The Hindu Business Line : Query Corner: What the charts say

Ashok Leyland (Rs 32.7): Ashok Leyland has key long-term support at Rs 24. However, this level has not been tested yet in the recent market correction. The stock has instead re-bounded twice this year from Rs 26. Long-term investors can hold the stock as long as it sustains above Rs 24.

If we consider the monthly chart of Ashok Leyland, the stock is oscillating in a wide band between Rs 30 and Rs 60 since the last quarter of 2005. Though this range was penetrated briefly in July, the stock has once more moved within this band. Since the stock is reversing from the floor of the trading range, it can rally towards the ceiling at Rs 60 over the next two years.

However, investor’s patience can be tested sorely in the interim period as the stock faces strong hurdles at Rs 38 and then at Rs 44. Investors with a shorter investor horizon can exit the stock on rallies to these levels.

Jayaswal Neco (Rs 39.2): This is a counter that is best avoided by investors with a lower penchant for risk. The tendency of Jayaswal Neco to move from one circuit to another both on its way up as well as down makes it a very risky investment. That said, the stock has weathered the recent market correction pretty well. It has recovered more than 50 per cent of the losses suffered between January and March. Hold the stock with a stop at Rs 33. There can be another spurt to Rs 60 or even Rs 80 over the medium term when you can divest your holdings.

I am holding shares of Siemens bought at Rs 781 and Supreme Petrochem bought at Rs 40. Please advice whether I should hold them or book loss. Ramanujam D, Rajee

Siemens (Rs 547.3):In our previous review of this stock in February this year, we had expected the correction in Siemens to halt at the 50 per cent retracement of the structural up-move from 2003 trough that is at Rs 575. But this support was penetrated and the stock finally formed a significant trough at Rs 363 in July. Since this low coincides with the level from which the stock rebounded after the May 2006 crash, a long-term trough is possible here.

The rally from the July trough has taken the stock to the peak at Rs 597 and it is consolidating sideways since then in what appears to be a halt before the next upward spurt. Short-term investors can hold the stock with a stop at Rs 500. Siemens can also be bought in declines with the same stop, with a short-term perspective. The stock can move higher towards Rs 700 or Rs 785 over the next six months, where you can divest your holdings. Long-term investors should hold as long as the stock sustains above Rs 380.

Supreme Petrochem (Rs 20): Supreme Petrochem peaked at Rs 52 in December 2007 and it is in a structural down-trend since then. Though the December peak is not likely to be re-visited over the next two years, the current decline is however halting at the long-term support at Rs 16. Investors can hold the stock as long as this level holds. There can be medium-term rallies to Rs 25 or Rs 30 where investors can pare exposure.

I have bought Elder Pharmaceuticals at Rs 370 and Titan at Rs 750. Should I hold these shares or sell? Siva Balaji

Elder Pharmaceuticals (Rs 331.5): Despite the highly volatile moves made by this stock since July, investors can take heart from the fact that Elder Pharmaceuticals is attempting to form a base around the long-term support at Rs 300. This stock has braved the market melt-down rather well, this far. It can rally higher to Rs 357 or Rs 370 where investors with a short-term perspective can sell their holding.

Investors with a longer horizon can hold Elder Pharma with a stop at Rs 280 (on a closing basis). If the stock sustains above this stop, it can rally towards Rs 400 or Rs 465 over the next year.

Titan Industries (Rs 1,231.6): Following the steep decline from the peak at Rs 1,715 this year, Titan Industries has been moving in a wide range between Rs 900 and Rs 1,300. Your decision to hold the share or to sell it at current level will depend upon your investment horizon. Short and medium term investors can sell the stock in the band between Rs 1,300 and Rs 1,350 since this level retraces exactly half of the prior down move. The outer target over this period would be Rs 1,450. Titan Industries could continue to move in the afore-mentioned range for a few more months.

However, long-term investors ought to hold the stock with a stop at Rs 900 since our long-term view for Titan Industries is positive. It can move towards its former peak at Rs 1,800 over the next couple of years. The long-term trend line positioned at Rs 920 coupled with the retracement support at this juncture would provide a reliable support in case of a protracted decline. This positive view would be negated only on a conclusive close below Rs 900.

I need your technical guidance on Chennai Petroleum bought at Rs 292 from a short and medium-term perspective. Rajesh Y

Chennai Petroleum Corporation (Rs 254.3): In our previous review of this stock, late last year, we had expressed a positive view for Chennai Petroleum and expected a range-bound move between Rs 350 and Rs 500 for a few months. But the stock breached the lower boundary of the trading range and is currently attempting to regain a foot-hold at Rs 250. This is a key support from a long-term perspective since the August 2007 trough occurred here and it is also a 50 per cent retracement of the structural up-move from the September 2001 trough. However, a breach of this level will take the stock to Rs 200.

Medium term investors can hold the stock with a stop at Rs 237. Stop loss for the short term can be at Rs 250. Chennai Petroleum can rally towards Rs 287 or Rs 330 in the short to medium term.

Please advice me on the technical outlook for Noida Toll Bridge. Ajith Bokadia, Manoj Bansal

Noida Toll Bridge (Rs 43.3): Almost the entire gains recorded in Noida Toll Bridge in the last quarter of 2007 have been eroded in the market crash between January and March this year. The stock price has been oscillating between Rs 30 and Rs 50 since then. This stock will continue to struggle to surpass the resistance between Rs 50 and Rs 55. The outer target for the next year would be Rs 64. It is highly unlikely that the stock would be able to re-attain the Rs 85-peak for the next couple of years. Investors holding the stock can divest their holdings at the resistance levels mentioned above.

What is the short-term outlook for Reliance Power? Ashok Gupte

Reliance Power (Rs 162.9): Reliance Power has formed a significant trough at Rs 116 in July and is currently in a medium-term up-move. One part of this up-move ended at Rs 189 and the stock is currently in a short-term reaction phase. The near-term outlook for the stock will stay positive as long as the stock holds above Rs 145. A reversal above this zone can take the stock higher to Rs 198 or even Rs 220.

The stock might however be unable to get past Rs 220 over the next three months and a move between Rs 100 and Rs 200 is likely in this period as Reliance Power bides its time before the next move. Long term investors can hold the stock as long as it holds above Rs 100.

— Lokeshwarri S.K.

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