Portfolio

Query Corner: Trail-blazing movement in Bosch

Updated on: Jun 11, 2011
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I bought Karur Vysya Bank at Rs 430. Kindly advise the stock's future prospects.

K.S. Suryanarayanan

Karur Vysya Bank (Rs 415): Karur Vysya Bank recorded the peak of Rs 508 last September and is in a narrow sideways consolidation since then. This correction is receiving support in the zone between Rs 380 and Rs 400. Investors with short-term perspective can hold the stock as long as it trades above Rs 380. Key medium-term support is, however, at Rs 350 that was fleetingly tested intra-day on April 15.

Investors with long-term perspective can use this as stop-loss. Breach of this support will mean that the stock could decline to Rs 300 or Rs 250. Resistances for the days ahead would be at Rs 465 and Rs 500. The stock could spend a few more months in the range of Rs 350 and Rs 500.

Such a move will, however, have bullish connotations and will mean that a break-out to Rs 640 is possible over the long-term.

I bought Coal India at Rs 360. Can I hold it for the next three years?

R Sreedhar

Coal India (Rs 404.2): Coal India was listed only towards the end of last year. We, therefore, do not have sufficient data to draw a conclusion on the long-term prospects of the stock. The stock is however moving in an upward moving trend channel since March and this is a bullish pattern.

Short-term investors can hold the stock with stop at Rs 385, just below the lower boundary of the trend channel. Key medium-term support is however at Rs 372 and investors with medium-term perspective can hold the stock as long as it trades above this level. Long-term view will turn negative only if the stock goes on to close below Rs 340.

What is your outlook on OnMobile Global and Hindustan Dorr-Oliver?

Suresh Kumar Yadav

OnMobile Global (Rs 110.1): OnMobile Global is trudging incessantly lower since the July 2009 peak of Rs 341. It is currently wallowing at levels it was trading at in the last quarter of 2008. The stock has to do a lot more work before it moves to a position of relative safety. However, investors with a greater penchant for risk can buy the stock at current levels with stop at Rs 98. It can move higher to Rs 155 or Rs 190 over the ensuing months where short-term investors can book profit.

The stock, however, faces strong medium-term resistance in the zone between Rs 190 and Rs 200. Risk-averse investors can buy the stock only on a strong close above this level. Subsequent resistances are Rs 216 and Rs 246. The stock is likely to face difficulty in moving above Rs 246 in the next 12 months.

Hindustan Dorr-Oliver (Rs 60.8): This stock peaked at Rs 159 in August last year and is sliding furiously since then. It recently went on to close below the key medium-term support at Rs 69. Since this is a long-term trend decider, we need to add a filter of two more weeks at least. The long-term trend will be considered to have reversed lower if it continues to trade below Rs 69 for two more weeks. Subsequent supports are Rs 42, Rs 37 and Rs 28. Breach of the support at Rs 28 will mean that the stock is heading towards its February 2009 low at Rs 12.

Investors still holding the stock can continue to do so as long as it trades above Rs 42. Fresh buying is recommended only if the stock goes on to close above Rs 69. Subsequent targets are Rs 96 and Rs 121.

I have purchased Geodesic at Rs 88. Kindly let me know the future prospects of this company.

B. Anant

Geodesic (Rs 79.2): The structural downtrend that began from January 2008 continues to hold sway in Geodesic. The recovery in 2009 could help retrace only half the down-move recorded in the 2008 crash. The stock is also in a protracted downtrend since September 2009 that is resulting in sideways movement between Rs 80 and Rs 150 over the last 20 months.

Critical trend deciding level for the stock is at Rs 84. The stock moved below this level in February this year and is currently moving in a range between Rs 70 and Rs 90. We can give the stock a little more leeway and move the stop-loss lower to Rs 60. Close below this level should be the cue for investors to exit the stock since that would mean that the decline can extend to the January 2009 trough at Rs 38.

The stock will face resistance at Rs 124 and Rs 160 in the months ahead and investors with a limited investment horizon can divest their holding at either of these levels. The long-term view for the stock will turn positive only on a strong close above Rs 187.

May I know the prospects of Bosch?

R.M. Rajendran

Bosch (Rs 6,990.7): Bosch is blazing ahead forming a separate trail of its own. The correction in January and February this year was a mere blip on its chart and it is currently ruling at a new life-time high.

Needless to add that the structural trend is very strong. It, however, needs to be noted that the stock has been climbing incessantly since March 2009 without any major correction. There could be sudden pull-backs but long-term investors have nothing to worry as long as the stock trades above Rs 5,200. The medium-term uptrend will reverse lower only once the stock closes below Rs 5,900. Investors can, therefore, utilise declines to buy the stock with stop at Rs 5,850.

Simple extrapolation of the structural up-move from 2001 low gives us the target at Rs 8,430. But there could be minor correction in the stock before it moves on to achieve this long-term target.

I bought ABG Shipyard at Rs 395 per share. Should I hold or sell this?

Sridhar Reddy

ABG Shipyard (Rs 370): This stock is in a medium-term correction since November 2010. But it is currently halting just above the key support at Rs 335. Investors can hold the stock as long as it trades above this level. It can move sideways between Rs 330 and Rs 500 for few months before breaking out higher to Rs 560 or Rs 670.

However, investors with short- and medium-term view ought to divest their holding on a close below Rs 335 since that would usher in a protracted decline to Rs 285 or Rs 235. Stop-loss for long-term investors will however be at Rs 230. The stock needs to breach this level to denote that the stock is heading towards the March 2009 low of Rs 68.

Please let me know the medium and long-term outlook for Indiabulls Securities bought at Rs 20.

Jayant Boravke

Indiabulls Securities (Rs 14.2): Investors in Indiabulls Securities would have undergone a torrid time as the stock kept plumbing new depths since October 2009. The stock declined below the January 2009 low at Rs 17 this year and is currently trading very close to its life-time low at Rs 13. It is hard to predict where this slide can halt, so it would be more prudent for investors to switch out at this juncture and consider re-investment only on a firm close above Rs 32. Long-term view will turn positive only on a weekly close above Rs 43.

Readers can send in their queries, on not more than two companies, to >techtrail@thehindu.co.in Queries can also be sent by post to: Tech Trail, 859/860 Kasturi Buildings, Anna Salai, Chennai 600002. We would endeavour to answer as many queries as possible. However, constraints of space will limit the responses featured under this column.

Published on June 11, 2011

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