The Hindu Business Line : Query Corner

I had purchased Ispat Industries at Rs 42.30 ten days ago. With the recent hike in the share price, I shall be obliged if you can advise whether I should hold the shares or book profits. Abhishek Gupta

Ispat Industries (Rs 70.2): Ispat Industries has been on fire since November 28, when news about its proposed inclusion in the derivative segment of the National Stock Exchange was made public. The stock has gained a whopping 95 per cent in this period. The stock has formed two significant peaks between Rs 85 and Rs 100 in the last ten years. So, partial profit can be booked in this zone.

It is hard to predict how far the momentum will take the stock. If you want to ride the up-trend as long as possible, you can hold the stock with a trailing stop of 20 per cent from the peak. The pitfall with this strategy is that stocks that run up this steep tend to fall equally fast and it is almost impossible to sell them while they are dropping like a stone. It should also be kept in mind that stocks traded in the F&O segment do not have circuit limits to arrest a fall.

Please give your view on Container Corporation of India. Should I hold or exit or buy more at current level. Anuj Kumar Jain

Container Corporation of India (Rs 1,858.8): The long-term up-trend that began in 2003 is currently pausing in Container Corporation of India. The stock has been moving in a range between Rs 1,800 and Rs 2,400 since November 2006. This sideways move is positive from a long-term perspective as the stock is building the base from which it can launch the next leg of the up-move. The next phase of the long-term up-trend can take the stock beyond Rs 3,000.

You should hold the stock with a stop at Rs 1,550. Additional quantity can be bought in the band between Rs 1,600 and Rs 1,800 with the same stop. The stock needs to breach Rs 1,550 in order to make the long-term outlook negative.

What are the prospects of Ador Welding and Micro Inks? Can I enter these stocks at current levels? Sharath George

Ador Welding (Rs 240.1)

Ador Welding has started moving higher after a long hiatus. But it has not yet moved past the long-term trend line positioned at Rs 246. Fresh investments can be initiated, with a strictly short-term perspective, only when the stock moves above Rs 255. The next target would then be Rs 310. However, we expect the stock to struggle to overcome the resistance at Rs 310 over the next one year. Long-term investors should buy the stock only if it moves above Rs 310.

Micro Inks (Rs 374.7): Micro Inks can be listed among the worst performing stocks in the current bull-market. Though it moved close to Rs 800 by September 2004, the subsequent fall has dragged it down to Rs 240 by July 2006. The stocks attempts at moving higher in the last one year have not been successful. The medium term trend is currently down and the stock can move lower towards the support band between Rs 250 and Rs 260. Fresh purchases can be made in this band with a medium term target of Rs 450 or Rs 550.

What is the long term prospect of Nelcast? I bought the share in the initial public offering. Leonard Prakash

Nelcast (Rs 147.4): Nelcast under went a torrid time after its listing in June as the stock lost more than 50 per cent from its listing-day peak. But the stock is currently trying to stabilise in the band between Rs 130 and Rs 180. The near-term outlook for the stock is positive and it can move towards the upper boundary of the current range at Rs 180.

But the long-term outlook will turn positive only when the stock closes above this resistance. Long-term investors can hold the stock with a stop at Rs 120.

What is the future prospect of Wockhardt? Can I continue to hold these shares? Uday Padubidri

Wockhardt Life Sciences (Rs 395.8): Wockhardt has been in a long-term corrective phase since September 2005. The stock has been vacillating between Rs 300 and Rs 550 during this period. Fifty per cent of the gains made since 2003 has been retraced in the last two years, since the commencement of this correction. The stock has strong support at Rs 330 from where it has bounced twice during the correction. Investors with a long-term perspective should hold the stock with a stop at Rs 300.

It has the potential to move towards Rs 550 again over the next two years. But the stock will face resistance at Rs 440 and then Rs 470 over the medium term. Investors with a short investment horizon can book profit around these levels.

I hold KSB Pumps at Rs 490 per share. What should I do with this stock? Should I hold on to it or sell it when it reaches Rs 520 levels? I also hold shares of Paramount Communications at Rs 28 per share. What is the future of this stock? Thirukkumaran

KSB Pumps (Rs 472.1): The structural bull market in KSB Pumps ended this October when the stock moved below Rs 500.

However, 50 per cent correction of the prior up-move gives the stock the long term support at Rs 350. The stock has reversed from this level in July 2006 too. Investors with a long term perspective can hold the stock with a stop at Rs 340.

The medium term outlook for the stock is negative and it can struggle to get past the Rs 520-level (rightly identified by you) in the next three months. If your investment time-frame is short to medium term, you can exit the stock between Rs 520 and Rs 550.

Paramount Communications (Rs 34.2): This stock is languishing in a band between Rs 25 and Rs 40 since April. Though the short-trend in the stock is up, it has reached the resistance zone between Rs 38 and Rs 40.

The medium term outlook for the stock will turn positive only if it moves above this zone. If your investment horizon is short, you can exit the stock around Rs 40. Else, hold with a stop at Rs 32.

Can you please express your views on ONGC purchased at Rs 1,333 and Federal Bank purchased at Rs 330. Should I hold on to these stocks or book loss. Tushar Kanti Ghosh

ONGC (Rs 1,190.1): You seem to be interested in the near term outlook for ONGC. The stock is correcting from the recent peak formed on November 2. But it is halting at the 38.2 per cent retracement of the previous up-move.

The 50-day moving average line is also still holding. In other words, the medium term outlook stays positive for the stock. You can hold on to the stock with a stop at Rs 1,100. A reversal from these levels can take the stock towards its previous all-time high at Rs 1,385 once again.

Federal Bank (Rs 326.3): Federal Bank witnessed a steep run-up from October 22 that made the stock rally from Rs 270 to Rs 407 in just over one month. The stock has, however, launched in to a steep correction since then, which seems to be retracing the larger move that began in March. The immediate support for the stock exists at Rs 310. Short-term investors should exit the stock if this support is breached. The chart pattern indicates weakness in the near term and we expect the stock to fall to Rs 280 in the near term.

— Lokeshwarri S.K.

More Stories on : Technical Analysis | Stock Markets

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page