The Hindu Business Line : Query Corner

It is always better to wait for the onset of a bullish trending phase before taking exposure. Only a close above Rs 76 would help the stock get into the bullish trending mode. It would, therefore, be better to wait for a while before taking equity stake in the company. Existing holders may note that a close below Rs 54 would impart bearishness and would warrant dilution of holdings.

Federal Bank (Rs 346.2): The share price dropped sharply during the post-election carnage witnessed last month. The subsequent bounce from the low of Rs 201 appears more of a corrective rally to the earlier downtrend. The implication is that the downtrend is not yet over and a drop to Rs 240-Rs 250 range is not ruled out.

Price dips pushing the stock to the earlier low of Rs 201 may be used to take limited exposures. For moment, there is no reason to commit funds in the stock.

I bought Infosys at Rs 5,450 per share. Now that the price has come down, is it advisable to buy more to? — V.R.K. Chari

Infosys (Rs 5,108.3): The short-term outlook is featured, elsewhere in this page, every week. From a longer term perspective, the trend does not appear too bullish.

The stock has been stuck in a narrow trading range of about Rs 800 in the past three months. Evidence of support around Rs 4,500-Rs 4,600 range may be used to take fresh exposures. Alternatively, long positions may also be considered if the price rules firm and manages to move past Rs 5,500. There is no compelling reason to take exposures at the moment.

Should I hold or sell Jindal Vijaynagar Steel and Rama Newsprint? — Philip

Jindal Vijayanagar (Rs 7.7): After a sharp slide, the stock has been moving sideways in the past few weeks. There appears to be little downside risk from present levels. Downside risk would be aggravated only if the stock drops below Rs 6.4. Those who are holding the stock may continue to do so as there is no point selling at these levels. Holding on with a stop loss at Rs 6.4 would be worth the risk as there appears to be chances of at least a nominal recovery. Any move towards the immediate resistance level of Rs 10 may be used to lighten holdings.

Rama Newsprint (Rs 9.5): The Rs 8 level is a crucial support for the stock. A drop below this level would warrant dilution of exposures. Alternatively any up move towards the resistance level of Rs 11-Rs 12 range may be used to reduce exposures.

Please advice on my holding of Glenmark bought in the IPO and Suryavanshi Spinning Mills Ltd purchased at Rs 220 in 1995-96. — Nikhilesh

Glenmark Pharma (Rs 136): The share price is headed towards the immediate resistance level at Rs 155-Rs 160 range. A break past this range would have positive implications. Though a break past this resistance and a subsequent continuation of the upmove is the preferred view, it would always be safer to wait for confirmation.

A drop below Rs 120 would negate the positive outlook and would warrant reduction of holdings. Existing holders may remain invested with a stop loss at Rs 120. Stop loss may be tightened once the stock moves closer to the above-mentioned resistance zone.

Suryavanshi Spinning (Rs 13): Taking into account the sharp erosion in investment in this stock and having held on to the stock for such a long period of time, there is no point selling it now.

It would not make much of a difference even if you sell it now. Instead, holding on might turnout to a profitable proposition if there is resurgence in the investor fancy for textile companies.

I am holding IPCL at Rs 163 and Canara Bank at Rs 185. What is the outlook and should I hold on to my position or sell? — Rahul Agarwal

IPCL (Rs 147.7): Remain invested with a stop loss at Rs 130. The stock could move towards the resistance level of Rs 160-Rs 165 range. Evidence of weakness at about this range may be used to reduce exposures. A drop below Rs 130 would impart weakness and could open the possibility of a slide to Rs 100-Rs 105 band. Those holding a profitable position may sell a portion of the holdings at market rates.

Evidence of support at Rs 100-Rs 102 range may be used to take fresh exposures. Only a close above Rs 190 would impart bullish trend.

Canara Bank (Rs 123.7): Though there is a possibility of a drop to Rs 98-Rs 100 levels, the stock is likely to bounce back and rally towards Rs 140-Rs 145 zone thereafter. Those with high-risk appetite may hold on with a stop loss at Rs 95.

