Should I buy Indraprastha Gas Ltd and Petronet LNG at current levels?

Suresh Kumar Yadav

Indraprastha Gas (Rs 225.2): Indraprastha Gas was hit hard by the recent order by the Petroleum and Natural Gas Regulatory Board that cut network tariff and CNG compression charge. The board had further asked the company to refund excess amount charged since 2008.

This order made the stock crash to Rs 170 on April 10 though it bounced intra-day to end the session at Rs 229. The issue is still under dispute but according to technical charts, the stock tested a significant long-term support at Rs 208 in this skirmish. The rebound from here is not too strong and the stock is currently attempting to hold above this level.

Investors with a greater penchant for risk can buy the stock at current levels with a stop at Rs 165.

It can bounce to Rs 280, Rs 312 or Rs 346 in the upcoming months. Long-term view will, however, turn positive only on a close above Rs 346. It would be best to avoid fresh purchases on decline below Rs 200. Subsequent supports are at Rs 170, Rs 153 and Rs 127.

Petronet LNG (Rs 160.2): Petronet LNG is on stronger turf compared to Indraprastha Gas. The stock is in a strong structural uptrend that began at Rs 30 in December 2008.

This up-move is halting since last September. But instead of a deep cut, the stock is moving sideways in the band between Rs 150 and Rs 190.

The volatility on this counter last week took the stock to the intra-week low at Rs 142 before it closed at Rs 160.

Investors can buy the stock close to the lower end of its current trading band at Rs 150 with stop at Rs 135.

Prolonged move in the above mentioned range will imply that the stock can break out higher to Rs 242 over the long-term.

Supports on decline below Rs 150 are at Rs 126, Rs 108 and Rs 90.

Investors can buy the stock in declines as long as it trades above Rs 126.

Please advise on whether to hold or sell IVRCL bought at an average price of Rs 43.

Muthu S

IVRCL (Rs 72.7): This stock has taken it on the chin in the last two years, declining from the peak at Rs 192 in July 2010 to Rs 28 by December 2011. But IVRCL has long-term support around Rs 28 where it bottomed out in October 2008 as well. Key short-term resistance for the stock is at Rs 72. You can book some profits if the stock reverses lower from current levels.

The zone between Rs 90 and Rs 100 is also a strong obstacle in the upcoming months. Reversal from here can drag the stock lower to Rs 47 or Rs 28 again. Targets on a move above Rs 100 are Rs 120 and Rs 142. Long-term resistance is present at Rs 200. Investors with a greater risk-taking ability can buy the stock on declines with stop at Rs 26.

Could you explain the short- and long-term trend of Neha International and Aishwarya Telecom?

Prasad

Neha International (Rs 58): This is a stock that investors should give a wide berth to. It has a tendency to move up too sharply and then decline from one circuit to another giving investors no chance to exit.

The short-term trend in this stock is up and it can attempt to move to Rs 72 or Rs 85 in the days ahead. However, you should divest your holdings if the stock fails to move beyond Rs 60. That will denote the intention to move down to Rs 34 or Rs 22 again.

Long-term trend in the stock is down. A close above Rs 125 is required to signal that a sustainable rally is underway.

Aishwarya Telecom (Rs 9.6): This is another stock that we would not recommend for investors. The manner in which the stock crashed from Rs 68 to Rs 5 in 2008 or from Rs 43 to Rs 8 in 2010 should warn investors that the stock can cause havoc to investor's wealth in very short periods.

Short-term trend in the stock is currently up and it needs to close below Rs 7 to negate this view. The stock can move higher to Rs 16 or Rs 19 in the months ahead. Long-term view will stay negative as long as the stock trades below Rs 19. Targets on a move above this level are Rs 27 and Rs 40.

Please let me know the long-term outlook of Gujarat NRE Coke bought at Rs 58.

R.M. Kumarappan

Gujarat NRE Coke (Rs 21.5): This stock is in a severe long-term downtrend.

The decline that began from the January 2010 peak of Rs 97 pulled the stock below its March 2009 low until it hit the low of Rs 14.8 in December last year.

The recovery from this low lacks conviction.

The ongoing rally from December low faces strong hurdle at Rs 31. Fresh purchases are recommended only on a move above this level.

Subsequent targets are Rs 41, Rs 47 and Rs 57. Investors holding the stock can divest at either of these levels.

Long-term trend will turn positive only on a move above Rs 67. It is possible that the stock vacillates in the zone between Rs 15 and Rs 65 over the next 12 months.

comment COMMENT NOW