The Hindu Business Line : Query Corner

MRF (Rs 4,811.4): MRF was swept higher with the broader market in the last quarter of 2007 that made the stock price more than double in this period. However, the fall from the peak formed in November has wiped out almost all the gains made in this period. But if this abnormal price movement is ignored, the stock remains in a long-term up trend. This structural bull market will be threatened only if the stock dips below Rs 2,500. Long-term investors should hold the stock as long as this level holds.

The immediate support for the stock is present at Rs 3,500. Investors with a shorter horizon can hold the stock with a stop loss below this level. There can be rallies to Rs 5,960 or Rs 6,950 over the next one-year. However, a run-away rally to the recent peak at Rs 8,950 cannot be expected in a hurry.

Walchandnagar Industries (Rs 5,463.3): The spell binding rally from September 2007 in Walchandnagar Industries that made the stock race from Rs 2,595 to Rs 12,048 ended in November 2007 and the stock has been in a corrective decline since then. This decline has retraced almost 50 per cent of the rally recorded from August 2006 lows. A three-wave down-move is also nearing completion from the November peak.

In other words, the corrective move in the stock could come to a halt in the area above Rs 5,000. The long-term outlook for the stock would turn negative only if the stock dips below this level. Investors with a long-term perspective can add to their holdings in the band between Rs 4,000 and Rs 5,000.

The stock would, however, face difficulty in rallying over Rs 8,000 over the next three months. Investors with a short-term perspective can book profits if the stock fails to clear this level.

I hold shares of DCW and TTML bought at Rs 18 and Rs 46, respectively. What is the long-term outlook for both the stocks? Altaf Hussain

DCW (Rs 25.2): DCW recorded a peak at Rs 55 in 1992 but it slid incessantly since then to plunge below Re 1 in 2001. But there has been a gradual recovery from these abysmal depths and the stock finally broke out sharply in December 2007 to move briefly above Rs 50-mark. The fact that the stock has moved up along with the rest of the third and fourth-rung stocks towards the fag end of the bull-run belies the strength in the current up-move.

The stock has immediate support at Rs 30 and then at Rs 25. But there is a strong likelihood of the stock sliding all the way to Rs 15. It would be best to divest your holdings in any short-term rallies. Stop loss can be maintained at Rs 23.

Tata Tele Maharashtra(Rs 35.1): This stock launched in to a long-term correction from the January peak at Rs 65. But the cut received over the last two weeks has been exceptionally severe and the stock has retraced almost 60 per cent of the gains recorded since 2003 during this down-move. The long-term support for the stock is present at Rs 21. Long-term investors can hold the stock as long as this level holds.

The near-term supports for the stock are at Rs 31 and then Rs 28. Investors with a short-term timeframe should exit the stock in rallies to Rs 42 or Rs 47. Though the long-term outlook stays positive, the near term can be turbulent for the stock.

I have bought Dish TV at Rs 93. Should I hold on to this stock? Hemchander P.N.

Dish TV (Rs 67.9): In our previous review of this stock in July 2007, we had recommended an exit at Rs 96 and advised re-entry if the stock moved above Rs 110. But the stock reversed from the peak at Rs 106 in January and once more moved close to its all-time low at Rs 52.

You can hold on to the stock with a stop at Rs 48. The stock has formed a double bottom in the zone between Rs 50 and Rs 55. This could be a strong long-term support zone. Long-term investors can accumulate the stock in this band. However, the stock would face strong resistance at Rs 86 and then at Rs 108 over the next one year. Short-term investors can book profits on a rally to these levels.

Please let me have your views on Bank of India purchased at Rs 373. G. Somashekhar

Bank of India (Rs 364.2): Bank of India has weathered the selling pressure much better than most other stocks in the recent meltdown. The long and the intermediate-term trends continue to be up in this stock. The intermediate-term uptrend will be threatened only if the stock closes below Rs 300. A sideways move between Rs 300 and Rs 480 would be a precursor to another upward breakout past Rs 500.

Investors with a longer horizon can hold the stock with a stop at Rs 280. Short-term investors can hold with a shallower stop loss at Rs 350.

I have purchased GTL Infrastructure at Rs 103. Should I hold this share or sell it? Kishore

GTL Infrastructure (Rs 56.9): You have purchased the stock close to its peak at Rs 106. The stock is down more than 50 per cent since this peak. However, the silver lining is that the stock is halting close to the intermediate-term support at Rs 60. You can hold this share as long as it holds above the recent trough at Rs 55. Fall below will drag the stock to the next support zone between Rs 40 and Rs 45. Resistance for the next three months would be at Rs 75 and then at Rs 87.

Fresh investments can be made in the stock only if it moves above the second resistance.

Kindly suggest your technical view for IFCI purchased at Rs 106. Geetha. M, Chandrasekhar. Y

IFCI (Rs 58.7): In our review of the stock in December 2007 pursuant to the scrapping of the stake sale, we had mentioned that short-term investors should offload their shares in rallies to Rs 92 or Rs 97, as the stock would be unable to move above Rs 100 in the near future. We had also written that the long-term outlook would turn negative only if the stock price fell below Rs 62.

The stock has moved well past this level to make a short-term trough at Rs 39.9 on January 22. It is also poised well below its long-term 200-day moving average. The next long-term support for the stock is around the recent trough at Rs 40. You can hold the stock with a stop at Rs 38. However, breach of this level can pull the stock to its long-term support zone between Rs 10 and Rs 20.

Up-moves in the stock will face stiff resistance from the 200-day moving average positioned at Rs 70. The resistances beyond this level are at Rs 78 and Rs 87. We do not envisage the stock price moving beyond Rs 87 over the next one year. Investors should utilize rallies to these levels to divest their holdings.

Can I buy Sundaram Clayton at current level? Harish

Sundaram Clayton (Rs 689.50): Sundaram Clayton reversed from its long-term support level at Rs 577 last week. The stock could have made a long-term trough at that point and can be bought at current levels. But a strict stop needs to be maintained at Rs 570. Fall below this level can drag the stock lower to Rs 360. — Lokeshwarri S.K.

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