Query Corner: Wipro poised below its long-term ceiling

I have bought Coromandel International for Rs 182 a share. Should I continue to hold it or sell?

Sakthi

Coromandel International (Rs 229): Long-term investors ought to hold on tight to Coromandel International. Despite the steep decline witnessed since last October, the stock is still in a long-term uptrend.

It did the right thing in halting at the long-term support at Rs 170 and registering a strong rebound from there. This level occurs at the critical 61.8 per cent retracement of the stock’s up-move from the 2009-trough. Stop-loss for long-term investors is at Rs 150.

That said, the stock faces resistance at Rs 246 and Rs 296 in the months ahead. Reversal from these levels will imply that the medium-term outlook remains down. Investors who do not want to be wedded to the stock can divest their holding at either of these levels.

Key long-term resistance zone for the stock exists between Rs 340 and Rs 380.

I am holding Bharti Airtel and Hyderabad Industries. What is the medium- to long-term outlook for these stocks?

Anil

Bharti Airtel (Rs 325): Long-term investors should stay dialled in to Bharti Airtel. This stock ended one leg of its long-term uptrend between 2003 and 2007. A protracted corrective move is in motion since then. That this correction is taking support at the area around Rs 230, which is a key long-term trend-deciding level, is a positive. Long-term investors can stay invested with the stop-loss at Rs 220.

Investors can also buy the stock in declines with the same stop-loss. The area around Rs 450 will be the first critical resistance for the stock. If this level is breached, the stock can attempt to move to its previous life-time high at Rs 575.

The medium-term trend for the stock is sideways in the zone between Rs 250 and Rs 350. The stock will continue to oscillate within this range as long as it trades below Rs 350. Medium-term targets on break above Rs 350 are at Rs 400 and Rs 450. Investors with short- to medium-term perspective can hold the stock with the stop-loss at Rs 250.

Hyderabad Industries (Rs 286): This stock has been vacillating violently between Rs 250 and Rs 550 since the end of 2011. The stock has key long-term support in the zone between Rs 250 and Rs 275. Investors can hold the stock with a stop-loss at Rs 240. Rebound above this level can take the stock higher to Rs 378 or Rs 445 over the medium-term.

The stock has key long-term resistance at Rs 450. The stock will stay volatile as long as it trades below this level. Subsequent resistances are at Rs 510 and Rs 570. The area between Rs 570 and Rs 600 will continue to be an important long-term ceiling for the stock.

Let me know the prospects of Gujarat State Petronet.

S. Manikandan

Gujarat State Petronet (Rs 51): Gujarat State Petronet has declined below its key long-term support at Rs 60, thus signalling a negative long-term view for the stock. It now needs to record a strong weekly close above Rs 60 to turn the long-term view positive again. Investors wishing to buy the stock can wait for that event before taking fresh positions in the stock. The stock is attempting to halt around Rs 50, but this reversal is far from convincing. Further decline can drag the stock lower to Rs 38 or Rs 30. Medium-term target on close above Rs 64 is at Rs 84.

Can I buy Wipro at current market price?

K. Kasi Nathan

Wipro (Rs 475): Wipro has recorded a stellar move since the June low at Rs 319, rising 57 per cent. It will be tempting for most investors to buy the stock at this juncture. But it would be best to wait for a strong close above Rs 500 before doing so. The reason is that the stock is moving in a wide long-term trading band between Rs 300 and Rs 500 since December 2010.

The zone between Rs 480 and Rs 500 is a strong resistance zone and the stock is currently poised at this level. It reversed lower from this zone multiple times in 2010 and 2011. The stock is also struggling to move beyond this level since the beginning of September.

A correction from these levels can drag the stock lower to Rs 450 or Rs 420 in the months ahead. A sideways move in the range between Rs 430 and Rs 500 can ensue, that will provide a good entry point for the stock with stop-loss at Rs 420.

Long-term target on break above Rs 500 is at Rs 530 and then at Rs 600.

Investors with short- to medium-term perspective should, however, desist from buying the stock on decline below Rs 420. Next supports are placed at Rs 408 and Rs 386.

The floor of the long-term trading range at Rs 300 should be the stop-loss for long-term investors.

Is this the right time to average Voltas?

V.H. Rao

Voltas (Rs 74): The long-term trend in Voltas continues to be down. It breached its key long-term support at Rs 120 in September 2011 and this level is thwarting rallies since then. The stock is thus confined to a sideways range between Rs 70 and Rs 130.

It is currently halting at the lower end of this trading range. But the outlook for the stock has not yet turned positive as the reversal is not strong enough. Investors with a lower risk appetite should wait for a close above Rs 150 before attempting to average the stock.

Those with greater penchant for risk can buy at current levels, but with strict stop-loss at Rs 60. Supports on drop below this level are at Rs 43 and then Rs 31.

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