Market Strategy

QUERY CORNER: Satyam Computer at inflection point

Updated on: Feb 02, 2013






Please let me know the prospects of Atlanta.

S.C. Ethirajan

Atlanta (Rs 49.5): Atlanta has been in a steep decline since the peak at Rs 133 recorded in April 2011. This decline pulled the stock below its key long-term support at Rs 54. The stock, however, halted the slide at Rs 32 and it is attempting to rally higher.

The up-move recorded over the last two months does not inspire confidence and investors should watch out for the resistances at Rs 70 and Rs 95 in the months ahead. If the rally is unable to surpass these levels, it will be a signal that the stock can decline sub-Rs 30 levels.

Long-term trend will reverse higher only on a strong weekly close above Rs 133. Inability to do so will keep the stock vacillating in the zone between Rs 20 and Rs 140 over the next couple of years.

Can I buy Jindal Poly Films and United Breweries for the short-term?

N.S. Ganesan

Jindal Poly Films (Rs 168): This stock recorded a stellar rise in 2010, from Rs 200 to Rs 700.

But the speed with which the rally corrected the next year, dragging the stock back to Rs 155 by December 2011, implies that the rally was not entirely supported by fundamentals.

The stock is moving in a narrow range between Rs 145 and Rs 245 since the beginning of 2012.

Since the structural trend in the stock continues to be down, it is not recommended as a buy for risk-averse long-term investors. The stock should close beyond Rs 250 before investors consider buying the stock. Subsequent long-term target would be Rs 350.

Investors with short-term perspective can buy the stock in weakness with stop-loss at Rs 140 with the target of Rs 240.

United Breweries (Rs 747): United Breweries has been very volatile since the peak of Rs 1,023 recorded last December. Following a steep fall since the beginning of this year, the stock is attempting to reverse from the recent low at Rs 669. Investors can buy the stock with stop at Rs 650.

This is an important long-term support for the stock and reversal from here will imply that the structural trend remains up and the stock can move higher to Rs 1,000 and beyond that to Rs 1,260 over the long-term.Short-term targets for the stock are Rs 800 and Rs 890.

What is your advise regarding the medium- and long-term outlook of Satyam Computer Services and Reliance Capital? Can they be bought at current levels?


Satyam Computer Services (Rs 117.6): Satyam Computer Services is poised at an inflection point.

The long-term trend in the stock has been up since the September 2009 trough. The correction that ensued at 2010 halted at the stock’s long-term support at Rs 55 and the stock has been once again etching a steady uptrend since February 2011.

This rally has, however, brought the stock close to its long-term ceiling at Rs 130. If we consider the rally in the stock since May 2012, the stock appears to have sufficient momentum to break out beyond the ceiling at Rs 130. If it does so, next long-term target for the stock would be Rs 171 and Rs 189. Key long-term resistance, however, exists at Rs 214. Investors with a medium-term perspective can hold the stock with stop-loss at Rs 97. Stop-loss for long-term investors can be at Rs 81.

Reliance Capital (Rs 474.1): Reliance Capital took a deep dive in 2011 that dragged it below the March 2009 low. But the stock has been in a steady medium-term uptrend since then.

This uptrend will face resistance at Rs 555 and Rs 750 in the months ahead. Investors with medium-term perspective can divest their holdings at either of these levels.

That said, the stock has a long way to go before the long-term view turns positive for it.

The stock faces strong long-term hurdle at Rs 1,066 and Rs 1,260. Strong close above Rs 1,260 is needed to turn the long-term view positive. Stop-loss for long-term investors can be at Rs 340.

Please let me know the prospects of Allahabad Bank purchased at Rs 142. I am a long-term investor.

S. Subramanyan

Allahabad Bank (Rs 159.5): The downtrend that began from the peak of Rs 271 in Allahabad Bank halted around the key long-term support at Rs 110 in December 2011. The stock has been vacillating in the band between Rs 110 and Rs 210 since then. The stock faces medium-term resistances at Rs 190 and Rs 210.

Reversal from these levels will result in the stock declining to Rs 147 or Rs 137 in the weeks ahead. Since the stock is currently reversing from the first resistance level, investors with short- to medium term perspective can cash out partially at this juncture.Stop-loss for long-term investors can be at Rs 110. Long-term outlook will, however, turn positive only on a close above Rs 210. Next target for the stock will be the former peak at Rs 271.

Since January 2011, I have been accumulating shares of JBF Industries at an average price of Rs 141. The stock is moving lower. Should I book loss?

Panini Deshpande

JBF Industries (Rs 121.5): This stock has long-term support in the band between Rs 104 and Rs 90. Long-term investors can hold the stock as long as it trades above Rs 90. But the stock is likely to face resistance around Rs 150 and then at Rs 176 in the months ahead. Investors with a shorter investment horizon can exit the stock at these levels. Long-term view will turn positive only on a close above Rs 176.

(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 featuredunder this column.)

Published on March 12, 2018

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