Market Strategy

Tata Global poised at key support

Lokeshwarri S.K. | Updated on April 20, 2013






I have Tata Global Beverages purchased at Rs 150 and Jain Irrigation purchased at Rs 60. Please advise whether to hold or exit these shares.

Pankaj Kumar

Tata Global Beverages (Rs 138.6): This stock turned tepid since last November when it recorded the peak at Rs 181. The correction since then has dragged the stock down 33 per cent from its peak. A one-third decline is a very good reversal point for long-term downtrends.

Besides this, 38.2 per cent retracement of the rally from November 2008 trough occurs at Rs 130. The stock is therefore positioned at a very important support level from a long-term perspective.

Investors holding the stock can continue to do so while maintaining the stop-loss at Rs 115. If this level is breached, next long-term supports are positioned at Rs 112 or Rs 96.

Though it is quite likely that the stock reverses upward from current levels, the recent peak at Rs 182 may not be breached in a hurry. The stock could spend some time in a sideways band between Rs 130 and Rs 180 before moving higher over the long term.

Medium-term hurdles for the stock are placed at Rs 145 and Rs 160.

Jain Irrigation (Rs 60.2): You have purchased Jain Irrigation at an apt juncture from a trading perspective. The stock has drawn close to its long-term support band between Rs 45 and Rs 64. There can be a short-term rally from these levels to Rs 75 or Rs 86 where short-term investors can divest their holding.

That said, the stock has a long way to travel before its long-term trend reverses for the better. Key long term resistance is at Rs 136.

Investors should steer clear of this stock if it declines below Rs 45.

I hold shares of TV18 bought at Rs 30. Let me know your technical view on the stock.

Nikhil Agrawal

TV18 (Rs 27): This stock hit the bottom at Rs 15 in June 2012 and is attempting to stabilise since then. But TV18 has some way to go before the medium-term view turns positive. The stock will face resistance at Rs 38 and then at Rs 52 in the months ahead. A firm close above Rs 52 is required to indicate that the medium-term view is turning positive.

Since you have a short-term perspective, it will be best to divest your position at these levels. Stop-loss for the short-term should, however, be at Rs 23.5. Decline below this level will drag the stock down to Rs 16 or even Rs 15 over the medium-term.

The long-term view for the stock will stay negative as long as it trades below Rs 116.

Please give your technical view on HBL Power Systems. Your previous view was we should not try to catch a falling knife. But is a bottom in the making now? Also give your view on BGR Energy.

D.H. Shah

HBL Power Systems (Rs 9.5): This stock did take a deep dive this January with the price halving from Rs 18.7 to Rs 9.5. But the stock has reached its long-term support at Rs 9 now. It is also holding at those levels over the past month. Though we cannot conclude that a bottom has been formed here, investors with a greater penchant for risk can buy the stock at these levels with stop-loss at Rs 9.

Fresh purchases should, however, be avoided on a decline below Rs 9. Medium-term resistances for the stock are placed at Rs 14.5 and Rs 18.

BGR Energy Systems (Rs 188.4): BGR Energy Systems is also close to the bottom at Rs 172 formed in January 2012. But there is no strong rebound and we have just a feeble sideways movement around this level. Short-term investors who like to take risk can buy the stock at this juncture with stop loss at Rs 175. Upward targets would be Rs 250 and Rs 300.

But, fresh purchases should be avoided on close below Rs 170, which can result in the stock spiralling lower to Rs 107.

Key long-term hurdle for the stock is at Rs 440. Inability to move above this level will keep the stock in the range between Rs 200 and Rs 440.

I have bought Aditya Birla Money at Rs 16. Please advise on the prospects of this stock.

Habib Mohamed

Aditya Birla Money (Rs 18.9): This stock has not gone anywhere over the past five years, vacillating in the wide band between Rs 10 and Rs 80 in this period.

The ongoing correction has pulled the stock towards the lower end of this trading band. The stock is, however, attempting to move higher since the trough of Rs 11 formed in September 2012.

You can hold the stock with stop-loss at Rs 15. Breach of this level will drag the stock towards its long-term support at Rs 10. Rallies can, however, be capped at Rs 22 or Rs 34.

Long-term view on the stock will turn positive only on strong close above Rs 34. Subsequent targets are Rs 41 and Rs 48.

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 April 20, 2013

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