The Hindu Business Line : Query corner

At the moment, there is no reason to take fresh exposures. Investors holding a profitable position may sell a portion of the holdings at prevailing levels and have a stop-loss at Rs 69 for the balance.

What is the outlook for Shriram Transport Finance bought at Rs 52? — Lakshmi Devi, M.Alekya

Shriram Transport (Rs 62.1): The long-term outlook is bullish and a close above Rs 70 would confirm the positive outlook.

The stock appears to be headed towards the target zone of Rs 85-90.

The positive outlook would be negated if the stock closes below the stop-loss level of Rs 56.

Shareholders may remain invested with a stop-loss at Rs 55. Fresh exposures may be considered on a close above Rs 70, with a stop-loss at Rs 59.

Shall I hold or sell Punjab National Bank bought at Rs 394 and Karur Vysya Bank at Rs 484? — K. Ashok

Punjab National (Rs 384.8): The recent price pattern does not convey a bullish outlook. A close below Rs 370 would confirm the weak outlook and would push the stock to the Rs 320-330 range.

Look to reduce exposures when the price moves up. Stop-loss for long positions may be placed at Rs 370.

The stock faces resistance at the Rs 410-415 range. Only a close above Rs 415 would negate the bearish outlook.

Karur Vysya Bank (Rs 434.4): It would take quite an effort for the stock to get back to your entry level.

The share price appears to be headed towards lower levels and a test of the Rs 340-350 range appears likely.

A close below Rs 410 would confirm the bearish outlook. Investors may sell a portion of the holdings now and have a stop-loss at Rs 410 for the balance. Fresh buying may be avoided.

I bought GTL at Rs 123.45 and Suven Pharma at Rs 114.80. Please let me have your views on these stocks. — Arindam Malakar

GTL (Rs 96.2): It would be advisable to reduce exposures as the stock appears to be headed towards lower levels. A drop to the Rs 80-85 appears likely.

Hold with a stop-loss at Rs 94 and reduce exposures on price rally. The negative outlook would be negated only if the stock closes above Rs 115.

Suven Pharma (Rs 87.3): The stock does not appear to have the potential to get back to your entry price in the near term.

Sell at least a portion of the holdings now and retain the balance with a stop-loss at Rs 81.

A drop below Rs 81 would push the stock to the Rs 65-68 range.

I purchased Ballarpur Industries at Rs 121 and Tata Motors at Rs 425. Kindly advise whether to hold or exit from these stocks. — Rajendra S. Bisht

Ballarpur Industries (Rs 112): An upward move may be stalled at the key resistance level of the Rs 120-122 range. Remain invested with a stop-loss at Rs 104. Fresh exposures may also be considered with a stop-loss at Rs 104 and a target price of Rs 120-122.

A close above Rs 128 would impart bullishness and would help the stock move to the next target zone at the Rs 145-150 range.

It would, however, take quite some time for the stock to break above the resistance level of Rs 122, followed by the Rs 128 mark.

A trailing stop-loss may be used in the event of a price rally to the Rs 121-122 range.

Tata Motors (Rs 428.2): A perceptible contraction in volatility is visible in the daily price charts. This is generally a precursor to an impending sharp and volatile move.

A close above Rs 457 would indicate that the stock is off to higher levels of the Rs 475-480 range.

Alternatively, a drop below Rs 410 would indicate that the stock is headed to lower levels of the Rs 375-380 range. Remain invested with a stop-loss at Rs 410 and look to reduce exposures on a move to the Rs 475-480 range.

Should I hold or sell Elder Pharma and Gujarat Alkalies? — Navendu Sharma

Elder Pharma (Rs 196): Taking into account your entry price and the positive outlook, there is no reason to sell the stock now.

The stock appears to be headed towards the Rs 225-230 range. Investors may hold with a stop-loss at Rs 180. Fresh exposures may be avoided for the moment. A close below Rs 180 would warrant dilution of holdings.

Gujarat Alkalies (Rs 125.6): There are no signs of completion of the downward trend that the stock is currently in. Though fresh exposures may be avoided, shareholders may remain invested with a stop-loss at Rs 110. The trend would turn bullish on a close above Rs 150. Till such time, fresh exposures may be avoided.

Is it advisable to buy Chemplast Sanmar and Tele Data Informatics at prevailing levels? — Shubham

Chemplast Sanmar (Rs 71.4): The stock appears to have completed the recent downward corrective phase. The sharp rise in share price accompanied by a surge in trading volume indicates that the next leg of the rally is underway.

The stock appears to be headed towards the Rs 95-100 range. Hold with a stop-loss at Rs 61. Fresh exposures may also be considered with a stop-loss at Rs 61.

Tele Data Informatics (Rs 26.3): Though the stock has tried to stage a recovery in the recent days, there are no conclusive signs of the completion of the recent downward trend. Considering that the stock is ruling close to the stop-loss level of Rs 22, it would be worth the risk to consider long positions at prevailing rates and on declines.

Stop-loss for all long positions may be placed at Rs 22. A close below this level would warrant liquidation of long positions. On the upside, the stock could move to the Rs 36-38 range.

I bought Cosmo Films at Rs 89.5. Is it advisable to average it because as you have mentioned earlier that it is in a long-term uptrend? — Jugal Bagga, N.S. Navandar

Cosmo Films (Rs 80.7): There is no change in the view expressed earlier. The long-term trend remains bullish and would remain so as long as the stock holds above Rs 50. Going by the recent price patterns, the stop-loss at Rs 50 is unlikely to be tested.

Remain invested with a stop-loss at Rs 50 and fresh exposures may be considered on a close above Rs 87, with a stop-loss at Rs 77.

Kindly let me know your views on Centurion Bank bought at Rs 14. — Mamta Gogoriya

Centurion Bank (Rs 14.1): Though the long-term trend is positive, it would be advisable to reduce exposures if the stock closes below Rs 12. This could result in a slide to the Rs 8-9 range.

The long-term positive trend would be negated if the stock closes below Rs 5. On the upside, the stock could recover to retest the previous high of the Rs 25-26 range.

The journey towards Rs 25-26 range would commence on the completion of the ongoing downtrend.

Investors willing to take risk may hold with a stop-loss at Rs 5.

The market behaviour in the last two weeks has been confusing, to say the least. Even as the indices are scaling new peaks, quite a few stocks are struggling in tight ranges. Is it the time to sell everything and get out? What do the charts say now, since only a month ago you were spelling gloom and doom about the "head and shoulder" pattern? — V.V. Sundaram

As always, you have come up with yet another pertinent question and addressing your queries is a satisfying experience. The market action has been quite in line with the long-term road map discussed over the past few months. We have been maintaining a target range of about 2250-2300 for the Nifty right through the first quarter of this calendar year.

Though there was a threat from a potential "head and shoulder" pattern, it was set aside when the indices broke past crucial resistance levels. We had also mentioned that the threat from this pattern had been effectively negated on the breach of the resistance level of 6670-6700 (edition dated May 29).

Though we continue to be bullish on the long-term outlook for the market, we also maintain that locking into gains by regularly booking profits is a healthy practice. The Nifty is likely to get into a prolonged corrective phase on the completion of the current leg of the rally. As mentioned earlier, it could peak to the 2250-2300 range. And, as you have rightly observed, a few stocks driving up the index is not a healthy sign; it is a sign of a topping-out pattern. From now on, money management and careful stock picking would be critical determinants of investment returns from the market.

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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