QUERY CORNER: Indian Bank on a long-term downtrend

I have purchased TRF at Rs 260. Please let me know the long term outlook on the stock. I can hold it for 3-4 years.

Kuldeep Singh

TRF (Rs 112.5): Ever since peaking out from the record high of Rs 1175 made in May 2010, TRF has been on a long-term downtrend forming lower peaks and troughs. After encountering resistance at around Rs 200 in early April this year, the stock has been on a short-term downtrend.

The stock is currently hovering just above its long-term support band between Rs 90 and Rs 100. An upward reversal from this support band can take the stock higher to Rs 200 in the medium-term. Investors can hold the stock with stop-loss at Rs 90. A strong fall below this level will pull the stock down to Rs 75 and to Rs 55 or Rs 46 in the medium-term. In that scenario, the investors can exit the stock and re-enter later.

Key resistances above Rs 200 are positioned at Rs 265 and Rs 335. The stock needs to trend above Rs 385 to alter its downtrend and take it higher to Rs 450 or to Rs 500 in the long-term.

I bought shares of Indian Bank at Rs 125. Please let me know the medium- and long-term outlook for the stock.

Raju Gopinath

Indian Bank (Rs 107.2): After registering an all-time high at Rs 316 in October 2010, the stock started to decline. Since then, it has been on a long-term downtrend shaping lower peaks and troughs. In early January, the stock met with resistance around Rs 217, and since then it has been on a medium-term downtrend.

While declining, the stock decisively broke through key long-term support at Rs 156 in late May and fell steeply. Nevertheless, the stock is hovering above important support at Rs 100. Short-term investor can hold the stock with stop-loss at Rs 100 and medium-term investors with stop-loss at Rs 86. A sharp fall below Rs 100 can drag the stock down to Rs 90 or Rs 86. Further decline below Rs 86 will pull the stock down to its record low of Rs 63 or even lower to Rs 50 in the long-term.

An upward reversal from Rs 100 can push the stock higher to Rs 122 and then to Rs 135 in the short-term. The stock needs to rally above Rs 156 to reverse its medium-term and take it higher to Rs 180 and Rs 190 range in the long-term. Next resistance is at Rs 217.

What is the near-term outlook for Ingersoll-Rand bought at Rs 416?

Rajamohan

Ingersoll-Rand India (Rs 379.0): Following a medium-term downtrend from the resistance level of Rs 500, Ingersoll-Rand is currently testing key long-term support at Rs 365. Investors can hold the stock with stop-loss at Rs 350 levels.

An upward reversal from the present support level can take the stock northwards to Rs 420 and then to Rs 445 in the medium-term.

Next significant resistance is at Rs 500. Important supports below Rs 350 are at Rs 327 and Rs 300.

Kindly let me know the outlook for OnMobile and MCX over the short- and medium-term horizon.

Ananth

OnMobile Global (Rs 28.4): Both short- and medium-term trends are down for OnMobile.

Medium-term trend has been down since its January peak of Rs 50 and the short-term trend from its May peak of Rs 41. Strong tumble below the immediate support at Rs 27 will drag the stock down to new lows. A decisive close above Rs 35 is required to alter the stock’s short-term downtrend and push it higher to Rs 38 or Rs 41 levels.

To alter the medium-term downtrend, the stock needs to trend above Rs 41, so that the stock can move higher to Rs 47 or Rs 50 in the medium-term. Investors can make use of rallies to exit from the stock.

Multi Commodity Exchange of India (Rs 714.5): Even this stock is trending down in long-, medium- and short-term. Since peaking out from its May level of Rs 1,015, the stock has been on a medium-term downtrend. In late June, the stock plunged breaking its key support at Rs 830 and continued to register record lows. Immediate resistance is at Rs 785. The stock has to move above this level to alter its short-term downtrend and push it higher to Rs 830 levels. An up move above Rs 860 will reverse its medium-term trend higher and take the stock to Rs 950 levels. Investors can exit from the stock in rallies. Next important resistance is at Rs 1,005.

Where will BGR Energy find support? Kindly let me know if this is the right time to invest.

Anand

BGR Energy Systems (Rs 123.5): The stock has been in a downtrend in all time frames — long-, medium- and short-term. It is just hovering above its significant long-term support which is its December 2008 trough at Rs 115. Strong decline below this support will reinforce bearish momentum and drag the stock to its next psychological support at Rs 100. However, it will be tough to envisage where the stock will bottom out, hence avoid investing in this stock at the moment.

An upward reversal from the aforesaid support level can take the stock to Rs 140 and then to Rs 175 in the medium-term. Subsequent resistances are pegged at Rs 200 and Rs 225 levels.

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