The Hindu Business Line : Query Corner

I have bought 100 shares of Canara Bank at Rs 281 and 100 shares of IndusInd Bank at Rs 60 per share. What would be the short-term as well as medium-term outlook for these stocks? A.V. Vittal Rao

Canara Bank (Rs 232.6): The stock price of Canara Bank has been in an intermediate-term down trend since December 5, 2006. The fall from this peak has already corrected 50 per cent of the increase recorded in the second half of 2006. There are no signs of reversal in the stock yet and it is below its long-term average as well. But, the stock has support at Rs 240, where the price is currently trying to stabilise. A fall below Rs 240, can take the stock to Rs 225. Hold your shares with a stop at Rs 220. We do not envisage a fall below Rs 225 in this stock.

Short-term resistance for Canara Bank will be at Rs 270 and then Rs 290. A rally past Rs 290 is required to make the intermediate term trend positive again. Fresh investments in this stock should be made only on a rally above Rs 270.

IndusInd Bank (Rs 56.1): The stock price of IndusInd Bank, which was an under-performer in 2006, is trying to play catch-up since January 2007. However, the stock has to overcome the hurdle that exists at Rs 62 before it can make an effort to rise to the May peak of Rs 84. A reversal from Rs 62 levels will drag the stock price lower towards Rs 46. Hold with a stop at Rs 50. Fresh purchases should be made only if the stock price closes above Rs 62.

I hold 1,000 shares of Orchid Chemicals at a price of Rs 226 per share. Let me know about the short-term outlook for this stock and also at what level I should place my stop loss level. C. Sarath, Abishek Kumar

Orchid Chemicals (Rs 265.2): The scrip moved up from a prolonged period of consolidation on January 22. It has made a short-term high at Rs 271.5, which is 50 per cent retracement of the fall that occurred from the April 2006 highs. This is a significant resistance for the short term. Support for the short term exists at Rs 241. A fall below this level would take the stock to Rs 223. Hold the stock with a stop at Rs 238. If the stock price consolidates in the current range, it can rally to Rs 303, where you can book your profits.

I hold 200 shares of Northgate Technologies bought at Rs 1,015. Since, the daily traded quantity is less, I am a bit concerned on the technical prospects of the stock. Can you please help me take a technical call on this? Nagaraju

Northgate Technologies (Rs 1,004.4): The volume in Northgate Technologies has improved since October 2006. The stock price is moving lower since it hit a high of Rs 1,149 in January 2007. We do not have adequate data to do complete analysis on this stock, but the immediate support for this stock exists in the price band between Rs 800 and Rs 850. Hold the stock with a stop at Rs 790 if you are a long-term investor. A reversal above Rs 800, will take the stock price to Rs 1,309 and then to Rs 1,624 over the long term.

I have purchased 100 BOC at Rs 185. What is the short-term outlook for this stock? P. Ghosh

BOC (Rs 158.2): This stock has been in a medium-term down trend since October 2006. The short-term support for this stock lies at Rs 153.

A fall below Rs 153 can take the stock price towards the June 2006 low of Rs 128. Hold with a stop at Rs 145.

The stock needs to rally above Rs 181 before the short-term outlook turns positive for this stock.

Winsome Textiles appears to be in an uptrend from Rs 38 (22-12-06). May I have your comments about its technicals? Raminder Singh

Winsome Textiles (Rs 60.0): Winsome textile has just broken out of the sideways channel between Rs 20 and Rs 45 in which it has been moving since 2004.

Investors can hold this stock with a stop at Rs 50. A fall below Rs 50 will mean that the long-term trend has reversed and the stock price can slide to Rs 38 or even Rs 35 again.

What is the short term and mid-term outlook for Austin Engineering purchased at Rs 120 and H. K. Fine Chemicals purchased at the cost of Rs 33.3. Should I hold or average? S. Ramamoorthy

Austin Engineering (Rs 94.3): The double top at Rs 128 does not augur well for Austin Engineering, as it is a long-term trend reversal signal. The stock price is moving lower after hitting this level in October 2006. The short-term outlook for this stock is negative. The slide can halt at the support at Rs 86. If you are a medium term investor, hold the stock with a stop at Rs 82.

H. K. Fine Chemicals (Rs 28.9): This stock faces intermediate term resistance at Rs 39. Inability to rally above this level will keep the stock fluctuating in the band between Rs 20 and Rs 40 over the next one year. Exit the stock around Rs 40 if it struggles to rally above this resistance. Till then, hold with a stop at Rs 27.

I bought 1,500 S. Kumar Nationwide at Rs 72.5. Please advise me whether I should sell the shares or hold it. Kesava Rao

S. Kumar Nationwide (Rs 77.9): The scrip has been moving in a band between Rs 72 and Rs 82 since September 2006. The intermediate term support for the stock exists at Rs 64.

Hold the stock with a stop at Rs 63. Consolidation in the band between Rs 65 and Rs 82 will take the stock higher to Rs 95 or Rs 113 over the long term.

What are the prospects of Hindustan Oil Exploration Company and Mangalam Cement? A. Sethuraman, K. Meenakshi

Hindustan Oil Exploration Company (Rs 91.2): HOEC has made a triple mountaintop at Rs 175, that is a negative sign for the long-term trend. The trend in this stock is down along all time frames. But, investors can take heart from the fact that the price has not yet breached the long-term support that exists at Rs 80. That is where the long-term investors can place their stops.

A rally above Rs 118 is required to make the short-term outlook positive for this stock. However, fresh purchases should be made only if this stock closes above Rs 128. Rally above Rs 128 can take the stock price to Rs 140.

Mangalam Cement (Rs 203.1): The long term up trend in Mangalam Cement will stay intact as long as the stock trades above Rs 165. The short-term support for the stock exists at Rs 200. Short- term investors can hold the stock with a stop at Rs 200. Fresh investments can be made in dips with the same stop. If the level of Rs 200 holds for the next one month, the stock can move higher to Rs 270 and then Rs 334.

Kindly advice me on the medium and long-term technical outlook for KPIT Cummins Infosysystems? Ritesh Sharma, N. Raghava Rao

KPIT Cummins Infosystems (Rs 141.1): This stock has recorded a gain of 157 per cent from the low that it made in September 2006. It is currently in a short-term downtrend that can take the stock price lower to the support zone between Rs 132 and Rs 138. Medium-term investors can buy the stock with a stop at Rs 130. Long-term investors can keep a deeper stop at Rs 110. The long-term outlook for this stock is positive. The stock has the potential to move up to Rs 206 and then Rs 248 over the next one year.

Please advise on the short-term targets of Siemens purchased at Rs 1,215. Abhishek Kumar, P. D. Muralidharan

Siemens (Rs 1,188.8): The chart of Siemens is currently correcting the rally that started in June 2006. The low of Rs 1,000 made on December 13, 2006, was exactly 61.8 per cent of the previous upward move.

There is strong long-term support at Rs 1,000 and investors should use dips to buy in to this stock with a stop at Rs 990. The long-term up-trend has the potential to take the stock beyond Rs 1,400 in the next one year.

For the short term, the stock price faces resistance at Rs 1,250. A strong breakout beyond Rs 1,250 is required to signal the resumption of the long term up trend. Till then, the stock can consolidate in a sideways range between Rs 1,000 and Rs 1,200.

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.

Lokeshwarri S.K.

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