Back Query Corner
B. Krishnakumar
What is the outlook for Lakshmi Vilas Bank purchased at Rs 155 and Alstom at Rs 45? — C. Balakrishnan
Lakshmi Vilas Bank (Rs 199.7): The long-term outlook is bullish and the stock is likely to move to the Rs 245-250 range. Helped by the sharp upward move on Friday, a "key reversal bar" pattern was completed in the weekly chart. This is a positive development; on the flip side, a drop below the low of this bar (Rs 176) would have negative implications. Hold with a stop-loss at Rs 175 and take partial profits on evidence of price weakness at around the Rs 245-250 range.
Alstom (Rs 86.9): A move towards the Rs 95-100 range appears likely. Though the near-term outlook appears bullish, the view is subject to the stock holding above Rs 70. There is a strong support at the Rs 70-73 range. A break below this zone would result in the completion of a bearish "head and shoulder" pattern that could push the stock to the Rs 58-60 range. Investors may hold with a stop-loss at Rs 70. A trailing stop-loss may be employed if the stock moves above Rs 100.
Please advise about my holding in MphasiS BFL bought at Rs 271 and HEG at Rs 100? — Krishna
MphasiS BFL (Rs 244.4): The stock appears to be tracing out a "contracting triangle" pattern in the weekly chart. If this assessment is valid, the stock would dart back towards the previous high of Rs 402 on the completion of this pattern. Hold with a stop-loss at Rs 220 for a portion of the holding and at Rs 200 for the balance. Though these stop-loss levels are too wide from prevailing market price, the risk would be worth taking as the upside potential is quite significant.
HEG (Rs 118.1): The outlook is bullish and a move to Rs 135-140 appears likely. Hold with a stop-loss at Rs 105. Fresh buying may also be considered with a stop-loss at Rs 110. Investors willing to wait for a longer time frame may find an exit avenue at the Rs 175-180 range. The bullish view would be negated if the stock declines below Rs 105.
Is it advisable to buy GE Shipping now and how does it look technically in comparison with Shipping Corporation? — A. Ramchandran.
GE Shipping (Rs 166.7): There are no signs of the onset of a new bullish phase. A close above Rs 178 would impart positive momentum. Fresh buying may be considered on a close above Rs 178. From a technical perspective, the patterns traced out by both the stocks are almost identical. However, the price pattern in the last couple of weeks places Shipping Corporation a couple of notches ahead of GE Shipping. If you are keen on taking exposures in the shipping sector, we would advise to buy a higher proportion of Shipping Corporation at prevailing levels with a stop-loss at Rs 160. A relatively lower quantity of GE Shipping may also be purchased on a close above Rs 178, with a stop-loss at Rs 155.
I bought Alok Industries at Rs 74 and Birla VXL at Rs 23.5. Are there chances of these stocks getting back to my entry levels? — K. Badri Narayanan, T.Rajesh, Praavin S. Warad
Alok Industries (Rs 66.9): The uptrend is likely to resume on the completion of the corrective phase that the stock is currently in. A close above Rs 75 would impart strength and would push the stock to higher levels of Rs 88-90. Hold with a stop-loss at Rs 59 and reduce a portion of the holding on evidence of resistance at around Rs 90.
Birla VXL (Rs 22.5): The trend is bullish and a move to the Rs 28-30 range appears likely. Remain invested with a stop-loss at Rs 19. Fresh purchases may also be considered on a move past Rs 24, with a stop-loss at Rs 20.
What is the outlook for Apollo Tyres bought at Rs 253? — T. Rajesh
Apollo Tyres (Rs 286.5): The price patterns in the weekly charts indicate that the stock has a fair distance to be covered on the upside. Patient investors may expect the share price to move to the Rs 395-400 range. The long-term bullish outlook would be negated on a drop below Rs 240. Shareholders may remain invested with a stop-loss at Rs 255.
