The Hindu Business Line : Query corner

Rajesh Exports (Rs 855): Rajesh Exports has beaten our expectations and turned out to be a multi-bagger in the last 12 months. The stock price has almost doubled from the August trough. Rajesh Exports is, however, consolidating at higher levels after recording the peak at Rs 988. The chart pattern indicates that the stock could breakout higher above the Rs 1,000 mark. However, only aggressive investors with a large risk-appetite should make fresh purchases at these levels. The sharp run-up since August implies that downward moves in the stock can be equally sharp. Risk-averse investors can keep off the stock or wait for a dip to Rs 650 before initiating fresh buys.

What is the outlook for TCS? Should I hold or exit at these levels? Satish

TCS (Rs 982.2): In our previous review of this stock, we had mentioned that the long-term outlook would get marred only if it fell below Rs 840. We stick to the view that long-term investors can hold the stock with a stop at Rs 820.

The intermediate-term support for the stock is at Rs 1,000. The stock is currently struggling to stay above this level. Short-term investors should exit the stock once it moves below Rs 900. The resistance levels for the near-term are at Rs 1,050 and Rs 1,150. Fresh purchases should be made only when the stock moves above Rs 1,050.

What is the outlook for Aegis Logistics and Shasun Chemicals? B. Saravanan

Aegis Logistics (Rs 216.8): The long-term down trend in Aegis Logistics halted at the March trough of Rs 111. After a gradual and steady increase from this trough, the stock price shot upwards at a steeper gradient in October. Though the medium-term outlook for the stock is positive, there is a significant resistance at Rs 242. A reversal from this level can make the stock fall towards Rs 150 once more. Investors with a medium-term perspective can book some profits around the current level and hold the rest with a stop at Rs 170.

The long-term trend in Aegis Logistics continues to be down. This down trend will reverse only when the stock moves above Rs 242. The subsequent target is Rs 321.

Shasun Chemicals (Rs 77.9): Shasun Chemical received a severe setback after June that has made the stock fall from the peak at Rs 158 to a trough at Rs 64. This slide has brought the stock close to its long-term support at Rs 65, from where the stock staged a magnificent reversal in June 2006. Long-term investors can hold the stock with a stop at Rs 60. A reversal from these levels can make the stock rally towards Rs 100 again over the next two years.

But the short-term outlook for the stock is rather weak. The stock would struggle to rally above Rs 85 over the next three months. Investors with a near-term horizon can book profit in the band between Rs 85 and Rs 95.

I intend taking position in Paper Products and Anant Raj Industries. Both these stocks are under performing in the broad market. Please revert with your perspective on these stocks. Shivendra Tripathi

Paper Products (Rs 50.3): Paper Product is certainly an under-performer; the kind of under performing stock that is best avoided. It has been vacillating between Rs 50 and Rs 92 over the last two years. The stock is currently hovering above the lower boundary of this trading range. The medium- and short-term outlook for the stock is negative. It would be a good idea to wait for the stock to recover and move above Rs 65 before buying the stock. A slide below Rs 50 can take the stock lower towards Rs 40.

Anant Raj Industries (Rs 353.6): It needs to be mentioned at the outset that the relative under-performance of a stock should not be the basis for stock selection. Though you might chance upon a value pick once in a while, you are more likely to get saddled with a dud stock through this stock-picking strategy.

However, it would be wrong to label Anant Raj Industries as an under performer. The stock had a stellar run; almost doubling in price since the August trough at Rs 214. Though the stock is retreating after recording the peak at Rs 393, the short-term outlook will stay positive as long as the stock trades above Rs 320. A sideways move between Rs 320 and Rs 400 would be a good launch pad for a move to Rs 500. Short-term investors can buy the stock with a stop at Rs 315. Investors with a longer horizon can hold the stock with a stop at Rs 280.

Can you let me know the prospects of Ispat Industries for a period of two months? Can I enter into the stocks at the current levels? T. Paul

Ispat Industries (Rs 45.2): Ispat Industries has recorded a very steep increase over the last three months and the stock price has multiplied three-fold in this period, from a low of Rs 13 to the recent peak at Rs 51. The stock is currently pausing for breath around its previous long-term peak at Rs 47. The stock of Ispat Industries certainly has momentum but it is difficult to envisage where the stock price would be after two months. Empirical studies reveal that stocks that tend to run-up too steeply in the last leg of the bull phase tend to wipe out all the gains recorded in such blow-off phases in next to no time. Agility is the key while trading such stocks.

The stock has support at Rs 42 and then at Rs 35. Prolonged sideways move between Rs 40 and Rs 55 would be the apt juncture where aggressive investors with a large risk appetite can buy the stock.

I would like to know the prospects of Financial Technology. Should I accumulate the stock or sell it? My time period is under one year. Srinivas

Financial Technology (Rs 2,476.4): Financial Technology is in a very strong structural bull-phase. A weekly close below Rs 2,000 would be the cue for long-term investors to exit the stock. The upper boundary of the long-term trend channel at Rs 3,100 would be target over the next one year.

Since your investment time-period is less than one year, you can hold the stock with a stop at Rs 2,180. The stock can rally up to Rs 2,855 in the near-term where you can exit your holding.

I hold Cinemax and Nitin Fire shares. Should I hold these stocks or come out of them? Manjula

Cinemax (Rs 120.5): The stock has not done much in the last six months, moving sideways between Rs 110 and Rs 170.

The saving grace is that it is holding above the support at Rs 100. Hold the stock with a stop at Rs 100. The stock can move higher to Rs 135 or Rs 150 over the next three months when you can exit your holding.

Nitin Fire Protection Industries (Rs 409.9): Nitin Fire Protection does not have sufficient history to enable us to express a long-term opinion on the stock. The stock is moving within a range between Rs 350 and Rs 500 since listing. The short-term outlook for the stock is, however, positive and the stock could move higher to Rs 460 and then Rs 500 over the next one year. You can hold the stock with a stop at Rs 385 and exit as it nears the given targets.

— Lokeshwarri S.K.

(Readers can send in their queries, on not more than two companies, to techtrail@thehindu.co.in.

Queries can also be sent by post to: Tech Trail, 859/860 Kasturi Buildings, Anna Salai, Chennai 600002.

We would endeavour to answer as many queries as possible. However, constraints of space will limit the responses featured under this column)

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