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

Jindal Steel and Power (Rs 779.9): Jindal Steel and Power had been holding up well above the key long-term support at Rs 1,700 up to the third week of September.

But once this level was breached, the stock has been falling relentlessly. It penetrated the long-term trend-line this month and is currently halting in the support band between Rs 700 and Rs 850. Next support on the long-term chart is at Rs 430.

Since the stock is well below your purchase price, it does not appear prudent to divest your holding at this juncture.

You can instead accumulate the stock if it moves lower towards the subsequent supports at Rs 430 or Rs 230. The June 2006 trough at Rs 230 should act as a reliable floor for this stock.

MMTC (Rs 14,926.2): This stock has support around Rs 17,500, where it formed a trough in July. MMTC is hovering just below this support level. It would be best to divest your holding on a close below Rs 12,000, since it can then slide all the way towards its long-term support band between Rs 2,000 and Rs 2,700.

Resistances for the year would be at Rs 22,000 and then Rs 30,000.

Rally beyond the second resistance is needed to mitigate the bearish medium-term view in this stock.

I am holding shares of Indusind Bank bought at Rs 50 and Mercator Lines at Rs 135. Please give your six month outlook for both these stocks. Viswanadham

Indusind Bank (Rs 43.8): The weekly chart of Indusind Bank has deteriorated considerably since the second week of October when it closed below its long-term trend-line and the key long-term support at Rs 57.

The stock needs to close above this level on a weekly basis in order to mitigate the negative near term view.

If the stock fails to move above this level, it can decline to Rs 38 or Rs 30 over the next six months. The June 2006 support at Rs 30 ought to halt the correction that is on since January.

Mercator Lines (Rs 34.2): Mercator Lines is currently struggling to hold the support at Rs 31.

The stock made significant troughs at this level in July 2005, December 2006 and then in March 2007. Next support on the chart is at Rs 27.6. Investors can hold the stock with a stop at Rs 27. If it holds above this level, there can be a rally to the band between Rs 55 and Rs 60 over the next six months.

Investors with a short investment horizon should sell the stock if it fails to surpass this level. A range bound move between Rs 30 and Rs 60 is possible over the medium term.

Please advise whether I can purchase Bank of Baroda at current levels. B S R Deeptha

Bank of Baroda (Rs 304): This stock is moving in an upward moving trend channel since 2004. Though Bank of Baroda declined below the lower boundary of this trend channel in July, it has recovered and is trading firmly above this line currently.

A sustainable trough appears to be in place at the July low at Rs 188.

But the stock faces resistance at Rs 335 and then Rs 380 in the medium-term. Reversal from these levels can drag the stock lower towards Rs 200 again.

Investors with a long-term perspective can however accumulate the stock in declines with a stop at Rs 175. Medium term investors can buy the stock with a higher stop at Rs 240.

A move higher towards the upper boundary of the trend channel at Rs 550 is possible over the long-term.

I have purchased the shares of HDIL at Rs 835 and Polaris Software at Rs 162.5. Please indicate the technical outlook for the above stocks. Tushar Kanti Ghosh, Kuppuraj

Housing Development and Infrastructure (Rs 124.9): Lack of adequate history makes it difficult to pronounce a long-term view on HDIL.

There has been a relentless decline in this stock since January tempered with short-lived and unconvincing rallies. It is currently close to its life-time low.

Since there are no signals of the stock having reversed yet, we recommend selling the stock at current levels. Re-investing in this stock can be considered on a weekly close above Rs 250.

Polaris Software (Rs 43.3): Polaris Software peaked at Rs 1,075 in the heydays of the dot-com bubble in February 2000.

But it has been a rough ride for investors in this counter since then as the stock plummeted to Rs 50 by October 2001 and has been vacillating in a range between Rs 50 and Rs 270 since then.

The lower boundary of this long-term range has however been breached last week and the stock is hovering just below it.

Hold the stock with a stop at Rs 40. If it clambers past Rs 50, it can attempt to rally higher towards Rs 90 or Rs 120 again. Medium-term investors can sell part of their holding on a reversal from this zone.

Please let me know the future prospects of South Indian Bank and Indian Hotels purchased at Rs 76 with an 18 month perspective. P S Agrawala

South Indian Bank (Rs 71.9):Despite the sharp decline from Rs 228 to the recent trough at Rs 69, the long-term trend in South Indian Bank continues to be up. The stock is poised delicately just above its long-term trend line at this point.

A reversal higher from current level can propel the stock higher to Rs 124 or Rs 156 over the next 18 months. But there is a strong resistance around Rs 100 and inability to surpass this level can make the stock remain in a sideways range between Rs 70 and Rs 100 over your investment time frame.

If the Rs 69 level is breached emphatically in the near term, the stock can decline towards Rs 42 and then Rs 32 over the next year and a half.

Indian Hotels (Rs 60.8): Indian Hotels is in a long-term decline following repeated attempts to surpass the Rs 150 level.

The stock has declined below the June 2006 trough at Rs 76 and is currently halting at the 61.8 per cent retracement of the entire up-move from 2001 trough.

It can form a significant long-term trough here which can trigger can up-move to Rs 93 or Rs 105 over the next year.

If Indian Hotels declines below Rs 56, subsequent long-term supports are at Rs 45, where the long-term trend line is poised and then Rs 30. Hold the stock with a stop at Rs 44.

I am holding shares of Reliance Petroleum purchased at Rs 95. What is your view on the stock? P N Vasudevan Namboodri

Reliance Petroleum (Rs 102.9): In our previous review of Reliance Petroleum in February this year, we had mentioned that the long-term outlook for this stock would stay positive as long as it stayed above Rs 145.

The stock moved below this level in the last week of September and has since declined to the next long-term support at Rs 100. There is a strong support band for the stock between Rs 106 and Rs 120.

There is another support just below at Rs 95. If this level is breached, the stock could decline all the way lower to its base between Rs 60 and Rs 68.

Hold your shares with a stop at Rs 90. Reversal above this level can cause a medium term rally to Rs 144. This level needs to be surpassed for the medium term outlook to turn positive again.

— Lokeshwarri S.K.

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