The Hindu Business Line : Query corner

I have purchased Gujarat Industrial Power Corporation at the rate of Rs 93. What are the prospects of this company? Shall I hold on to the share? Varghese John

Gujarat Industrial Power Corporation (Rs 60.6): GIPCL continues to grapple with the long-term bear market that commenced in August 2005. One leg of this down move was completed at the June 2006 trough. The rally in GIPCL in the second half of 2006 is far from convincing and resembles a bear market pull back.

The tentative nature of the rally supports this assumption. You can exit your position if the stock struggles to surpass the Rs 78 level.

A reversal below this level would mean that the stock can head lower towards Rs 58 or even Rs 45 again. Stop loss for investors ought to be at Rs 57.

I am holding shares of Sanghvi Movers bought at the rate of Rs 890 (post split price of Rs 178). What are the future prospects for the company? Can I buy Usha Martin at current market price? Vinod

Sanghvi Movers (Rs 214.6): This stock was moving in a broad range between Rs 120 and Rs 180 since the beginning of 2006. The upper boundary of this trading range was breached this August.

The medium term outlook for this stock will stay positive until the support at Rs 180 holds. The stock has the potential to rally to a high of Rs 280 over the long-term. However, a fall below Rs 180 will negate this outlook and the stock can continue to move in the aforesaid range between Rs 120 and Rs 180. Hold the stock with a stop at Rs 110.

Usha Martin (Rs 231): Usha Martin is currently reversing after recording a peak at Rs 300 in July. The zone between Rs 280 and Rs 300 is a strong resistance band since the stock reversed from this zone in 2000 to form a long-term peak.

Buying the stock at this juncture is not advisable. The near term trend in the stock is weak and it can slip lower to Rs 210 or Rs 199. You can buy the stock if it halts above Rs 200. If the stock slips below this support, it would then head towards Rs 145.

I would like to know the prospects of Mcnally Bharat Engineering Company bought at Rs 189. Vigneshwar Hegde

Mcnally Bharat Engineering Company (Rs 177.2): The long-term up trend that began from the August 2006 trough of Rs 81 in Mcnally Bharat Engineering continues to be in force. A close below Rs 125 is required to reverse this up trend. Im mediate support for the stock exists at Rs 155. The short-term outlook will turn negative on a fall below this level. Short-term investors should hold the stock with a tight stop at Rs 150. Long term investors can hold with a deeper stop at Rs 120.

The stock has already achieved its long-term target for the move that began in 2003. A period of consolidation between Rs 120 and Rs 220 can go on for a year or more before the stock resumes its long-term up-move.

I have purchased Graphite India at Rs 55 and Nagarjuna Fertilisers at Rs 23.5. Please let me have your outlook on both these shares. R. Mohan

Graphite India (Rs 53.3): Graphite India is moving in a range between Rs 50 and Rs 70 since October 2006. The intermediate term outlook for this stock will stay positive as long as it stays above Rs 50.

There is a strong resistance around Rs 70 and the stock is struggling to rally past this level since December 2005. But we expect the stock to break-out above this barrier in the long-term to go past Rs 100.

Hold the stock with a stop at Rs 45. Long-term investors can hold the stock with a deeper stop at Rs 41.

Nagarjuna Fertilisers (Rs 33.7): Nagarjuna Fertilisers, along with the rest of the fertiliser pack have been on an unbridled bull-run this month. This stock has gained over 200 per cent since March this year. It is currently poised at a multi-year high. The previous all-time high in the stock was at Rs 52 in 1994. If this rally continues, the stock could head towards that peak.

Sharp rallies such as these can be followed by an equally sharp correction that can trap lay investors. If you are a short-term investor, book some profits at current levels. Else hold the stock with a stop at Rs 32.

I have recently purchased Sun TV at Rs 420 and Sona Koyo Steering System at Rs 52. What is your outlook for these stocks in the short and medium term? P. Selvaraj

Sun TV (Rs 295.7): The recent correction has made Sun TV tumble from the July peak of Rs 457 below the important intermediate term support that exists at Rs 305. The subsequent supports for the stock exist at Rs 260 and then at Rs 210.

A close above Rs 350 is required to indicate that the near term outlook has turned positive for the stock. Fresh buys should be avoided until then.

Those already holding the stock can exit at current levels and re-enter once the stock moves beyond Rs 350.

Sona Koyo Steering (Rs 45): Sona Koyo Steering is in a down-trend since the July peak of Rs 61. The long-term trend line positioned at Rs 44 provides the immediate support for the stock.

The support below this would be available at Rs 41 and Rs 38. Investors can hold the stock with a stop at Rs 38. Short-term resistance would be encountered at Rs 51 and Rs 55.

Please give your views on TCS and NTPC. Parasuram

TCS (Rs 1,016.4): TCS peaked at Rs 1,400 in January 2007 and has lost 28 per cent since then. The trend in this stock is extremely weak and the stock has also moved below both the 50-day and the 200-day moving averages. It has retraced close to 60 per cent of the gains made since June 2006. The immediate support for the stock is at Rs 986. Short-term investors can watch for buying opportunity if the stock bounces off this support. The more risk-averse investors can wait for a close above Rs 1,200 before taking fresh exposures to this stock.

Fresh purchases should be avoided if the stock moves below Rs 986 as the next support is available at Rs 860.

NTPC (Rs 163.8): NTPC has been one of the steady performers since the May 2006 crash. The stock has been moving in an upward moving trend channel since then, almost doubling its value in this period.

The lower boundary of this channel at Rs 152 would support any short-term dip in prices. Investors can buy the stock in corrections with a stop at Rs 150. The stock can move to the zone between Rs 195 and Rs 200 over the medium term.

I hold shares of Kohinoor Foods bought at Rs 110. What are the short and medium term prospects for this stock? K. V. Antony

Kohinoor Foods (Rs 48.8): Kohinoor Foods is in a long-term bear phase since early 2005. The stock has also broken past its long-term support present at Rs 60. A close past Rs 60 is required to make the outlook for this stock positive a gain.

The next support for the stock is present around Rs 42. However, we advise exiting the stock at these levels and re-entering on a close above Rs 72.

— Lokeshwarri S. K.

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