The Hindu Business Line : Query Corner

I have bought Mid-Day Multimedia shares at an average price of Rs 118 and 166 Mahindra Gesco at Rs 1,000. What should I do now, book loss, purchase additional quantity or shift to another scrip? T. Radhakrishna

Mid-Day Multimedia (Rs 43.4): Mid-Day Multimedia made two unsuccessful attempts to cross Rs 120 since September 2005. There has been a long-term reversal from that level. Heavy volumes were witnessed in this stock between August 2005 and May 2006 when the stock was trading between Rs 80 and Rs 100. The investors who bought in this band would come forward to book profit in rallies, thus keeping a lid on the upward movement of the stock price.

The stock can move higher to Rs 56 or Rs 66 over the next one year. But it is highly unlikely that the stock would make any further headway. Exit the stock in such rallies. Hold till then with a stop at Rs 32.

Mahindra Gesco (Rs 609.1): The long-term up trend is still intact in Mahindra Gesco. This outlook will turn negative only if the stock falls below Rs 450. Hold the stock with a stop at Rs 440, if you are a long-term investor.

However, the intermediate term outlook for the stock is negative. There will be resistance at Rs 734 and then at Rs 834 over the next six months. A rally above Rs 834 is required to take the stock back to its previous highs. But investors would be advised to exit part of their holdings if the stock struggles to surpass these limits.

Please let me know your views on Hyderabad Industries and Indian Hotels. Vishal Shastri, Nanjundan K

Hyderabad Industries (Rs 208.3): This stock is in a severe long-term down trend. Near term resistance for the company exists at Rs 260 and then at Rs 320. Inability to move above Rs 260 in the short term would mean that the downward move would continue. The stock could struggle to rally above Rs 320 over the next one year. Investors contemplating fresh positions should do so only on a firm close above Rs 320.

Indian Hotels (Rs 143.8): Indian Hotels made a rounding top in December 2006 and January 2007 before falling to a low of Rs 122 in March. This fall retraced 50 per cent of the gains recorded in the second part of 2006. The stock could have made a significant intermediate term low at this juncture.

The short-term outlook for this stock is also positive as it is consolidating above its 50-day and 200-day moving averages. The short-term targets for the stock are Rs 162 and then Rs 175. If the stock is unable to move past Rs 165, it can spend some more months in the band between Rs 125 and Rs 165. Short-term investors can buy with a stop at Rs 141 and long-term investors can hold with a stop at Rs 120.

Please let me know the prospects of IVRCL. Brij Lal Dhiman, Usha Uday Padubidri, Devendra Sharma

IVRCL (Rs 314.6): The slump in the price of the IVRCL stock in February 2007 is long-term in nature as it wiped out 50 per cent of the gain recorded since 2003. The long-term supports for this stock exist at Rs 233 and then at Rs 180. Long-term investors can hold the stock till it manages to hold above Rs 180.

Though a short-term rally is underway from the recent low at Rs 241, the up trend will need to carry on above Rs 350 before it gets convincing. A reversal below Rs 350 can make the stock oscillate in the zone between Rs 250 and Rs 350 in the medium term. Investors can buy the share near the lower boundary of the range with a stop at Rs 175.

Please let me have your views on a three to six month TVS Motors movement. I hold 1,500 shares at an average price of Rs 70. Kishore Krishnaswamy, Binu Babykurien

TVS Motors (Rs 61.4): In our last review of this stock in December 2006, we had indicated that a strong support exists in the band between Rs 75 and Rs 90. The stock has breached this long-term support in 2007. The last buttress for the stock exists around Rs 40. Any further fall would mean that it is heading towards the sub-Rs 10 level seen in 2001.

The movement of the stock over the last two months does not inspire any confidence. The short-term resistances exist at Rs 70 and then Rs 83. Hold with a tight stop at Rs 52 and reduce exposure in rallies.

I would like to know the medium- to long-term outlook for Indraprastha Gas purchased at Rs 95 and Cinemax India bought at Rs 120. Rajan Taluja

Indraprastha Gas (Rs 99.5): Indraprastha Gas has a medium term support around Rs 90. The medium term outlook will turn negative only if the stock closes below Rs 90. But we expect the stock to move sideways in the range between Rs 90 and Rs 130 over the next three months. Short-term investors can book profits as the stock nears the upper limit of the band.

The long-term outlook for this stock is positive. Long-term investors can buy with a stop at Rs 80. The stock can move up to Rs 150 and beyond that to Rs 195 over the long term.

Cinemax India (Rs 128.9): Insufficient history makes a detailed technical analysis difficult in new listings. Short-term resistance for the stock exists at Rs 141. Breakout beyond this level will take the stock price to Rs 165.

I have shares of Manugraph at Rs 200 and 200 Honda SIEL at Rs 189. Please advise, as Manugraph looks bearish while Honda seems to be in an uptrend. S.P. Singh

Manugraph Industries (Rs 155): This stock was languishing below Rs 10 before 2003. The rally that followed took Manugraph Industries to a high of Rs 318 in April 2006. There has been a sustained bear phase since then that has made the stock correct about 50 per cent from its peak. A long-term support exists for the stock around Rs 150. If there is a fall below Rs 150, it can halt at Rs 125. Long-term investors can hold with a stop at Rs 120. The stock can move up to Rs 215 over the next six months. But a firm close above Rs 215 is required to make the stock move to the next intermediate term target of Rs 255.

Honda SIEL (Rs 188.3): This stock is making a gradual move upwards since 2001. This long-term up trend continues to be in force and will reverse only if the stock falls below Rs 120. Honda SIEL has the potential to move higher to Rs 235 or Rs 268 over the next 12 months.

The stock has reversed down from the short-term peak of Rs 210 on April 20. Though some weakness can be seen in the short-term, supports present in the band between Rs 140 and Rs 148 can halt the down move in this stock. Investors can utilise dips to this band to initiate fresh positions in this stock.

It has been seen that the board of directors announce the issuance of bonus share or split of the share, but subsequently they defer the decision and in the meanwhile the stock price picks up heavily. It has also been found that such deferred date never comes. Does this not raise a strong doubt of insider trading? I. P. Puri

It is rare for the board of directors to make announcement regarding a bonus issue or a stock split and then to defer it. You might have been misled by rumours regarding the possibility of such an announcement and the stock price could have moved up as a result of this. The key to avoid falling prey to such misconceptions is to check the BSE and NSE Web site to see if these announcements have been made by the company. Once the corporate announcement has been announced by the exchanges, it would be irreversible. Insider trading regulation of SEBI would come in to play only if the company insider buys or sells shares prior to such announcements.

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