Can I buy Lanco Infratech and Deccan Chronicle Holdings at the current price?

Sivaraj

Lanco Infratech (Rs 11.8): This stock is in a fresh leg of the long-term downtrend from August 2010.

One part of this down-move ended at Rs 8.6 in December 2011 and the stock has been attempting to form a base since then.

This effort is making the stock move in a wide trading band between Rs 10 and Rs 25.

Investors with a short- to medium-term perspective can buy the stock in declines with stop at Rs 8.

The short-term target for the stock is, however, at Rs 25. Inability to move beyond this level will keep the stock in the aforementioned trading range.

Targets on break above Rs 25 are Rs 27 and Rs 31. Key long-term resistance for the stock is at Rs 34.

Inability to move beyond this level will imply that the medium-term prospects continue to be under a cloud.

Deccan Chronicle Holdings (Rs 11.4): This stock is in a vicious downtrend and there is no rational technical reason why an investor should consider investing in this stock. The stock is currently trading at its life-time low. It is hard to identify the level where the stock can halt and reverse.

Investors tend to compare a stock’s price with how it was trading at a few months ago, and decide that it is cheap. But buying a stock such as this is akin to catching a falling knife. It can make a deep gash in the portfolio and can stay at lower level for extended period.

Those who are determined to buy the stock can do so, on a weekly close above Rs 25. Subsequent hurdles will be at Rs 57 and Rs 75.

Could you please advise me on medium- and long term outlook of SKF India and SRF Ltd?

Anil Kumar Ray

SKF India (Rs 607.8): SKF India has held pretty well in the bear onslaught of the last two years. The stock hit the peak of Rs 694 in January 2011 and has been moving in a broad trading range between Rs 530 and Rs 730 since then. Key long-term supports for the stock are at Rs 535 and Rs 492.

Long-term investors can buy the stock in declines with stop at Rs 490. The stock could find it difficult to get past Rs 700 in the months ahead. Investors with medium-term perspective can, therefore, divest part of their holding if the stock fails to get past this level.

Target on a strong move above Rs 700 is Rs 905. Supports on decline below Rs 490 are at Rs 425 and Rs 352.

SRF (Rs 217): SRF is in a steep decline since the December 2010 peak at Rs 448. This slide is attempting to halt at the key long-term support at Rs 200. This level occurs at 61.8 per cent retracement of the up-move from the February 2009 low.

The stock could attempt to form a base in the zone between Rs 175 and Rs 200. Investors can, therefore, hold the stock with stop at Rs 175. But fresh investments are not advised on decline below this level. Subsequent support levels are at Rs 98 and Rs 62.

Key medium-term resistances for the stock would be at Rs 288 and Rs 350. Long-term view will turn positive only if the stock manages to close above Rs 350.

I am holding Thinksoft Global bought at Rs 151. At which rate can I exit the stock?

Thariath Kurien

Thinksoft Global Services (Rs 86.6): This stock is forming a rounding-bottom formation on the weekly chart. This is a long-term reversal pattern. But the reversal could be gradual.

The stock will face resistance at Rs 128 over the medium-term. Investors not into the stock for the long-haul can exit it on failure to move beyond this resistance. That will signal that the stock will vacillate in the zone between Rs 30 and Rs 130 over the next 12 months.

Move beyond this hurdle will take the stock to the long-term resistances at Rs 186 and Rs 226. It is hard to envisage a move beyond these levels in the next couple of years. The stock will receive supports at Rs 71 and Rs 55 in the months ahead.

Please advise on the long-term prospects of Globus Spirits. Can I enter this stock at current levels?

Rohit

Globus Spirits (Rs 107.7): Globus Spirits has long-term support at Rs 87 and then at Rs 74. The stock is attempting to reverse from the first support. But it is unable to surpass the resistance at Rs 130 resulting in a sideways movement in the band between Rs 87 and Rs 130.

Investors with a lower risk appetite can wait for a close above Rs 130 before buying the stock. It can then move on to Rs 142 or Rs 156. But failure to move beyond Rs 130 will make the stock decline towards its support levels again. Stop-loss for those holding the stock should be at Rs 72.

Please let me know your outlook on Videocon Industries. Can I buy at this level from a 3-4 year perspective?

Jayesh Shah

Videocon Industries (Rs 174.7): Videocon Industries is in a long-term decline since the peak at Rs 294 formed in October 2010. That said the stock is currently halting at the key long-term support at Rs 160. Investors who have a greater penchant for risk can buy the stock at current level with stop loss at Rs 150.

The stock can move up to Rs 215 or Rs 245 in the months ahead. Long-term view will turn positive only on a move above Rs 245. Subsequent targets are Rs 295 and Rs 384.

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

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