I have shares of Pipavav Shipyard purchased at Rs 84. Please give your 6-month view on the stock. Should I hold it or book loss? Suresh Kumar Yadav
Pipavav Shipyard (Rs 83.1): In our review of this stock in May, we had indicated that the stock was moving with a positive bias and medium-term targets on a break above Rs 90 were Rs 108 and Rs 122. The stock formed the peak at Rs 117 in August this year and is sliding lower sharply. This decline has already retraced 61.8 per cent of the previous up-move from November 2009 low.
Investors with a medium-term perspective ought to be alert at this juncture since the stock is testing the key medium-term support at Rs 75. Investors should exit the stock if it declines below Rs 70 as that would imply that the stock is heading towards its long-term base between Rs 50 and Rs 60. Resistances for the days ahead would be at Rs 92 and Rs 102.
I would like to have your opinion on Inox Leisure bought at Rs 71 and Mukand Engineers purchased at Rs 54. I plan to hold these stocks for 18 months. Sunil
Inox Leisure (Rs 73): One leg of the up move that commenced at the March 2009 low of Rs 19 ended at Rs 92 in February and the stock is in a medium-term correction since. This decline however halted at the support at Rs 55 and the stock is moving higher once again. Investors can hold the stock with the stop at Rs 45. Sideways movement between Rs 55 and Rs 90 is positive from a long-term perspective and will signal the propensity to move higher to Rs 99 or Rs 126 over the next 12 months.
The stock however faces strong long-term resistance in the zone between Rs 100 and Rs 125 and the long-term outlook for this stock will improve only on a weekly close above this level.
Mukand Engineering (Rs 47.8): This stock achieved its pinnacle in March 2000 when it recorded the peak of Rs 235. It then rolled down from that level until it bottomed at Rs 6.5 in June 2004. It has been a very volatile phase for Mukand since then in a wide band between Rs 8 and Rs 50.
The stock has reached the upper end of this long-term trading range and is currently struggling to move over it. Investors should hold the stock only as long as it trades above Rs 42. Breach of this level will drag it down to Rs 33 or Rs 28 over the medium-term. Conversely, target on a move above Rs 55 is the 2008 peak of Rs 81.
I bought 3i Infotech at Rs 71. Please suggest what I can do with this stock? Vikas Sharma, D.V. Deshpande
3i Infotech (Rs 61.9): 3i Infotech is in a medium-term decline from the peak of Rs 103 formed in October 2009. This decline is however halting above the medium-term support at Rs 55. Investors can continue to hold the stock as long as it trades above this support. Reversal above this level can take the stock to Rs 75 or Rs 86 in the days ahead. The long-term view for the stock will however turn positive only once the stock records a close above the key intermediate-term resistance at Rs 111. Sideways move between Rs 55 and Rs 110 is the most likely scenario for the medium-term.
I hold the shares of Kalindee Rail Nirman bought at Rs 147. What is the medium-term perspective of this stock? Hardy Johnson
Kalindee Rail Nirman (Rs 165.6): Kalindee Rail Nirman is yet to shake off the bear phase that it entered in January 2008. The rally from March 2009 lows could not take the stock past Rs 240, that is only one-third of the way up the decline recorded in 2008. The stock will continue to face strong medium-term resistance between Rs 240 and Rs 280 and is likely to struggle to move above this level over the medium-term.
Long-term targets on a close above Rs 280 are Rs 345 and Rs 410. Investors with long-term perspective can hold the stock as long as it trades above Rs 115. Stop for medium-term investors can be higher at Rs 150.
What is the view on Union Bank of India and Bank of India for medium and long term? Kevin
Union Bank of India (Rs 388.3): This stock is in a structural uptrend since 2002. Following the correction to Rs 96 in 2008, the stock is currently in the third leg of its long-term uptrend. The long-term trend for the stock will reverse downward only on a weekly close below Rs 230. It has support around Rs 290 and Rs 260 in the medium-term.
First long-term target on extrapolation of the up-move from 2002 gives us the level of Rs 414. If the stock continues surging higher, next long-term target for the stock is Rs 600.
Bank of India (Rs 558.2): Bank of India is also in a medium- as well as long-term uptrend. The stock moved past its long-term resistance at Rs 475 in September and is currently trading well above this level. The medium-term view will turn negative only if the stock records a weekly close below this level. This can therefore serve as the stop-loss for medium-term investors.
Key long-term support for the stock is at Rs 320. Third leg of the up-move from March 2009 low can take the stock higher to Rs 606 and then Rs 790.
Can you give me the outlook for Development Credit Bank (DCB)? Chandru
DCB (Rs 61): Development Credit Bank is one of the under-performers in the banking space. This stock continues to trade below the key long-term resistance at Rs 71. It needs to close strongly above this level to signal that the worst is over.
The medium-term trend in the stock is however up since April this year. This appears to be the third wave from March 2009 low and has a target of Rs 67. Investors should therefore watch out for turbulence as the stock approaches the band between Rs 65 and Rs 70. Long-term targets on a close above Rs 70 are Rs 88 and Rs 106. Investors with medium-term perspective can hold the stock with the stop at Rs 50 while long-term investors can hold with a deeper stop-loss at Rs 40.
I bought Riddhi Siddhi at Rs 425. What is the outlook for this stock? Ganesh Kamath
Riddhi Siddhi Gluco Biols (Rs 460): Riddhi Siddhi Gluco Biols is currently close to its long-term high and investors holding the stock should do so with a trailing stop loss of twenty per cent from its peak. Since the stock is extremely volatile and can decline sharply at any time causing huge losses to investors, we advise investors with lower risk appetite to stay away from this counter.
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