Market Strategy

Query Corner: Stellar uptrend in KPIT Tech

Lokeshwarri S. K. | Updated on November 19, 2014 Published on January 11, 2014








Lokeshwarri S. K.

I hold Jindal Saw and JSW Energy, bought at Rs 120 and Rs 75, respectively, in September 2012. Please suggest what I should do with these stocks.


Jindal Saw (Rs 59): Jindal Saw is in a severe downtrend since the peak of Rs 234 recorded in October 2010. The stock has also moved well below your purchase price. But you can take heart from the fact that the stock is attempting to move higher from the low of Rs 37.5 seen in August 2013.

You can hold the stock as long as it trades above Rs 37. The stock can attempt to move higher to Rs 95 or Rs 130 in the months ahead if this support holds. You can exit the stock if it reverses lower from either of these levels. The long-term outlook will turn conducive only on a strong close above Rs 115.

If Jindal Saw declines below Rs 37, the next long-term support is the 2009 trough of Rs 27.

JSW Energy (Rs 48): This stock is also reversing higher from its long-term support of Rs 37. Investors can hold JSW Energy as long as it manages to hold above this level. But the uptrend in progress since August 2013 will face resistance at Rs 73 in the months ahead. The stock has made multiple efforts to move beyond this level since February 2012, but to no avail. Inability to move above this level will keep the stock in the range between Rs 40 and Rs 70.

On the other hand, a strong move above Rs 73 can take the stock to Rs 97 in the months ahead. Subsequent long-term resistance is at Rs 136.

Is this the right time to buy GVK Power and Infrastructure?

Bhavani Prasad C. N.

GVK Power and Infrastructure (Rs 10): GVK Power and Infrastructure is reversing higher after hitting a life-time low of Rs 5.6 in August last year. But the uptrend is not yet convincing enough to signal a reversal of the medium-term downtrend. The stock will need to record a strong close above Rs 20 to indicate that it is out of the woods, from a medium-term perspective. Investors wishing to buy the stock can therefore wait for a firm close above Rs 20. Subsequent targets are Rs 24, Rs 30 and Rs 35. Those with a higher penchant for risk can buy now with stop loss at Rs 5.

The long-term trend in GVK Power and Infrastructure will remain down as long as it trades below Rs 40. Inability to move beyond this level will mean that the stock will slip lower to the Rs 10 level.

What are the short- and long-term targets for KPIT Technologies, purchased at Rs 74? I am willing to hold for another year or so. Should I book profit or hold?

Vimal Bhatia

KPIT Technologies (Rs 180): KPIT Technologies is in a stellar uptrend since May 2013, gaining 87 per cent since then. This appears to be the third leg of the uptrend that began at the 2009 low of Rs 10. Extrapolation of this move gives targets of Rs 160 and then Rs 220. The stock could head toward the second target since it has already surpassed the first. You can book some profit in the band between Rs 200 and Rs 220. You can hold the stock with stop loss at Rs 150. Subsequent supports for the stock are at Rs 142 and Rs 117. The medium-term trend will reverse lower only if the stock closes below Rs 117. Its key long-term support is at Rs 92.

Please let me know the medium-term trend for CESC, purchased at an average price of Rs 390, and Castrol, bought at Rs 309.

K. V. Nandan

CESC (Rs 444): CESC is in a medium-term downtrend since the peak of Rs 470 formed on January 7. Investors with a short-term investment horizon can hold the stock as long as it trades above Rs 433. If this level holds, the stock can move higher to Rs 470 or even Rs 493 in the weeks ahead. The key medium-term support for the stock is at Rs 370. Investors wanting to hold the stock in the long-term can buy on declines as long as it trades above this level. Subsequent supports are at Rs 346 and Rs 271.

Castrol India (Rs 296): Castrol, too, is in a corrective mode since the June 2013 peak of Rs 371. But this correction is halting at a very important long-term support of Rs 288. If the stock manages to hold above this level, it can move higher to Rs 371 or Rs 398 over the medium-term.

Supports below Rs 288 are at Rs 282 and then Rs 261. The long-term trend in the stock will be threatened only if it closes below Rs 261.

I am holding shares of Unitech, purchased at Rs 17. I am a long-term investor. Please advice whether I should hold or sell.

Deepak Kumaran

Unitech (Rs 14): The chart of Unitech is a picture of gloom, with the stock forming consecutive lower troughs.

It moved below the 2008 trough of Rs 22 in July 2013 and is currently trading close to a new low.

You can, however, draw solace from the fact that the stock is attempting to form a base at Rs 13. This can serve as a stop loss. The stock may plunge below Rs 10 if it breaks this level.

Medium-term resistances are at Rs 54 and Rs 79. Investors should divest their holdings on rallies to either of these levels.

The long-term trend in the stock will turn positive only on a strong move above Rs 120.

Readers can send in their queries, on not more than two companies, to > 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 January 11, 2014

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