The Hindu Business Line : Query Corner

I hold Suzlon Energy bought at Rs 300 and Godrej Industries purchased at Rs 277. Please tell the support and resistance levels these stocks. Prasanjit

Suzlon Energy (Rs 296.2): Suzlon Energy is currently in a long-term corrective phase. Key long-term support for the stock exists in the band between Rs 220 and Rs 250.

It bounced off this zone twice in March, forming a double bottom pattern in the daily charts.

Long-term investors can hold Suzlon as long as it holds above Rs 220. If this level is breached, the next halt could be at the April 2007 trough at Rs 186.

The immediate resistance for Suzlon is at Rs 320, where the 200-day moving average is also positioned.

A reversal from this level will imply a sideways move between Rs 220 and Rs 320 for a few more months as the stock builds the base from where it can launch the next leg higher.

The subsequent resistance is at Rs 370. The medium-term outlook will turn positive only if the stock closes above this level.

Godrej Industries (Rs 276.2): Despite the steep correction that has almost halved the value of the stock since December 2007, Godrej Industries continues to be in a structural bull market. The stock is hovering close to the long-term trend line that is present at Rs 280.

The next long-term support for the stock is present at Rs 200.

The immediate resistance for the stock is at Rs 328. However, the upmove from the March trough appears strong enough to take the stock price higher to Rs 360 or Rs 400 over the medium-term.

The positive medium-term view will be negated only if the stock declines below Rs 250.

I have been holding Everonn Systems for the last 8 month. Please give me a long-term perspective on this stock. Gautam Sikka

Everonn Systems (Rs 760.5): The limited trading history of this stock makes formation of a long-term view difficult.

Everonn Systems has a strong support in the band between Rs 480 and Rs 500. It has reversed from this trading band twice over the last one year.

You can hold the stock as long as it remains above Rs 450. This stock can also be accumulated in the zone between Rs 450 and Rs 550. Though it is not possible to project a long-term target at this juncture, the stock can at least move on to its previous peak at Rs 1,235 over the next two years.

I am holding shares of Crew BOS Products at an average cost of Rs 200 for the last one year. Should I go average at this level? U. K. Singh

Crew BOS Products (Rs 58.8): It has been a one-way trip downward for Crew BOS Products since the peak recorded at Rs 290 in February 2007.

The stock price has been spiralling lower forming a succession of lower peaks and troughs.

The immediate support for the stock is at Rs 50. But the stock could decline below this level towards the next support at Rs 37.

Lack of strength in Crew BOS Products at this juncture makes averaging a risky proposition.

If additional stocks are bought to average at this level, the loss would only get widened.

A better alternative would be to exit the stock at current levels and consider re-entry once it moves above Rs 115 again.

I hold shares of K.S. Oils bought at Rs 80. Please advise me on the future of this company. Suresh Kumar Yadav

K S Oils (Rs 76): The recent correction that commenced in January in K S Oils halted above the key long-term support at Rs 55.

Long-term investors can continue to hold the stock with a stop at Rs 52.

As long as this support holds, KS Oils can head towards its previous peak at Rs 142 over the next two years.

However, the stock is likely to move sideways over the next three to six months.

The resistance at Rs 90 can arrest the stock’s progress in this period.

The range that we envisage for K S Oil in the medium-term is between Rs 60 and Rs 90.

The resistance above Rs 90 would be at Rs 100 and then Rs 110.

Investors with a shorter perspective can exit the stock at either of these resistances.

Can you outline the long-term prospects for Lloyd Electrical and Engineering? J. Joseph

Lloyd Electric and Engineering (Rs 115.6): Lloyd Electric has been moving in a wide trading band between Rs 100 and Rs 250 since August 2005.

The stock moved below the lower boundary of this trading band briefly in March but it has reversed after forming a trough at Rs 90.

The key long-term support for the stock is present at this level (Rs 90).

The structural bull market in Lloyd Electric will be threatened only on a close below this support.

The stock can remain confined to the above-mentioned range between Rs 100 and Rs 250 for a year or more.

But there is a strong likelihood of it moving beyond the upper boundary over the long-term.

Investors with a shorter horizon can exit the stock as it moves beyond Rs 200.

I have purchased Tata Motors at Rs 683 and TVS Motors at Rs 55. Should I hold these shares or sell them? H. Dutta

Tata Motors (Rs 637.8): Tata Motors is currently in a long-drawn corrective phase. This phase from May 2006 is retracing the gains made in the stock since the 2001 trough at Rs 58.

The fact that the down-move is halting at the first long-term support at Rs 630 is a positive for the long-term since it implies that the stock can move way beyond Rs 1,000 once the third leg of the long-term upmove unfolds. But that may take a couple of years more.

Meanwhile, the descending triangle formation since the May 2006 peak implies that a move lower to the next long-term support at Rs 520 is possible over the next 12 months.

Long-term investors can accumulate the stock in the area around Rs 600.

Investors with a medium-term perspective can hold the stock with a stop at Rs 590 and attempt to exit in rallies to Rs 740.

A move beyond this level is needed to mitigate the negative medium-term outlook.

TVS Motors (Rs 39.4): There has been no respite for TVS Motors since it recorded the peak at Rs 186 in April 2006.

The stock has been continuously under the hammer and rallies have been utilised by investors to exit the stock, thus curtailing the up-moves. In our previous review of the stock in November 2007, we had indicated that the stock would struggle to move past Rs 75.

TVS Motors reversed from the interim peak at Rs 79 in January.

The stock is well below the key long-term support at Rs 75.

It can be said to be turning the corner only on two consecutive weekly closes above this level.

The short-term support for the stock is at Rs 30.

You can hold the stock with a stop at this level and contemplate exit as the stock moves closer to your cost price.

The better alternative would be to sell at current levels and switch to some other stock.

Support below Rs 30 is at Rs 14.

I am holding shares of Voltas bought at Rs 185. Could you please advice whether I should hold them or book loss? Prem

Voltas (Rs 158.3): Voltas has been in a long-term correction since the December 2007 peak at Rs 267.

The stock continues to be in the bear’s grip since the rallies are getting curtailed at the minimum retracement levels.

The long-term trend line on the weekly chart has also been breached this month. The point in favour of Voltas at this juncture is that it is halting at the key long-term support at Rs 150.

A recovery from this level would indicate that the structural bull market that is in motion since 2000 continues to be in force.

That said, the stock could move in a long-term trading band between Rs 150 and Rs 270 for a few months before breaking out to move beyond Rs 300.

If Voltas moves below Rs 150, the subsequent supports are Rs 130 and then Rs 100.

We do not expect the stock to decline below Rs 100 and long-term investors should utilize moves to the band between Rs 100 and Rs 150 to accumulate the stock.

The near-term outlook for the stock is however negative and a decline to Rs 130 can not be ruled out.

Move beyond Rs 200 is needed to mitigate the bearish near-term outlook.

— 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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