The Hindu Business Line : Query Corner

KPIT Cummins (Rs 430.6): Taking into account your entry price and near-term prospects, it is advisable to remain invested with a stop loss at Rs 390.

The price could move to Rs 455-Rs 460 range. Partial profit booking may be considered on signs of weakness at this range.

Geometric Software (Rs 314.1): The recent recovery from the lows recorded in June appears corrective in nature. Each price swing in this upward move has tended to overlap with the preceding move. This is not a sign of a healthy bullish trend. The stock is likely to seek lower levels on the completion of the present upward move. Hold with a stop loss at Rs 299 for a portion of the holding and at Rs 275 for the balance. Partial selling may be considered if the stock faces resistance at about Rs 335-Rs 340 range.

KEC International has been on an uptrend. What is the prognosis? — S. Sharma

KEC Intl (Rs 98.6): After a sharp rise, the stock appears to have hit a short-term overbought zone. There is a possibility of a drop to Rs 85-Rs 88 range.

The long-term trend, however, appears positive and the stock is expected to resume the upward move after the completion of the anticipated short-term drop.

The stock is likely to move to Rs 125-Rs 130 range in the near term. Shareholders who have entered at fairly lower levels may have a stop loss at Rs 78.

Risk-averse investors uncomfortable with such a wide stop loss may settle for a stop at Rs 90. Fresh buying may be considered on price declines with a stop loss at Rs 78.

I purchased Ballarpur Industries (Rs 70) and Voltas (Rs 130). Should I hold or sell? — Sumit Chakrabarty

Ballarpur Industries (Rs 78.9): The stock appears to be headed towards the Rs 71-Rs 72 range in the near-term. It is, however, likely to stage a recovery after completion of the expected downward move.

Hold with a stop loss at Rs 70. If the stop loss gets triggered, fresh buying may be considered on a subsequent move past Rs 83.

Voltas (Rs 143.4): The immediate resistance for the stock is at the Rs 158-Rs 160 range. The recent price action indicates that the share price would break above this level and continue the uptrend to Rs 175-Rs 180 range.

The positive view would be valid as long as the stock trades above Rs 114. A drop below Rs 114 would warrant reduction of holdings in the stock.

Stakeholders may remain invested with a stop loss at Rs 114 and a trailing stop loss may be used once the stock moves above Rs 160.

Based on your recommendation, I bought FDC at Rs 51. Please recommend further course of action. — Bhavesh Savla

FDC (Rs 52): The earlier view (edition dated August 29, 2004) that the stock would move to Rs 65-Rs 70 range is still valid. As recommended earlier, those holding long positions may have a stop loss at Rs 41. Investors willing to take risk may consider long positions on a move past Rs 54, with a stop loss at Rs 45. At least partial profit booking may be considered if the stock faces resistance at about Rs 65-Rs 70 band.

What is the outlook for Hindustan Oil Exploration (Rs 69) and Shipping Corporation of India (Rs 125)? — Yogesh Pagdhare

Hindustan Oil (Rs 71.1): The outlook for the stock was covered recently (edition dated August 25) in this section. As anticipated, the stock moved to the target zone of Rs 72-Rs 75 and has since turned weak.

The near-term outlook appears positive and a move past Rs 73 would confirm this view and could push the stock to the next target zone of Rs 82-Rs 85.

Shareholders may remain invested with a stop loss at Rs 60. Investors willing to take risk may consider long positions on a move past Rs 73, with a stop loss at Rs 65.

Shipping Corporation (Rs 125.5): A bullish momentum would set-in if the stock moves above Rs 130. This would also be a trigger for taking fresh long positions. A stop loss for all long positions may be placed at Rs 110. The stock appears to be headed towards Rs 142-Rs 145 range. Remain invested with a stop loss at Rs 110 and partial profit-booking may be considered on the evidence of resistance at about Rs 142-Rs 145.

I have shares of Elder Pharma bought at Rs 162 and Neyveli Lignite at Rs 61. What is the outlook and should I hold or exit? — N.S. Rao, M. Kumar & R. Uma Maheswari

Elder Pharma (Rs 142): The stock has not been in a position to sustain any significant upward move.

It is still confined to a narrow range. The outlook for the stock appears positive. Only a drop below Rs 125 would negate the positive outlook. Hold with a stop loss at Rs 125 and a trailing stop loss may be used in the event of a sustained uptrend.

