The Hindu Business Line : Query Box

The near-term outlook for Hinduja TMT appears positive. The scrip appears to have the potential to touch Rs 225-230 levels within the next few weeks. This view would remain valid as long as the share price manages to hold above Rs 194. A drop below Rs 192 would negate the possibility of a rally to Rs 225-230 levels.

If you have long position in Hinduja TMT, you can hold on with a stop loss at Rs 190. Fresh buying may be avoided at the current price level of Rs 202.10. A move past Rs 225 could be used to gradually reduce exposures.

Could you tell me why despite fabulous results and growth prospects Ranbaxy Labs is not looking up on the charts? Further what is the near / medium-term outlook on the stock? Further Hindalco has made long strides from 550 levels to where it is today on the charts, round about the 620 level. Do you see more upside in the stock? — Santhanam

Reply:

Ranbaxy Labs (Rs 642.85): The outlook for the Ranbaxy Laboratories stock does not appear too bullish. The scrip could seek lower levels in the medium term (next three to six months). Some sort of upward sloping "Wedge" pattern appears to be taking shape in the daily price chart.

If this assessment were to be valid, the share price of Ranbaxy would not move above Rs 710-720 levels on the upside. On the downside, a drop below Rs 615 would have negative implication and could push the stock to lower levels of around Rs 525-550. Existing holders could remain invested with a stop loss at Rs 615. Fresh buying may be deferred.

Hindalco Industries (Rs 645.95): The share price of the company has been on an uptrend in the past few weeks. However, the scrip has been confined within the boundaries of a descending triangle pattern. Though there is a case for the triangle pattern to have completed at Rs 476 in October 2002, it is always better to wait for a confirmation.

A move above Rs 730 would be an early confirmation of the completion of the triangle pattern. If the triangle pattern is complete at Rs 476, the scrip could be expected to rise to the Rs 950-1000 range.

However, if the triangle pattern is not complete as yet, the scrip could face resistance at the Rs 715-720 range and drop back to the Rs 425-450 band thereafter.

In any case, the scrip is likely to seek the Rs 715-720 band in the next few weeks. Existing holders could remain invested with a stop loss at Rs 590. Traders willing to take delivery could also take long positions. A move past Rs 710 could be used to book profit.

What is the view on Apollo Tyre? In which wave is it? What is the target & support levels. Advise whether we can take delivery. — M.Prabakar

Reply

Apollo Tyres is an Elliott Wave follower's dream-come-true scrip. The way the price patterns have evolved is absolutely text-bookish. The scrip has completed a 5-wave impulsive pattern at Rs 149.5 in December 2002. The fifth wave of this impulsive pattern was a classic Ending Diagonal in Elliott Wave parlance.

This impulsive pattern could either be Wave 1 of a new impulsive sequence or Wave A of a Zig-Zag Elliott correction. In any case, the scrip has significant upside potential from current levels. Investors willing to take delivery could buy Apollo Tyres stock. It could yield at least a 30-40 per cent return for a holding period of about six to nine months.

You have been writing about HLL for the past 3 weeks that it will touch 115-120 but it is not happening why? Do you think that technical is not working in HLL counter. Please explain. — K.Sankar

Reply:

It is not that technical analysis does not work in the Hindustan Lever counter. Technical Analysis tends to work well in almost all liquid and actively traded markets. If the prices do not behave in line with anticipation, it is quite probable that the analyst concerned could have misread the situation. In the case of Hindustan Lever, the outlook has been discussed under the Nifty Techtrail column. The earlier view remains valid.

(Note: The views and price targets mentioned in this column is entirely based on the technical analysis of past price behaviour. Price targets and trend analysis are based primarily on the principles of Elliott Wave. The views expressed in this column could be subject to changes based on subsequent price movement. There is a risk of loss in trading.)

Readers are invited to send in their queries at:

techtrail@thehindu.co.in

bkumar@thehindu.co.in

Queries can also be sent to: Tech Trail, Hindu Business Line, 859/860, Kasturi Buildings, Chennai 600 002

Responses to queries will either be e-mailed on Saturday or will be featured in this column.

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