Portfolio

Query Corner: Aurobindo Pharma trending downwards

Lokeshwarri S. K. | Updated on September 10, 2011

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I want to buy Dhanuka Agritech and Indraprastha Gas. Kindly let me know the correct level to enter these stocks.

Baldev Gulati

Dhanuka Agritech (Rs 101): Dhanuka Agritech was one of the outperformers in the bleak market of 2011. The stock put up a stellar performance between May and July this year to reach a new record high at Rs 114.9. It is, however, in mild corrective phase since then. Short-term supports for the stock are at Rs 95, Rs 90 and Rs 85.

Investors with a greater penchant for risk can buy the stock in declines with stop at Rs 83. Fresh purchases need to be avoided on a decline below Rs 84, since that will denote that the stock is heading towards the medium-term support zone between Rs 65 and Rs 70. Investors with long-term perspective can hold the stock as long as it trades above Rs 64.

Sideways movement between Rs 95 and Rs 115 will be positive for the stock's short-term prospects as it will signal the propensity to move up to Rs 123 or Rs 143 in the months ahead.

Indraprastha Gas (Rs 441.9): Indraprastha gas has been blazing higher this year, charting a unique trajectory for itself. The stock is up 28 per cent since the beginning of 2011 and it recorded a new life-time high on Wednesday when most of the others were staring down the barrel.

Key medium-term support for the stock is at Rs 375 that is the peak formed in September 2010 and January 2011. Investors can buy the stock in declines as long as it trades above this level. However, breach of this support will result in the stock moving down to Rs 350 or even Rs 285 over the months ahead.

If the stock manages to hold above Rs 374, it can continue its strong uptrend that can take it up to Rs 564 in the months ahead.

Please give me long-term advise on Aurobindo Pharma and JSW Energy bought at Rs 185 and Rs 78 respectively.

R.M. Kumarappan

Aurobindo Pharma (Rs 133.8): Aurobindo Pharma is a high-beta stock that has the tendency to fall very steeply in market corrections. The stock gained over 44 per cent in 2010 and went on to record a life-time high of Rs 275 in January this year. But the tide turned thereafter, and the stock has shaved off 50 per cent from its peak value in the ensuing months.

Key long-term support that investors need to watch carefully is at Rs 118. Long-term investors can hold the stock as long as it holds above this level. Reversal above this support will also be a buying opportunity for short- or medium-term investors looking for an entry point.

That said, supports on a decline below Rs 118 are at Rs 81 and Rs 72. Therefore, it will be best to divest your holdings on a decline below this buttress.

The stock could find resistance at Rs 180 and Rs 217 in the months ahead. The second resistance needs to be breached to signal a revival in the long-term outlook and the possibility of a move to a new high again.

JSW Energy (Rs 59.4): There is no respite from the selling pressure in JSW Energy, and the stock recorded a new life-time low at Rs 51.5 in the last week of August. The recovery from this trough has not progressed sufficiently to enable us to judge if it can sustain.

Key medium-term trend decider is at Rs 85. Strong weekly close above this level is required to denote that the stock is out of the woods. Subsequent resistances are at Rs 94 and Rs 104.

Short-term resistances are at Rs 62 and Rs 69. Inability to move above these levels will mean that the stock could plumb new depths in the months ahead.

I am holding shares of Ion Exchange purchased at Rs 133 for long-term. What is the outlook for the company?

Suresh Kumar Yadav

Ion Exchange (Rs 138.8): This stock has formidable resistance in the zone between Rs 250 and Rs 300. Long-term rallies have been thwarted over and over again in this zone, in 1994, 2008 and again in 2010. So, it will be prudent for long-term investors to divest their holdings if the stock stutters in this zone again.

A medium-term correction is currently in progress from August 2010 peak of Rs 264. This correction has support in the zone between Rs 120 and Rs 135. Investors should, however, divest their holdings on a strong breach of this zone since next halts could be Rs 100 or Rs 91.

Resistances for the months ahead would be at Rs 175 and Rs 209.

I brought Bilcare at an average price of 650. Kindly give your outlook on this stock.

Reddy

Bilcare (Rs 365.4): Bilcare could not recover from the bludgeoning it received in the crash of 2008 and the long-term downtrend that commenced from the 2008 peak of Rs 1,830 continues to remain in force. The stock needs to move above Rs 820 to reverse the structural downtrend.

It is, however, currently moving close to its long-term support in the zone between Rs 280 and Rs 300. Investors can hold the stock with stop at Rs 270. Rebound from this zone can take the stock higher to Rs 500 or Rs 600 in the months ahead. Investors with short- to medium-term perspective can divest their holding at either of these levels. Next resistance zone lies between Rs 800 and Rs 830.

Kindly describe the short-term prospects of Alok Industries. Can I buy the stock at current levels?

Renju K Devasia

Alok Industries (Rs 19.5): This stock has key medium-term support around Rs 19. Though this level was breached in August, the stock is currently attempting to move above it again. Short-term investors with a greater penchant for risk can buy the stock in declines with stop at Rs 15.

Bounce from these levels can take the stock higher to Rs 23 or Rs 27 in the days ahead.

Short-term view will turn positive only on a firm close above Rs 27. Conversely, close below Rs 15 will denote that the stock is heading towards the March 2009 low of Rs 11.3.

I would like to know about investing opportunities in Delta Corp at current levels.

Amit Dhoot

Delta Corp (Rs 106.2): This stock is holding quite well against the onslaught of the current market correction. It has key medium-term support in the zone between Rs 60 and Rs 73. The stock reversed from this zone in February this year, and investors can use Rs 60 as stop-loss for their holdings.

Investors with short- to medium-term perspective can, however, buy the stock at current levels with stop at Rs 80.

The stock can attempt to move higher to Rs 116 or Rs 141 in the near-term.

Long-term trend in Delta Corp in also up, but rallies will face strong resistance at the previous peak of Rs 141. Long-term target on a breach of this peak is Rs 170.

Readers can send in their queries, on not more than two companies, to >techtrail@thehindu.co.in

Published on September 10, 2011

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