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Please discuss the medium- and long-term outlook of Karur Vysya Bank. Can I enter the stock at this level?
J. Senthan
Karur Vysya Bank (Rs 372.9): Karur Vysya Bank has weathered the market correction in 2011 quite well. It has retraced about 38.2 per cent of the rally from March 2009 low and is currently attempting to hold above this level. The structural trend in this stock continues to be up.
Investors can buy the stock on declines with stop at Rs 350. Those already in possession of the stock can continue to hold with stop at Rs 350. Medium-term view will turn negative only on a weekly close below this level. Subsequent supports are at Rs 306 and Rs 260.
Resistances for the months ahead will be at Rs 440 and Rs 500. Those with shorter investment horizon can exit the stock at either of these levels. Inability to move above Rs 500 will keep the stock in the zone between Rs 350 and Rs 500 for a few months.
Such a move will, however, mean that the long-term view stays positive. Long-term targets on break above the Rs 500 ceiling are Rs 565 and Rs 719.
Please let me know the trend in Anant Raj Industries bought recently at Rs 75.
Manoharan N.
Anant Raj Industries (Rs 58.5): The long-term and short-term trends in Anant Raj Industries are currently down. The medium-term trend is up since the trough at Rs 39 formed last December. Investors need to watch out for the support band between Rs 50 and Rs 55. It would be best to divest your holding on breach of Rs 50. The stock can then decline to Rs 40 or even below that level.
That said, reversal above Rs 50 can take the stock higher to Rs 87, Rs 118 or Rs 165. Investors can hold the stock with stop at Rs 50 and divest at either of these levels. The long-term outlook will turn positive only on an emphatic close above Rs 175.
I intend buying shares of HCL Technologies around Rs 500 with six-month perspective. What are its future prospects?
Honnur Krishnamurthy Jois
HCL Technologies (Rs 482.3): HCL Technologies is in secular downtrend since 2000. Corrective rallies will face strong resistance around Rs 500 that occurs at 61.8 per cent retracement of the previous down-move. The region between Rs 480 and Rs 550 is the hurdle that investors need to watch out for. The stock was thwarted in this zone in May 2011. It is once more approaching this zone.
Fresh investments are suggested only if the stock records a strong break above Rs 550. Subsequent targets are Rs 631 and then Rs 750. But if the stock reverses lower from this ceiling around Rs 500, it can spend some more months vacillating between Rs 360 and Rs 550.
Investors can buy the stock on declines with stop at Rs 350. Fresh purchases should be avoided once the stock plunges below Rs 350. Subsequent targets are Rs 310 and Rs 257.
What is the short- and medium-term view on NMDC and NTPC?
R.N.B. Rao
NMDC (Rs 161.1): NMDC is fluctuating in a very wide band between Rs 120 and Rs 500 since 2008. The stock retreated from the upper end of this band in January 2010 and it is currently drawing close to the lower end. The zone between Rs 140 and Rs 150 is a potential area from which a rebound can take place.
Investors can, therefore, buy the stock in this area with stop at Rs 130. Next support on the chart is at Rs 120. We do not recommend purchases below this level since it then becomes hard to infer where the next halt can be.
Near-term resistances are at Rs 210 and Rs 246. Key medium-term hurdle will be at Rs 300. Inability to move beyond this peak will result in the stock fluctuating between Rs 120 and Rs 300 over the upcoming months.
NTPC (Rs 162.7): NTPC has key long-term support around Rs 160. The stock is currently nearing this support level. The area between Rs 150 and Rs 160 is a potential reversal zone for the stock. Investors with a greater penchant for risk can buy the stock in declines with stop at Rs 150. Near-term resistances are at Rs 187 and Rs 208.
Key medium-term resistance will, however, be at Rs 241. The stock will have to move above this level to signal the intention to move on to the stock's life-time high at Rs 291.
Supports on decline below Rs 150 are at Rs 130 and Rs 113.
The share price of Bata has zoomed suddenly. What are your views and targets for three-month duration?
J.H. Krishna Murthy
Bata India (Rs 769.2): This stock has definitely been rising at a fast clip since the beginning of this year. It has gained 46 per cent since the trough formed in late December last year. The stock has strong resistance around Rs 740. It formed a double top formation at this level between August and November 2011.
That the stock has broken past this resistance is a positive from a medium-term perspective. Investors can buy the stock in declines as long as it trades above Rs 740. If this support holds, Bata can break higher to Rs 940 over the medium-term.
Supports on decline below Rs 740 are at Rs 680 and Rs 610. Long-term investors need to divest their holding only if the stock goes on to close below Rs 500.
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