The Hindu Business Line : Query Corner

Short-term investors who have bought the share in the past two months, between Rs 80 and Rs 100 have two recourses, the first is to book loss immediately. This is highly recommended since it would save many days of waiting and anxiety. Please do not average at this juncture as the stock could fall further thus expanding the loss.

The alternate course for short-term investors would be to hold the stock with a stop just below Friday’s panic bottom at Rs 73.

There could be a short-term rally to Rs 86, Rs 92 or Rs 97, where you can exit the stock. It is unlikely that the stock would get past Rs 100 in the near future even if there is a sharp pullback, since the yawning gap between Rs 92 and Rs 97 would be a strong resistance zone.

Investors who have bought the stock prior to June can hold the stock with a stop at Rs 62.

The stock appears to be in a volatile consolidation phase since September. The long-term outlook will turn overtly negative only if it closes below its long-term 200-day moving average line positioned at Rs 63.

This is also the 50 per cent retracement of the entire gains made since December 2006.

What are the short-term and medium-term targets for Petronet LNG? Jayaprakash, Krishna Parmeshwar

Petronet LNG (Rs 101.5): In our previous review of this stock in May, we had expected it to move past Rs 100 in the long-term. Petronet LNG has already achieved this feat. A long-term up move has commenced in this stock in April. This move gained momentum once it moved past the strong long-term barrier at Rs 65. Long-term investors can hold the stock as long as this support (Rs 65) holds.

The support band for both the short-term and medium-term investors lies between Rs 94 and Rs 97. The stock could move between Rs 95 and Rs 120 for a few weeks before it breaks out higher. The medium-term target is Rs 130 or Rs 148.

Kindly let me know the future prospects of Rama Newsprint bought at Rs 30. Bhaskar Joshi

Rama Newsprint (Rs 36.1): In our answer to this query in last week’s column, we had written that the stock recorded a rapid rally in September 2006 from Rs 8 to Rs 58.

But we had omitted mentioning that this rally was the result of price adjustment resulting from the reduction in the company’s share capital. Investors owning the stock prior to September 2006 would have made almost nil gains to date.

The rest of the answer remains unaltered.

Rama Newsprint has an immediate support at Rs 25 and will face strong resistance in the band between Rs 45 and Rs 48. Investors can book profits if the stock fails to clear this zone.

Kindly let me know the future prospects of Infotech Enterprises bought at Rs 278 and Hotel Leela bought Rs 63. Sampath Reddy

Infotech Enterprise (Rs 288): Infotech Enterprise is currently in a long-term correction.

This move commenced from the February peak at Rs 447. The immediate long-term support is present at Rs 242, from where the stock reversed upwards on October 19.

Investors with a medium-term horizon can hold the stock with a stop at Rs 238. The stock can attempt to move to Rs 325 over the next three months where investors with a short-to-medium term perspective ought to exit.

Fresh purchases should be initiated in this stock only if it moves past this level (Rs 325).

Long-term investors can hold the stock with a deeper stop at Rs 190. The long-term outlook for the stock will stay positive as long as this support holds.

Hotel Leela Venture (Rs 65.4): Hotel Leela Venture reversed from the long-term support zone around Rs 38 indicated in our previous review of this stock in May. A three-wave correction was charted in this stock between May 2006 and August 2007.

The fresh up-trend that commenced at the August trough can make the stock rally beyond Rs 100 in the long-term.

Long-term investors can hold the stock with a stop at Rs 50.

That said the stock faces strong intermediate resistance at Rs 70.

Investors with a shorter horizon can book partial profits around this level and hold the rest of the shares with a stop at Rs 60.

I am holding the shares of Chennai Petroleum Corporation and Syndicate Bank purchased during 2002 for Rs 35 and Rs 17, respectively. Kindly give your view on the stocks. C. Renganathan, Jeyaprakash

Chennai Petroleum Corporation (Rs 388.6): Despite the volatile moves witnessed in Chennai Petroleum since November 19, the long-term up trend continues to be intact. Since you are a long-term investor, you can stay sanguine as long as the stock price holds above Rs 300.

Our preferred view is that Chennai Petroleum will move in a wide band between Rs 350 and Rs 500 over the next three months.

Investors with a shorter perspective can book profit near the upper end of the band. The stock can reach Rs 600 over the long-term.

Syndicate Bank (Rs 106.1): Syndicate Bank too is in a short-term correction following the strong run-up witnessed since mid-October. But long-term investors can continue to hold the stock as long as it remains above Rs 95. The near-term target for the stock is Rs 118 and the medium-term target is Rs 140.

Kindly let me know the future prospects of Hindustan Motors bought at 43. Should I hold or sell? J.J. Pinto, Tushar Kanti Ghosh

Hindustan Motors (Rs 51.8): There are some stocks that move up only in the rear end of a bull market. When the market reverses, these stocks tend to fall back to where they started.

From the weekly chart of Hindustan Motors, it is evident that it recorded an extremely steep move between March and May 2006 that made the stock almost double in price from a trough of Rs 36.

But the subsequent market correction found the stock plunging to Rs 25 in less than two months. History could repeat itself in Hindustan Motors.

The stock has surged sharply in November and is close to the long-term resistance level at Rs 60. Investors should exit the stock at this juncture since the risk-reward ratio is highly unfavourable in this stock. — Lokeshwarri S.K.

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