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B. Krishnakumar

What is the outlook for Gujarat Ambuja Cements, bought at Rs 450 and Engineers India at Rs 460? — S. Srinivas

Gujarat Ambuja Cements (Rs 443): The stock is in a long-term uptrend. Investors willing to wait for about six months may find opportunities to exit at around Rs 525-530 levels. The positive outlook would be in force as long as the stock holds above Rs 370. Long-term investors, especially the ones who have entered at fairly lower levels, may have a stop-loss at Rs 370. The rest may remain invested with a stop-loss at Rs 408. Though even this stop-loss may appear too wide for comfort, the historical price action, underlying volatility and the upside potential would justify the stop-loss of Rs 408.

Engineers India (Rs 400.5): The share price has recovered smartly from the low of Rs 200 recorded in July 2004. Though the trend appears bullish, a drop below the stop-loss level of Rs 365 would be a cause of concern. A weekly close above Rs 465 would be an early indicator that the stock is headed towards the Rs 600-625 range. Shareholders may remain invested with a stop-loss at Rs 380. Fresh exposures may be deferred.

As advised by you in the Query Corner section, I purchased Nucleus Software at Rs 219.5. Is there further upside potential or should I sell it now? — K. Hemant, Saurabh Karmakar

Nucleus Software (Rs 281.1): The stock has risen steadily in the past few weeks. It has posted a gain of about 25 per cent in the past couple of days. The outlook remains bullish and the stock could move to the Rs 325-330 range in the near term. Remain invested with a stop-loss at Rs 255. Partial profit-booking maybe considered on a move to the Rs 325-330 range.

What is your view on Matrix Labs and Strides Arcolab after the recent announcement of the merger? Which is the stock that would deliver superior returns between the two? — R.R.N. Ramabhadran

Matrix Labs (Rs 198): The near-term outlook is bullish and a move to the Rs 225-230 range appears likely. Investors may hold with a stop-loss at Rs 180. Stop-loss may either be tightened or partial profit-booking may be considered on a move to the Rs 225-230 range.

Strides Arcolab (Rs 282): After a sharp run-up, the stock has turned weak in the last few days. The price-based indicators suggest that the stock is still in an extreme overbought zone and the stock could probably seek lower levels of the Rs 265-268 range in the near-term. Fresh exposures may be considered on price weakness.

Of the two stocks, Strides technically appears to be a better bet. Buy on declines, with a stop-loss at Rs 234. The stock appears to have the potential to move past Rs 300 on the completion of the short-term correction.

Kindly let me have your opinion on Gujarat Fluorochemicals. — Y.S. Rao

Gujarat Fluorochemicals (Rs 862.3): The share price is in a corrective mode subsequent to the earlier upward spike. The stock is likely to resume the bullish trend once the present corrective phase gets over. A drop to the immediate support level at the Rs 825-830 range appears likely. Remain invested with a stop-loss at Rs 830. The stock is likely to move to the Rs 1075-1100 range after the correction is complete. Taking into account the long- term positive outlook, there is no reason for shareholders to sell at this moment.

I wish to know the outlook for Apollo Hospitals bought at Rs 265. — Rajat Mittal

Apollo Hospitals (Rs 335.5): There appears to be significant upside potential in the stock from the prevailing levels. The stock has been consolidating in a tight trading range for a while now. Such a narrow trading range is typically followed by an explosive move in price. The recent price pattern indicates that the stock could see an upside breakout shortly. Hold with a stop-loss at Rs 310. Exposures may be considered on a close above Rs 340, with a stop-loss at Rs 310. The stock has the potential to move to the target zone of the Rs 425-430 range. A drop below Rs 310 would impart weakness but would not jeopardise the long-term positive view. It would only delay the resumption of the rally to the Rs 425-430 range.

