The Hindu Business Line : Query Corner

Deccan Aviation (Rs 135.8): The crash in the stock price of Deccan Aviation was as dramatic as the dizzying upward spiral in the stock price in November and December 2007.

The stock lost about 70 per cent from its peak in the first quarter of this year. The long-term supports at Rs 170 and then at Rs 130 have been penetrated in this decline.

The next long-term support for Deccan Aviation is at the April 2007 trough at Rs 88. Long term investors would need to hold the stock as long as this level holds.

The medium-term trend in the stock has reversed since the March 24 trough at Rs 100.

The immediate target for this medium term up-move is Rs 155 and then Rs 191. Investors with a medium term horizon can hold the stock with a stop at Rs 118.

Though the current move can extend further, the stock could find the hurdle at Rs 190 hard to surmount.

Can you please outline the long-term prospect of GVK Power purchased at Rs 41? Vivek Bhatia

GVK Power: GVK Power has taken a harsh tumble from the peak at Rs 93.5 to the recent trough at Rs 32.8.

The stock is, however, trying to recover from the long-term support at Rs 41. Investors with a long-term perspective can hold the stock with a stop at Rs 30, which is just below the recent trough.

But the stock might not race back towards the January peak just yet.

The up-move from the trough at Rs 32 is rather tentative, suggesting that the stock can remain in a range between Rs 30 and Rs 60 for three to six months before making an attempt to move on to Rs 67.

The long-term outlook will turn positive only if the stock moves past Rs 67.

Kindly let me know the long-term and short-term prospects of Ambuja Cements and Zee Entertainment. Sekar

Ambuja Cements (Rs 114.8): Ambuja Cements has strong long-term support at Rs 106 and then at Rs 100, from where the stock began its up move in April 2007.

Investors on the look-out for long term buys should accumulate the stock in this band. The long-term view will turn negative only if this stock declines below Rs 100.

But the medium term trend in the stock is sideways. It can vacillate in the band between Rs 108 and 128 for a few more months as it builds the base from where the next long-term up-move can be launched.

The short-term resistances are at Rs 122 and then Rs 128. Failure to move past the first resistance will imply an impending move lower towards the long-term base around Rs 100.

Zee Entertainment (Rs 211.1):The third leg of the structural bull market that began in 2003 appears to have terminated at the October 2007 peak at Rs 361 in Zee Entertainment.

The stock could now be charting the fourth wave with the fifth wave (up) yet to take off. In other words, the long-term prospects of the stock remain positive.

This view will be marred only on a decline below Rs 180. It would need at least two weekly close below this level to confirm a long-term trend reversal.

In the short-term however, the stock is not yet on firm ground. Immediate support is in the band between Rs 200 and 206.

But a breach of this level can drag the stock towards Rs 180. Short-term resistances are at Rs 230 and Rs 245.

Kindly let me know the future prospects of Sanghvi Movers purchased at Rs 325 and Alchemist at Rs 166. Please advice if I should hold or sell the above shares. T Raveendran

Sanghvi Movers (Rs 258.6): In our previous review of this stock in January, we had assumed that the stock would consolidate between Rs 280 and 340 before moving higher.

But the stock reversed sharply and recorded a low at Rs 195 in March.

The stock is however recovering from the long-term support at Rs 200.

Investors can hold the stock with a stop below the recent trough at Rs 190. A sideways move between Rs 200 and Rs 350 is possible for a year or more before the stock moves past its previous all-time high.

The medium term resistances for the stock are at Rs 264 and then Rs 280. Investors with lower holding power can divest their holdings at either of these levels.

Alchemist (Rs 104):In our review of this stock in September 2007, we had advised switching from it since it was expected to fall to Rs 80.

Alchemist bottomed at Rs 53 in November that year. The stock is in an intermediate term up trend since this trough.

The higher peaks and troughs formed during the course of this move are promising. Alchemist has also managed to move above its long term moving average lines.

The stock could move on to the band between Rs 130 and Rs 140 over the next year. It is doubtful whether this band can be surpassed.

If it does, the subsequent targets are Rs 166 and then Rs 195. Hold the stock with a stop at 78.

I am holding shares of JMC Projects purchased at Rs 464. Please advise whether I should hold the share or sell. Sanjay

JMC Projects (Rs 290.2): This stock is in a structural bull phase since 2004.

One leg of this phase has ended at the December 2007 peak of Rs 575 and there has been a harsh correction to the March low at Rs 215.

However, the long-term outlook for the stock remains positive since JMC Projects is attempting to move higher from the long-term support at Rs 226.

Investors with a long term perspective can hold the stock as long as it holds above this level.

However, we can not infer that the stock would record a ’V’ shaped recovery and gallop back to its life high.

It is likely that it spends a few months moving in the range between Rs 200 and 400 before moving higher. Investors with a short or medium term perspective can exit the stock in the band between Rs 350 and 375.

Kindly tell me the future prospects of BAG Films and Media brought at Rs 44. Prabhavathi K.

BAG Films and Media (Rs 42.5): This stock is in a long-term corrective phase since November 2007.

It is too early to draw conclusions on whether the correction has ended at the March trough at Rs 25 or if the current rally is just a bear market pull back.

Near term outlook will stay positive as long as the stock holds above Rs 32. Short-term investors can hold the stock with a stop at this level.

The stock can rally to Rs 56 or Rs 63 over the medium term. Investors still holding on to the stock purchased at higher levels can exit at either of the above targets.

Please let us know your view on Nagarjuna Construction bought at Rs 194 and Havells India bought at Rs 480. Ganesh

Nagarjuna Constructions (Rs 200.7): The last time we covered this stock in August 2007, we had expected it to move above Rs 400 over the ensuing year.

Nagarjuna Constructions recorded a peak at Rs 372 in January 2008 and is currently in a serious corrective mode. This correction has eroded half the gains made since 2001. But the stock is halting at the key long-term support at Rs 190.

A long-term trough is possible at this level. If this level is breached, the stock could move lower towards the next support at Rs 140.

We do not expect this level to be penetrated over the long-term. Investors can continue to hold the stock as long as this level holds.

But the stock could continue to be volatile over the medium term.

A range between Rs 180 and 250 is likely in that period. The near term resistance is at Rs 230. The medium term outlook will stay positive only if the stock moves above Rs 250.

Havells India (Rs 482.6): Havells India is in a short-term up trend since the March trough formed at Rs 385. The stock is currently consolidating sideways after a sharp spike. Investors with a short-term perspective can hold the stock with a stop at Rs 425.

The stock could move higher to Rs 550 or Rs 600 over the next three months. The long-term outlook will turn positive only on a move above Rs 600. — Lokeshwarri S.K.

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