The Hindu Business Line : Query Corner

TCS (Rs 1,056.75): TCS has been under pressure since January after having slid almost 30 per cent from this peak. But the stock is halting at crucial long-term support at Rs 1,000.

A reversal is possible here. So investors with a short-term perspective can hold the stock with a stop at Rs 970. The immediate resistance for the stock is present at Rs 1,088, but the stock can move higher to Rs 1,141 in the near-term.

Short-term investors can exit the stock in these minor rallies. We require a close above Rs 1,200 to signal that the medium-term trend in the stock has reversed upwards.

The long-term outlook for this stock will get marred only if it falls below Rs 840. Since we do not expect the stock to fall below Rs 840 over the long-term, long-term investors can hold the stock with a stop at Rs 820.

Polaris Software Lab (Rs 122.80): This stock is moving between Rs 105 and Rs 125 over the last two months after loosing Rs 135 from the peak formed in January.

The current sideways move does not instil confidence about the stock’s near-term prospects. It needs to rally above Rs 143 to make the short-term outlook positive. The current range-bound move could be a precursor to a fall to Rs 82 or even Rs 53. We recommend exiting the stock at current levels. Re-entry can be considered on a rally above Rs 145.

I have purchased 3i Infotech at Rs 151 and Tube Investments at Rs 63.5. What are the prospects for this stock in the medium-term? M. Chowdhury

3i Infotech (Rs 147.80): Though 3i Infotech has been trending downwards in tandem with the rest of the stocks in this sector, the relatively shallow correction in this stock is a positive from a long-term perspective.

3i Infotech has an immediate support at Rs 135. A move below this level would make the stock fall to the next support at Rs 125.

Investors can hold the stock with a stop at Rs 120. The stock has the potential to move higher to Rs 187 or Rs 225 over the next one year. The positive view will be negated only if the stock price falls below Rs 125.

Tube Investments (Rs 59.55): In our previous review of Tube Investments in February, we had expected the stock to bounce from the long-term support at Rs 50 and launch in to the next long-term up move. Though the stock did reverse from Rs 50 in March, the move was arrested at Rs 81. We expect the stock to struggle to overcome the resistance around Rs 80 over the next six months too. Investors with a short-term perspective can exit the stock close to this level.

The support at Rs 50 can act as the stop loss. A move above Rs 82 will take the stock to the next resistance at Rs 91.

I am holding shares of Hyderabad Industries purchased at Rs 270. Kindly let me know the future prospects of this stock. P. M. Pandian

Hyderabad Industries (Rs 200.55): The last time that we covered this stock, we had indicated that it would be unable to move past the resistance in the zone between Rs 260 and Rs 320 over the next one year and we had suggested that fresh purchases should be made only if the stock moves beyond Rs 320. Hyderabad Industries has been unable to make a headway past Rs 250 since our last review.

The range bound-move between Rs 150 and Rs 250 could extend for a few more months before the stock moves out of this band.

But since the long-term trend is down, it would be advisable to exit the stock in rallies to the above mentioned resistance levels. Stop loss can be maintained at Rs 170.

I hold Lok Housing bought at Rs. 200. Can you please provide me the short-term and long-term view on this stock? Arogya Reddy

Lok Housing and Construction (Rs 144.15): The stock of Lok Housing and Construction underwent a bubble phase between November 2005 and May 2006. The stock price rallied from Rs 19 to Rs 645 in this period. The subsequent crash has made the stock erase about 80 per cent of these gains. We do not think it is likely to climb back to those historic heights over the next two years.

Intermediate term rallies would get arrested at Rs 400 or Rs 450. The stock is moving sideways between Rs 130 and Rs 200 since March. This sideways move can continue for a few more months.

Since strong resistance level is present at Rs 200, hold the stock with a stop at Rs 120 and exit close to your purchase price. A move beyond Rs 235 is required to signal that the medium-term trend in this stock has reversed upwards.

I have bought shares in Sundram Fasteners at the rate of Rs 75. What is the near-term prospect of this stock? Durga Prasad

Sundram Fasteners (Rs 53.25): In our previous review of this stock in February, we had expected it to halt above Rs 70. But the stock has slipped below this support and is currently poised around Rs 50, the level that supported it during the June 2006 crash.

But the medium-term down trend that began from the peak at Rs 94 appears extremely menacing and the stock can fall further towards Rs 40 over the next one year. The negative view for the medium-term will be mitigated only if the stock rallies above Rs 70. Hold the stock with a stop at Rs 48 and try to exit as the stock moves close to your cost price.

I’ve bought Uniphos Enterprises at Rs 45, a year back. Should I sell it or hold it? Partha

Uniphos Enterprises (Rs 53.50): The spectacular run in this stock over the last two weeks does make it tempting to cash in on some profits at this point. But the stock has just risen past the long-term resistance at Rs 50, the level that has arrested the long-term up-moves in 2003 and then in 2005. If the stock sustains above Rs 50 for a couple of weeks more, it can move towards Rs 80 or Rs 100 in a very short time.

The short-term trend in the stock is down since it is moving down after recording a peak at Rs 63. Hold the stock with a stop at Rs 50. The more impatient investors can book some profits at current levels and re-enter the stock if it moves past Rs 63.

I have bought Geometric Software at Rs 115. What is your recommendation on these shares? Subramanium

Geometric Software (Rs 97.45): The structural bull phase that began in 2001 continues to be intact in this stock. The last time we re-visited the stock, we had expected the stock to oscillate between Rs 80 and Rs 150 for a year before the long-term up trend resumed and made the stock price rise towards Rs 200. We had advised long-term investors to hold the stock with a stop at Rs 75.

Our view is unaltered. The long-term prospects for this stock are bright. This view will be negated only on a fall below Rs 75. Immediate resistance for the stock exists in the band between Rs 115 and Rs 118. A move past this resistance will take the stock to Rs 133. Investors with a medium-term perspective can book profits at either of these levels. The stop loss level continues to be at Rs 75.

— Lokeshwarri S.K.

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