The Hindu Business Line : Query Corner: HDIL could launch into medium-term decline

Anant Raj Industries (Rs 130.5): Anant Raj Industries raced from Rs 38 to Rs 147 in the two months from April this year. But there has been little action since then and it has been moving in a zone between Rs 100 and Rs 160 since then. The stock faces strong resistance in the zone between Rs 150 and Rs 170 and it has attempted thrice to get past this level since the end of August.

Repeated failure to get past the hurdle mentioned above makes a medium-term correction to Rs 112 or even Rs 84 likely.

Investors with a short to medium-term perspective can therefore divest part of their holdings at current levels and consider re-purchase on a weekly close above Rs 180. Subsequent targets for the stock are Rs 215 and Rs 260. Long-term investors can hold with a stop at Rs 110.

Can you please let me know your next 3 months view on Housing Development & Infrastructure Ltd (HDIL) and Hotel Leelaventure? Srikanth

HDIL (Rs 316.5): In our review of this stock in March this year, we had indicated that the medium-term ceiling for this share would be at Rs 460. The stock is currently reversing lower from the peak of Rs 410.

A 3-wave move from the March lows could have ended here and the stock could now launch into a medium-term decline that drags it down to Rs 280 or even Rs 197.

Since your horizon is only three months, you can hold the stock with a stop at Rs 270. A reversal above this level will result in the stock moving higher to Rs 460 over the medium-term. Targets above Rs 460 are Rs 590 and Rs 714. Investors with a long-term perspective can hold the stock with a stop at Rs 190.

Hotel Leelaventure (Rs 34): Hotel Leelaventure faces strong intermediate-term resistance in the zone around Rs 44.

The stock has not been able to surpass this level this year and is once more reversing lower from here. This decline can continue to pull the stock lower to Rs 30 or even Rs 27 over the next three months.

Investors with a medium-term perspective can hold the stock with a stop at Rs 30. If the decline halts here, the stock can attempt to rally towards Rs 43 or Rs 47 over the next three months.

Please let me know the prospects of NHPC and Idea Cellular for the next one year. Akshay Narendra

NHPC (Rs 30.5): Since technical analysis is the study of the past price movement of a stock, it is not possible to give an opinion on the NHPC stock from a technical perspective since it is newly listed and has very little history.

The near-term trend is down and those wishing to buy the stock should wait for firm signs of reversal before doing so.

Idea Cellular (Rs 52): Last time we had visited Idea Cellular in April this year, we had advised readers to accumulate the stock in the region between Rs 40 and Rs 50 and had given the outer target for the next 12 months at Rs 83. Though the stock made intra-day forays above Rs 83 in June, it could not record an emphatic close above this level and the stock is currently slipping towards its long-term base.

Key support to watch now is Rs 50. Short and medium-term investors should divest their positions on a close below this level for the next target for the stock would be Rs 42. Since the long-term base for the stock is between Rs 35 and Rs 55, investors should use declines to this region to accumulate the stock with a stop at Ts 32.

If the impediment at Rs 85 is crossed, next long-term target is Rs 98.

I have bought Gati at Rs 61 and Shanti Gears at Rs 75. Please let me know when I should exit these shares. V Kalyanaraman

Gati (Rs 51.3): This stock continues to be in the throes of a bear phase and the recovery this year could not take the stock past the key medium-term resistance at Rs 66.

You have bought the stock close to this level that is likely to be the upper end of the stock’s medium-term range with the lower boundary at Rs 33. Pattern formed on the daily chart suggests that the stock is facing difficulty rising over Rs 63 and a decline to Rs 48 or Rs 42 is possible in the near-term.

Investors with a short investment horizon can therefore exit the stock at these levels and consider re-investing only on a weekly close beyond Rs 75.

Shanti Gears (Rs 45.7): It is seldom that one comes across a stock that is more exasperating than Shanti Gears.

The stock vacillated between Rs 55 and Rs 85 between November 2005 and November 2007 when the bull market was raging rest of the market.

The spike to Rs 114 in January 2008 proved to be short-lived and only helped to exacerbate the fall to Rs 24 by March this year.

The recovery from the March lows, though strong enough, halted at the key medium-term resistance of Rs 60. The stock is likely to spend some more months in the range between Rs 35 and Rs 60 before attempting to move higher to the long-term targets of Rs 70 or Rs 80.

Investors can either continue to hold the stock with a stop at Rs 34 or they can exit at current levels and consider re-purchase on a weekly close above Rs 60.

I am holding Nilkamal and Areva T&D India purchased at Rs 171 and Rs 325 respectively. Please let me know whether to hold or sell these stocks. S Devi Prasad Panda

Nilkamal (Rs 139.8): Nilkamal moved in the zone between Rs 160 and Rs 200 between March to September 2008. This zone becomes a strong resistance to the stock on its upward journey. The stock could find it difficult to move past this zone just yet.

However the medium-term up-trend continues to be strong in this stock and following a correction to Rs 124 or Rs 110, the up-trend can resume to take the stock to the medium-term targets of Rs 227 or Rs 270. Investors can hold the stock with a stop at Rs 100.

Areva T&D India (Rs 280.3): Areva T&D is in a medium-term down-trend since June this year and the formation of lower peaks from Rs 386 points towards further decline in the offing.

Key medium-term support is at Rs 225 and investors can hold the stock as long as this level holds.

Decline below this level will drag the stock to the December low of Rs 130.

— Lokeshwarri S.K.

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