The Hindu Business Line : Query Corner

I have purchased shares of Shriram Transport Finance Corporation at the rate of Rs 10 during May 1997. I am also holding Divis Lab at the rate of Rs 1,275? What are the short-term and medium-term prospects for these two stocks? R.S.G. Rajun

Shriram Transport Finance (Rs 166.1): Though the Shriram Transport Finance stock has turned volatile after recording the peak at Rs 189, the medium-term outlook for the stock stays positive. The rally that commenced from the April low of Rs 111 has not ended yet. The stock is not expected to dip below Rs 140 in the near term. Short-term investors can hold the stock with a stop at Rs 138. Since you are a long-term investor, you can hold the stock with a deeper stop at Rs 110. It is expected to move past Rs 200 over the long-term.

Divi’s Lab (Rs 1,174.3): Divi’s Lab has given a bonanza to the investors in the post-June 2006 recovery, yielding five-fold returns since this trough. Though the slide from the July peak of Rs 1,436 might have rattled some investors, the halt at Rs 990 indicates that reversal is not long-term in nature. The stock would face resistance from the band between Rs 1,250 and Rs 1,270 in the near term. Short-term investors can pare their positions if the stock reverses from this band. Investors with a longer time horizon can hold with a stop at Rs 820.

I have purchased Nucleus Software at Rs 1,000 in June. The stock has fallen significantly since then. Please advise if I can accumulate at these levels with a time horizon of one year. J. Chand

Nucleus Software (Rs 347.9): In our previous review of this stock in June, we had assumed that the sideways move witnessed since February was a consolidation pattern that would form the platform for the next wave up. But this move turn ed in to a terminal corrective (rounding top) and the stock has moved sharply lower since July 10.

The immediate support for the stock is present at Rs 308. Hold the stock with a strict stop at Rs 300. The momentum of the present slide can pull it lower below this support. In this event, exit the stock and look out for buying opportunity between Rs 180 and Rs 200. The short-term target for the stock is Rs 436. Fresh purchases should be initiated only on a close above this level.

I want to purchase UCO Bank at present rate. Please let me know the prospects for this share. P. Murali

UCO Bank (Rs 32): UCO Bank had long-term resistance at Rs 30. The stock has managed a close beyond this resistance this week. You can buy the stock with a stop at Rs 30 for short-term trading purpose. Near term targets are Rs 34 and th en Rs 39.

Please give your advice on KPIT Cummins purchased at Rs 124 six months ago. Savita

KPIT Cummins Infosystems (Rs 117.8): KPIT Cummins has launched in to a long-term down trend after making two attempts to rally above the resistance at Rs 180. The stock is currently halting at Rs 110, the level that has supported the s tock in March too. There can be a short-term bounce from these levels that can take the stock higher to Rs 132 or Rs 152.

You can exit part of your holdings if the stock struggles to rally above the first resistance as that would signal a protracted down trend in the stock. Hold the rest with a stop at Rs 108. The stock can spend the next one year in the band between Rs 110 and Rs 155.

I have bought 50 shares in ITI at Rs 46.7. What is the near term prospect of this stock? Debaraj Sengupta

ITI (Rs 40.3): The trend along all time frames is down in this stock. The immediate support for ITI is present at Rs 36.

Any short-term rally will have trouble rallying above the resistance band between Rs 42 and Rs 45. You can exit the stock if it fails to surpass this resistance. Move above this band can take the stock to Rs 53.

What are the future prospects of PTC India and Hindustan Oil Exploration? Can I buy these stocks at current level? Jagadees J

PTC India (Rs 80.5): PTC has recorded a very sharp surge from the trough at Rs 60 to Rs 107 in June and July this year. The plunge that ensued has been equally sharp and the stock has given up all the gains since July 20. The near term trend in the stock is weak.

The immediate resistance for the stock is at Rs 84. Reversal from this level can keep the stock confined to a range between Rs 85 and Rs 65 over the medium term. Move above Rs 84 can take the stock to Rs 93. Wait for a close above Rs 84 before taking fresh exposure to the stock. Conversely, look for buying opportunity in the band between Rs 55 and Rs 60 with a stop at Rs 52.

Hindustan Oil Exploration (Rs 102.9): In our previous review of this stock in February, we had underlined the long-term reversal in the stock following the three attempts to surpass Rs 175 between August 2005 and May 2006. Though the s tock dipped below the long-term support at Rs 80 briefly, it recovered to make an intermediate term peak at Rs 154 in July.

The slide from this peak is a resumption of the long-term down trend in this stock and can drag the stock towards the long-term support band between Rs 60 and Rs 75. The immediate support for the stock is present at Rs 90. Short-term investors can hold the stock with a stop at Rs 88. Fresh purchases are not recommended if the stock dips below this support.

What is the outlook for ABB from a medium term perspective? I have bought it at Rs 1,125. S. Kala

ABB (Rs 1,130.7): ABB was one of the stellar performers in the post-March recovery, gaining almost 80 per cent from that trough. The resistance at Rs 1,150 has, however, arrested the stock’s rise and made it move sideways over th e last two months. The recent trough at Rs 981 could prove to be a medium term support for the stock.

The medium term outlook for ABB stays positive. A fall below Rs 950 is needed to reverse this outlook. The stock is charting the final leg of the rally that commenced in June 2006.

This leg has the target at Rs 1,166 and then Rs 1,284. Short-term investors can hold with a stop at Rs 950 and try to exit at the targets mentioned above.

Please advice on the technical prospects of Aarvee Denim and Deepak Nitrate in the short to medium term. Subur Basha Shaikh

Aarvee Denim (Rs 93.1): This stock is bouncing back from the low of Rs 54 recorded in August 6.

The low volumes accompanying this bounce calls for caution while initiating fresh longs in this stock. Short-term support for the stock exists at Rs 73.

Medium-term support would be at Rs 68. Near-term resistance at Rs 96 can pose a strong impediment to the current rally. If the stock manages to move past this level, investors can expect a level of Rs 110.

Deepak Nitrite (Rs 113.8): Deepak Nitrite is in a strong structural down trend and has breached its long-term supports as well. Though a short-term rally is currently underway, it would be prudent to wait for a close above Rs 145 befor e taking it seriously.

Short-term investors can hold with a stop at Rs 95 and try to exit at Rs 120 or Rs 135. — Lokeshwarri S.K.

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