The Hindu Business Line : Query Corner

City Union Bank (Rs 476.70): The stock has been spurting upward sharply since November 2007. The medium-term target for the stock lies between Rs 567 and Rs 590. If City Union Bank continues to move in the current trajectory, it has the potential to rally above Rs 700 over the long-term.

Short-term investors can hold the stock with a stop at Rs 450. Investors with a longer horizon can hold the stock as long as it remains above Rs 350. Corrections to the Rs 350 zone can also be utilized to make fresh purchases in the stock.

Savita Chemicals (Rs 381.5): In our previous review of Savita Chemicals in May 2007, we had expected the stock to move to Rs 282 or Rs 327 over the medium-term. The stock has moved past the second target in December and is currently in a fresh leg of the long-term upmove.

This long-term upmove has the potential to take the stock higher to Rs 500. Investors with a long-term horizon can hold the stock with a stop at Rs 310.

The short-term support for the stock exists at Rs 355. The stock could fluctuate in the band between Rs 350 and Rs 425 for a few more weeks before moving higher.

Investors with a short-term view can buy near the lower boundary of this band with a stop at Rs 350.

What are the future prospects of Sanghvi Movers and Garware Offshore? Do you recommend a buy at current levels? J K Bhalla

Sanghvi Movers (Rs 309.70): Sanghvi Movers is currently in the third phase of the long-term bull market that began in 2004. The steep upmove that is on since November has all the characteristics of a strong third wave. But the stock is currently pausing and consolidating at higher levels. This sideways move between Rs 280 and Rs 340 would be a precursor to a breakout to Rs 411 over the medium-term. Investors with a medium-term perspective can enter the stock at current levels with a stop at Rs 275.

Garware Offshore (Rs 256.60): Garware Offshore has been extremely volatile since December 2006, fluctuating in a very broad band between Rs 160 and Rs 300. The stock once more tested the resistance zone at Rs 300 and is currently in a corrective phase. It would be best to wait for the stock to move above this ceiling before buying the stock.

The other alternative would be to wait for another correction to the zone between Rs 215 and Rs 230 before buying the stock with a stop at Rs 200.

Please let me know your assessment on IVRCL Infrastructure for a period of six months. Rajesh Kumar Sharma.

IVRCL Infrastructure (Rs 568.90): When we had last reviewed IVRCL Infrastructure in April 2007, the stock was in a long-term corrective phase that had wiped out 50 per cent of the gains recorded since 2003. We had then recommended that investors could buy the stock close to Rs 250 with a stop at Rs 175. IVRCL reversed from Rs 241 in April 2006 and is charting the third leg of its long-term up-trend since then.

A simple 1:1 extrapolation of the move from the 2003 trough gives the stock the target of Rs 680. But this could take about 24 months to achieve. The prospects for the next six months are positive for the stock. Corrections would get support at Rs 450. Short-term investors can buy the stock during corrections as long as IVRCL Infrastructure remains above this level. Long-term investors can remain invested with a deeper stop loss at Rs 370.

I have shares of K S Oil purchased at Rs112. I want to know the medium-term target for the same. Badrish Vishal Gautam, Deepak Vohra

K S Oils (Rs 109.30): The outlook for K S Oils remains positive as long as the stock stays above Rs 100. The upper target for the stock is 147. Investors with a medium-term time frame can hold the stock as long as it holds above Rs 90.

Kindly outline the long-term prospects of Marson and Gufic Bioscience. Vivek Bhatia

Marsons (Rs 16.30): The chart of Marsons is similar to the chart of many other backbenchers that have suddenly taken centre-stage and are moving up from one circuit to another. This stock clearly reflects the dangerous times that we are living in. The going is presently good, so any scrap of news or rumour is sufficient to send stock prices higher. But stocks that move in this fashion towards the fag end of a bull market mostly return to where they started. So over the long-term, it is easier to envisage Marsons below Rs 7 than above it. If you hold the stock, it would be best to exit. If you wish to initiate fresh positions here, please don’t.

Gufic Biosciences (Rs 24.20): Gufic Biosciences had tumbled from a lofty height of Rs 46 in November 2004 to Rs 7.5 in June 2006. After languishing between Rs 7 and Rs 15 till December 2007, the stock is once more enjoying its days under the sun. Again, the timing of the up-move makes it difficult to conclude that this is a long-term reversal. It is hard to tell how far the momentum can take the stock. Rs 31 is the immediate target. Rs 40 would be the outer limit. But it would be best to hop out while the stock is moving forward as there would be no buyers once it reverses.

I hold shares of SKM Engineering Products Exports India purchased at Rs 10 per share. Please advice whether to hold or sell. V. Venugopal

SKM Engineering Products (Rs 41.30): SKM Engineering has spent most of its time meandering below Rs 10 prior to 2004. Though the stock spurted in 2004 it halted at the all-time high of Rs 38 in January 2005. The stock has recently moved above this lifetime high level. You can divest part of your holdings at current levels and hold the rest with a stop at Rs 35.

I am holding 1000 shares of Natco Pharma bought at Rs 140. What is the time span for which I can hold the stock? Sri Sakthi

Natco Pharma (Rs 159): It is not always a good idea to tie oneself down to a fixed period for holding a stock. It would be better to have a certain return expectation and to exit the stock once it has been achieved. Natco Pharma is currently testing its lifetime high at Rs 181. The stock faces strong resistance from the band between Rs 160 and Rs 180. Since the stock is reversing from this band again, you can sell the stock at current levels.

Please tell me the medium-term and long-term outlook for MRPL. Dipankar Dev Burman

MRPL (Rs 142): MRPL is currently in a very strong upward move following the long-drawn correction that was recorded between January 2004 and August 2007. The long-term outlook for the stock is positive though it might stop moving in a steep upward trajectory and spend a few months consolidating between Rs 105 and Rs 150. Long-term investors can, however, remain invested as long as the stock stays above Rs 100.

Medium-term investors can hold the stock with a stop at Rs 120. The targets for this time frame are Rs 155 and then Rs 170.

— Lokeshwarri S.K.

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