The Hindu Business Line : Query corner

UCO Bank (Rs 31.8): The stock is likely to move past the recent high of Rs 39.2. The outlook is bullish and would remain so as long as the stock trades above the stop-loss level of Rs 28.

A drop below Rs 28 would warrant dilution of exposures. Long positions may also be considered on a move above Rs 34, with a stop-loss at Rs 30.

Sangam India (Rs 33.5): Remain invested with a stop-loss at Rs 29. The share price could recover ground and move towards your purchase price. A trailing stop-loss may be employed in the event of a sustained increase in the share price. Fresh purchases may be avoided, as there are no signs of either bullishness or a strong momentum.

Shall I hold or exit from Essar Oil bought at Rs 29.5 and Mercator Lines at Rs 40? — Deepak Jain, A.Vijayakumar

Essar Oil (Rs 32.8): The share price has been stuck in a trading range of Rs 27.5-Rs 34 in the recent months. A strong trend would emerge only if the stock breaks out of this range. A close above Rs 35 would have positive implications while a close below Rs 26 would impart weakness. Hold with a stop-loss at Rs 29.

Mercator Lines (Rs 95.1): Taking into account your entry price and the positive outlook, there is no reason to sell the stock at this juncture. After a brief consolidation, the stock appears to set to resume the earlier uptrend. A move to Rs 125-Rs 130 range appears likely. Hold with a stop-loss at Rs 77.

Though the stop-loss may appear wide in comparison to the market price, the profit potential in the stock justifies this kind of a risk. Investors who prefer a tighter stop-loss may settle for Rs 84. Fresh buying may also be considered on a move above Rs 97, with a stop-loss at Rs 84.

It is advisable to buy S. Kumars Nation and Matrix Laboratories at current levels? — D.V.G.Pal

S. Kumar's Nation (Rs 22.8): After a steady downward trend, the stock has been in a recovery mode in the recent months. Though the stock is on the verge of triggering a "buy" signal, it remains to be seen if the recent recovery is an indicator of a trend reversal. Long positions may be considered at prevailing levels and on declines, with a stop-loss at Rs 18.

The stock could move to Rs 28-Rs 29 range in the near term. Shareholders may remain invested with a stop-loss at Rs 17.

Matrix Labs (Rs 170.7): The stock is in a corrective phase to the earlier uptrend. The recent downtrend does not appear complete. A drop to Rs 140-Rs 145 range appears likely. Fresh exposures may be avoided, as there are no signs of the completion of the recent correction. Evidence of support at around Rs 140-Rs 145 range may be used to take fresh exposures.

I hold shares in Bank of Rajasthan at Rs 75 and Teledata Infomatics at Rs 56. Is there any upside potential in these stocks or should I exit at a loss? — R. Nagarajan, Ravi Agarwal, S. Suresh, N. Gopalakrissnan, N. Rama, N. Sivasubramanian, B. Radhika, S. Maran

Bank of Rajasthan (Rs 60.4): There is a fair chance that the stock could move past your cost price. The share price in a consolidation phase and a sharp upward move is likely to follow on the completion of this phase. A move above Rs 66 would indicate that the share price is in the early stages of the next leg of upward move. Hold with a stop-loss at Rs 55. Fresh buying may be considered on a move above Rs 66 with a stop-loss at Rs 58.

Teledata Info (Rs 41.7): There are no signs of the completion of the downward correction that the stock is presently in. Hold with a stop-loss at Rs 38 for a portion of the holding and at Rs 31 for the balance. A trailing stop-loss may be used if the stock recovers ground.

Shall I hold or sell Avaya Global purchased at Rs 235 and SRF at Rs 80? — B.K. Talwar

Avaya Global (Rs 374.8): Taking into account the upside potential and your cost of acquisition, it would be advisable to remain invested. The stock could move to Rs 450-Rs 460 range. Though there is a possibility of a short-term weakness that might extend to Rs 350-Rs 360 range, the upward move would resume on the completion of the expected downward move. Hold with a stop-loss at Rs 320.

SRF (Rs 79.4): A move past Rs 83 would trigger a "buy" signal. Investors may consider exposures on a move past Rs 83, with a stop-loss at Rs 74.

The immediate target is Rs 108-Rs 110 range. The positive view would be negated if the share price declines below Rs 66. Shareholders may remain invested with a stop-loss at Rs 66 and consider partial profit booking if the stock faces resistance at around Rs 108-Rs 110.

What is the price and stop-loss for Siemens bought at Rs 1,250? — Neeraj

Siemens (Rs 1,456): There is no reason to sell this stock as it has ground to be covered on the upside. The share price could move to Rs 1,575-1,600 range. Hold with a stop-loss at Rs 1,350. Partial profit-booking may be considered on signs of weakness or resistance at Rs 1,575-1,600 range.

I have purchased Saregama at Rs 155, after the news of rights issue. Will I get an opportunity to exit at least at this price in the future? — Krishnamurthy

Saregama (Rs 129.6): The stock has recovered ground in the recent weeks. We have to wait for confirmation to decide whether this recovery is just a technical correction of the previous decline or the start of a new upward move. If this recovery is just a technical correction, the stock is likely to face resistance at around Rs 138-140 range and would drop subsequently to Rs 95-100 range. Alternatively, if the recovery is the start of a new leg of a rally, the stock may move past your entry level. It would be safer to sell a small portion of the holding at prevailing levels and remain invested with a stop-loss at Rs 116 for the balance. Fresh buying may be considered if the stop-loss gets triggered and the stock subsequently moves past Rs 126. A trailing stop-loss may be used if the stock seeks higher levels.

In the edition dated January 30, 2005, you have mentioned that nifty may go down to 1350-1400 level. That means a correction of about 800 points if your prediction of reaching Nifty 2250-2300 level is valid. A drop of this magnitude is quite huge, is it true or a printing mistake? If true, what will be the probable reason of such big drop? — S. Das

Based on the study of chart patterns, it would be possible to arrive at conclusions pertaining to the likely direction of price movement and also on price targets. We, however, would like to emphasise that such price targets and views on future price direction is based on the past price action and more importantly on a lot of assumptions that forms the premise or the basis for the underlying view expressed.

Each day's price movement would provide further clarity and would either confirm or negate the earlier view. Given this backdrop, the earlier view is bound to change if the set of conditions that formed the basis for that view either gets altered or is no longer in existence.

Coming to the specifics pertaining to the Nifty, we believe that the index could see a sizeable correction. It is impossible to list out the reasons or triggers for a correction of that magnitude. It may be recalled that we had been calling for a prolonged correction right from the first week of December 2003. Though we were not sure about the reason for the correction, the expected correction did happen. The general election result eventually turned out to be the trigger.

We would like to reiterate that though the Nifty is expected to drop to 1350-1400 range, this view may be negated at a later date if the basis for this view or set of assumptions on which the view is based, gets altered at a later date. Any such change in the view would always be featured in this page as and when the situation demands.

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)

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
SPEED-e service to clients

P&G-Gillette deal: Getting the FMCG sector in a lather

ITC-government excise spat — Smoke the settlement pipe

EPF: Defined-contribution scheme in the making

Sundaram Tax Saver: Invest

Do old funds carry baggage?

JM Mutual launches Equity & Derivative Fund

Indian Overseas Bank: Buy

Kotak Mahindra Bank: Buy

Birla Corp: Buy

EIH: Hold