The Hindu Business Line : Query Corner

Please give your medium term technical view for Jupiter Bioscience. Can one buy at the current price of Rs 134 for holding period of 12 to 18 months? S.H. Shah

Jupiter Bioscience (Rs 132.5): Jupiter Bioscience is moving in a wide band between Rs 80 and Rs 200 since 2003. The stock price made a high at Rs 215 on February 19 and has lost 35 per cent since then in a matter of six sessions. The short-term trend in this stock is extremely weak. The stock can stabilise in the band between Rs 110 and Rs 150. But a fall below Rs 110 can drag the stock price lower to Rs 80. Since, you are contemplating investment with a longer-term horizon, you can buy as the stock price nears Rs 110 with a stop at Rs 100.

I hold McLeod Russel purchased at Rs 108 and Madras Cement purchased at Rs 3,400. Please let me know the future prospects and should I hold these for long-term or at what levels should I exit. Also let me know if I should add on to my holdings at current levels. Dhanalakshmi

McLeod Russel (Rs 56.9): McLeod Russel is in a long-term bear market since 1995. Strong resistance exists at Rs 150. The long-term trend will turn favourable only on a rally beyond Rs 150. The resistance for the intermediate term exists at Rs 115. It would be best to exit this stock as it nears your cost price.

Re-entry can be considered only if the stock price manages to close above Rs 155.

Madras Cements (Rs 2,581): This stock has had a deep sell-off over the last three weeks. The move that began from the June 2006 lows seems to be complete now. Supports that investors need to watch out for are at Rs 2,684 and then at Rs 2,400. If the price stabilises above Rs 2,400, the stock can be expected to move higher once more and record a new high over the next one year. Hold the stock with a stop at Rs 2,380.Additions to current holding can be made if the stock manages to sustain above Rs 2,400 over the next two months.

I have bought Mahindra and Mahindra at Rs 885. Should I exit now or wait? Shiv P. Godara

Mahindra and Mahindra (Rs 732.4): If we consider the retracement of the upward move from the low of Rs 502, the key support for the stock exists at Rs 687. If the stock price manages to bounce from this level, we can expect the long-term up trend to continue in this stock. However, a breach of the Rs 687 support can drag the stock price lower to Rs 640 or even the June low of Rs 502. Exit the stock if it falls below Rs 680 and try to re-enter around Rs 600.

What is the technical outlook of Punjab National Bank and NTPC? Anshul Gupta, B. Srinivas

Punjab National Bank (Rs 430.2): PNB has the intermediate term support at Rs 410. A fall below this level will take the stock to the long-term support that exists at Rs 352. Long-term investors can hold the stock with a stop at Rs 350. Any upward move in price will face resistance at Rs 470 and then at Rs 515 in the short term. A close beyond Rs 470 is required to signal that the short-term trend has turned upwards. That is when fresh buys should be initiated.

NTPC (Rs 139.7): NTPC has been correcting since it made a high of Rs 158 in November 2006. The stock has currently retraced about 50 per cent of the increase that it had recorded in the second half of 2006. The immediate support for the stock exists at Rs 127. A fall below this level will take the stock to the next intermediate term support at Rs 120. Investors can hold the stock as long as it sustains above Rs 120. A reversal from this level can take the stock price higher towards its all-time high of Rs 158. On the other hand, fall below Rs 120 will signify that the stock is heading towards its June low of Rs 95.

Please outline the short-term as well as long-term prospects of Cholamandalam DBS Finance purchased at Rs 220 and Oriental Bank of Commerce purchased at Rs 252. Rajeev Kumar

Cholamandalam DBS Finance (Rs 108.1): Cholamandalam DBS Finance peaked in February 2006 and is currently trading 58 per cent below this peak. The stock did not participate in the mid-cap rally that took place in 2006. The third leg of the long-term phase in this stock seems to have started in February 2007. The stock has breached all long-term supports. It would be best to exit from this stock. Re-entry should be considered only if the stock price closes above Rs 155.

Oriental Bank of Commerce (Rs 167.2): This stock has been an under performer over the last two years. The recovery in the stock price after July 2006 could retrace only 60 per cent of the fall since early 2005. The stock is currently hurtling towards its July 2006 low of Rs 138. Any recovery in the stock price would face resistance at Rs 240. Hold with a stop at Rs 130 and try to exit as close to your cost price as possible.

I hold 140 shares of Bannari Amman Spinning Mills bought at Rs 135 and 400 shares of Jaiprakash Hydropower bought at Rs 32. Please advise the technical prospects of these scripts. Anil

Bannari Amman Spinning Mills (Rs 86.2): Bannari Amman Spinning made a high of Rs 175 on the day it got listed. The stock slid from this level to make a low of Rs 62 in June 2006. There is strong intermediate term resistance at Rs 135, where the post-June 2006 recovery was stalled. The long-term outlook for this stock will turn positive only if there is a firm break out beyond Rs 135. Else, we can see some broad-based consolidation in the band between Rs 60 and Rs 140. Since, you have bought near the upper end of the trading band, hold for the long term with a stop at Rs 60.

Jaiprakash Hydro-power (Rs 27.5): Strong short-term support for Jaiprakash Hydro existed at Rs 27.5. The short-term trend will deteriorate if the stock price continues to rule below this level. The next support for this stock exists at the June 2006 low of Rs 21.5. The short-term outlook for the stock will turn positive only if the stock price rises beyond Rs 30. Exit the stock in a rally if you are a short-term investor. If you are a long-term investor, then hold with a stop at Rs 20.

I am holding shares of Tata Elxsi purchased twelve years back. Should I hold the share or exit at current price? HPSS

Tata Elxsi (Rs 272): Tata Elxsi made a high of Rs 334 in the year 2000. The great dotcom crash that followed made the stock plumb a low of Rs 31 in 2001. The stock has managed to climb out of the morass and has reached Rs 300 once more in 2007. There are no signs of weakness in the chart as yet. The long-term outlook for this stock will not be threatened as long as the stock price rules above Rs 255. You can hold the stock with a stop at Rs 250. A fall below Rs 250 will take the stock price towards Rs 225.

I bought RNRL at Rs 24. What is the long-term outlook for this stock? Srikanth Babu K, Madhav Chandra Sahoo

RNRL (Rs 22.5): We had reviewed RNRL in September 2006 and had written that the stock would face difficulty in going past Rs 32 over the next one year. We had also advised exiting if the price reaches that level.

RNRL reversed from a high of Rs 30.6 in February 2007 and is now moving towards the lower boundary of its intermediate term range that exists at Rs 20. The long-term outlook remains the same. The stock price would move in the range between Rs 20 and Rs 32. A breakout beyond Rs 32 is required to make the long-term outlook positive for this stock. Long-term investors can hold with a stop at Rs 19.

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