The Hindu Business Line : Query Corner

Reliance Capital (Rs 993): In our previous review of Reliance Capital in March, we had indicated that the decline in the stock can halt around Rs 1,135 and that the next support for the stock was at Rs 930.

The stock is currently hovering close to the support at Rs 930.

Investors can hold the stock with a stop at Rs 800.

The next support band for the stock is at the March 2007 levels between Rs 570 and Rs 650.

Fresh investments are advised only on a close above Rs 1,200 again. The medium-term resistance levels for the stock are at Rs 1,650 and then Rs 2,500.

What is your advice on Accel Frontline at current levels? T V Sathish

Accel Frontline (Rs 85.1): This stock has been declining since December 2007 and has now moved close to its intermediate-term support at Rs 81.

A reversal from current levels will pull the stock higher to Rs 130 or Rs 162.

Investors can hold the stock with a stop at Rs 75.

However, it would be prudent to wait for a close above Rs 130 before adding to the holding since a decline from these levels will drag the stock lower to Rs 62 and then Rs 44.

I am holding shares of GTC purchased at Rs 156. Please give your six-month outlook for this stock. Suresh Kumar Yadav

GTC Industries (Rs 133.5): This stock has been in a severe down-trend since December 2007 that pulled it down from Rs 750 to below Rs 150.

GTC Industries has penetrated various key support levels during the course of this decline.

Since the stock is not showing any signs of recovery yet, there is a possibility of the stock declining further towards the July 2006 trough at Rs 107 over the next six months.

We would recommend a switch from this stock at current levels and consider re-entry if it closes above Rs 200. Medium-term resistance levels are at Rs 190 and then Rs 228.

The bearish short-term outlook will be mitigated on a rally above Rs 228.

Could you please revisit your views on Jain Irrigation’s technical outlook given in May 18, 2006 edition as the stock breached the long-term trend line at Rs 570. What are the long-term prospects for this stock? G. Ramakrishna Bhat

Jain Irrigation (Rs 458.2): We had expressed a positive long-term view for Jain Irrigation in our previous review and expected the stock to sustain above the long-term trend line at Rs 570.

But that has been subsequently breached, as pointed out by you.

The stock could now get in to a long-drawn corrective phase that makes it oscillate in the band between Rs 400 and Rs 750.

The stock has strong support around Rs 400 where it formed a base between March and April 2007.

However, protracted decline can make the stock seek the supports at Rs 385 and then Rs 296.

The stock would face resistance at Rs 550 and then Rs 650 over the next one year. Investors with a shorter investment horizon can exit the stock at either of these levels.

I am holding shares of ABB and Siemens purchased at Rs 950 and Rs 400 respectively. Let me know the future prospects of these stocks. V K Raheja

ABB (Rs 834.9): ABB has recorded a nightmarish plunge since the December peak at Rs 1,650 leaving most investors in a state of bewilderment.

We had expected the slide to halt at Rs 1,000 and the stock to move sideways in a range between Rs 1,000 and Rs 1,500 for a couple of years before the resumption of the up-trend.

But the decline below Rs 1,000 implies that the stock is now headed towards the key long-term support at Rs 653. Since the stock also formed a significant trough at this level in March 2007, the long-term decline could halt here and the stock could attempt to stabilize itself around these levels.

But it needs to be borne in mind that there are no sacrosanct levels in a raging down trend.

It would be as hopeless to look for rationality in stock price movement in strong declines as in a frenzied bull-market.

The demarcation between a fundamentally sound and un-sound stocks vanishes when all stocks go in to a decline en-masse.

But it is also true that when the recovery takes place, fundamentally sound stocks are the first to recover whereas those with dubious fundamentals go back in to wilderness.

Siemens (Rs 427.5): Siemens has been spiralling downward since its January peak at Rs 1,044.

The rallies have been unable to sustain due to the bouts of profit-booking at every incline.

The stock is hovering close to its key long-term support at Rs 400.

This level halted the steep decline in May and kick-started a rally to Rs 1,000 over the ensuing year and half.

Investors can hold the stock as long it holds above this level.

A weekly close below Rs 400 should be the cue for investors to exit the stock.

The next support band for the stock lies between Rs 220 and Rs 240.

Though the stock is currently in a short-term up-trend, investors can wait for a close above Rs 500 before making fresh purchases.

The resistances over the next year would be at Rs 640 and then Rs 800.

The medium-term outlook will turn positive only on a move above the first resistance.

Please advice on the shares of Century Textiles purchased at Rs 873. Tony

Century Textiles (Rs 505.3): The structural up-trend in Century Textiles that commenced in September 2001 came to an end in January 2008 at Rs 1,275 and the stock has been declining sharply since.

This decline has pulled the stock down to the key long-term support at Rs 500.

Investors can hold the stock as long as it holds above this support on a weekly basis.

It would be best to divest the holdings on a breach of this level since the next support for the stock exists at the June 2006 trough at Rs 260. The medium-term resistances for the stock would be at Rs 770 and Rs 1,000.

Medium-term investors can divest their holdings on a rally to these levels.

I want to purchase shares of Vijaya Bank. Please advise whether I can purchase the share at current level. Saksham Bansal

Vijaya Bank (Rs 33.1): Vijaya Bank has moved close to the lower boundary of its long-term trading range between Rs 30 and Rs 75.

The stock has not penetrated this level conclusively since 2003.

Though the stock is close to key long-term levels, there has been no meaningful reversal in the stock yet.

Wait for a close above Rs 42 before investing in this stock. The stock can then move up to Rs 55 or Rs 70 over the medium term.

Investors with a higher risk appetite can buy the stock at current levels with a stop at Rs 30.

I have bought Titan at Rs 750. Should I hold this share or sell it? Siva Balaji

Titan (Rs 1034): In our previous review of this stock in September 2007, we had expected the stock to record a high at Rs 1,673 over the ensuing year.

Titan Industries reversed from a peak at Rs 1,790 in November 2007 and is currently in a long-term corrective phase.

This phase has already given up half the gains recorded since 2001.

Investors with a medium-term horizon can hold the stock with a stop at Rs 880. Long-term investors can hold with a deeper stop at Rs 670 which is the key long term support for the stock.

Titan Industries is unlikely to decline below Rs 880.

We envisage a sideways move between Rs 900 and Rs 1,500 over the next year.

Close beyond the upper boundary in needed to signal the reversal in the intermediate term down-trend.