The Hindu Business Line : Query corner

Financial Daily from THE HINDU group of publications Sunday, Jul 24, 2005

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Query corner

B. Krishnakumar

What is your opinion on Kesoram Industries and Bell Ceramics purchased at Rs 132 and Rs 30 respectively? — B. Vijay Kumar, Krishan Kumar

Kesoram Industries (Rs 129.4): The sharp recovery over the past few weeks could lead to a short-term corrective phase.

The stock is likely to resume the upward move, towards the target zone of Rs 140-145, on the completion of the expected short-term correction.

Taking into account your entry level and upside potential, there is no reason to sell the stock now. Hold with a stop-loss at Rs 110.

Bell Ceramics (Rs 35.2): Remain invested with a stop-loss at Rs 29.

The stock appears to be headed towards the target zone of the Rs 42-45 range.

The positive view would be negated if the price closes below Rs 29.

Shall I hold or sell Nicholas Piramal acquired at Rs 250? — Alok Varshney, Jasbir Singh

Nicholas Piramal (Rs 257): The near-term outlook is positive and a move to Rs 295-300 appears likely. Hold with a stop-loss at Rs 235.

Fresh exposures may also be considered on price weakness with a stop-loss at Rs 235, a close below which would warrant closure of long positions.

What is outlook for Tata Metaliks bought at Rs 173 and Orchid Chemicals at Rs 356? — Usha Giri

Tata Metaliks (Rs 148.5): The stock is likely to move to the Rs 200 mark.

onsidering the upside potential, it would be worth the risk to hold with a stop-loss at Rs 128.

Fresh exposures may be considered on price weakness, with a stop-loss at Rs 128.

Exposures may be enhanced, with a suitable stop-loss, when the stock closes above Rs 169.

At least partial profit booking may be considered on a move to the target zone.

Orchid Chemicals (Rs 360.6): The outlook is positive and the share price could move to Rs 395-400.

This view would be in force as long as the stock holds above the negative trigger level of Rs 335.

Hold with a stop-loss at Rs 335 and partial profit booking may be considered on a move towards the target zone.

Fresh exposures may be considered on price weakness, with a stop-loss at Rs 335.

Please let me know whether to hold FDC bought at Rs 54 and Ashok Leyland at Rs 25. — K. Parameshwar

FDC (Rs 52.2): The stock was covered in the "Focus of the Week" earlier (edition dated May 15).

It has already moved to the target zone at Rs 52-55. The stock still has upside potential extending to the Rs 68-70 range. Hold with a stop-loss at Rs 46.

Fresh exposures may also be considered on a close above Rs 56, with a stop-loss at Rs 49.

Ashok Leyland (Rs 27.2): Hold with a stop-loss at Rs 24. The stock could move to Rs 30-31 in the near term.

A trailing stop-loss may be employed in the event of a rally past Rs 31.

I hold shares of Indo Rama Synthetics and Mahavir Spinning Mills. Kindly advise on the future prospects of these companies. — M. Ramana

Indo Rama (Rs 28): A drop below Rs 23 would impart weakness while a close above Rs 33 would have positive implications.

Considering that the price action in the next few weeks would be the key determinant of the short-term trend, it would be advisable to hold with a stop-loss at Rs 23.

A trailing stop-loss may be used in the event of a break above Rs 33.

Mahavir Spinning (Rs 423.2): The stock was covered earlier (edition dated April 24) in the "Focus of the Week" column.

It has already moved past the target price of Rs 395-400. The upward move does not appear complete as yet. A move to Rs 445-450 appears likely. Remain invested with a stop-loss at Rs 390.

Aggressive traders may consider fresh exposures with a stop-loss at Rs 390.

I am holding BOC at Rs 108 and McDowell at Rs 313. Kindly let me have your views on the two stocks. — K.R. Subramanion

BOC (Rs 115.1): The stock has been on a corrective phase from early May. This corrective phase appears to have been completed and the stock is now in the next segment of the upward move.

The present leg of the rally could take the stock to Rs 135-140. Considering your purchase price and upside potential, it would be better to hold with a stop-loss at Rs 100. Fresh exposures may also be considered with a stop-loss at Rs 100.

Partial profit-booking may be considered on a move to the target zone of Rs 135-140.

Investors willing to wait for a longer time frame may find exit opportunities at the Rs 175-180 range.

McDowell (Rs 315): After a sharp run up in price during January to April, the stock has been in a corrective phase. In the process, it has also under performed in relation to returns generated by key indices during the past couple of months.

Investors, however, are likely to be rewarded for their perseverance, as the stock appears to have commenced the next leg of the rally towards the target zone of the Rs 375-380 range. Hold with a stop-loss at Rs 270.

I would like to have your opinion on Arvind Mills bought at Rs 142.4. — N.S. Ganesh

Arvind Mills (Rs 134.5): The stock is in a corrective phase and the price pattern does not throw up convincing signs of the conclusion of the corrective phase.

The positive aspect, however, is that the stock would resume the bullish phase on the completion of the corrective phase.

A move to the Rs 175-180 range appears likely.

Remain invested with a stop-loss at Rs 120. Aggressive traders may consider long positions on a close above Rs 139, with a stop-loss at Rs 128.

I purchased D.S.Kulkarni at Rs 91 and Mercator Lines at Rs 92. Kindly advise me whether I should hold sell. — Mahesh Wadhwa, D. Chandrakumar

D.S.Kulkarni (Rs 111): After the completion of a classical "sideways triangle" pattern, the stock appears to have embarked on the next leg of the rally.

This could be the final leg of the rally, as the earlier triangle pattern would qualify as Wave 4 in Elliott Wave parlance.

The recent upward move would be the fifth and the final Wave of this segment of the rally.

On completion of the fifth wave around the Rs 165-170 range, the stock could get into a major corrective mode. Hold with a stop-loss at Rs 100. Fresh buying may also be considered with a stop-loss at Rs 100 and target price of Rs 165.

Mercator Lines (Rs 82.8): There is no sings of the completion of the downtrend that commenced at Rs 113 in March.

Considering that the stock has not generated any significant return despite the recent bullish market undertone, it would be advisable to switch to stocks that are in an uptrend.

By doing so, you would have an opportunity to make a surplus even after offsetting the loss incurred in this stock. There is no point locking up funds in a stock that is not trending, as this denies money making opportunities elsewhere.

I purchased Aurobindo Pharma at Rs 320. Please let me know if I should hold or sell the stock. — Devender

Aurobindo Pharma (Rs 356.5): The stock was on a prolonged corrective phase spanning quite a few months.

The share price appears to have finally made an upside breakout from the consolidation phase.

Having held on to the stock for such a long time, it would be worthwhile to remain invested with a stop-loss at Rs 330. The stock is likely to move past the Rs 400 mark.

I am holding GNFC at Rs 82. In June, you mentioned that stock may touch the level of Rs 102-105, but it receded from the level of Rs 99.85. Kindly advise me about whether to hold/sell. — A.S. Bhasin

GNFC (Rs 107.3): The stock managed to move past the target zone in the previous week. Though our target has been met, we would like to highlight that "money management" would be the key determinant of the returns from the market.

Though our analytical method suggested a target zone of Rs 102-105 in June, investors need to realise that stocks may fall short of this target in a few instances.

An efficient money management system would ensure that investors get to lock in profits even when the stock falls short or reverses just ahead of the target zone. As far as the outlook for the stock is concerned, we still feel that there is upside potential extending to the Rs 122-125 range.

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, Chennnai 600 002

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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