The Hindu Business Line : Positive outlook for Orchid Chemicals

THE market sentiment was distinctly positive during the week gone by. While the old-economy stocks provided the initial momentum, the technology heavyweights propped up the indices on Friday.

Sensex (3056.58): The Sensex managed to record a higher high and higher low pattern which is an indicator of underlying positive momentum. The immediate resistance for the Sensex is at the 3080-3100 range. A move past 3100 could push the Sensex up to the next target zone of 3175-3200.

However, the expected short-term uptrend would not negate the earlier view of a drop to the 2500-2600 range. Only a close above 3200 would warrant a reassessment of the bearish view in the bigger time frame.

The focus this week is on Orchid chemicals and Indian Oil Corporation. The outlook for both the stocks appears positive. Existing holders could remain invested while investors willing to take delivery may also contemplate fresh buying.

Orchid Chemicals (Rs 94.95): The share price of the company has been moving up steadily with a sharp pick-up in trading volumes in the recent days. The outlook for the stock appears bullish. The scrip could move towards the Rs 130-140 band in the near term. Existing holders may remain invested while long-term investors can accumulate the stock. Price dips could be used to enhance holdings.

Indian Oil Corporation (Rs 279.2): The share price of the company could move past Rs 300 in the near term. Existing holders could remain invested while fresh buying may also be considered on price declines.

Recommendation follow-up

The share price of Ucal Fuel ruled firm while other two stocks - India Cements and Elgi Equipment were confined to a narrow trading band. The near-term outlook for these stocks continues to remain positive.

Elgi Equipment (Rs 23.9): Last week's view of a move up to the Rs 29-30 level continues to remain valid. A move past Rs 26.5 would have positive implications and would re-establish the bullish trend. Drop below Rs 22 would blunt the positive view. Existing holders could remain invested with a stop loss at Rs 22 while a move past Rs 26.5 could be used to take fresh long positions.

Ucal Fuel (Rs 226.25): The scrip ruled firm and trading volumes have picked up sharply in the past few days. The scrip appears to be on its way towards the price target of Rs 250 that was mentioned last week. Existing holders could remain invested with a stop loss of Rs 200, while a move past Rs 236 could be used to take long positions.

India Cements (Rs 16.75): After some sideway action during the week, the scrip staged a sharp upmove on Friday on the back of a sharp jump in volume. The short-term outlook continues to remain bullish. Existing holders could remain invested with a stop at Rs 15 and a profit objective of Rs 20.

(Note: The analysis and opinion expressed in these columns are based on the technical analysis of the past price behaviour. Analysis and price targets are based on the Elliott Wave Analysis. There is a risk of loss in trading)

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