The Hindu Business Line : Query Corner

I am holding shares of Jain Irrigation purchased at Rs 610 and Patni Computers bought at Rs 245. Please let me know the prospects of these two stocks for the next 6 months. N S Wadhwani

Jain Irrigation (Rs 644.6): Jain Irrigation has recovered smartly from the correction recorded in March and the stock is currently in a medium-term up trend. However this uptrend is facing resistance at the key level of Rs 675. Hold the stock with a stop at Rs 610. The current rally has the potential to take the stock higher towards its former peak at Rs 770.

The long-term outlook for Jain Irrigation is also positive. The stock is currently well above the long-term trend line that is positioned at Rs 570. This support is not likely to be breached even if the stock launches in to another leg downward.

Patni Computers (Rs 281): Patni Computers is currently attempting to pull itself out from the abysmal depths that it had sunk to in the first quarter of this year. The long-term support at Rs 250 was shattered during this crash as the stock declined to its 2004 trough at Rs 180.

However, the rally since April is convincing enough to lead us to expect that a long-term trough could have been made at Rs 188. The stock is moving sideways currently after the sharp spike in April. This up-move can continue to take Patni computers higher to Rs 306 or Rs 350 over the next six months. Short-term investors can hold the stock with a stop at Rs 235 while long-term investors can hold as long as the March trough at Rs 188 holds.

Please outline the future prospects of GTL Infrastructure. Kanna S

GTL Infrastructure (Rs 52.2): This stock is currently trying to regain the ground lost in the decline from Rs 106 to Rs 40 between January and March. But the recovery so far has been feeble. GTL Infrastructure is quite likely to move in a band between Rs 40 and Rs 65 for the next quarter or two. Investors with a shorter perspective can exit their holdings at Rs 60 or Rs 66. Stop loss for the near-term could be at Rs 47.

The long-term outlook for the stock is negative. Investors holding this stock should divest their holdings in rallies and switch to some other stock.

I hold Shreyas Shipping and Logistics at an average price of Rs 100. What is the short and long term outlook for this stock? K Ramasubu

Shreyas Shipping and Logistics (Rs 76.7): The long-term bull phase that began in 2003 at Rs 3, ended in May 2006 when the stock recorded an all-time high at Rs 290. Shreyas Shipping and Logistics has been reeling under severe selling pressure since this peak.

Every attempt at rallying has been met with fresh bout of selling resulting in a succession of lower peaks and troughs. The stock has also moved below is key long-term support at Rs 100 during this correction.

A range bound move between Rs 60 and Rs 120 can ensue for a few months before the stock makes its next long-term move. The stock would need to move above Rs 150 to mitigate the long-term bearishness. Long-term investors can consider investing in this stock only on a close beyond this level.

The near-term trend in this stock is also down. A move below Rs 73 can drag it towards Rs 65 again. Short-term investors can hold the stock with a stop at Rs 72. Short-term resistance levels are Rs 87 and then Rs 92.

Please let me know about your view on Amar Remedies. Vinodh Raj

Amar Remedies (Rs 30.4): This stock is in a structural bear market since April 2006. The recent leg of this down-trend has made the stock record a life-time low at Rs 21. The stock would be able to shake-off this bearish bias only when it closes past Rs 60. In other words, any rally in the near-term would find it difficult to get past Rs 60.

Investors can switch from this stock at current levels. The other alternative would be to hold with a stop at Rs 20 and try to exit as Amar Remedies draws close to Rs 50.

I am holding shares of Ashok Leyland purchased at Rs 27. Please let me know the future prospects of this stock. Uday Padubidri

Ashok Leyland (Rs 39.2): Ashok Leyland has been moving in a broad range between Rs 30 and 60 since 2006. The stock has bounced off the lower boundary at least four times over the last two years.

Since this sideways movement occurs after a strong upward move recorded from the trough formed in October 2000, the stock is likely to move beyond the upper boundary at Rs 60 over the long term. Hold the stock with a stop at Rs 28.

Ashok Leyland however faces medium-term resistance at Rs 44 and then 47. A strong move beyond the second target is needed to make the medium-term outlook positive. Until then, the stock can move in a band between Rs 30 and Rs 45. Investors with a shorter horizon can offload part of their holding above Rs 40.

I am holdingshares of Tata Tele Maharashtra at Rs 38. Please advice the prospects of this stock. Narain Sagar

Tata Tele Maharashtra (Rs 35.8): The decline in this stock since the beginning of 2008 has halted at the key long-term support at Rs 27. The stock has also bounced off its long-term trend line when it formed the trough at Rs 26.8. In other words, the long-term outlook for the stock stays positive as long as it holds above Rs 27. It can regain the previous peak at Rs 65 over the next two years.

The medium-term outlook for the stock is also positive and the current up trend can take the stock higher to Rs 45 or Rs 50 over the period.

But a reversal below Rs 50 would mean that the stock would remain volatile in the band between Rs 25 and Rs 45 for a few more months. Investors with a shorter horizon can sell the stock above Rs 45.

Please state the approximate periods assumed for each of the following terms used by you in this column and elsewhere in this publication by the in-house analysts - short-term, near-term, medium-term and long-term. M.Prabhakar Shet

There is no rigid definition of the terms short-term, medium-term and so on. Different books would define these terms in varying ways. When we write about short-term in techtrail column, we mean 1 day to 1 month. Medium-term is used to denote the period between 1 month and 1 year. Long-term implies more than one year.

The terms short-term, near term and immediate terms are synonyms and mean the same period, that is, less that one month.

I have bought Emco at Rs 202 and IDBI at Rs 108. Should I hold these shares or book loss? Karthick Chita

Emco (Rs 174.8): This stock is currently correcting the entire up-move recorded since 2003. The decline from Rs 330 to Rs 155 has already retraced half the gains made since the 2003 trough.

Emco has strong support in the band between Rs 150 and Rs 170, where it is currently tying to stabilize. Investors can hold the stock as long it holds above the lower boundary of this support band. The next long-term support is present at Rs 120.

If the reversal witnessed last week sustains, Emco can rise higher to the zone between Rs 220 to Rs 235. Investors with a shorter perspective can book profits in this region.

The medium term outlook will turn positive only when the stock moves above this band.

IDBI (Rs 100.4): The structural bull market that commenced in 2002 in IDBI continues to be in force. The stock tested its long-term trend line towards the end of March and reversed. The positive long-term view will be negated only on a weekly close below Rs 72.

However, the medium-term outlook for the stock has not turned positive yet. IDBI faces immediate resistance at Rs 110 and then at Rs 119.

It is quite likely that the stock stays within the sideways range between Rs 80 and Rs 120 over the next three months.

— 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. However, constraints of space will limit the responses featured under this column)

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