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

The next support for the stock on the long-term charts is at the May 2006 trough at Rs 158. If this level is penetrated too, the next halt could be at Rs 120.

The stock has been declining sharply since September 11 and there is no convincing reversal visible on the charts yet.

Resistances for the short-term would be at Rs 270 and then Rs 300. TV 18 would have difficulty moving beyond Rs 437 over the ensuing year. Investors can hold the stock as long as it holds above Rs 150.

I am holding TTML and Exide Industries purchased at Rs 32 and Rs 71 respectively. Kindly let me know the prospects of these shares. Sushma Sahai

Tata Tele Maharashtra (Rs 21.1): In our previous review of this stock in March, we had written that the long-term view for TTML would stay positive until it records two weekly closes below Rs 27. We had also indicated investors with a shorter investment horizon could divest their holdings as the stock rallies towards Rs 40 or Rs 50.

TTML reversed from the peak at Rs 38 in May and closed emphatically below the key long-term support at Rs 27 in June.

The view on this stock will turn positive if it moves strongly above this level once more.

It is currently halting just above the next support band between Rs 15 and Rs 20. Investors still holding the stock can continue to do so as long as it remains above Rs 15.

However, there are too many impediments in its move higher and it could take more than two years for it to re-attain its January peak at Rs 65. Key resistances in the year ahead would be at Rs 31 and then Rs 37.

Exide Industries (Rs 63.5): The long-term view for this stock remains positive despite the correction that is on since January.

If we consider the long-term charts, Exide Industries has been moving in a broad range between Rs 60 and Rs 90 over the last year.

Since the stock is close to the lower boundary of this trading range, long-term investors should continue to hold the stock with a stop at Rs 46.

Declines to the zone between Rs 45 and Rs 60 would be an opportunity for investors to accumulate the stock. The stock can move higher to Rs 70 or Rs 78 over the next year.

I am holding shares of Bhagyanagar India bought at the rate of Rs 40. Can I continue to hold the shares or book loss? Vinoth

Bhagyanagar India (Rs 15.6): This stock has shed all the gains made in the last two years and is back to the level at which it was trading in March 2006.

Immediate support band for the stock lies between Rs 12 and Rs 16 but the nature of the correction witnessed since January from the peak at Rs 79 implies that the recovery in the stock is not likely to be swift.

The stock would find it difficult to move past Rs 35 over the next year. We recommend a switch from the stock at current levels.

I have bought ICICI Bank at Rs 580 per share and Tata Power at Rs 1,210. Please advise me whether I can hold these shares or exit. Ravichandran M A

ICICI Bank (Rs 504.5): The structural up-trend that began in 2001 ended at the January peak at Rs 1,465 and the stock has been in a vicious correction since then.

This correction has resulted in the stock retracing more than 61.8 per cent of the gains made since 2001. ICICI Bank halted its recent leg of correction at the June 2006 trough at Rs 440.

Though the correction is substantial if we consider the magnitude, the time consumed so far has been insignificant.

A significant trough is possible between Rs 400 and 450. But the stock can spend a couple of years moving sideways in the band between Rs 400 and Rs 1,000.

That said, investors who have lived through the market correction since the beginning of this year would have realized that no support level is infallible.

Those who are not wedded to this stock for life can exit if it declines below Rs 440 for the next halt could be in the band between Rs 280 and Rs 320.

Short-term resistances would be at Rs 655 and then Rs 800. Fresh investments are recommended only on two weekly closes above Rs 600. Major resistance levels over the next year would be at Rs 965 and then at Rs 1,100.

Tata Power (Rs 888.5): Tata Power has been relatively resilient in the recent bout of market correction.

The structural up-trend in the stock continues to be intact. The stock is pausing close to the long-term support at Rs 870 that occurs at 50 per cent retracement of the up-move from the 2000 low.

Investors with a short-to-medium term horizon can divest their holding on a decline below Rs 850. However long-term investors ought to hold the stock as long as it trades above Rs 660.

A rally to Rs 1,150 or Rs 1,250 is possible over the next six months where short-term investors can divest their holdings. The long-term trend will turn positive only on a close beyond Rs 1,350.

In your review of TCS on 24/2/2008, you had mentioned that "Fall to Rs 700 levels would be buying opportunity for longer-term investors". Now that the stock has fallen further do you still feel it is a buying opportunity? Harish Somayaji

TCS (Rs 656.8): In the review mentioned by you, we did say that fall to Rs 700 levels would be buying opportunity for long-term investors. But in the same column, we had also moved the long-term stop loss to Rs 700, which means that fresh purchases are not recommended below this level.

TCS has already recorded two weekly closes below Rs 700. Subsequent supports on the chart are at April 2005 trough at Rs 545 and then the stock’s all-time low at Rs 482. Aggressive investors can accumulate in declines.

But risk-averse investors can wait for a weekly close above Rs 850 before making fresh purchases in this counter.

In your review on 25/5/2008 you had mentioned of a long term support for Tata Motors was at Rs 590. How will this stock fare in the next 12 months? Harish Somayaji

Tata Motors (Rs 330.7): Tata Motors had been holding steadily around Rs 600 prior to May and that had led to the assumption that it would bottom around that level.

But the stock has declined very sharply in June and July that has taken it below the key long-term support at Rs 410 as well.The next support on the long-term chart is between Rs 300 and Rs 325.

A reversal from this zone can take the stock higher towards Rs 550 over the next year. A sideways movement between Rs 300 and Rs 600 is the preferred view for the next year. The stock needs to record a monthly close above Rs 600 to signal that it is out of the woods.

If Tata Motors declines below Rs 300, the outlook will turn extremely negative and there would be the likelihood of the stock halving from that level.

I am holding Prism Cements bought at Rs 60. What is the outlook for this share? Can I continue to hold it? N Sivanandam

Prism Cements (Rs 27.2): This stock has breached key long-term supports and appears headed towards the support band between Rs 18 and Rs 21. A decline below this level is also possible as the down-trend unfolds. We recommend a switch from this stock. Consider re-entry on a weekly close above Rs 34.

— Lokeshwarri S.K.

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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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