The Hindu Business Line : Query Corner

HCL Infosystems (Rs 230.1): HCL Infosystem has been gaining ground steadily since the April trough at Rs 127. The stock is currently poised above its long-term averages.

It is also above the intermediate term resistance at Rs 217. The short-term outlook for this stock is positive. We expect it to move higher to Rs 250 or Rs 280 in the near term.

This outlook will be negated only if the stock moves below Rs 217. The subsequent support for the stock is at Rs 170.

The long-term outlook for HCL Infosystems is positive too. Investors with a long-term perspective can hold the stock with a stop at Rs 160. The stock is expected to move beyond Rs 350 over the next two years.

I hold 4,000 shares of Punj Llyod. I want to know short-term and medium-term prospects of the stock. S.K. Mishra

Punj Lloyd (Rs 443.3): Punj Lloyd has been one of the darlings of the bourses ever since its listing; a must-possess stock for long-term portfolios. The stock recorded a significant trough in March 2007 and has more than doubled since then. Both the short-term as well as the medium term trend in the stock are currently up. The short-term trend will turn down if the stock falls below Rs 310 and a fall below Rs 250 is needed to make the medium term trend negative. Investors should utilise corrections to increase their exposure to this stock. Punj Lloyd has the potential to surpass Rs 500 over the long-term.

I hold ABB purchased at Rs 1,200 and Nandan Exim bought at the rate of Rs 6. Please advise whether I should hold these shares or sell them. C.S. Narayanan

ABB (Rs 1,436.7): You can book profits in ABB at current levels, if you are a short-term investor. We expect the stock to stay volatile in the band between Rs 1,300 and Rs 1,600 over the next three months. You can exit the stock close to the upper boundary of this trading range. However, investors with a long-term perspective ought to hold the stock with a stop at Rs 1,150.

Nandan Exim (Rs 3.3): The fall in the last quarter of 2006 has wiped out almost all the gains that Nandan Exim recorded since 2005. The stock could move in the band between Rs 2.5 and Rs 5.5 over the medium term. You can sell the share as it nears the upper boundary of this trading range.

I have bought shares of Parsvnath Developers at Rs 460. I am a short-term investor but I can wait if the stock is expected to move higher. Munish Bhatheja

Parsvanath Developers (Rs 353.8): Parsvanath Developers underwent a torrid four months immediately after listing; plunging from a peak of Rs 580 to Rs 220. However, the stock has managed to regain about half of the lost ground.

The immediate resistance for the stock is present at Rs 400 and the next resistance is at Rs 445. We expect the stock to struggle to rise above the second target over the next six months. A range bound move between Rs 250 and Rs 400 is the preferred outlook in the medium term. Since you are a short-term investor, you can exit the stock the next time it nears Rs 400. Stop loss should be placed at Rs 300.

I want to know the future prospects of Radico Khaitan and Alok Industries. Chitra Venkateswaran

Radico Khaitan (Rs 195.8): The stock is moving in a broad-based range between Rs 130 and Rs 220 since 2006. Since this sideways move follows a strong rally from sub-Rs 10 level, we can assume that this is a consolidation phase that would be succeeded by a long-term break-out in the price that takes it beyond Rs 300.

Investors who do not wish to hold the stock for a protracted period can sell it close to the upper boundary of the trading range. Short-term investors can hold the stock with a stop at Rs 160 while long-term investors can hold with a deeper stop at Rs 140.

Alok Industries (Rs 68): As mentioned in our previous review of this stock, Alok Industries has strong support at Rs 50. The stock has bounced from this level twice since 2006. However, the rally that began from here in March could not surpass the intermediate term resistance at Rs 80. A firm break-out beyond this level is required to take the stock towards its previous record high of Rs 100.

Our preferred view is that the stock would oscillate in the band between Rs 50 and Rs 80 over the next one year. Investors with a short-term perspective should consider selling the stock close to Rs 80.

Fresh purchases can be made close to Rs 50 with both short as well as medium term perspective. Long term investors can hold the stock as long as it remains above Rs 50.

I am holding RNRL purchased around Rs 48 and Tamil Nadu Newsprint purchased at around Rs 100. Please give your targets for the short and medium term for these stocks. Subur Basha Shaikh

Reliance Natural Resources (Rs 99.3): Reliance Natural Resources launched in to an explosive move in September that made the stock price more than double in the month that followed. The running correction that preceded this move should have warned us of an impending surge.

However, the stock has been moving sideways between Rs 75 and Rs 105 since the beginning of October; accompanied by intense volatility. Short-term investors can book partial profits around Rs 100 and hold the rest with a stop at Rs 70. Re-entry can be considered beyond Rs 105 as such a move will result in another Rs 50 increase in the stock price. The short-term outlook for the stock will turn negative only if it closes below Rs 70.

Tamil-Nadu Newsprint (Rs 99.4): The down trend that commenced at the May 2006 peak in Tamil Nadu Newsprint was arrested at the long-term support at Rs 80. But the rally from this trough has halted at the intermediate term resistance at Rs 115. Long term outlook for this stock stays positive as long as it stays above Rs 80. However, the stock can spend a few more months moving in the zone between Rs 80 and Rs 115.

Short-term investors can hold the stock with a stop at Rs 94. A move below this support can make the stop dip to Rs 80. The short-term upside is expected to be capped at Rs 115.

What is the outlook for MTNL purchased at Rs 168? Tarun K. Gupta

Mahanagar Telephone Nigam (Rs 180.5): MTNL has not made any progress in the five-years from 2002; moving in a broad band between Rs 100 and Rs 200. The stock is in a long-term downtrend since the April 2006 peak of Rs 226. This down trend is finding support at Rs 120. Investors with a long-term perspective can hold the stock with a stop below this level.

However, we expect the stock to struggle to rally above Rs 200 over the next 12 months. If you have bought the stock with a short-term investment perspective, you can consider booking some profits at this level. Stop loss for short-term investors ought to be at Rs 150.

— Lokeshwarri S.K.

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