The Hindu Business Line : Query Corner

ICSA India (Rs 395.0): This stock recorded a life-time high at Rs 648 last December and has been in a serious long-term correction since then. ICSA India is currently down almost 50 per cent from this peak.

The movement in this stock since June 2006 can be enclosed within an upward moving trend channel.

The stock has currently moved to the lower end of this channel at Rs 340.

Investors with a medium-term perspective can hold the stock with a stop at Rs 285. The subsequent long-term support is present at Rs 248. Investors with a two year horizon can hold as long the stock trades above this support.

ICSA India can rally beyond its life high at Rs 649 over the next two years.

The resistances for the stock over the next year would be at Rs 430 and then Rs 500. Increase beyond the second resistance in required to make the medium term outlook positive again.

I hold shares of Asian Electronics purchased at Rs 470. Should I hold this stock or book loss? Suresh Kumar Yadav

Asian Electronics (Rs 119.8): Asian Electronics made two attempts to move beyond the resistance at Rs 600; in July 2007 and then in January 2008.

The second failure resulted in a very sharp decline that made the stock plunge from a peak at Rs 585 to Rs 100.

The stock has moved well below the key long-term support at Rs 225. A close above this level is needed to convert the negative long-term view to neutral.

There will be psychological support for Asian Electronics at Rs 100. You can exit the stock once this level is breached since the next downward target would be Rs 50.

I hold shares of Jaiprakash Associates bought at double the current market price. Please advice the outlook for this stock. I am a long-term investor with one-to-two year perspective. Satheesan Sivaraman

Jaiprakash Associates (Rs 178.7): In our previous review of this stock in February this year, we had written that the long-term outlook would turn negative on a decline below Rs 200.

The stock was reversing from its long-term trend line then. We had advised investors to exit the stock if it failed to move beyond Rs 385 over the ensuing three months.

The medium term up-move that commenced in March halted at Rs 297 in May and the stock appears to be charting the third leg of its long-term correction now.

The decline below the previous trough at Rs 189 confirms that the stock is in a long-term bear phase. This phase can drag the stock to Rs 150 or even Rs 100.

You can switch from this stock at current levels and consider re-entry once it closes above Rs 250.

I have purchased Dredging Corporation at the rate of Rs 560. Kindly let me know the future prospects of the company from a three-four year perspective. Sunil Kalra

Dredging Corporation (Rs 581.4): This stock had been moving in a sideways range between Rs 400 and 700 in the three years between 2004 and 2007.

The entire movement of the stock since 2004 can be enclosed within an upward moving trend channel.

The move beyond this range in the last two months of 2007 appears to be unjustified since the entire gains made in this period was eroded in January and the stock recently recorded a trough at Rs 515.

The stock is currently close to the lower boundary of this trend channel. It is also close to the key long-term support at Rs 544.

A decline below Rs 544 will pull the stock to the next long-term support band between Rs 450 and 460.

Long-term investors can hold the stock with a stop at Rs 450 though the current decline is likely to halt above Rs 500.

We expect the stock to reverse from this level and move towards the upper end of the trend channel at Rs 1,500 over your investment horizon.

I have bought shares of Reliance Petroleum at Rs 188.Please give your advice on this stock. Nagendra Iyer

Reliance Petroleum (Rs 179.1): This stock has key long-term support at Rs 145. The long-term view on this stock will stay positive as long as this support holds.

Reliance Petroleum has been repeatedly reversing from this area since the beginning of this year. The intra-day decline below this level on January 22 can be ignored since it was a fleeting move and the stock closed at Rs 147 on that day.

The immediate resistance for the stock is at Rs 210 and we adhere to the view that a sideways move between Rs 140 and Rs 210 is likely for a few months before the stock moves higher.

Targets beyond Rs 210 are at Rs 218 and then Rs 236.

The short-term outlook for Reliance Petroleum is positive and short-term investors can hold the stock with a stop at Rs 155. A rally towards Rs 200 or Rs 220 is likely in the near term.

Kindly give your outlook for Tech Mahindra and Parsvnath Developers purchased at Rs 550 and Rs 530 respectively about 2 years back. Should I book loss in Parsvnath? A Kanakath

Tech Mahindra (Rs 788.2): In our last review of this stock in September 2007, we had expected Tech Mahindra to halt its slide around Rs 1,500 and commence a fresh leg of the up-trend. But the stock has slipped far below this level to form a trough at Rs 615 in March.

A medium-term up-trend is currently in progress from this low. If it manages to sustain above Rs 700, a move higher to Rs 1,000 or Rs 1,150 is possible over the medium term.

Investors with a medium-term perspective should exit the stock once it declines below Rs 700 and look for buying opportunity close to Rs 500.

The supports on the chart are at Rs 614 and then Rs 520. Investors with a long-term horizon can hold the stock as long as it holds above Rs 500. Fresh investment is advised in the stock only on a firm close beyond Rs 1,150. The subsequent target would be Rs 1,500.

Parsvnath Developers (Rs 164.9): In our previous review of Parsvnath Developers in October 2007, we had envisaged a range-bound move between Rs 250 and 400 over the medium term. The stock moved beyond this range in December 2007 and finally peaked at Rs 598 this January.

Since the race to Rs 598 was propelled by the bullish frenzy prevalent in the market at that time, the correction that followed was extremely sharp and severe and the stock is currently close to its all-time lows at Rs 165.

Since the stock is already close to its life-time low, it is hard to identify the level at which it can finally halt.

You can divest your holdings at current levels and switch to another stock. Fresh investments in this stock are advised only on a firm close above Rs 300.

Kindly give your outlook for Henkel (I) purchased at Rs 38 and Mundra Port purchased at Rs 1168. Rach

Henkel (I) (Rs 18.2): Henkel India has been in a long-term bear market since 1999.

This phase has resulted in the stock falling from the peak at Rs 149 to Rs 14 by 2004. The stock has done almost nothing since then; moving in a sideways range between Rs 13 and Rs 40.

This range can continue to shackle the stock over the next couple of years as well. Hold with a stop at Rs 13 and try to divest your holding the next time the stock draws close to Rs 40.

Mundra Port and SEZ (Rs 599.2): Mundra Port and SEZ has formed a significant trough at Rs 463 in March from where it gained almost 100 per cent to record the May peak at Rs 925.

The intermediate resistances for the stock are at Rs 900 and Rs 1,000. The fact that the stock reversed from one of these, denotes that the up-move from the March trough was only a bear-market pull-back.

A close beyond Rs 1000 is needed to signal that the stock is on the road to a new high again.

The stock has currently moved below the key medium term support at Rs 640 and now appears to be headed towards the March trough at Rs 460 once more.

But a reversal above the March low forming a higher bottom or a rebound from the band between Rs 400 and Rs 450 would provide a good opportunity for long-term investors to take exposure to the stock. Stop loss level for long term investors can be at Rs 400.

— Lokeshwarri S.K.

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