The Hindu Business Line : Query Corner: Consolidation in Jaiprakash Associates

Rei Agro (Rs 47.8): Rei Agro is one of the disappointments of 2009. Though the stock rallied from Rs 38 to Rs 103 between April and June, it gave up most of these gains in the fall that ensued and has been vacillating in the zone between Rs 45 and Rs 55 over the last two months. The short-term outlook for this stock is weak and a decline below Rs 45 can make the stock fall all the way to the March low.

Fresh investments are recommended only on a move above Rs 55. Subsequent target for the stock is Rs 68.

Mirc Electronics (Rs 17.7): The short-term prospects of Mirc Electronics are good. The stock has been moving between Rs 17 and Rs 20 since the end of August. Since this consolidation occurs just below the key medium-term resistance at Rs 21, the stock could be garnering strength before attempting a break-out to Rs 24 or Rs 28 over the medium-term. Short-term investors can hold the stock with a stop at Rs 16.5.A close below Rs 16 will however imply that a fall to Rs 13 or Rs 11 is in the offing.

What are the medium-term and long-term prospects of Jaiprakash Associates? R. Rajendran, N. Divya

Jaiprakash Associates (Rs 237.4): Jaiprakash Associates too was bludgeoned out of shape in the 2008 crash as the stock lost over 90 per cent of its value from the life-time high of Rs 510. But the recovery between March and June this year was spectacular and has helped the stock erase almost 50 per cent of the losses recorded last calendar year.

That said the stock has lost momentum since June and it has been moving sideways albeit with a positive bias since then. A sideways move between Rs 170 and Rs 270 is possible over the medium-term which will be construed as positive from a long-term perspective. Medium-term investors can therefore buy in declines with a stop at Rs 165. Medium-term target for the stock is Rs 320.The long-term trend in the stock will turn positive only on a strong weekly close above Rs 320.

Such a move will pave the way for a rally to Rs 500. Long-term investors can therefore hold the stock with a deeper stop at Rs 125.

I am holding Gayatri Projects bought at Rs 50 and Himalaya International. Please let me know the targets and stop-loss for these stocks. Ramit

Gayatri Projects (Rs 358.1): The intermediate-term trend in Gayatri Projects continues to be up. But the stock is nearing key intermediate-term resistance at Rs 450. A reversal from here can cause a decline to Rs 260 or Rs 160. Partial profit can therefore be booked if the stock fails to surpass Rs 450.

Target above this level is however the previous peak of Rs 696. Investors with a long-term perspective can hold the stock with a stop at Rs 255. Short-term investors can hold with a higher stop at Rs 345.

Himalaya International (Rs 31.3): Himalayan International faces resistance at Rs 30 where the stock peaked in 2000 and again in January 2008. Though the stock has moved above this resistance this break-out lacks conviction. A sideways move between Rs 30 and Rs 37 is possible for a few more weeks before the stock rallies to its previous life-time high of Rs 48. The stock can falter at this level again however if it manages to move beyond Rs 48, next target is Rs 68. Stop-loss for investors can be at Rs 27.

Please let me know the 3 months target of Astra Microwave and Nucleus Software Exports. Krishna Parameshwar

Astra Microwave Products (Rs 75.3): This stock continues to be in the throes of a long-term down-trend and the recovery since March has done little to rectify the situation. Astra Microwave faces immediate resistance in the zone between Rs 90 and Rs 95.

That is likely to be the three month target for this stock. A sideways move between Rs 60 and Rs 95 is envisaged for the rest of this year.

Targets on a break-out above Rs 95 are Rs 108 and Rs 124. Investors ought to switch from this stock if it continues to struggle to get past Rs 100.

Nucleus Software Exports (Rs 116.2): Nucleus Software too continues in a long-term down-trend despite the spell-binding rally from Rs 40 to Rs 130 this year. The stock faces key medium-term resistance in the zone between Rs 120 and Rs 130 and it has reversed lower from this zone twice, in June and in August. However the correction since August has been long-drawn but shallow indicating strength and a possible move towards Rs 170 or Rs 190 over your investment horizon. Stop-loss is recommended at Rs 105.

What are the prospects of Confidence Petroleum India? Rajinder, Sonali

Confidence Petroleum India (Rs 8.4): This stock has been moving between Rs 7 and Rs 13.5 since June. Investors can hold the stock as long as it holds above the lower boundary of this trading range. The upper target for the next three months is likely to be Rs 15. Subsequent targets are Rs 19 and Rs 22.

I have purchased Canara Bank at an average price of Rs 330 and IDBI at an average of Rs 130. What are the short-term prospects for these stocks? Venkatesh J. K.

Canara Bank (Rs 378.4): If we extrapolate the move from the March low of Rs 145 in Canara Bank, the target for the medium-term was Rs 383. The stock peaked at Rs 395 on October 17 and is currently in a short-term correction. Short-term investors can book partial profit at these levels and hold the rest with a stop at Rs 360. Target on a move beyond Rs 395 is Rs 421.

The medium-term trend in the stock continues to be up and any medium-term correction will find strong support at Rs 300. Investors can accumulate the stock in declines with stop at Rs 290. Fresh investments are however not recommended below Rs 290.

IDBI Bank (Rs 127.9): IDBI Bank has achieved the intermediate-term target of Rs 136 but it is currently struggling to hold above this level. A decline from these levels can make the stock retrace the entire rally recorded since March lows. Downward targets in this even would be Rs 100 and Rs 85.

Short-term investors should divest their holding on a close below Rs 120.

A sideways consolidation between Rs 120 and Rs 136 would mean that the stock can record yet another spurt to Rs 135 and beyond that to Rs 154 in the short-term.

I am holding shares of Siemens purchased at Rs 490. Should I sell it, hold or buy more? Kindly advise. M. N. Krishna Murthy

Siemens (Rs 577.7): Siemens has been struggling to move higher since June and the stock is currently near key medium-term resistance zone between Rs 550 and Rs 600. Short-term investors can hold the stock with a stop at Rs 548. If this level holds, the stock can attempt to move higher to Rs 660 in the near-term.Those wishing to buy the stock can wait for a decline to Rs 420.

— Lokeshwarri S.K.

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