Market Strategy

QUERY CORNER - Sintex Ind continues in a downtrend

Lokeshwarri S.K. | Updated on November 03, 2012 Published on November 03, 2012

Plunging: The Sintex stock has dropped 80 per cent after hitting a peak of Rs 236 in November 2010.





What is your advise regarding medium- and long-term outlook on Orchid Chemicals and Gloydne Technoserve. Can those be brought at the current levels?


Orchid Chemicals & Pharmaceuticals (Rs 105.1): It is not advisable to buy Orchid Chemicals at this point. The long- as well as medium-term trends in the stock are currently down. The stock has moved below its key long-term support at Rs 167 as well as 2010 low at Rs 128. Though the stock is attempting to form a base around the psychological support at Rs 100, this is not very convincing.

Investors holding the stock can continue to do so only as long as it trades above Rs 100. Next support on the chart is at Rs 78. If you wish to buy the stock, you should wait for a close above Rs 125. Short-term targets would then be Rs 168 and Rs 196. Medium-term trend will, however, turn positive only on a strong close above Rs 200. Subsequent medium-term targets are Rs 223 and Rs 253.

Glodyne Technoserve (Rs 52): Glodyne Technoserve fell off a precipice this July when its price almost halved as it plummeted from Rs 414 to Rs 197. The decline has, however, not ended yet and the stock is currently close to its 2009 low at Rs 48. This can serve as the stop-loss for those still hanging on to the stock.

Investors would do well to steer clear of this stock until it manages to raise itself above Rs 200 again. Those with a short-term trading perspective can wait for a close above Rs 100 to buy the stock. Targets would then be Rs 143 and Rs 200.

I have invested in Bank of India at Rs 466. Please let me know the prospects of this share. I am ready to hold this stock for a period of one year.

V. Karthik

Bank of India (Rs 282.6): The long-term trend in Bank of India is down since the stock is trading below its key long-term support at Rs 340. Investors can, however, draw solace from the fact that the stock is attempting to form a base around Rs 250.

It has already made two troughs in this region, in December 2011 and again in September 2012. Investors can, therefore, hold the stock with stop at Rs 250. But the stock faces strong medium-term resistance between Rs 380 and Rs 400. Medium-term trend will turn positive only on a strong close above Rs 400. Else, the stock is likely to vacillate between Rs 250 and Rs 400.

Investors with lower investment horizon should, therefore, exit the stock on failure to move above Rs 400. If it manages to do so, rally to Rs 420 or Rs 460 would be possible.

Please suggest the long-term view on Nakoda.


Nakoda (Rs 9.6): The long-term downtrend that began from the November 2010 peak is halting at Rs 7.2 and the stock is attempting to rally from here. The stock is, however, halting at key long-term resistance at Rs 10. Move above this level will take the stock onward to Rs 12.

Outlook for the stock will improve only on close above Rs 12. Inability to move above this level will mean that the stock could slide below Rs 7 again over the medium-term. Targets on close above Rs 12 are Rs 14 and Rs 16.

I have purchased Sintex at Rs 69. Please give your medium-term view on this stock.

Sailaja V

Sintex Industries (Rs 65.9): This stock is in a vicious downtrend, down 80 per cent since the peak of Rs 236 formed in November 2010. Though the stock is trying to halt this slide around the psychological support at Rs 50, the rallies from this level are far from convincing, implying that the stock is not out of the woods yet.

A strong close above Rs 100 would be the first requisite to signal that the medium-term trend is reversing in the stock. Next targets would be Rs 123 and Rs 166. Investors with medium-term perspective should divest their holding if the stock is unable to move beyond Rs 120.

Stop-loss for the medium-term can be at Rs 50. Move below will drag the stock to its March 2009 trough at Rs 35.

I would like to accumulate shares of L&T Finance Holdings for the next one year on rallies. Kindly let me know the outlook of this company.


L&T Finance Holdings (Rs 54): L&T Finance Holdings has very short trading history that makes it difficult to give a long-term outlook on the stock. It has been facing strong resistance in the band between Rs 52 and Rs 57 since its listing. The stock recently recorded a peak at Rs 56.9 this October and is in a corrective mode since then.

Investors can use such corrections to buy the stock. First level supports for the stock are at Rs 52 and Rs 50.5. Halt above these levels will have bullish connotation for the long-term prospects of the stock. It will mean that the stock can race higher above its recent peak over the next 12 months.

But move below Rs 50.5 will mitigate the positive trend, paving the way for decline to Rs 48.5 and Rs 46.6 over the medium-term. Long-term investors can hold the stock as long as it trades above Rs 46.5.

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Published on November 03, 2012
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