The Hindu Business Line : Query Corner

I hold shares of Fortis Healthcare bought at Rs 75. Please tell me the future prospects of this company and advise whether I should hold or sell. M. Vimala

Fortis Healthcare (Rs 72): The limited trading history of this stock makes it difficult to pronounce a long-term outlook. The stock moved down since listing to form a trough at Rs 69 in November 2007.

The up-move from Rs 69 to Rs 123 was an unwarranted rise in price that was more due to the euphoric conditions prevailing in the market than due to an alteration in the company’s intrinsic worth.

That is the reason why the subsequent fall has pulled the stock price back to Rs 70.

The trend in the stock continues to be down. Investors can hold the stock as long as it remains above Rs 65.

Offload your holdings if the stock struggles to move above Rs 90 over the next three months.

Kindly let me know the short-term outlook for Bhagyanagar India. Selvakumar Ramesh

Bhagyanagar India (Rs 52.2): Bhagyanagar India has been in a steady up trend since the second half of 2006. This move can be enclosed within an upward moving trend channel. The stock broke above this channel in January.

But this proved to be a false break-out since the stock reversed very swiftly and is now close to the lower end of this trend channel.

In the short-term, the stock is likely to reverse from the zone between Rs 37 and Rs 40 and move higher to Rs 53 or Rs 58.

Investors with a longer horizon can hold the stock as long as it remains above Rs 35.

Can I buy Aurobindo Pharma at current level for the long-term? R.B. Saboo, Sanjay

Aurobindo Pharma (Rs 293): Aurobindo Pharma has undergone a vicious fall since January that has caused considerable damage to the long-term outlook. It has fallen way below its long-term trend line and has also closed below the 40-week moving average line.

But investors can take heart from the fact that it is halting at the key support levels that exist at Rs 260. A long-term reversal is possible here.

You can buy the stock for the long-term as it consolidates in the band between Rs 250 and Rs 300 with a stop at Rs 230.

The more risk-averse investors can wait for a pullback above Rs 360 before buying the stock.

Kindly advice on the future prospects of SAAG RR Infra. Ankit Maheshwari

SAAG RR Infra (Rs 46.1): This stock has been unable to move past the Rs 70 ceiling since 2005. On the flip-side, the stock has been able to hold above Rs 25. SAAG RR Infra reversed from the Rs 70-level twice between November 2007 and January 2008, thus forming a double top that is an ominous long-term reversal pattern. The immediate support is in the band between Rs 38 and Rs 42. However, the stock is likely to breach this level and move towards its long-term base at Rs 25. Investors should divest their holdings once the stock moves below Rs 38.

Please let me know your outlook for Ingersoll Rand bought at Rs 390 and Welspun Gujarat bought at Rs 420. Lakshmi

Ingersoll Rand (Rs 299.2): This stock has done nothing since March 2006, moving in a wide band between Rs 200 and Rs 450. But the secular trend in the stock is up since 2001.

Your purchase price for the stock falls close to the upper band of this long-term trading range. The stock is now heading towards the lower end of this range.

Near-term support for the stock exists at Rs 300. A strong breach of this level will take the stock to the long-term support zone at Rs 230. Investors with a long-term view can hold the stock with a stop at Rs 220.

The stock can move towards the upper end of this trading band over the long-term.

Welspun Gujarat (Rs 446.9): The longer-term outlook for this stock is positive. However, the stock is currently correcting the rally that commenced in July 2006.

It has already retraced 38.2 per cent of this move; that falls at Rs 348. The stock could halt at these levels and begin the next leg of the long-term up-move.

However, a fall below Rs 348 will take the stock to Rs 300. Short-term investors can exit the stock as it bounces to Rs 460 or Rs 520. Others can hold the stock with a deeper stop at Rs 290.

Please advise the medium term prospects of CESC bought at Rs 640 and Core Projects bought at Rs 260. S. Gupta

CESC (Rs 548.5): The long-term outlook for CESC will stay positive as long as the stock holds above Rs 400. Though this level was tested on January 22, it closed the day at Rs 496 thus negating the reversal in the long-term up trend.

However, the medium-term trend in the stock is down. It can fluctuate in the band between Rs 450 and Rs 600 for a few months before breaking-out on the higher side.

Short- and medium-term investors can exit the stock if it fails to move past the upper end of the band.

Core Projects (Rs 200.1): The move since August 2007 in Core Projects has been completely eroded in the first two months of the year indicating that the stock could be returning to the support band between Rs 110 and Rs 150.

The near-term outlook for the stock is also bleak. It will struggle to move above Rs 275 in the near-term.

Hold the stock with a stop at Rs 150 and try to exit in short-term rallies.

I am holding shares of BHEL bought at Rs 2,180. Kindly let me know your views on this stock for long-term. T. Sutha, Bhavani

BHEL (Rs 2,261.3): BHEL has been in a spectacular up-trend since 2003. The fifth leg of this up trend appears to have commenced at March 2007.

The positive long-term trend will not be under threat as long as the stock holds above Rs 1,700.

A reversal above this level can take the stock to a new high again.

However, BHEL has been in a corrective down-trend since November 2007. This fall can get stemmed at the recent lows since the stock has already retraced more that 50 per cent of the gains made in the last calendar year.

The stock has also reversed from its long-term moving average line. Investors ought to hold the stock with a stop at Rs 1,650. The medium-term resistances for the stock would be witnessed at Rs 2,350 and Rs 2,500.

What is the medium- and long-term outlook for Crompton Greaves? Can we hold the stock at current levels? Bala Maniam

Crompton Greaves (Rs 301.6): Crompton Greaves is currently correcting the up-move recorded from the 2002 trough.

However, it has halted above the key long-term support at Rs 280. Investors with a long-term view should hold the stock as long as it remains above Rs 250. The stock is likely to move within a wide band between Rs 250 and Rs 450 for a few months before it resumes its upward route. Medium-term resistance would be at Rs 338 and then Rs 380.

— Lokeshwarri S.K.

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