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

I have purchased Nagarjuna Fertilizer at Rs 38. Can I purchase some more shares at current levels? Is it also advisable to buy Mysore Cements at current levels with the intention to hold for three or more years? C. N. Godinho

Nagarjuna Fertilizer (Rs 16.7): In our review of Nagarjuna Fertilizers earlier this year, we had indicated that the stock was in a long-term down-trend and that a move between Rs 30 and Rs 55 was possible over the medium-term.

The support at Rs 30 was however emphatically penetrated in October and the stock is currently attempting to stabilize itself in the long-term support band between Rs 12 and Rs 20.

The long-term trend-line is also poised at Rs 20 currently. Investors should wait for two weekly closes above this level before adding to their holding. Subsequent target is Rs 28 and Rs 36.

Mysore Cement (Rs 15.7): The structural down-trend that commenced in March 1992 in Mysore Cements continues to be in force.

The rally in this stock from 2003 could not even retrace one-third of the prior down-trend, reinforcing the bearish outlook for this stock.

This stock formed a double-top pattern, that is a top reversal pattern, from June 2006 to March 2008 and launched a sharp decline thereafter.

The long-term trend-line at Rs 27 was breached in September and the stock appears to be dropping in to an abyss since then.

A short-term reversal is currently underway but a move above Rs 28 is needed to make the medium-term outlook positive.

We do not recommend buying Mysore Cement at current levels since the next supports on the stock are at Rs 8 and Rs 6.

Kindly give me the technical outlook of Karur Vysya Bank bought at Rs 490. R M Kumarappan

Karur Vysya Bank (Rs 210.9): This stock moved below the key support at Rs 237 in November this year but the decline since then was not too harsh.

It is currently attempting to pull itself higher from the recent trough at Rs 187. There is a strong support band between Rs 160 and Rs 220 and a long-term trough can be formed here.

Investors can therefore hold the stock with a stop at Rs 150.

Key resistances will be at Rs 280 and then Rs 330. The medium-term outlook will however turn positive only when the stock moves above the first resistance.

I have shares of HEG bought at an average price of Rs 224. Can you please provide medium term outlook of this stock? Viswanatham

HEG (Rs 114.2): HEG moved in a sedate range between Rs 10 and Rs 100 between 1990 and 2005. Once it broke out of this range, the stock managed to move higher to Rs 200 by May 2006.

The real spurt however came in the last quarter of 2007 when HEG moved from Rs 220 to Rs 600 in just three months.

The speculative nature of this move is clearly demonstrated by the fact that it moved back to Rs 220 by March 2008.

The stock is currently hovering close to its long-term support at Rs 100. But the trend along all time-frames, short, medium and long-term continues to be down. Penetration of the support at Rs 100 will pull the stock lower to Rs 65.

Medium-term resistances would be at Rs 175 and Rs 215. Fresh investment buying is recommended only on a close above Rs 200.

I have purchased Development Credit Bank at Rs 80 and Helios and Matheson at Rs 120. Please advise me on the long-term technical outlook of the stock. A O Vincent.

Development Credit Bank (Rs 24.6): It has been one-way ride down-hill for DCB since the beginning of this year. The stock is down almost 90 per cent from the peak of Rs 162 recorded in January.

Though a mild pull-back is currently underway from the trough at Rs 17 formed on December 2, this up-move lacks strength and it cannot be said that a sustainable trough has been formed just yet.

Weekly close above Rs 42 would be the first indication that the stock is on the road to long-term recovery. The next resistance is at Rs 60.

Helios and Matheson (Rs 23.4): This stock has been in a structural down-trend since January 2006. The third leg of this down-trend that commenced this year dragged Helios and Matheson lower from Rs 150 to Rs 19.

Next supports on the long-term charts are at Rs 12 and then Rs 4. It wouldn’t be surprising to see the stock declining below Rs 10 over the next few months.

Inability to participate in the intermittent rallies this year indicates that the stock could take more than a year to recover. We recommend a switch from this stock at current levels.

I am holding share of IFCI bought at the price of Rs 80. Please tell me the support levels of these shares. Sailesh Sahu

IFCI (Rs 20.9): IFCI was in a structural up-trend from September 2001 to December 2007.

The long-term trend-line defining this up-trend is currently poised at Rs 15. That is the immediate support for the stock.

There is also a support band between Rs 7 and Rs 20 between which the stock moved between September 2003 and 2006.

The near-term trend in IFCI is sideways and the stock is attempting to stabilize itself in the band between Rs 15 and Rs 22 since the last week of October.

However, the near-term trend will turn positive only if the stock climbs above Rs 30. It could be difficult for the stock to move above Rs 40 over the next year.

I have shares of Walchandnagar bought at Rs 708. Should I book loss or buy more shares to average? I also bought Noida Toll Bridge at an average cost of Rs.57. What is the outlook of this company in short and long term? Rajesh D

Walchandnagar Industries (Rs 101.9): This multi-bagger of 2007 has been reduced to naught by the market correction this year. Walchandnagar Industries is currently back to its January 2007 level and the bottom is not in sight yet.

The next support-band is between Rs 40 and Rs 80. If this level is breached the subsequent target is Rs 25.

The rally in 2007 was unsustainable and driven by a speculative frenzy. So it is difficult to envisage a move back to the 2007 highs over the next two years. Instead of locking-in your money, it would be better to switch from this stock at current levels.

Noida Toll Bridge (Rs 19.7): This stock is currently halting around the long-term support at Rs 15.

Investors with a short-term perspective can hold the stock with a stop at Rs 15. A rally to Rs 22 or Rs 27 is possible in the near term. Key long-term resistance for the stock is at Rs 32.

Investors with a longer horizon should buy the stock only on a monthly close above this level.

Can I continue to hold Shipping Corporation of India for the next six months or exit at current levels? Anuj Jain