The Hindu Business Line : Query corner

Oriental Bank of Commerce (Rs 161.7): OBC is in a long-term bull market since October 2000. The first leg of this phase halted in April 2004 and the stock has been moving sideways between Rs 150 and Rs 350 since then. The stock has now moved close to the lower boundary of this long-term range.

Hold the stock with a stop at Rs 135. OBC has reversed from the support band between Rs 130 and Rs 150 thrice over the last four years.

The near-term trend in the stock is extremely weak, the stock has lost more than 40 per cent in the last one month. The near-term supports for the stock are at Rs 158 and then Rs 138. Medium-term resistance levels would be Rs 210 and then Rs 245.

Indian Hotels (Rs 109.5): This stock is currently charting the third leg of the downtrend that began at the peak in January.

The near-term outlook for the stock is weak and it appears to be heading towards the support band between Rs 93 and Rs 95. Investors with a medium-term horizon can hold the stock with a stop at Rs 90.

The medium-term resistance for the stock is present at Rs 130.

Indian Hotels is in a protracted sideways move since May 2006.

The next long-term support for this stock exists at Rs 79. Long-term investors should stay invested as long as the stock remains above this level. The stock is expected to move above the ceiling at Rs 150 in the next two years.

Please tell me the future prospects of Container Corporation of India. Can I buy the stock at current level? Anuj Jain

Container Corporation of India (Rs 1,656.6): This stock formed a lifetime high at Rs 2444 in June 2007 and has been sliding lower ever since. This decline is halting at the key long-term support at Rs 1,540. A sideways move between Rs 1,500 and Rs 2,500 would be conducive to the long-term prospects of Container Corporation of India (Concor).

Investors with a two-year perspective can buy the stock close to Rs 1,500. However, a fall below Rs 1,500 can pull the stock to Rs 1,300. We do not expect the stock price to decline below Rs 1,300.

Concor can attempt to rally higher to Rs 1,860 or Rs 1,900 over the medium-term. Fresh purchases from a medium-term perspective are recommended only on a move above the first resistance.

I would like to know the long-term outlook for Reliance Capital bought at Rs 1,518. Vivek Bhatia

Reliance Capital (Rs 1,102.7): Reliance Capital is one of the stocks that have received a hard knock in the market slide since February 20.

The stock has now given up the entire gains recorded since August 2007, losing more than 60 per cent from its lifetime high of Rs 2925 recorded on January 15.

The stock is currently poised close to the key long-term support of Rs 1,135.

The long-term trend line that is present a little below at Rs 930 will provide the next support.

Investors can watch out for a long-term trough between Rs 900 and Rs 950. A reversal from this zone will imply that the stock can move beyond its lifetime high over the long-term.

The medium-term resistance will be encountered at Rs 1,760 and then from Rs 2,200.

The stock could spend a few months moving in a band between Rs 1,760 and Rs 900 as it builds the base from which it can launch the next move higher.

Please tell me the long-term and medium-term prospects of Gujarat NRE Coke and Ucal Fuel. Sanjay Sahni

Gujarat NRE Coke (Rs 124.5): Gujarat NRE Coke has been one of the out-performers in the recent market fall.

The stock moved past the key resistance at Rs 85 in September 2007 and continued the up-move until February this year when it recorded its lifetime high of Rs 181.

The stock is, however, in a medium-term downtrend since this peak.

The medium-term supports for the stock are at Rs 122 (where the stock is currently poised) and then at Rs 110. If the stock reverses from current levels, it is likely to move to a new peak within the next one year.

The long-term trend in the stock continues to be up. This view will be altered only if it records a weekly close below Rs 85.

Ucal Fuel Systems (Rs 66.7): This stock is in a long-term down trend since September 2005. It has also penetrated key long-term supports.

The medium-term trend in the stock too is down since the January peak at Rs 143. Investors holding the stock can divest their holdings at the current juncture and consider buying it back only if it records a weekly close above Rs 150.

I had bought Unitech at Rs 480 in December 2007. Should I hold the stock or book loss? Shanbag M.V.

Unitech (Rs 267.4): Unitech has been in a long-term correction since the January peak at Rs 547.

This decline has resulted in an erosion of more than 50 per cent in the stock price since its life high.

That said, the secular up-trend that began in 2003 has not ended yet. The next long-term support for the stock exists at Rs 208 and below that, at Rs 175.

Investors with a long-term horizon can hold the stock as long as it sustains above the second support.

Chart patterns on the daily chart imply that the stock price would stay under pressure and it can head lower to Rs 220 in the near-term.

Medium-term resistances would be at Rs 340 and then Rs 365. Volatility would persist until the stock closes above Rs 365.

I bought Reliance Energy at Rs 1,750 per share in February. Could you kindly share some analysis about the stock’s future and guide me whether I should keep this stock or try to sell it off. Ankur Chandra, A. Gupta, T.P. Bhola

Reliance Energy (Rs 1,206.5): In our previous review of Reliance Energy in early October 2007, we had pointed out that the third wave of the long-term bull phase from the 2003 trough has commenced from June 2007. We had also projected the target for the extended third wave at Rs 2,452.

Reliance Energy recorded a peak at Rs 2,631 in January and has tumbled in to a correction from that level, leaving investors gasping for breath.

However, if we place the current correction in the context of the wave counts discussed above, this appears to be the fourth wave from 2003 low, with the fifth wave (that will take the stock price higher) yet to unfold.

The stock is halting at Rs 1,221, the level that is the key support for the intermediate-term.

A reversal from here can start the fifth wave of this cycle that can take the stock price beyond Rs 3,000. However, a sharp fall below Rs 1,000 will need a revision of the long-term counts. The next long-term support is present only at Rs 820.

The short-term trend in the stock is weak. Reliance Energy can encounter resistance from Rs 1,500 and then from Rs 1,700 over the medium-term.

Investors can hold the stock with a stop at Rs 1,000. Exit the stock if this level is breached and look for an entry point around Rs 800.

— Lokeshwarri S.K.

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