Neyveli Lignite (Rs 52): The stock appears to be gearing up for the next phase of the upward trend. A move above Rs 55 would confirm the positive outlook and could push the stock to Rs 63-Rs 65 range. This view would be blunted on a drop below Rs 42. Hold with a stop loss at Rs 42. Risk-seeking investors may go long with a stop loss at Rs 49, on a break above Rs 54.

Should I hold or sell Tata Motors bought at Rs 384 2 and at what levels should I enter Tata Elxsi? — Danish Kapur & Suresh

Tata Motors (Rs 395.5): The long-term outlook for the stock appears positive. The near-term outlook is featured on this page every week. From a long-term perspective, a close above Rs 440 would have positive implications. Long positions may be added on a move past this level. It would be safer to remain invested now with a stop loss at Rs 370. A drop below Rs 370 would warrant dilution of holdings.

Tata Elxsi (Rs 152.1): Though the stock has seen a sharp rise in the recent weeks, the trend does not appear convincing. We would not recommend this stock for investors who fall in the buy-and-hold category. Investors who wish to trade on a short-term basis may consider long positions on a move above Rs 154, with a stop loss at Rs 140.

I bought Vardhman Spinning Mills and Mahavir Spinning Mills recently. What will be the effect of the merger and what is your recommendation now? — K. Jawahar & V. Balachandran

Vardhman Spinning (Rs 207.5): The stock has already reached the initial target zone mentioned in the last couple of weeks. With the new scheme of arrangement between Vardhman and Mahavir, the textile business of the former would get transferred to the latter. Given this backdrop, it is more important to concentrate on the outlook for Mahavir Spinning, as Vardhman would not have presence in textiles.

Mahavir Spinning (Rs 213): The stock appears to have significant upside potential. The outlook appears positive and only a drop below Rs 160 would blunt the positive outlook. Shareholders with a high-risk preference may hold with a stop loss at Rs 160. Risk-averse investors may have the stop loss at a higher level of Rs 185. Based on chart patterns, we continue to remain bullish on this stock.

I am holding Cipla bought at Rs 1,300. What is the short-term outlook for the stock? — Ishwar Lal Pareek

Cipla (Rs 260.7): The stock recorded a sharp rise on Friday. Technically, the outlook appears positive and a move to Rs 295-Rs 300 range appears likely. This view is subject to the price holding above Rs 230. A drop below Rs 230 would be cause of concern and could impart weakness. Hold with a stop-loss at Rs 230 and take partial profits on evidence of resistance at the Rs 300-mark.

Please advise on the medium-term outlook for Granules India and Karnataka Bank. — Anil Palan

Granules India (Rs 89.2): The stock appears to be headed towards higher levels of Rs 98-Rs 100. There is no reason to sell this stock now. Shareholders may have a stop loss at Rs 74. Partial profit taking may be contemplated on a move to Rs 100.

Short-term traders may go long on a break above Rs 93, with a stop loss at Rs 85.

Karnataka Bank (Rs 87.3): The near-term outlook appears bullish. A move to Rs 92-Rs 93 appears likely. The bullish momentum would gain strength if the stock breaks above Rs 94. Remain invested with a stop loss at Rs 70.

Short-term traders may take long positions on a move above Rs 90, with a stop loss at Rs 83. — B. Krishnakumar

What is the short-term outlook for Gujarat Ambuja Cements bought at Rs 320 and Century Textiles at Rs 135? — Vishal Mehta, Tom

Gujarat Ambuja Cement (Rs 342.3): The price is moving towards the crucial resistance at the Rs 347-Rs 352 range.

A close above Rs 358 would impart bullish momentum and result in the continuation of the recent uptrend. Hold on with a stop loss at Rs 310. Investors with a preference for high risk may consider long positions on a move past Rs 349, with a stop loss at Rs 325.

Century Textiles (Rs 155.1): The outlook appears positive and the stock is likely to move to Rs 168-Rs 170 range in the near-term. This view would be valid till such time the stock trades above Rs 146. A decline below Rs 146 would negate the short-term positive outlook and would require liquidation of holdings.

Long-term holders, who have entered at lower levels, may have the stop loss at a slightly lower level of Rs 135, as the longer-term trend might turn weak if the stock drops below this level.

(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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