The Hindu Business Line : Query Corner

Jupiter Biosciences (Rs 163.9): This stock is vacillating in a wide band between Rs 100 and 250 since early 2004. The movement in this period can be encased within an upward moving trend channel. Jupiter Biosciences tested the lower boundary of this trend channel once again in March and is currently trying to move higher.

The long-term outlook for this stock is positive and there is a strong likelihood of it breaking above the upper boundary of the trend channel over the long-term. It would hence be prudent to accumulate it near the long-term support at Rs 100. Hold with a stop at Rs 100.

Kindly let me know the short term prospects of Rajesh Exports bought at Rs 80. Parrivel Saravanan

Rajesh Exports (Rs 95.8): The short-term prospect for this stock is positive. Rajesh Exports is in a short-term

Up-trend since the trough formed in late March. After a sharp spurt upward, it is consolidating sideways.

There could be another leg higher towards Rs 104 or 115. But the stock might not be able to climb beyond Rs 120 in the medium-term.

Short-term investors can divest their holdings at either of the levels indicated above. The stop loss for the near term can be at Rs 84.

Please let me know your view on Wockhardt bought at Rs 290 and XL Tele bought at Rs 248. I can hold the shares for 2 to 3 years. Ghanshyam Bihani

Wockhardt (Rs 299.9): This stock has been in a long-term correction since the March 2006 peak at Rs 562. The third leg of this correction unfolded between January and March this year, as the stock went in to tailspin, declining from Rs 435 to 245. However, the fact that it has recovered from the long-term support band between Rs 240 and 270 implies that the outlook over the long-term remains positive.

The stock could rally to Rs 440 or it life-time high at Rs 550 over your investment horizon (2 to 3 years).

The medium-term trend in Wockhardt is up. This trend will continue to be in force as long as the stock holds above Rs 270.

The medium-term targets for the stock are at Rs 320 and then 370. Partial profits can be booked by medium-term investors on a failure to get past either of these targets.

XL Telecom and Energy (Rs 280): XL Telecom has undergone a severe correction from the January peak at Rs 595 to the March trough at Rs 185.

The long-term trend deciding level at Rs 278 has been breached during the course of this correction. However, the stock is attempting to recover from its long-term trend line at Rs 200.

Investors with a two to three year horizon can hold the stock as long as it holds above Rs 180.

The near-term outlook for the stock is positive.

The stock can move higher to Rs 302 or Rs 335 in the medium-term. Partial profits can be booked around Rs 330 since the stock can move in the range between Rs 200 and 300 for a few

Can you please advice me whether to hold or sell HCL Infosystem bought at Rs 225 and Kirloskar Oil Engine bought at Rs 181. Shankar

HCL Infosystems (Rs 202.3): This stock has reversed from its long-term support at Rs 150 in March.

The near-term up-trend that commenced from this trough continues to be in force. The stock could move higher to Rs 225 or Rs 240 in the medium-term.

Medium-term investors can divest their holdings at either of these levels. The stop loss for the short-term ought to be at Rs 170.

Long-term investors can hold the stock with a deeper stop at Rs 110.

The stock is moving in a broad range between Rs 100 and 300 since 2004.

Accumulation near the lower boundary of the trading range is advised with a long-term perspective.

Kirloskar Oil Engine (Rs 110.9): After a protracted struggle to move beyond Rs 200 between July and December 2007 during which it formed a triple top formation, Kirloskar Oil Engines reversed and launched in to a long-term correction.

This correction has eroded half the gains made since 2001.

The stock is currently attempting to move higher but the medium-term up move from the March trough lacks conviction.

Failure to move beyond Rs 130 over the next three months will drag the stock lower to Rs 76 or 63.

Long-term investors ought to stay invested as long as the lower support holds.

The medium-term resistances are at Rs 130 and then 155. Investors with a shorter horizon can exit at either of these levels.

I have purchased Larsen and Toubro around Rs 4070. Please advise whether I should hold the stock or exit. Amman Agencies

Larsen and Toubro (Rs 3141): This stock is in a short-term up trend from the April trough at Rs 2545. In our previous review of this stock, we had expected the correction to halt above Rs 2,900.

But the stock weakened considerably in the beginning of April and fell to our long-term trend deciding level at Rs 2400.

We adhere to the view that long-term investors should hold the stock as long as it holds above this level. The next support is way below at Rs 1800.

Larsen and Toubro is currently in a strong up-move. This move could face immediate resistance in the band between Rs 3,200 and Rs 3,300.

Once this level is penetrated, the next target would be Rs 3565 and then 3800. Hold with a stop at Rs 2900, and exit at either of the levels cited above.

I had bought the shares of Bank of Baroda at Rs 495. Kindly advise whether to hold these shares or to book loss at current rate. K M Kathiresan

Bank of Baroda (Rs 320.1): This stock remained shackled to a range between Rs 130 and 300 in the four years between April 2004 and 2007. However, it moved beyond this range in 2007 and finally peaked this January at Rs 501.

You have purchased the stock close to a long-term peak since it is down almost 50 per cent from this peak. However, it also needs to be noted that Bank of Baroda is reversing from its long-term trend line that is positioned at Rs 250.

Long-term investors should hold the stock as long as it remains above this level.

Though the stock can take a couple of years to get back to its former high, there can be intermediate rallies to Rs 350 or Rs 400, where investors with a shorter horizon can exit.

What is your view on GNFC bought at Rs 180? Vikas

GNFC (Rs 162.4): The up-move that began at the March trough at Rs 121 is losing momentum. The stock faces strong resistance in the area around Rs 160 where the long-term average lines are positioned.

A reversal from these levels can pull the stock towards it recent trough at Rs 121 again.

Hold the stock with a stop at Rs 150. If the stock gets past the resistance zone around Rs 160, it can move to Rs 185 over the medium-term.

Please let me know the outlook for Shasun Chemicals and Valecha Engineering for the next 12 months. Ganeshan, Kathiresan

Shasun Chemicals (Rs 59.1): This stock is in a severe correction since June 2007 that has pulled it below its long-term support at Rs 65. Shasun Chemicals is however in a short term uptrend from its recent trough at Rs 37. It will face immediate resistance at Rs 65. If this level is surpassed, the next target would be Rs 84.

Shasun Chemicals can find it difficult to climb above this resistance over the next three months.

Investors can divest part of their holdings if the stock reverses lower from either of these levels. Hold the stock with a stop below the recent trough at Rs 35.

Valecha Engineering (Rs 174.5): Valecha Engineering has been reeling under severe selling pressure since January as the stock tumbled from the peak at Rs 358 to the March trough at Rs 142.

However, despite the steep erosion in the stock price, the structural up-trend is still intact in the stock.

A decline below Rs 130 is needed to negate this view.

The medium-term trend is however positive and the formation of higher peaks and troughs since March is promising.

But the stock would face resistance at Rs 220 over the next three months.

A reversal from this level can result in a sideways move between Rs 150 and 220 for a few months before the next up-move unfolds.

Investors should hold the stock with a stop at Rs 130. It has the potential to move to Rs 270 over the long-term.

— Lokeshwarri S.K.

More Stories on : Technical Analysis | Stocks

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page