Query Corner

I am holding shares of Ceat bought at an average price of Rs 98. I am a long term investor. Please suggest whether I should book profits at current level or hold for further gains in the next couple of years?

Dr V.H. Rao

Ceat (Rs 253.9): Ceat formed a long-term peak at Rs 244 in December 2007. Since this September, the stellar move in the stock that took it higher from Rs 98 has already surpassed this peak. But the rally is pausing after hitting the high of Rs 271 this month. If your investment horizon is short to medium term, you can book some profit at current levels and hold the rest with stop-loss at Rs 205.

A sharp decline below Rs 205 can drag the stock lower to Rs 185 or Rs 165. This can act as a stop-loss level for long-term investors.

The stock is at an inflection point as it is attempting to break out to a new high. Consolidation for few days in the range of Rs 205 and Rs 270 will be construed as positive for the long-term outlook and will keep open the possibility of a break to Rs 310 in the medium-term.

I am holding SpiceJet at an average price of Rs 21. Please let me know whether I can book loss now or wait.

Venkat K.

SpiceJet (Rs 16.8): The trends along all time-frames, long, medium and short, are currently down in SpiceJet. But you can continue to hold on to the stock since it is nearing a key long-term support at Rs 15.3, hit in December 2011. Bounce from this level can result in the stock moving higher to Rs 30, Rs 38 or Rs 51 in the months ahead. You can exit the stock at either of these levels. That said, the outlook will deteriorate considerably if the stock declines below 15. Subsequent target is the October 2008 low of Rs 9.

The long-term outlook for the stock will improve only if the stock manages a strong weekly close above Rs 47. Subsequent targets are Rs 56 and Rs 66.

Please give long-term outlook on Gujarat NRE Coke.

R.M. Kumarappan

Gujarat NRE Coke (Rs 11.8): The long-term outlook for Gujarat NRE Coke is unmistakeably down. The attempt to form a base at Rs 15.5 has not succeeded since this support was breached in June. The stock is hovering below this level since then. Next support on the long-term chart is well below Rs 10 at Rs 5.7.

It would be best to switch out of Gujarat NRE Coke at this juncture. You can consider re-investing only if the stock records a strong close above Rs 29.

I hold shares of Anant Raj at an average price of Rs 72. Please advise me on the technical outlook for the next six months to one year.

Raj Kiran

Anant Raj (Rs 50): This stock is trying to reverse from the long-term support level at Rs 43. It rebounded from this level in November 2008, March 2009, January and September 2012. Investors can hold the stock with stop-loss at Rs 40. Next support for the stock is at Rs 33.

Breach of this level will result in the stock declining below Rs 10.

Short-term resistances for the stock are placed at Rs 80 and Rs 100. Investors can use rallies to these levels to exit the stock. Key long-term resistance zone for the stock is between Rs 160 and Rs 178.

I bought shares of IDBI Bank and Suzlon Energy at average price of Rs 110 and Rs 38, respectively. Could you please suggest whether I can buy more shares or exit my current holding?

A.N. Srinivas

IDBI Bank (Rs 63): The slide since the November 2010 peak in IDBI Bank has taken away almost all the gains made from the 2009 low. The stock is attempting to reverse higher from the September trough at Rs 52.3.

But this move will face resistance at Rs 78 and Rs 94. Failure to move beyond the first resistance level will result in the stock declining to the 2009 trough at Rs 40.

Long-term investors who are still holding the stock can continue to do so as long as it trades above Rs 39. Breach of this support can take the stock lower to Rs 29 or even Rs 16.

A strong close above Rs 120 is needed to signal that the long-term trend in the stock is reversing higher. Key long-term resistance for the stock is at Rs 146.

Suzlon Energy (Rs 9): There seems to be no bottom in sight for Suzlon Energy. It is constantly dredging newer lows since June 2009.

Investors who tried to bottom fish in this stock would have seen their money sink. Buying more stocks with an intention to average is not recommended as it can only exacerbate your losses.

But die-hard loyalists who are still holding on to this stock can revise the stop-loss to Rs 5. The stock will have to cross the short-term hurdles at Rs 14, Rs 19 and Rs 27 before the short-term outlook gets less gloomy. You can consider exiting the stock at this stage and re-purchasing it on a close above Rs 27.

Key long-term resistances for the stock are placed at Rs 60, Rs 92 and Rs 150.

I have purchased Sun Pharma at Rs 608. What is the medium-term view on this stock?

V.K. Maheshwari

Sun Pharma (Rs 575.25): The long-term chart of Sun Pharma is a joy to behold, after the morass of stocks that are at multi-year lows.

Sun Pharma is racing ahead with scarcely any meaningful correction since 2009. This move can be enclosed within an upward moving trend channel that gives us the target of Rs 700 or thereabouts in the medium-term.

Key medium term support is at Rs 536 and you can use that as a stop-loss. Subsequent supports are at Rs 505 and Rs 469. The long-term outlook will be under threat only on a strong move below Rs 469.

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