The Hindu Business Line : Query Corner

GMR Infrastructure (Rs 174.1): GMR Infrastructure formed a significant long-term peak in December 2007 at Rs 269 and has been in a corrective mode since then. This falls has retraced more than 50 per cent of the entire gains made since it’s listing in 2006. The stock has key support at Rs 130. It could form a long-term trough at this level and move higher.

Investors with a three-month perspective can wait for a fall to the zone between Rs 130 and Rs 140 before purchasing the stock. It is expected to remain in a sideways range between Rs 130 and Rs 200 in this period. Else wait for a break-out beyond Rs 200 to add this stock to your portfolio.

Karnataka Bank (Rs 263.9): In our previous review of this stock in June 2007, we had advised investors to hold the stock with a stop at Rs 150, in anticipation of an upward move to Rs 227. The stock moved well past this level to record a peak at Rs 286 in February. Karnataka Bank has held quite steady in the market turbulence witnessed since the beginning of this year, except for a mild totter on January 22. The stock can be bought for the medium-term with a stop at Rs 225. The medium-term target would be Rs 342.

I have purchased Lanco Infratech at Rs 853 and Ganesh Housing Corporation at Rs 705. What is the technical outlook for these stocks? Chandra Jha

Lanco Infratech (Rs 475.2): Lanco Infratech moved up sharply to more than double in price in the last two months of 2007. However, the fall that commenced in the second half of December 2007 has eroded more than 50 per cent from the stock price.

The stock is currently trying to stabilise around Rs 400 that is the 61.8 per cent (Fibonacci retracement) of the rally from April to December 2007. You can hold the stock with a stop at Rs 375.

Rallies in the stock would face strong resistance at Rs 570 and then at Rs 630 in the medium-term. We expect the stock to move in a range between Rs 380 and Rs 630 in this period. Medium-term investors can exit the stock if it struggles to move past the second resistance. A weekly close above Rs 680 is needed to make the intermediate-term trend positive.

Ganesh Housing Corporation (Rs 466.3): This stock is currently correcting the entire up-move recorded since 2004. The long-term supports for the stock exist at Rs 420 and then at Rs 320. The near-term outlook for the stock is negative as it is currently below its long-term average line and is recording a sequence of lower peaks and troughs. This denotes selling pressure every time the stock attempts to move higher. We expect the stock to move down towards the first long-term support at Rs 420. You can hold the stock with a stop at Rs 400 and exit it on near term rallies to Rs 600 or Rs 650.

Please advice on the prospects of Power Grid Corporation for the next six months. I have purchased the stock at Rs 157. Faseehur Rahman

Power Grid Corporation (Rs 109.7): In our previous review of this stock, we had expected a range bound move between Rs 135 and Rs 170 for a few months before it moved higher. We had also mentioned that a breach of the Rs 135 support would pull the stock to the band between Rs 115 and Rs 120 that could be a buying opportunity.

The stock fell to a low of Rs 80 on January 22 and has been trying to stabilise in the band between Rs 90 and Rs 120 since then. The stock could stay within this band for a few more months. But investors with a long-term perspective should hold the stock with a stop at Rs 80. We expect the stock to move past the ceiling at Rs 120 over the next one-year towards it previous peak at Rs 167.

I want to know the technical outlook of Sasken Communication purchased at an average cost of Rs 250. Abdullah Masood

Sasken Communication (Rs 128.9): Sasken Communication has been in a relentless fall since the beginning of 2007. The going got worse in January 2008 as the stock decisively breached the long-term support at Rs 254. The near-term outlook for the stock is weak and we do not have any confirmation that the stock has bottomed out yet. You can exit the stock at these levels and re-enter if it records a weekly close above Rs 300.

Such a move is required to signal that the worst is behind the stock.

I am holding shares of Adlabs bought at Rs 1,100. Should I hold these stocks or sell them? Dileep Singh, Sripriya

Adlabs Films (Rs 838.9): Adlabs Films has been one of the worst affected stocks in the recent market meltdown. The stock went in to a tailspin since January 7 that resulted in the price plummeting from Rs 1,945 to Rs 666 in less than one month.

Longer-term investors can, however, take heart from the fact that it is currently halting above the long-term support band between Rs 750 and Rs 700. The outlook will turn distinctively negative only if this band is breached. Long-term investors should hold the stock with a stop at Rs 650. Although, we do not expect this level to be breached, if it does, the next level to watch out for would be at Rs 400.

The near-term outlook for the stock is neutral. Though it has bounced off the long-term average at Rs 780 it is struggling to move higher. The near-term resistances would be at Rs 1,150 or Rs 1,300. Volatility is expected to stay over the medium-term as the stock moves in a range between Rs 650 and Rs 1,150 for a few months.

I have purchased shares of MRPL at Rs 142. Should I buy more shares to average the price? Yatin Bhandari

Mangalore Refinery & Petrochemicals (Rs 86.2): The steep fall in the stock price of MRPL in the second week of January denotes that the rally recorded between October and December 2007 was merely speculative in nature.

The recovery in February has been rather tentative and the stock is currently struggling to move above the resistance at Rs 95. A sideways move between Rs 70 and Rs 95 would be construed a distributive phase, which can be followed by another move down towards the long-term support band between Rs 30 and Rs 50.

It is not advisable to buy extra shares of this stock with the intention of averaging. Averaging is never a good idea as the loss doubles if the stock continues moving lower.

Secondly, one can never be sure if the recent trough will hold or if the stock will continue trending lower. You can hold the stock with a stop at Rs 72.

Divest your holding if the stock rallies to Rs 105 or Rs 115.

I am holding shares of IVR Prime purchased at the IPO price of Rs 550. Should I continue to hold on to this stock? A.K. Maheshwari

IVR Prime Urban Developers (Rs 249.2): This stock does not have sufficient history to enable us to identify the support and resistance levels or to pronounce a long-term outlook. You can hold the stock with a stop at Rs 160. The stock could, however, struggle to move above Rs 340 over the next three months. Medium-term investors can offload their shares at this level.

— Lokeshwarri S.K.

(Readers can send in their queries, on not more than two companies, to techtrail@thehindu.co.in.

Queries can also be sent by post to: Tech Trail, 859/860 Kasturi Buildings, Anna Salai, Chennai 600002. We would endeavour to answer as many queries as possible.

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