Query Corner: Jaiprakash Associates attempting to move higher

Please let me know the outlook for Future Capital Holdings and Subex.

N. Gopalakrishnan

Future Capital Holdings (Rs 127.2): This stock has not really gone anywhere over the last three years. It is vacillating in the band between Rs 100 and Rs 300 since March 2009. This range is likely to shackle the stock in the months ahead also and provide a lucrative trading band within which short-term investors can play around.

Future Capital Holdings is currently close to the floor of its long-term trading range at Rs 100; it has been trying to stabilise above this level over the last couple of months. Investors with a greater penchant for risk can buy the stock at current levels with stop at Rs 95. Those holding the stock can also continue to do so with the same stop-loss. The stock could move higher to Rs 180 or Rs 198 where investors with medium-term perspective can offload some holdings.

Targets on move beyond Rs 198 are Rs 230 and Rs 302. Long-term outlook for the stock will turn positive only on strong weekly close above Rs 302. Next long-term target would be Rs 520.

Subex (Rs 31.1): Subex started spiralling lower since the January 2007 peak at Rs 803. It was then decimated in the 2008 crash and finally bottomed at Rs 18.8 in March 2009. The stock is moving in a trading band between Rs 20 and Rs 100 since this trough. Support that long-term investors can watch out for is between Rs 18 and Rs 25.

Since the stock is currently attempting to move higher from this support, investors with a higher risk appetite can buy at this juncture with stop at Rs 22. Medium-term targets for the stock are Rs 53, Rs 62 and Rs 72.

Long-term view will, however, turn positive only if the stock closes above Rs 100.

I would like to know the short- and medium-term technical outlook for Jaiprakash Associates and Lanco Infra bought at Rs 75 and Rs 20 respectively.

P.V. Ramakrishnan

Jaiprakash Associates (Rs 74.5): Jaiprakash Associates made a double bottom around Rs 50 in September 2011 and again in January this year, and is currently attempting to move higher. The stock faces immediate resistance at Rs 90 and then at Rs 100.

Short-term investors should exit the stock if it has trouble moving beyond these levels. Stop-loss for the short-term investors can be at Rs 64.

Medium-term support would be available at Rs 50 and this can be the stop-loss for medium-term investors. Next supports would be at Rs 40 and Rs 31. The stock needs to move above Rs 100 to signal reversal in its medium-term outlook. Subsequent targets are Rs 115 and Rs 130.

Key long-term resistance band for the stock is between Rs 180 and Rs 190. If the stock struggles to move beyond this level in the months ahead, it will imply continued movement in the trading range between Rs 50 and Rs 180 in the forthcoming months. Target above Rs 180 is at Rs 220.

Lanco Infratech (Rs 20.6): Lanco Infratech was beaten to a pulp since last April as the stock crashed from Rs 45 to Rs 8.6. The magnitude of this decline implies that it will be some time before the stock is able to move to a position of safety. Key medium-term resistance that investors need to watch out for is at Rs 34.

The stock needs to move above this level to signal the intent to rally on to Rs 42 or Rs 50.

But if the stock is unable to get past Rs 35, it will mean that the stock will stay in the range between Rs 8 and Rs 35 in the months ahead.

Short-term investors can hold the stock with stop at Rs 15 while long-term investors can hold the stock with deeper stop at Rs 8.

Please let me know the technical trend for Havells India bought at Rs 485.

Manoharan N.

Havells India (Rs 526.9): The stock is in a strong long-term uptrend. This is also one of the rare stocks that have hardly corrected this year and managed to move to a new life-time high at Rs 565 this year. Short-term trend will not be under threat unless the stock goes on to close below Rs 450.

Key medium-term support is at Rs 300. Investors with long-term perspective can buy the stock in declines as long as it trades above this level. Having said that, it needs to be noted that first target on extrapolating the up-move from March 2009 low gives us the first target at Rs 557. The stock is currently poised around this level.

This level needs to be emphatically crossed before it goes on to the next target at Rs 709. But we maintain a positive medium-term view as long as the stock trades above Rs 450.

Can you tell me the medium-term prospects of Axis Bank bought at Rs 955?

Shekhar

Axis Bank (Rs 1,173.2): The decline in Axis Bank since the October 2010 top of Rs 1,608 halted at the long-term support at Rs 800. The stock reversed smartly from this level to gain 62 per cent since the beginning of this year.

Medium-term investors should, however, tread with care since the stock is reversing lower from the critical resistance at Rs 1,300. This level needs to be crossed to enable the stock to move on to its previous peak at Rs 1,608.

Conversely, failure to move beyond Rs 1,300 in the weeks ahead would result in the stock declining to Rs 990 or even Rs 800 in the months ahead. Stop-loss for short-term investors can be at Rs 980 while long-term investors can hold the stock with stop at Rs 780.

Please give long-term advise on GVK Power and Infrastructure purchased at Rs 40.

R.M. Kumarappan

GVK Power and Infrastructure (Rs 18.2): This stock was also pummelled out of shape in 2011. It is presently attempting to recover from its long-term base at Rs 10 and Rs 15. The stock bounced off this level in July 2006 and again in October 2008. Investors still holding the stock can continue to do so with stop at Rs 9.

The stock will face hurdles at Rs 27 and then at Rs 37 as it moves higher. Investors with short- to medium-term perspective can exit at either of these levels. Long-term hurdles are at Rs 52 and then at Rs 62.

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