The Hindu Business Line : Query Corner

Reliance Natural Resources (Rs 46.3): Since RNRL was listed in March 2006, the stock does not have adequate data to help us form an opinion for the long-term. The immediate term outlook is positive until the stock trades above Rs 38. I t may witness some weakness in the short-term that drags it lower to Rs 40 or Rs 38. Watch out for buying opportunity around these supports. The stock can rise to Rs 52 over the medium term.

Please let me know the prospects of SREI Infrastructure. Krishna Parameshwar

SREI Infrastructure Finance (Rs 97.8): In our previous review of this stock in February, we had advised holding the stock with a stop at Rs 42 as it was expected to rally to Rs 70 or Rs 85 over the next one year. The stock has surpasse d both these targets and is moving in a range between Rs 85 and Rs 105 since June 2006. The outlook for this stock stays robust until it stays above Rs 84. Fresh buys can be initiated with a stop at Rs 82. A breakout above Rs 105 can propel the stock towards Rs 128 and then Rs 152 over the next one year.

I bought Atlanta at Rs 410. What are the prospects for this stock? Should I exit booking loss? K. P. Sharma, E. Judha

Atlanta (Rs 280.4): Investors in this stock have had a horrendous time this year as the stock plummeted from over Rs 1,000 to Rs 231. The recovery in April was arrested at Rs 492 and the stock is sliding lower again. The all-time low f or the stock is Rs 170. Hold the stock until this level holds. If the stock sustains above Rs 200, a medium-term rally to Rs 612 or Rs 700 can be expected where you can exit the stock.

I have Taj GVK at Rs 200 and Igate Global Solutions at Rs 320. Please give a technical view on the two stocks. G. D. Bhatia

Taj GVK Hotels (Rs 152.6): Taj GVK Hotels is in a long-term bear phase since the peak formed in May 2006. It has already retraced 50 per cent of the gains made since 2003. The stock is currently halting above the crucial long-term supp ort that exists at Rs 153. It has bounced from this level twice since June 2006. Investors can hold the stock with a stop just below, at Rs 150. But chart patterns suggest that the stock can move lower to Rs 125. Fresh positions should be initiated only if the stock closes above Rs 200.

Igate Global Solutions (Rs 239.5): Igate Global is moving in an upward moving trend channel since 2003. The stock has reversed from the upper boundary and is now headed for the lower boundary of the channel that is positioned at Rs 167 . The fact that the stock has also moved below the intermediate term support at Rs 255 corroborates this view.

The medium term outlook will turn positive only on a close above Rs 320. You can exit the stock at current levels and consider re-entry around Rs 170 or if the stock moves above Rs 320.

I have bought ABG shipyard at Rs 590 and Elecon Engineering at Rs 620.Can you please tell me the prospects of both these companies in the short and the medium term? Shekhar Pylur

ABG Shipyard (Rs 507.7): A significant intermediate term trough was formed in ABG Shipyard in December 2006 at Rs 208. The stock has not looked back since. This intermediate term up-trend will remain in force until the stock sustains a bove Rs 460. However, the correction that commenced last week can drag the stock down to this support. A move below will make the stock dip to Rs 423 or Rs 373. Hold the stock with a stop at Rs 460. If your stop loss is hit, then exit the stock and watch for buying opportunity around Rs 400.

Elecon Engineering (Rs 600.6): Elecon Engineering has given multi-fold returns to the investors since 2004 when it was available at less than Rs 10 per share. This long-term up-trend continues to be intact. But one leg of this long-ter m up-trend could have been completed at the recent high of Rs 660. The stock could move lower to the support band between Rs 525 and Rs 536 in the near term. Short-term investors can hold the stock with a stop at Rs 520. A fall below Rs 520 will take the stock to Rs 440. The positive outlook for the long-term will stay until the stock trades above Rs 440.

I hold Action Construction Equipment bought at Rs 310.What does its chart depict? I also hold Neyveli Lignite bought at Rs 78. Can I hold it for six months? J. J. Pinto

Action Construction Equipment (Rs 308.4): The stock is in an intermediate term up trend since the March trough of Rs 162. But the current up-move would face resistance from Rs 315. A reversal from this zone can make the stock fall to R s 270 or Rs 250. Hold the stock with a stop at Rs 265. If you are a short-term investor, you can exit at current levels and re-enter on a firm close above Rs 340.

Neyveli Lignite (Rs 76.7): Neyveli Lignite has not really done much, oscillating in a band between Rs 50 and Rs 85 since 2004. The stock has reversed from the Rs 85 resistance twice since August 2005. Since the rally from the March 200 7 trough was also thwarted by this resistance level, the stock could now head towards the support band between Rs 62 and Rs 65. Short-term investors should exit at current levels. Long-term investors should hold with a stop at Rs 60 and exit the stock the next time it moves to the band between Rs 85 and Rs 90.

I have purchased Biocon at Rs 473 and Dena Bank at Rs 45. Can you please provide me the short term and long term view on these stocks. Joseph

Biocon (Rs 440.1): Biocon has moved out of the long-term bear market that began in April 2004 and a significant long-term low has been formed at Rs 306. The ongoing correction has the initial target at Rs 445 and then at Rs 395. Long-t erm investors can hold the stock until it trades above the second target. Investors with a shorter horizon can hold with a stop at Rs 430. The stock could test Rs 575 over the next one year. A firm break-out beyond this level is required to signal the stock would move to the former peak at Rs 740.

Dena Bank (Rs 57.5): Dena Bank was moving in a long-term range between Rs 20 and Rs 40 since May 2004. The stock finally broke out of this range in May 2007 and went on to record a peak at Rs 61 this week. The volatility witnessed sinc e July 27 suggests that the stock is correcting the rally that began in March this year.

This correction can make the stock move in a range between Rs 48 and Rs 60 for a few weeks before the next leg of the up-move takes the stock higher to Rs 70 or Rs 83 over the next one year. A fall below Rs 48 will, however, dilute the positive intermediate term outlook.

I have bought IVRCL at Rs 320. What are the prospects of this company? Should I hold or exit from the stock at current levels. P. S. S. Reddy

IVRCL (Rs 380.7): IVRCL has made a significant trough at Rs 241 in April this year. The rally since then peaked at Rs 445 in July. The current correction could halt in the support zone between Rs 350 and Rs 360. Short-term investors sh ould hold the stock with a stop at Rs 345. Long-term investors can hold with a deeper stop at Rs 318. — Lokeshwarri S.K.

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