While having such a wide stop loss may not be a prudent way to trade, the ones willing to play the waiting game and especially those who have entered at fairly lower levels may remain invested with a stop loss at Rs 95. The rest may have the stop loss at Rs 115 and contemplate at least partial selling on price up moves.

Please comment on the short and long term prospects of IPCA Labs and Mahindra & Mahindra. — Sadiq Pasha

IPCA Labs (Rs 622): The near-term outlook does not appear too positive. A drop to Rs 540-Rs 550 range appears likely. There is no reason to take long positions at prevailing market rates. Only a close above Rs 680 would impart positive trend. It would be safer to wait for confirmation regarding onset of bullish trend before investing.

Mahindra & Mahindra (Rs 447.1): The stock is in a long-term uptrend. The near term trend however does not appear all that bullish. A drop to Rs 360-Rs 370 range is not ruled out. Existing holders may take partial profits while fresh buying may be deferred for the time being.

What is your view on the Ashok Leyland bought at Rs 217? — Manwinder Singh

Ashok Leyland (Rs 208): The stock dropped below the crucial support level of Rs 210 on Friday. This is bearish development and would warrant dilution of holdings in the company. Those willing to take extra risk may hold on with a stop loss at Rs 200. Others may trim holdings at present levels and on price upticks.

I have a sizeable chunk of holdings in Shipping Corporation bought at Rs 140. What is the outlook especially in the context of the new government deciding not to disinvest shares of profit making PSUs? Should I exit or hold?

Shipping Corporation (Rs 97): Taking into account your size of holdings, the market outlook and the near-term trend for the stock, it would be safer to trim holdings. The stock appears to have significant downside risk. It would be safer to reduce holdings and contemplate re-entry at lower levels if the situation warrants at a later date. At the moment, a drop to Rs 60-Rs 65 range is not ruled out. Look for opportunities to reduce holdings.

What is the outlook for Tata Teleservices & Kalyani Steel? — P.D.Master & Ramachandra Reddy

Tata Teleservices (Rs 19.1): After rising to high of Rs 25.3, the stock has turned weak recently. This has resulted in the formation of a potential "double top" pattern.

A drop below Rs 14 would validate this pattern and would have negative implications.

A drop below Rs 17 would be an early indicator of the possibility of a further drop to Rs 14. Remain invested with a stop loss at Rs 17 and look to reduce exposures. Fresh buying may be deferred.

Kalyani Steel (Rs 36.5): The stock is ruling close to the support level at Rs 31. Remain invested with a stop loss at Rs 35 as there is a possibility of a short-term bounce towards Rs 42-Rs 45 range. Fresh buying may be avoided. A drop below Rs 31 would warrant dilution of holdings.

I recently purchased shares of Cadila Healthcare at Rs 534 and Oriental Bank at Rs 305. Please advice me on the prospects of the two companies? — Ravi

Cadila Healthcare (Rs 443.8): There is a risk of a drop to Rs 360-Rs 380 range. A drop below Rs 410 would be an early indicator of the possibility of a drop to this range. Existing holders may have a stop loss at Rs 410 and use intermittent short-term bounce to reduce exposures.

Those uncomfortable with the stop loss at Rs 410 may have it at a slightly higher level of Rs 425.

At the moment, a close above Rs 490 would negate the weak outlook while a move past Rs 535 would impart bullish trend. Fresh buying may be considered if the stop loss is triggered and the stock subsequently manages to move above Rs 490.

Oriental Bank (Rs 216): The decline from the recent high of Rs 369 does not appear complete. The outlook for the stock does not appear too positive and test of the latest low at Rs 175-Rs 180 range appears likely.

Look for opportunities to reduce holdings. Those willing to take extra risk may hold with a stop loss at Rs 200.

Readers can send in their queries, on not more than two companies, to techtrail@thehindu.co.in

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 featured under this column.

(Note: The analysis and opinion expressed in these columns are based on the technical analysis of the past price behaviour. Opinion and price targets are based on the Elliott Wave Analysis. The stop-loss level provided with the recommendation is important. The original view would stand negated if the stop loss level is breached. There is a risk of loss in trading)

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