points since October 2006 as it rose steadily from Rs 300 to Rs 1,090.

Long term investors can buy at the current juncture with a stop at Rs 850. Investors with a shorter horizon can initiate fresh buys with a stop at Rs 930.

The near term targets for the stock are Rs 1,201 and then Rs 1,380. The medium term target for the stock is Rs 1,500.

Readers can send in their queries, on not more than two companies, to techtrail@thehindu.co.in Queries can also be sent by post to: Tech Trail, 859/860 Kasturi Buildings, Anna Salai, Chennai 600002. 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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