HPCL, IPCL may perk up further

B. Krishnakumar

The Sensex ruled relatively flat last week. It however managed to edge past the key level of 4333.

Though the near term sentiment has turned positive, there is still no conclusive evidence of a reversal in the long term downtrend. The negative divergence in the 14-day Relative Strength Index coupled with the lack of momentum and follow-up buying in the recent days has infused some weakness in the market set-up.

Though the Sensex managed to break past the key resistance level of 4333, such attempts were short-lived. The Sensex is yet to see a real surge past this level. A strong move past 4333, backed by rising volume would be first indicator that a new uptrend is gathering pace. Till such time, it would be safer to use price rally to trim exposures in index stocks. A strong close past 4333, could take the Sensex to the next target level of 4600-4700.

The focus this week is on Hindustan Petroleum (HPCL), Wartsila NSD and IPCL. These stocks have the potential to move up further. Existing holders could remain invested and use price rally to book profit in the above three scrips.

The share price of HPCL (Rs 191.8) appears to have the potential to touch the immediate price target band of Rs 203-208 range. Existing holders could remained invested and use price rally to book profit. Aggressive traders could take short positions (with close stop) once the scrip moves closer to the Rs 208.

The share price of Wartsila NSD could touch the immediate price target of Rs 175-180.

Existing holders could remain invested and fresh buying may be contemplated if the scrip surges past Rs 158. Price move either to or past Rs 175 could be use to book profit in Wartsila.

The share price of IPCL (Rs 77.4) could move to the target price of Rs 85-90 range. Existing holders could use price rally to the Rs 85-90 range to clip exposures in IPCL.

Fresh buying may be deferred for the time being. Aggressive traders could take short positions on evidence of weakness at around the Rs 85 mark.

Recommendation follow-up

The market obliged with the price action that was on course with last week's recommendation pertaining to Gujarat Ambuja Cement. As mentioned last week, the move past Rs 172 infused short term uptrend in the stock.

The stock price also moved to the target zone of Rs 185-190, mentioned last week. The Gujarat Ambuja Cement stock closed on a firm note at Rs 188 on Friday and appears to be heading towards the next target zone of Rs 200-210. Existing holders could book profit. Aggressive traders initiate fresh short positions on evidence of weakness at around the Rs 205-210 range.

In the case of Wipro, the share price failed to move past the first resistance level of Rs 3,000. After touching a high of Rs 2,991, Wipro turned weak and ended the previous settlement at Rs 2,837. A move past Rs 3,000 would infuse bullish trend in the stock. Investors could initiate long positions (with a stop at 2700) once the share price moves past Rs 3,000. A close past Rs 3,000 would take Wipro to the next target price of Rs 3,750-4,000.

(Note: Recommendations in this column is based entirely on Technical Analysis of the past price behaviour of the scrip concerned. There is a risk of loss in trading.)