What is your advice regarding medium-and long term outlook of Sundaram Clayton and Wipro? Can these stocks be brought at the current level?

Anil

Sundaram Clayton (Rs 292.5): The long-term trend in Sundaram Clayton is up since the low of Rs 26 formed in March 2009. Despite the stock being in a medium-term correction since this January, it is halting at key long-term support at Rs 260. Investors can consider buying the stock with stop-loss at Rs 250. The peak formed in September 2010 will act as an important support for the stock.

That said breach of this level will result in the stock moving lower to Rs 218 or Rs 174 over the coming months. The stock will face resistance at Rs 400 and then at Rs 450 over the medium-term.

The long-term view for the stock will turn positive only on a strong close above Rs 450. Subsequent targets are Rs 500 and Rs 700.

Wipro (Rs 446.5): Wipro is in a long-term consolidation phase that is making the stock vacillate in the zone between Rs 300 and Rs 500 since 2009. This would not be the right time to buy this stock since it would meet with considerable resistance in the zone between Rs 480 and Rs 520.

A reversal from this resistance band will result in the stock moving lower to the area around Rs 300 again in the months ahead.

It would therefore be prudent to wait for a strong close above Rs 500, else wait for a decline to Rs 370 or Rs 310 again before buying the stock. These are the medium-term supports for the stock. Key long-term support is placed at Rs 260.

The long-term trend for the stock is up since the January 2009 trough at Rs 120. Once the stock clears the Rs 500 mark forcibly, it can have a strong run to Rs 550 and then long-term target beyond that would be Rs 700.

I have shares of SAIL bought at Rs 89 and BHEL bought at Rs 348. Please advise on the short, medium and long term outlook of these stocks.

O.P. Krishnan

SAIL (Rs 40.1): The chart of SAIL is painting a very bleak picture with the stock sinking deeper and deeper into a quagmire. That the stock has dropped below its long-term support at Rs 55 that was hit in November 2008, spells trouble from a technical perspective. Next support on the long-term chart is present quite some way off, at Rs 22.

The short, medium as well as the long-term trends are down for the stock and you can consider exiting the stock at this juncture. Consider re-investment on a close above Rs 60. Medium-term hurdles are placed at Rs 55 and Rs 73.

Long-term resistances for the stock are present at Rs 101, Rs 116 and Rs 134. Long-term view will turn positive only on firm close above Rs 135. It is, however, difficult to envisage a move above Rs 185 over the next couple of years at least.

BHEL (Rs 117.5): BHEL has put up a very disappointing show over the last couple of months. We had expected the stock to hold above the support at Rs 200 that had been cushioning the stock in declines since 2008. But this low was breached in the last week of June and the stock is dropping like a stone since then.

There are hardly any supports in the vicinity on the charts and investors can look forward to a halt at the psychological support around Rs 100. If this level does not hold, the slide can continue to even Rs 68 or lower.

Investors can consider exiting the stock at this point since there is no sign of reversal in the chart yet.

Consider re-investing only on a weekly close above Rs 200. Subsequent resistances are placed at Rs 272 and Rs 376. Long-term trend will turn positive only on a firm close above Rs 376.

The zone between Rs 550 and Rs 600 will continue to act as a long-term ceiling for the stock.

I have shares of Canara Bank. Please let me know the technical prospects of this stock.

Harshavardhan Hanumara

Canara Bank (Rs 244.4): The chart of Canara Bank is looking as woeful as the rest of its peers in the banking pack. Drop below Rs 300 implies that the long-term outlook has turned negative for the stock. Immediate support is around Rs 230. But the stock could even slip all the way down to its 2009 low at Rs 145.

Medium-term resistances for the stock are placed at Rs 357 and Rs 430. Key long-term resistance is at Rs 550. Long-term prospects for this stock will improve only on a close above Rs 550.

I had bought Cadila Healthcare at Rs 850. Should I continue to hold these stocks? Also can I average these stocks now?

Arun

Cadila Healthcare (Rs 707.8): The long-term trend for Cadila Healthcare is up since the 2008 trough at Rs 148. Within this uptrend, the stock is moving in a sideways trading zone between Rs 650 and Rs 1,000.

Long-term investors can continue to hold the stock as long as it trades above Rs 600.

But the medium-term prospects for the stock appear weak since it has breached the key medium-term support at Rs 718. You should exit the stock on a move below Rs 700, if your investment horizon is short or medium-term.

Next downward target is at Rs 630. Key medium-term resistance is placed at Rs 862. Once this level is cleared, the stock can move on to the long-term resistance around Rs 1,000.

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