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B. Krishnakumar

Please advice whether I should hold or sell Videocon International bought at Rs 72 and Indo Rama Textiles at Rs 42? — R. Ganesh

Videocon International (Rs 57.2): A close above Rs 59 would impart strength. This would result in the completion of an inverse "head and shoulder" pattern that could have positive implications. This could help the stock move to the immediate target zone at Rs 72-75 range.

The positive view would be valid as long as the stock holds above Rs 50. Remain invested with a stop-loss at this level. A drop below Rs 50 could push the stock down to the Rs 32-35 range. Fresh exposures may be considered on a move above Rs 59, with a stop-loss at Rs 54.

Indo Rama Textiles (Rs 36.8): Though the stock could face resistance at Rs 41-42 range, the long-term outlook is positive and it is likely to move to the target zone of Rs 52-55. The stop-loss for long positions may be placed at Rs 33. Fresh exposures may be considered on a move past Rs 37.5, with a stop-loss at Rs 350.

What is the long-term outlook for Praj Industries? — P.T. Balu

Praj Industries (Rs 519): The stock has been in a relentless up trend in the recent months. The price patterns suggest that the stock has upside potential that could extend up to the Rs 595-600 range. The positive view would be negated if the share price drops below the stop-loss level of Rs 445. Though the stop-loss is quite wide in relation to the market price, it would advisable to settle for this stop-loss as the upside potential justifies the risk involved.

Is it advisable to buy Nalco at prevailing levels? — Goutam Hazra, N.S. Srikanth, S. Manuja Chellam

Nalco (Rs 150.1): Considering that the recent downward trend is not over, investors may refrain from buying the stock now. There is a possibility of the stock declining to the Rs 120-125 range in the near-term. A close below Rs 119 would push the share price to Rs 85-90 range. Shareholders may remain invested with a stop-loss at Rs 138. Fresh exposures may be deferred.

Kindly guide me about my holdings in Bharat Bijlee at Rs 3,700 and Yokogawa Blue Star at Rs 213. — B.K. Modi

Bharat Bijlee (Rs 4,996): Taking into account your entry price and the positive outlook, it would be advisable to remain invested with a stop-loss at Rs 4,500. The stock is likely to move to the Rs 5,400-5,500 range in the near-term.

A trailing stop-loss may be employed in if the share price moves to higher levels.

Yokogawa Blue Star (Rs 264): The share price could rise to the Rs 325-330 range. Considering that you have entered at relatively lower levels, it would be worth the risk to hold on with a stop-loss at Rs 240. The stock has upside potential and there is no reason to sell it now. Only a close below Rs 235 would impart weakness and would warrant dilution of holdings.

What is the outlook for Bhagyanagar Metal? — Y.K. Santosh, Suri Virendra

Bhagyanagar Metals (Rs 26.5): The stock appears to be gearing itself for a sharp move on the upside. The price action in the recent weeks has been devoid of any significant momentum and there is a perceptible drop in volatility as well.

Such a situation is typically followed by increased volatility and a sharp move in price. Taking into account the recent price patterns a sharp upward move in price appears likely. This view would be negated if the stock drops below Rs 22.

Hold with a stop-loss at this level and fresh exposures may be considered on a close above Rs 29.

I purchased Varun Shipping at Rs 32 and Aarti Industries at Rs 350 (cum bonus). Is it worth holding these stocks? — S. Priya

Varun Shipping (Rs 41.3): Taking into account your purchase price and the positive near-term outlook, remain invested with a stop-loss at Rs 39.5. Fresh exposures may be avoided. Stop-loss may be pushed closer to the market action when the stock moves to the target zone of Rs 48-49. A close below Rs 39.5 would warrant liquidation of at least a portion of the holdings, as the stock could get into a prolonged corrective phase subsequently.

Aarti Industries (Rs 108.5): The stock is likely to reverse direction at the Rs 118-120 range. It is likely to drop to lower levels of Rs 80-85 on the completion of the expected rally to the target zone. A strong upward momentum would materialise if the stock closes above Rs 132. Remain invested with a stop-loss at Rs 100. Sell a portion of the holding if the stock faces resistance at the Rs 118-120 band. Fresh exposures may be considered with a suitable stop-loss if the stock closes above Rs 132.

What is outlook for Mercator Lines purchased at Rs 103? — Nainesh Shah

Mercator Lines (Rs 88.3): The share price is ruling close to the support level at the Rs 86-87 band. A close below Rs 85 would have negative implications and could push the stock to the Rs 70-72 range. Hold with a stop-loss at Rs 85.

Fresh exposures may be considered on the evidence of support at Rs 70-72 range. Long positions may also be considered if the stop-loss gets triggered and the stock moves past Rs 100 subsequently.

I wish to invest in the Nucleus Software and Subex Systems. What is your advice and at what levels should I enter? — G.B. Damodar, K. Hemant

Nucleus Software (Rs 210.4): Buying may be considered after the stock moves above Rs 218. A move to the immediate target zone of Rs 245-250 range appears likely. The trend would be bullish if the stock holds above the stop-loss level of Rs 189. Investors buying the stock after the break above Rs 218 may have a stop-loss at Rs 201.

Subex Systems (Rs 458): The outlook is bullish and the stock can be included in the portfolio. In Elliott Wave parlance, an explosive "third wave" may be just round the corner. This could propel the stock to higher levels within a short span. The immediate target is Rs 545-550 range. The positive outlook would be negated if the stock declines below Rs 400.

I am holding Dabur bought at Rs 110. What is the outlook for the stock? — Suresh Kumar Yadav

Dabur (Rs 124.8): The long-term outlook is bullish. The stock is in a consolidation mode. The upward trend would resume on the completion of this phase. The share price could move to Rs 145-150 range once it gets into a trending mode. Considering that you have entered at relatively lower levels, we would recommend a hold with a stop-loss of Rs 114. Fresh exposures may also be considered on a close above Rs 127, with a stop-loss at Rs 114.

I hold a sizeable quantity of IndusInd Bank at an average price of Rs 60. The stock is stuck in a range now. I am willing to hold the stock for a longer period if the stock will recover to the target price of Rs 100 that you had mentioned in one of your earlier recommendation. — C.N. Sivaraman

IndusInd Bank (Rs 56.7): After drifting to lower levels, there are signs of bullishness in the stock. We continue to maintain that the stock could recover to the target price of Rs 100. Long-term investors may continue to hold with a stop-loss at Rs 48. A close above Rs 60 would indicate that the share price is headed towards higher levels.

I bought IVRCL at Rs 423. What is the outlook for the stock and will it be advisable to switch to Larsen & Toubro? — Murali Krishnan

IVRCL (Rs 478.1): The long-term bullish trend does not appear complete as yet.

The stock could move to Rs 540-550 range in the near term. Hold with a stop-loss at Rs 420. Though this stop-loss may appear too wide, it is safer to have a relatively wide stop-loss as the price action is marked by a high degree of volatility. Moreover, the upside potential is significant enough to skew the risk-reward ratio in favour of the latter.

Larsen & Toubro does not appear as promising (in terms of upside potential) in relation to IVRCL. For the sake of portfolio diversification and relatively stronger fundamentals, a portion of the funds may be diverted from IVRCL to Larsen & Toubro at a later date.

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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