The Hindu Business Line : Query Corner: What the charts say

Areva T&D (Rs 339.7): This stock reversed from the trough of Rs 130 formed on December 2, 2008 and has been charting a strong intermediate term up-trend since then. Key resistance levels for the next 12 months are at Rs 395 and Rs 426.

The long-term view will stay negative as long as it trades below Rs 426. But a move above Rs 426 will imply a change in the long-term view and an impending rally towards the stock’s all-time high of Rs 656.

The stock is currently in a short-term correction that can halt at Rs 290 or Rs 228. Long-term investors can hold the stock with a stop at Rs 225. Investors with a short-term perspective can buy in declines as long as the stock holds above Rs 280.

Bharti Airtel (Rs 809.5): Bharti Airtel is one of the rare large cap stocks in which the secular up-trend continues to be up. The stock is holding above the long-term up trend-line drawn from the trough formed in 2003.

It is also holding above the key long-term support at Rs 450. Long-term investors can hold the stock as long as it trades above this level.

Key intermediate term resistance for the stock is in the zone between Rs 900 and Rs 1,000. The stock needs to record a firm weekly close above this band to signal the intention to move on to its former peak of Rs 1,149.

That said since the stock is currently reversing from the resistance zone mentioned above, there is a likelihood of the decline extending to Rs 720 over the medium-term.

Medium-term investors can hold the stock as long as it trades above Rs 700. Long-term investors can accumulate the stock if it declines below Rs 700.

Let me know the future prospects of Tourism Finance Corporation.

J Rajagopalan

Tourism Finance Corporation (Rs 20.7): TFC moved up after consolidating in the band between Rs 12 and Rs 18 from October 2008 and May 2009.

Key medium-term resistance for the stock is at Rs 24 and then Rs 29. The stock is reversing from the recent peak at Rs 27.2. Failure to move beyond Rs 29 implies that the stock can oscillate in the range between Rs 12 and Rs 30 for a few more months. Target on a break above Rs 29 is Rs 39.

Short-term support for the stock is at Rs 18. Decline below this level will drag the stock to Rs 12 again. Short-term investors should therefore divest their holdings on a decline below Rs 18. Long-term investors can hold with a deeper stop at Rs 12.

Please tell me the outlook of MIC Electronics and Emco Transformers. Can I invest at this level from a six-month perspective or should I wait for lower level? Ajith Bokadia

MIC Electronics (Rs 38.6): The intermediate up-trend from the March low of Rs 14.5 was stalled just below the 200-day moving average at Rs 50.

The January peak at Rs 46 also acted as a strong barrier to the up-trend. Supports for the stock are at Rs 34 and Rs 26. Short-term investors can hold the stock as long as it holds above Rs 26.

Investors with a higher penchant for risk can invest in declines as long as the stock holds above Rs 27. Fresh longs are however not recommended if the stock closes below this level. The long-term outlook for this stock stays under a cloud and a sideways move between Rs 15 and Rs 50 is possible for a few more months.

Emco (Rs 81.1): Emco has had a splendid rally from Rs 26 to Rs 100 since March and is currently in a short-term correction. Immediate supports for the stock are at Rs 62 and Rs 53. Investors with a short-term perspective can buy in declines with a stop at Rs 50.

If the stock sustains above this level over the next month, a rally to Rs 100 or Rs 145 would be possible within your investment time-frame.

I have purchased Kingfisher Airlines at Rs 64 and Financial Technologies at Rs 1,350. Please explain about their prospect. You had predicted that Jaiprakash Associates would decline Rs.50 latermove from Rs.60to Rs.160. What is the outlook for this stock now? Ishwar Patil

Kingfisher Airlines (Rs 50.9): In our previous review of this stock in February, we had indicated that risk-averse investors can wait for a weekly close above Rs 70 before venturing to purchase it.

Kingfisher Airlines recorded an intra day peak of Rs 73 on June 5 and has been declining since then. The area around Rs 70 is a key medium-term resistance for the stock and since it failed to record a daily close above this level in the recent run-up, the ongoing correction can drag it down to Rs 42 or Rs 24.

You can hold the stock with a stop at Rs 40. A reversal from this level can result in a bounce higher to Rs 70 again. Strong close above Rs 70 would take the stock towards our medium-term target of Rs 100. The long-term view will turn positive only on a weekly close above Rs 100.

Financial Technologies (Rs 1,377.3): In our review of Financial Technologies in late March, we had suggested that investors could hold this stock as long as it trades above Rs 380. The stock however rose steadily from the trough formed on March 6 and the post-election result surge took the stock beyond our medium-term target of Rs 1,107 to the recent peak of Rs 1,582.

Key intermediate-term resistance for the stock is around Rs 1,430. A strong weekly close beyond this level is needed to take the stock higher to Rs 1,740 or Rs 2,050. Short-term investors can buy in declines as long as the stock trades above Rs 1,140. Investors with a longer horizon can hold with a deeper stop at Rs 860.

Jaiprakash Associates (Rs 221.2): Last time we wrote about this stock in April, we had indicated that a rally beyond Rs 170 would take it to Rs 220.

We had also written that a move above Rs 220 is not possible this calendar year but if the stock manages to do so, the next long-term target is Rs 320.

JP Associates achieved our medium-term target but is currently in a short-term correction from the recent peak of Rs 236. This decline can halt at Rs 163 or at Rs 120.

If the stock does not test the first support, it would indicate strength and the inclination to move higher to Rs 286 or Rs 345 over the long-term. Short-term investors can therefore hold the stock with a stop at Rs 280 while long-term investors can hold with a deeper stop at Rs 118.

I had bought Rajshree Sugars at Rs 50. What are its prospects? Mohan

Rajshree Sugars (Rs 70.8):

This stock faces strong resistance around Rs 80. Investors with a medium-term perspective should divest part of their holding around this level. Immediate supports for the stock are at Rs 60 and Rs 53. Investors with a medium-term perspective can hold with a stop at Rs 50. Target on a breakout above Rs 80 is Rs 105.

— Lokeshwarri S.K

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