Query Corner : Robust outlook for Supreme Ind

I would like to invest in LIC Housing Finance from a long-term perspective (at least five years). Can you advise me regarding its technical aspect?

Prabir Malakar

LIC Housing Finance (Rs 222.2): LIC Housing Finance was battered beyond recognition in the housing loan scam last November making it lose 50 per cent of its value from the peak of Rs 300. There is no doubt that the long-term uptrend that began from the December 2008 low ended at that peak and a long-term correction is currently on. This down-move has supports at Rs 160 (where it took support in January this year) and then at Rs 130.

Investors with long-term perspective can hold the stock as long as it trades above Rs 130. Decline to the zone between Rs 130 and Rs 160 will also be an opportunity for investors to accumulate the stock with stop-loss at Rs 125.

The stock, however, faces key resistance at Rs 245 and this zone will continue to thwart rallies in the months ahead.

Inability to move above this level will result in the stock moving in a wide band between Rs 150 and Rs 250 in the months ahead. The stock faces strong resistance in the zone between Rs 300 and Rs 330. Strong close above this zone will take it to Rs 420.

Please provide me your views on Bank of Maharashtra purchased at Rs 70.

D.D. Panse

Bank of Maharashtra (Rs 56.3): Bank of Maharashtra faces strong long-term resistance in the zone between Rs 85 and Rs 95. The stock reversed from this zone in January 2008 and more recently in October 2010.

The correction that commenced from the peak formed at Rs 85 last October appears to be long-term in nature since it has already retraced half the gains made since the March 2009 low.

Key long-term supports are at Rs 52 and Rs 44. Long-term investors can hold the stock as long as it holds above the second support.

The stock will face resistance at Rs 65 and then Rs 72 in the days ahead. Inability to move above the second resistance will keep the stock vacillating in the zone between Rs 52 and Rs 72 for a few more months. Target on a move above Rs 85 is Rs 95.

Please give an idea about the short- and medium-term outlook for Kalindee Rail Nirman and YES Bank.

Vivek Agarwal, G.S. Sastry

Kalindee Rail Nirman (Rs 102.4): Kalindee Rail Nirman never recovered from the thrashing it received in 2008 as the stock price plummeted from the peak of Rs 600 to Rs 85. Key long-term resistance for the stock is at Rs 240 and then Rs 270.

Only if it rises above the second resistance can we assume that it is on the way to a sustained long-term recovery. Else, it can continue to meander in the band between Rs 80 and Rs 240.

The support at Rs 80 has cushioned the stock's decline in October 2008, March 2009 and again in March 2011. Investors can, therefore, hold the stock as long as it trades above this support. Decline below can pull the stock to Rs 74 or even Rs 30. Medium-term resistances would be at Rs 133 and Rs 161.

YES Bank (Rs 297): The medium-term outlook for YES Bank is down since the peak of Rs 388 recorded in November last year. The stock faces immediate resistance at Rs 330 and it can struggle to move above this in upcoming months. Inability to record a close above this level can result in decline to Rs 240 or even Rs 204 in the medium-term.

The short-term trend in the stock is also down. The stock will face short-term resistance at Rs 300 and Rs 315 in the days ahead. Investors with a short-term perspective can exit the stock at either of these levels. Stop-loss for short-term investors can be at Rs 260.

I purchased shares of Supreme Industries at Rs 155. Please let me know the medium- and long-term outlook on this share.

Krishan Kumar Gillon

Supreme Industries (Rs 170.6): Supreme Industries is one of the rare stocks that have got away with a very shallow down-move in the correction that is raging since last October. The stock has not even retraced one-third of the rally recorded since March 2009 implying that the long-term outlook remains robust for this stock. It is currently moving in a band between Rs 140 and Rs 170. This sideways move can continue for few more months and short-term investors can hold the stock with stop at Rs 130.

Upward breakout above Rs 170 can take the stock higher to Rs 230 over the long-term. Long-term supports for the stock are at Rs 112 and Rs 95. Long-term investors can hold the stock with stop at Rs 110.

Please explain the short- and long-term outlook of ONGC.

Nilesh Modi

ONGC (Rs 283): The long-term outlook of ONGC reversed higher in the first quarter of 2009 and this uptrend continues to be in force. The stock has long-term resistance around Rs 350 where it peaked in November 2007. Though the stock moved above this level last September, it could not get far and peaked at Rs 368 in October.

A medium-term correction is currently unfolding and this correction will receive support at Rs 260 and then at Rs 236 in the following months.

Investors with long-term perspective can hold the stock as long as it trades above Rs 236. Subsequent supports are at Rs 200 and then Rs 160.

The stock will face resistance at Rs 300 and then Rs 327 in the short-term. Failure to move beyond Rs 327 will denote that the stock can continue to vacillate in the zone between Rs 260 and Rs 330 for a few more weeks. Stop-loss for short-term investors can be at Rs 260.

I own C&C Constructions brought at Rs 210. Currently the price of the same is touching Rs 100. Please tell me whether I will ever be able to recover my cost under the current scenario.

Sunil Sasidaran

C&C Construction (Rs 99.3): The trends along all time-frames — long-, medium- and short-term are down in this stock.

There is no sign of a reversal yet in this stock. If the stock continues trending lower, it can reach Rs 87 and then its life-time low at Rs 71.

Investors still holding the stock can continue to do so as long as it trades above Rs 70. However, it is hard to figure out where it can halt once it declines below Rs 70 since the stock has limited history. Medium-term resistances are at Rs 170 and Rs 215. Investors with a short- to medium-term perspective can divest their holding at either of these levels.

Kindly provide long-term advice on Andhra Bank.

R.M. Kumarappan

Andhra Bank (Rs 140.5): One leg of the long-term uptrend that began from the March 2009 ended at the October peak of Rs 190 and the stock is currently in a serious decline.

Presently, this decline is receiving support at Rs 128. If this level is breached, the decline can extend to Rs 110 or Rs 93. Stop-loss for long-term investors ought to be at Rs 90.

Key resistances for the upcoming months will be at Rs 167 and Rs 190.

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