The Hindu Business Line : Query Corner

Yes Bank (Rs 181.85): Yes Bank has a history that dates back just two years. So giving a long-term outlook for this stock would not be possible.

The medium-term outlook for this stock is positive. But there is a convergence of targets in the zone between Rs 215 and Rs 220.

Investors with a short-term perspective can book profits in this zone. A rally above this resistance band will propel the stock to Rs 258. Medium-term investors can hold the stock till it trades above Rs 160.

Please give an example for finding time duration using Fibonacci ratio. Vijayaraja

There are two ways in which the Fibonacci series and the ratios can be used in forecasting the time. The simplest is to start counting from the nearest peak or the trough. The numbers in the Fibonacci series, 1, 1, 2, 3, 5, 8, 13 and so on are the days in which a reversal of the prevalent trend can happen. For example, if the stock has been in an up trend for 28 sessions, trend reversal can occur at the 34th session from the trough (the next number in the Fibonacci series).

The other method employs the ratios 23.6, 38.2, 50, 61.8, 1.618, 2.618 and so on. If an up move has consumed 15 trading sessions, then multiply this number by the ratios and add to the point of termination of the move to obtain the days on which the correction can terminate. Since corrections normally take longer than impulse waves, the ratios 61.8, 1.618 and 2.618 will be more useful in projecting the time duration of corrections.

The caveat does not use time projections in isolation. Always use them in conjunction with other technical tools.

I have recently purchased shares of LIC housing Finance at Rs 205. My investment horizon is around one year. What are the future prospects and the price target? Ravi Kumar, D. Ramraj Naidu

LIC Housing Finance (Rs 201.40): LIC Housing Finance has been moving in a volatile fashion between Rs 120 and Rs 280 since June 2004.

The stock bounced off the lower boundary of this long-term trading band in March and has been moving up strongly since then. However, the critical level for deciding the intermediate-term trend lies at Rs 224.

The stock is halting just below this resistance level. We envisage a short-term trading range between Rs 220 and Rs 195. Fall below Rs 195 will pull the stock lower to Rs 186. Hold the stock with a stop at Rs 180. Firm break above the Rs 225-resistance will take the stock towards its previous all-time high of Rs 283.

Please give your outlook on Investment and Precision Casting bought Rs 215 and Tata Investment Corporation bought at Rs 492. C. Ram Narayan Rao

Investment and Precision Casting (Rs 155.30): This stock has been in a long-term bear market since May 2006. It has lost 65 per cent of its value from this peak. Though the attempts at staging a turnaround have not been convincing so far, the stock is halting at the long-term support that exists at Rs 150.

Long-term investors can hold the stock with a stop at Rs 135. We do not expect the stock to recover beyond Rs 250 over the next one year. Short-term rallies to Rs 180 or Rs 210 can be utilised to pare positions.

Tata Investment Corporation (Rs 461.80): Tata Investment Corporation recorded a peak at Rs 500 in April 2006. The crash in the ensuing two months made the stock fall to a low of Rs 282. The stock has recovered from these lows and is once more near its all-time high.

The recovery from the March lows of Rs 328 could be the commencement of a fresh leg of the long-term bull market that is in place since 2003. A consolidation between Rs 440 and Rs 520 could precede a breakout to Rs 560 or Rs 630 over the next one year.

Conversely, the stock has made three attempts to get past the Rs 500-level since June. A move below Rs 440 can drag the stock to Rs 400. Short-term investors can hold the stock with a stop at Rs 440. Long-term investors can hold the stock with a stop at Rs 390.

What are the future prospects of Tantia Constructions and Indo Asian Fusegear? Dr George Thomas

Tantia Constructions (Rs 117.40): Tantia Constructions is moving sideways between Rs 80 and Rs 170 since June 2006. The stock faces stiff resistance from the Rs 170 level. The medium-term outlook will turn positive only if the stock closes above this level. Else, it will continue to languish in the current trading range or even move lower. Hold the stock with a stop at Rs 85. Consider fresh position only if the stock closes firmly above Rs 170. It can then move towards Rs 195 or Rs 225.

Indo Asian Fusegear (Rs 131.90): This stock has formed a steeple between April and June 2006 when the stock rose sharply from Rs 143 to Rs 320 and then plummeted down to Rs 99, all in the space of two months. Since the run-up prior to the crash reeks of a speculative bubble, the highs of Rs 320 may not be re-visited any time soon. The stock has the near term targets of Rs 158 and then Rs 175. Profits can be booked as the stock nears these targets. The stock could struggle to get past Rs 175 over the next one year.

I have purchased Praj Industries at Rs 550 00 Metal and Power at Rs 18. Please let me have your outlook on both these stocks. Hardev Singh

Praj Industries (Rs 229.10): You have bought the shares of Praj Industries at cum-bonus price. The stock broke out from the long-drawn consolidation phase witnessed in the second half of 2006 in January 2007 and has recorded a 200 per cent gains since then.

Though the stock is presently correcting this meteoric rise, it is too soon to announce that the party in this stock has ended.

The immediate support for the stock exists at Rs 200. A consolidation between Rs 200 and Rs 300 for a few months will be a good platform from which the stock can launch the next leg of its up-move that takes it past Rs 400. Hold with a stop at Rs 170. Utilise dips to buy the stock with the same stop.

Vikash Metals and Power (Rs 15.60): This stock has been stuck in a range between Rs 10 and Rs 17 over the last 15 months. A short-term up trend is in place since April 2007. This up trend will not reverse unless the stock price falls below Rs 14. Hold the stock with a stop at that level. Exit the stock when it moves higher to Rs 19.5 in the near-term.

I had bought Panacea Biotech for Rs 432. What is your outlook for this stock in the short-term? Ajeet

Panacea Biotech (Rs 403.50): Panacea Biotech made a brilliant recovery from the June 2006 low of Rs 240 to Rs 500 in February 2007. The stock is oscillating in a band between Rs 400 and Rs 500 since then in what can be construed as a consolidation before the next spurt upwards to Rs 558 and then Rs 660. The bullish outlook for the stock will stay until it trades above Rs 380. Hold the stock with a stop at Rs 375. — Lokeshwarri S.K.

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