Escorts in a severe long-term downtrend

Lokeshwarri S.K. | Updated on January 18, 2018 Published on March 23, 2013





I would like to know the outlook for Escorts. I have purchased it at an average price of Rs 117. Please advise on its prospects.


Escorts (Rs 51.5): It is best to avoid stocks that are diving to a seemingly bottomless pit. Escorts, is one such stock that has lost 79 per cent of its value from the November 2010 peak. The stock’s attempt to regain lost ground failed this January, and it has once again resumed its downward path.

The trend along all time-frames — long, medium and short — are currently down for the stock. There are no signs of reversal and further fall will take the stock lower to Rs 40 and the 2009 low of Rs 30.

There are too many hurdles along the way before the stock gets to your purchase price. You can switch out of the stock at this point and consider re-entering once it closes above Rs 80. The medium-term trend will improve only if the stock closes above Rs 125.

I bought shares of Vijaya Bank at Rs 62. Should I hold or exit?

R Krishnasamy

Vijaya Bank (Rs 47.2): You have purchased Vijaya Bank close to its recent peak at Rs 67. The stock is moving in a sideways band between Rs 45 and Rs 69 since the beginning of 2012. You can hold the stock as long as the lower floor of this band holds.

The going can deteriorate on a breach of the Rs 45 level. Subsequent supports are at Rs 40 and Rs 37.

Medium-term hurdle for the stock is at Rs 71. Targets on break above this level are Rs 80 and Rs 88.

But it is quite likely that the stock will spend a few more months below the Rs 71 level.

What is the long-term outlook for SAIL bought at Rs 94?

Dr K.S.S. Saibaba

SAIL (Rs 63.4): SAIL is in a vicious long-term downtrend since the twin peaks formed at Rs 258 in 2010. The reversal in 2012 from the trough at Rs 73 could not take the stock far and it is once again spiralling downward. The stock is currently trading at four-and-a-half-year low.

The only silver lining in this gloom is that the stock is drawing close to the November 2008 low at Rs 55.

This can serve as the stop-loss level for investors. Next support zone for the stock is between Rs 42 and Rs 50. It would be best to avoid bottom fishing if the stock moves below Rs 55.

Short-term hurdles for the stock are positioned at Rs 84 and Rs 100. Medium-term view for the stock will turn positive only on close above Rs 140.

What is your opinion on HCL Technologies? Can I buy the stock now?


HCL Technologies (Rs 767.7): HCL Technologies is on a roll. It soared past its 2000 high of Rs 749 this month underlining that it is in a very strong long-term uptrend. The trends along the short- and medium-term time frames are also up for the stock. Investors with a greater penchant for risk can buy the stock at current levels with stop-loss at Rs 750. The stock needs to close below this level to reverse the medium-term view downwards.

That said, investors who like to play it safe can wait for the stock to move above Rs 800 before buying the stock. The need for caution stems from the fact that 1:1 extrapolation of the up-move from March 2009 low gives us the target of Rs 812. The stock has already achieved this target.

If a correction sets in, it can pull the stock lower to Rs 650. This can serve as a stop-loss for long-term investors.

What is your advise regarding medium- and long-term outlook of Hyderabad Industries Ltd (HIL)? Can it be bought at current levels?


HIL (Rs 361): HIL is in a long-term correction since July 2010. The rebound in 2012 halted at the key medium-term resistance around Rs 550 and the stock is once more headed lower. It has been on a vicious down-move since this January, as it plunged from Rs 506 to Rs 360.

It is understandable that the lower prices can make the stock attractive for some. But only the bravehearts should venture to buy the stock at this juncture. The stock is poised at key short-term support and a reversal is possible from here. But there are no reversal signals in the oscillators. Investors should desist from buying the stock on decline below Rs 360. That would indicate the propensity to fall towards its December 2011 low at Rs 255.

The stock faces resistance at Rs 434 and Rs 480 in the weeks ahead. Long-term view will turn positive only on move above Rs 570.

What is the one-year outlook for Fortis Healthcare?


Fortis Healthcare (Rs 95.1): The chart of Fortis Healthcare appears quite sick at present. But the stock is drawing quite close to its key medium-term support at Rs 90. Investors wishing to buy the stock can do so in declines with stop-loss at Rs 85. Decline below Rs 85 will, however, send the stock hurtling towards the 2012 low of Rs 76.

Reversal from the Rs 90-support level will mean that the stock will move in the range between Rs 90 and Rs 125 over the next year. The stock needs to move above Rs 135 to reverse the long-term view and pave the way for a higher move to Rs 175.

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Published on March 23, 2013
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