What is the technical position of Aurobindo Pharma? — Elango

Aurobindo Pharma (Rs 336.3): The stock has grossly under-performed the key market indices in the past eighteen months. The prolonged corrective phase appears to be complete and the stock appears to be bracing for a strong move on the upside. Remain invested with a stop-loss at Rs 290. A weekly close above Rs 360 would confirm the completion of the earlier correction and that the new uptrend is underway. Fresh exposures may be considered on a close above Rs 360, with a suitable stop-loss in place.

Is it advisable to hold or sell Polyplex purchased at Rs 242? — S. Shyam Sunder

Polyplex (Rs 185.5): There is no reason to sell now as the near- term outlook is positive. The recent downtrend appears to have been completed at the low at Rs 164, recorded a few weeks ago.

A close above Rs 190 would indicate that the stock is headed towards Rs 220-225 band. There is a fair chance that you could exit at levels higher than your entry price.

Should I hold or sell Punjab National Bank? — Ravindra Singh

Punjab National (Rs 386): The stock is trading close to the resistance level at the Rs 395-398 range. A close above this range would impart strength and the stock could move to Rs 425-430 subsequently. The trend would turn bearish if the share price closes below Rs 360. A drop below Rs 330 would have major negative implications. Remain invested with a stop-loss at Rs 360. Use a trailing stop-loss in the event of a recovery in price from the prevailing levels.

I am holding Crisil bought at Rs 845.Shall I hold or sell it now? — K. Gnanasekaran

Crisil (Rs 992): The recent surge in price does not appear over. The long-term charts indicate that the stock could move up by another 25 to 30 per cent from prevailing levels. There is no reason to sell the stock now. Hold with a stop-loss at Rs 880. Fresh exposures may also be considered on weakness, with a stop-loss at Rs 880.

Based on your recommendation, I purchased GNFC when the stock moved past Rs 75. Please guide me whether to hold or sell. — A.S. Bhasin

GNFC (Rs 91.3): The stock could move to the Rs 102-105 range in the near term. Sell a portion of the holdings if the stock faces resistance at this zone.

Alternatively, a trailing stop-loss for a portion of the holding may be employed to lock-in partial profits. In the long term, the stock could move to the Rs 125-130 range. Stop-loss for existing holdings may be placed at Rs 83.

Is it advisable to buy Encore Software and Chemplast Sanmar at prevailing levels? — M. Vasu Chandra

Encore Software (Rs 52.6): The stock is in a consolidation zone.

A strong move on the upside would materialise on a close above Rs 56. Buy on a close above Rs 56, with a stop-loss at Rs 46 and a price target of Rs 78-80.

Chemplast Sanmar (Rs 73.4): The stock appears to have the potential to move to the Rs 98-100 range. Buy now and on declines, with a stop-loss at Rs 61. Sell a portion of the holdings on a move to the Rs 98-100 range.

Based on the recommendation in the `Stock Focus' column on June 27, 2004, I bought Kirloskar Brothers at Rs 365. Will it be advisable to book profit or hold as the stock has run-up quite sharply. Your advice is also solicited on my holdings in Cummings India at an average rate of Rs 115. — V.R.K. Chari

Kirloskar Brothers (Rs 1721.3): The stock has been on an upward spiral since the time it was last recommended. The long-term price charts indicate that the stock has upside potential that extends to the Rs 1900-1950 range. Considering your entry price, you can afford to settle for a slightly aggressive stop-loss level of Rs 1450. You could see an upside of about 30 per cent from prevailing levels provided you prefer to hold for at least six months. A close below Rs 1450 would warrant reduction of holdings. Investors with a higher risk appetite may consider long positions with a stop-loss at Rs 1530.

Cummins India (Rs 125.5): The stock is ruling close to the strong resistance zone at the Rs 135-140 range. A close above Rs 142 would push the stock into the next leg of the rally. It could move to Rs 175-180 on a break above the trigger level at Rs 142. A close below Rs 104 would impart weakness. As the stock is likely to move to the target zone of Rs 175-180, you may hold with a stop-loss at Rs 104.

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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