The Hindu Business Line : Query Corner

Megasoft (Rs 129.4): Megasoft has recorded a long-term peak at Rs 205 in May 2006. The correction that ensued eroded 50 per cent of the gains made by the stock since June 2004. The long-term support for the stock exists at Rs 110 and then at Rs 90. Investors with a two to five-year horizon should hold the stock as long as it remains above Rs 90.

The intermediate-term trend in the stock is sideways. The stock can fluctuate in the band between Rs 100 and Rs 170 over the next one year. Short-term investors can swing trade within this band. A breakout past Rs 170 is required to take the stock to a new high.

Gwalior Chemicals (Rs 60.9): This stock has been in a sustained down trend since October 2006. A firm close beyond Rs 73 is needed to signal the end of the bear phase. Investors can exit the stock if it struggles to rise past this level. The resistance beyond Rs 73 would be available at Rs 87. Short-term investors can hold the stock with a stop at Rs 58. Others can keep a deeper stop at Rs 48.

Kindly give me your valuable advice on Sundaram Clayton, which I had bought at Rs 998. I am willing to hold the stock for one year. Muthukrishnan. G

Sundaram Clayton (Rs 899.1): The correction from the December 2006 peak has made the stock lose over 40 per cent and has ushered in a long-term correction. But the fact that the slide has been arrested around the initial support at Rs 900 bodes well for this stock. A consolidation between Rs 900 and Rs 1,400 will be conducive for the long-term outlook of Sundaram Clayton. Supports below Rs 900 are present at Rs 728 and then Rs 572. However, we do not expect the stock to fall below Rs 700. The stock will face stiff resistance from Rs 1,100 over the next one year. You can exit your position in the band between Rs 1,100 and Rs 1,200. Hold with a stop at Rs 800.

Kindly throw some lights on the prospects of Wipro and Paradyne Infotech. E. Venkatesan

Wipro (Rs 547.7): Wipro is moving in a long-term trend channel since 2003. The structural up-move that began in 2003 will be threatened only if the stock breaches this channel and closes below Rs 500. But long-term resistance exists at Rs 700. The stock can consolidate in a broad range between Rs 500 and Rs 700 over the next 12 months before the next leg of the long-term move takes off. Weekly close above Rs 700 will take the stock to Rs 890 over the long-term. Investors can hold the stock with a stop at Rs 470.

Paradyne Infotech (Rs 151.3): Paradyne Infotech is in the third leg of the up-move that commenced in June 2006. The target for this move is Rs 150. Since the stock has almost achieved the target, it can now move lower to Rs 116 or Rs 106. Investors can buy the stock if it halts above Rs 116 with a stop at Rs 114. Those who are already holding the stock can book profits at these levels and consider re-entry between Rs 110 and Rs 115.

I am holding Radico Khaitan. Please tell me about its prospects. Rajesh Tiwari

Radico Khaitan (Rs 137.9): This stock is pausing after the strong run it registered between 2004 and 2006. Sideways move between Rs 125 and Rs 200 is possible over the next one year as the stock gathers steam for the next leg of the bull-run. Fall below Rs 125 can take the stock to Rs 105. Long-term investors can hold the stock till it sustains above Rs 100. Investors with a shorter horizon can keep a shallower stop at Rs 122.

Please give me the long-term outlook for Jaiprakash Hydropower bought at Rs 28. S. Chaudhuri & A. Das

Jaiprakash Hydropower (Rs 33.8): It is not possible to give a long-term outlook for Jaiprakash Hydropower given the stock's short history. It has not gone anywhere since its listing in 2005, oscillating in a band between Rs 20 and Rs 40. The stock needs to break out of this band before its long-term trajectory can be deciphered. For the medium term, the stock is reversing from the resistance that exists at Rs 35. It can now move down towards the support at Rs 30. Medium-term investors can exit at these levels and re-enter if it stabilises above Rs 30.

Do you advise me to hold or sell Reliance Communications purchased at Rs 501 and Bharti Airtel purchased at Rs 842? Subur Basha Shaikh

Bharti Airtel (Rs 815.4): The decision to sell or hold the shares of Bharti purchased at Rs 842 would be dependant on your investment timeframe. If you are a short-term investor, exit at current levels. The stock can move lower towards Rs 725 in the short term.

The long-term investor, however, should hold on as the stock is entering a consolidation phase. It is correcting the over-200 per cent gains that were recorded since June 2006. This correction can make the stock move between Rs 650 and Rs 950 for a few months before the upward journey resumes. Investors can watch out for buying opportunities if the stock dips to the zone between Rs 650 and Rs 700. However, refrain from making fresh purchases if the stock falls below Rs 650.

Reliance Communications (Rs 516.2): The medium term outlook stays positive for this stock. The dip in February 2007 corrected about 40 per cent of the previous up-move in Reliance Communication. The point that remains unresolved is whether the up-move since the Rs 371 trough is a part of a long-drawn correction or a fresh leg of the long-term uptrend.

As per the first count, the stock will reverse from present levels and head back towards Rs 390. As per the second count, the stock will continue to move upwards, with mild corrections, to Rs 575 and then to Rs 700. Fall below Rs 435 will signal that the stock is still in a corrective phase.

Since the stock is hesitating around the previous high of Rs 520, short-term investors can book some profits here and hold the rest with a stop at Rs 480.

Please let me know the short and medium term targets of Punj Lloyd. R. G. Naria, Saji, Imam Hussain

Punj Lloyd (Rs 239.6): Punj Lloyd has made a significant long-term low at Rs 108 in July 2006. The third leg of this up-move is unfolding since March 2007. The target of this third leg would be Rs 224 and then Rs 259. The stock is nearing the second target. Since the May 2006 peak was also at Rs 250, short-term investors can initiate buys only if the stock closes above Rs 260. Stop for short-term would be at Rs 220. The long-term target for this stock would be Rs 259 and then Rs 331. Long-term investors can stay invested till the stock stays above Rs 140.

I hold shares of Deccan Aviation at Rs 144 per share. Let me know the future outlook of this share. Sarath

Deccan Aviation (Rs 135.1): The year 2007 has been a torrid one for this stock. First, there was the plunge from Rs 163 to Rs 87 in the first three months followed by the recovery that took the stock towards it all-time high. Resistance would be expected around this peak of Rs 160. Investors with a short horizon can book profits around this level. Others can hold with a stop at Rs 114.

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