I am holding a huge lot of Reliance Capital for almost a year now. You had mentioned that the stock is in a long-term bullish phase last year, but the share price is not heading anywhere. What should I do with my holdings? — Sanjay Jain
Reliance Capital (Rs 153.1): Your earlier query on this stock was answered in the edition dated July 25, 2004. The earlier view mentioned is still valid as long as the stock does not breach the then-mentioned stop-loss of Rs 115. After protracted spell of sideways price action, the stock has staged a recovery in the past couple of weeks. We continue to maintain that the outlook is bullish and you would find opportunities to exit with returns of at least 25 per cent from your entry price. This view would be valid as long as the stock holds above Rs 140. Hold with a stop-loss at Rs 140.
Is it advisable to hold sell ING Vysya bought at Rs 495? — Shikha Agarwal
ING Vysya (Rs 592.4): Taking into account your entry price and the positive outlook, there is no reason to sell the stock now. Hold with a stop-loss at Rs 550. The stock appears to be headed towards the Rs 645-650 range. A portion of the holdings may be sold at the Rs 645-650 range and the balance may be retained with a suitable stop-loss.
Is it advisable to switch from Hindustan Lever to Infosys? — JayaKumar
The outlook for both these stocks is regularly covered elsewhere in this page. From a long-term perspective, it would be advisable to sell a portion of the holding in Hindustan Lever and switch to Infosys. A close above Rs 2140 would impart strength to the Infosys stock. Buy above Rs 2140 with a stop-loss at Rs 2010. Long-term investors may consider profit booking on a move to the Rs 2325-2350 range.
What is the outlook for Ispat Industries purchased at Rs 26 and Aban Lloyd at Rs 1225? — Penmatcha Raju
Ispat Industries (Rs 27.4): The stock is in a long-term bullish phase and a move to the Rs 35-36 range appears likely. There is no reason to sell at this juncture. Hold with a stop-loss at Rs 22. Fresh exposures may also be considered on a move above Rs 29, with a stop-loss at Rs 25.
Aban Lloyd (Rs 1462.7): This stock is a testimony to the theory that volatility expansion is always preceded by a contraction in volatility. After the contraction of the volatility, it is not unusual to expect a sharp move in price. After a prolonged phase of sideways price movement, resulting in a contraction of volatility, the stock staged a breakout on the upside last week. Hold with a stop-loss at Rs 1400 for a portion of the holding and at Rs 1300 for the balance. Partial profit taking may be considered on evidence of resistance in the Rs 1650-1700 range.
I bought a huge chunk of Gujarat NRE Coke at Rs 150. Should I hold or book the profit? — Suri Virendra
Gujarat NRE (Rs 142.3): The stock is traded on ex-bonus basis since February 9. The long-term outlook remains bullish and there is no reason to sell now. A move to the Rs 175-180 range appears likely. Hold with a stop-loss at Rs 125.
I hold Infotech Enterprises bought at Rs 175. What is the technical outlook for the stock? — Bhat SS
Infotech Enterprises (Rs 222): The price pattern traced out by this stock is text-bookish from an Elliott Wave perspective. The stock commenced a corrective phase after hitting an all-time high in January 2000. The first leg of the corrective phase appears to have been completed at Rs 26 in May 2001. The stock is yet to complete the corrective phase to this sharp drop from the high of Rs 892 in the year 2000, to the low of Rs 26 in 2001.
The first leg of the corrective phase got over at Rs 412 in June 2002; the second segment was completed at the recent low of Rs 111 in May 2004. The stock appears to be in the final leg of the corrective phase of the earlier drop from Rs 892 to Rs 26. On the completion of this upward move at the Rs 385-400 range, the stock is likely to record one more leg of decline that could take the share price to sub-Rs 100 levels. If this view is valid, investors may look to reduce exposures at the Rs 380-400 range. A move past Rs 245 would confirm the rally towards Rs 400. The positive view would be negated if the stock declines below Rs 180. Hold with a stop-loss at Rs 180.
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We would endeavour to answer as many queries as possible. However, constraints of space will limit the responses featured under this column.
(The analysis and opinion expressed in these columns are based on the technical analysis of the past price behaviour. Opinion and price targets are based on the Elliott Wave Analysis. The stop-loss level provided with the recommendation is important. The original view would stand negated if the stop loss level is breached. There is a risk of loss in trading)
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