The Hindu Business Line : Query corner

Andhra Bank (Rs 96): Remain invested with a stop-loss at Rs 88 as the near-term outlook is positive. A move to Rs 112-115 appears likely. A close below Rs 88 would negate the positive outlook and push the stock to Rs 75-78.

Short-term traders may consider fresh exposures, with a stop-loss at Rs 88. Take partial profits on the evidence of resistance at the target zone.

Is it advisable to buy Arvind Mills at prevailing levels? — Venugopal

Arvind Mills (Rs 93): The downtrend that commenced in June 2005 has run most of its course. Though there are no signs of completion of the corrective phase, the downside risk appears marginal. The stock could drop to Rs 78-80 in the event of a close below Rs 89. Long-term investors may start accumulating the stock on declines, with a stop-loss at Rs 77. Exposures may be enhanced on a close above Rs 101, with a suitable stop-loss, as this would be an early indicator of a reversal of the downtrend.

What is the outlook for Hindustan Motors bought at Rs 51 and Asian Electronics at Rs 413? — N.R. Srinatha

Hindustan Motors (Rs 35): The near-term outlook does not appear bullish. A close below Rs 32 would indicate that the stock is headed towards Rs 27-28. Hold with a stop-loss at Rs 32. Fresh exposures may be avoided. The bearish outlook would stand negated on a close above Rs 38.

Asian Electronics (Rs 436): The share price has moved in line with expectations outlined in the edition dated January 1, 2006. It is on course to move to the target price of Rs 465-470. The recent price patterns indicate the possibility of a move to the next target zone at Rs 500-510. The positive view would be valid as long as the stock holds above Rs 380. Remain invested with a stop- loss at Rs 379. Fresh exposures may also be considered on weakness, with a stop-loss at Rs 379.

Please advise whether to hold or sell Andhra Sugars bought at Rs 171. — Kandi Rajasekhar, Sathish

Andhra Sugars (Rs 220): The recent market frenzy for sugar sector stocks has helped the stock record a sharp run-up in the recent weeks. After the sharp rally to Rs 255, the stock has entered into a corrective phase that does not appear complete. A drop to Rs 200-205 appears likely. Investors may, however, use such declines to enhance exposures, as the long-term trend is positive. The long-term uptrend would resume on the completion of the expected short-term downtrend. The stock is likely to move to Rs 275-280. Stop-loss for all long positions may be placed at Rs 170.

Should I exit or hold D.S. Kulkarni bought at Rs 95? — Chitrang Srivastava

D.S. Kulkarni (Rs 294): Taking into account your cost of acquisition and the positive outlook, there is no reason to sell the stock at prevailing levels. The share price appears to be headed towards Rs 355-360. Hold with a stop-loss at Rs 260. Fresh exposures may also be considered by those willing to take risk. Stop-loss for fresh exposures may be placed at the same level.

What is the outlook for Gayatri Sugar and Rain Calcining? — Ramesh More, Dr Mohit Maurya

Gayatri Sugar (Rs 22): The share price could move to the immediate target zone of Rs 27-28. This view would be invalidated on a close below Rs 18. Hold with a stop-loss at Rs 18. Long positions may also be considered with the same stop-loss. A trailing stop-loss may be used in the event of a move past the target zone.

Rain Calcining (Rs 49): The short-term outlook is positive and a move to Rs 55-56 appears likely. Shareholders may remain invested with a stop-loss at Rs 45. Fresh exposures may also be considered with the same stop-loss. A trailing stop-loss may be used in the event of a sustained uptrend past the target zone.

What are the prospects for Neyveli Lignite bought at Rs 89? — R. Srinivasan

Neyveli Lignite (Rs 75): There is a possibility of a rally to Rs 98-100. This is, however, contingent on the share price holding above the stop-loss level at Rs 69. A close below Rs 69 could push the stock to Rs 58-60. Remain invested with a stop-loss at Rs 69. Fresh exposures may be avoided for the moment. A close above Rs 81 would confirm the positive outlook as well as the possibility of a rally to Rs 98-100.

What is the outlook for FDC bought at Rs 57 and Gujarat NRE Coke at Rs 106? — Yogesh Kumar, Antony R. Costa, Sulabh Sharma

FDC (Rs 56): The price action has been devoid of any trend in the recent months. A close above Rs 61 would impart strength and help the stock move to the target zone of Rs 67-98. The trend would turn bearish and a close below Rs 52. Hold with a stop-loss at Rs 52. Fresh exposures may be avoided.

Gujarat NRE (Rs 95): The stock has been on a major downtrend since March 2005. The recent price patterns do not provide confirmation about the completion of this corrective phase. A close below Rs 87 would indicate that the downtrend is not complete and the stock may slide to Rs 75-77 subsequently. Investors need to keep a close tab on the price action as the downside risk is marginal and a significant upward move would commence on the completion of the corrective phase.

A close above Rs 102 would confirm the completion of the downtrend. Hold with a stop-loss at Rs 87. Fresh exposures may be considered on weakness, with a stop- loss at Rs 80.

Please furnish your views on Alstom Projects bought at Rs 223 and Mukand Engineers at Rs 33? — Aishwarya

Alstom Projects (Rs 300): The growing stock market preference for engineering sector stocks has had a positive impact on the share price of quite a few companies including Alstom Projects. Despite the recent rally, there appears to be upside potential extending up to Rs 355-360. The positive outlook would be under threat on a close below Rs 250. Stop-loss for long positions may be placed at Rs 250. Fresh exposures may also be considered on weakness, with a stop-loss at Rs 250.

Mukand Engineers (Rs 32): The outlook is positive and a move to Rs 39-40 may materialise in the near-term. Remain invested with a stop-loss at Rs 29. Fresh exposures may be avoided. A close below Rs 28.9 will warrant dilution of holdings.

What is your view on Jet Airways? — Huzefa, Naseer

Jet Airways (Rs 1,009): The unimpressive quarterly performance has imparted a bearish trend. The price patterns indicate that the stock is on the verge of completion this downtrend. A significant upward corrective phase may be expected shortly. A move to Rs 1,150-1,175 appears likely. A close below Rs 960 would, however, indicate that the downtrend is incomplete and investors need to wait for confirmation of the completion of the downtrend before committing funds.

Shareholders may remain invested with a stop-loss at Rs 960. Fresh exposures may also be considered with the same stop-loss.

I have bought Era Constructions at Rs 100 and Voltas at Rs 600. As a long-term investor, I intend to hold onto them for the next two- to -three years. Please advise. — Vinay

Era Constructions (Rs 259): The share price has been on an upward spiral in the recent months. The outlook remains bullish and a move to Rs 325-330 appears likely. Taking into account your entry levels and positive outlook, it would advisable to hold with a stop-loss at Rs 230. Conservative investors may use a trailing stop-loss in the event of a steady uptrend as the stock is heading towards an overbought zone. A corrective phase appears to be around the corner. Partial profit-booking may be considered on the evidence of resistance at around the target zone.

Voltas (Rs 678): Hold with a stop-loss at Rs 620, as the outlook is positive. A move to Rs 730-740 appears likely. Fresh exposures may be considered on weakness, with the stop-loss at Rs 635. From a long-term perspective (at least six months), a move to Rs 825-850 appears likely.

(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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