The Hindu Business Line : Query Corner

I purchased Balrampur Chini at Rs 85 some two years ago. Since then the stock has seen a high of Rs 220. What is your take on the stock? I am a long-term investor. Vimal Bhatia

Balrampur Chini (Rs 79.25): The long-term bear market that commenced from the May 2006 peak has made the stock move below the important support at Rs 85. But Balrampur Chini is making an attempt to break loose from the bear’s stranglehold since August. It has moved above the 50-day and 200-day moving averages and has also risen above the long-term down trend line thus signalling a potential long-term bottom at the August trough of Rs 52.

Last week’s climb has pulled the stock price close to its immediate resistance at Rs 88. A move past this level would signal that the stock is on its way to recovery and a rally to Rs 110 and then Rs 145 can be expected over the next two years.

However, the viciousness of the correction from the May 2006 peak implies that getting back to the previous peak would be extremely difficult, if not impossible. Consider exiting from the stock in the zone between Rs 120 and Rs 140. Hold until then with a stop at Rs 48.

I am holding shares of CESC and Rolta. Please advise whether there is further scope of appreciation. Sunil Rani

CESC (Rs 505.40): The structural up-trend that began in 2003 continues to be in force in CESC. Though the stock is moving sideways between Rs 400 and Rs 520 since July, the medium-term outlook for this stock stays positive. This view will be negated only on a fall below Rs 400. Investors with a medium-term perspective can hold the stock with a stop at Rs 400. Additional shares can also be bought with the same stop.

The medium-term target for the stock is Rs 557. But a breakout beyond the resistance zone between Rs 520 and Rs 550 can take the stock to Rs 691 over the next two years.

Rolta India (Rs 522.90): Rolta India has recorded a smart rally from the June 2006 trough of Rs 122. After a three-fold rise from these lows, the stock is consolidating in the sideways band between Rs 400 and Rs 550 since May. This move can be construed as a halt preceding another leg of the up-move to the medium-term target at Rs 636. Hold the stock with a stop at Rs 380. Correction to this level can be used as a buying opportunity by investors with a 1-2 year horizon.

I hold shares of Unitech and Venus Remedies, purchased about 10 years back. Kindly advise whether I should hold these shares or sell them. S.K. Ranjan

Unitech (Rs 337.40): Unitech, after having yielded manifold returns in the last two years is any investors’ darling. The consensus opinion on this stock is to perceive every correction as a buying opportunity. The corrections since the 2006 trough have not been able to retrace more than 50 per cent of the preceding up-moves, thus underlining the strength in this stock.

Since you have been holding the stock for 10 years, it would not be advisable to divest your holding at this juncture. The downside risk in the event of a long-term correction is about 40 per cent from these levels. The structural bull-phase will be threatened only on a fall below Rs 200. You can hold the stock as long as this support holds. The target for the stock over the next one-year is Rs 440.

Venus Remedies (Rs 511): Venus Remedies made a significant long-term trough at Rs 178 on June 15. The stock price has almost tripled since this trough. The movement since December 2006 appears to be a consolidation before the next leg of this long-term up trend resumes. Hold the stock with a stop at Rs 450. Additional shares can also be bough near this support. Though the stock could face resistance in the band between Rs 580 and Rs 600, it could move towards Rs 800 over the long-term.

I am holding 5,000 shares of NALCO purchased at Rs 250. Should I hold or exit. Aravindhan V.

NALCO (Rs 280): NALCO is still struggling to recover the losses that it sustained in the metals meltdown in May 2006. But the stock has made steady progress since the August-2006 trough to record an intermediate-term peak at Rs 305 this July. The correction witnessed over the last two months has been arrested by the long-term 200-day moving average.

The immediate resistance for NALCO lies at Rs 280, where the stock is currently halting. Short-term investors can book profit and exit at this level. More aggressive investors can hold with a stop at Rs 265. A breach of the Rs 280-barrier can take the stock to Rs 305.

Since the stock price is vulnerable to the fluctuation of the aluminium prices in the domestic and international markets, it would be prudent to book profits at regular intervals in this stock.

I am a long-term investor. I have purchased Kale Consultants at Rs 95 in March. Please advise the prospects of this share and whether I have to hold it or exit? Sumod PP

Kale Consultants (Rs 88.85): The chart pattern in Kale Consultants is extremely bearish. The trends along all time frames are down. The stock is heading towards its immediate support at Rs 85. A breach of this level can make the stock fall to the next buttress at Rs 75. We recommend exiting your position at these levels. Wait for a weekly close beyond Rs 100 before contemplating fresh purchases in this stock.

I have purchased Shrenuj and Company at Rs 47 and Paramount Communication at Rs 32. Kindly let me know the future prospects of these two scrips in the medium and long-term. Ganesh

Shrenuj and Company (Rs 53.25): This stock is consolidating in a broad range between Rs 35 and Rs 55 since April 2006. The higher troughs being formed during this sideways move is a positive sign. But there is strong resistance in the zone between Rs 55 and Rs 60. The stock has reversed from this band twice in the last two years. Short-term investors can consider booking some profits in this region. A breakout beyond the upper limit will take the stock to Rs 73 over the medium-term. Hold the stock with a stop at Rs 51 if you are a short-term investor. Others with a longer holding period can hold the stock with a stop at Rs 41.

Paramount Communication (Rs 31.80): This stock is attempting to stabilise around the long-term support at Rs 25 since April. A close above Rs 42 is required to signal that the stock has broken out of this consolidation and is ready to move higher again. Else, this move between Rs 25 and Rs 40 can continue for a few more months. Short-term investors can book profits in the region between Rs 37 and Rs 40. Stop loss can be maintained at Rs 22.

I want to know about the future prospects of MIC bought at Rs 525. Vishal Mehta

MIC Electronics (Rs 553.95): MIC Electronics has been one of the scorchers over the last three months; gaining 200 per cent in this period. Since this is a recently listed stock, we cannot express a long-term opinion on it. But the immediate support is present at Rs 500. If the stock manages to sustain above this level, it can rally to Rs 660 or Rs 765 over the next one year. Hold the stock with a stop at Rs 500.

— Lokeshwarri S.K.

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