Back Query corner
B. Krishnakumar
Is there any upside potential in the near future for Karnataka Bank bought at Rs 73.5? — M.K. Naik
Karnataka Bank (Rs 69.1): There appears to be little downside risk from prevailing levels. Taking into account your entry price and the positive near-term outlook, there is no reason to sell now. The stock is likely to move up to the Rs 78-80 range in the near term. Remain invested with a stop-loss at Rs 63. Use a trailing stop-loss or sell a portion of the holdings once the stock moves to the target zone.
What is the short-term outlook for LIC Housing Finance bought at Rs 257.5 and Welspun India at Rs 127.50? — Mayur Joshi & Muthukrishnan
LIC Housing (Rs 266.5): The long-term outlook for the stock is impressive. Investors willing to hold for a year may expect returns in excess of 30 per cent. Remain invested with a stop-loss at Rs 220. Though the stop-loss is too wide in relation to the prevailing market price, it would be advisable to settle for this stop-loss, as the upside potential would outweigh the risk by a long chalk.
Welspun India (Rs 119.5): Hold with a stop-loss at Rs 104. The stock appears to be on the verge of completing the ongoing corrective phase. A weekly close above Rs 124 would be an early indicator of the reversal of the recent corrective phase. The stock is likely to move to Rs 155-160 on the completion of the downward correction that commenced at Rs 148.
I purchased Vijaya Bank at Rs 66 Maruti Udyog at Rs 421. Please suggest the long and short-term outlook for these shares. — Rajesh Kochavan
Vijaya Bank (Rs 60.4): The near-term outlook does not appear bullish. A drop to the Rs 52-53 range appears likely. Sell a portion of the holdings at prevailing rates and retain the balance with a stop-loss at Rs 57. The trend would turn bullish on a close above Rs 65. If the stop-loss is triggered, fresh exposures may be considered on a subsequent move past Rs 65.
Maruti Udyog (Rs 438): The share price could move to the Rs 455-460 range in the near term. Taking into account your entry price and the upside potential, it would be advisable to remain invested with a stop-loss at Rs 416. Fresh exposures may also be considered on weakness with a stop-loss at Rs 416. The trend would turn from positive to neutral on a drop below Rs 416 and a close below Rs 410 would negate the positive outlook.
Kindly advise about my holding in SRF bought at Rs 86.5 and Apollo Tyres at Rs 302. — Satish
SRF (Rs 107.3): The short-term outlook is positive and a move to the Rs 118-120 range appears likely. Hold with a stop loss at Rs 91. Stop-loss may be trailed in the event of a steady run up in price. Considering that the long-term outlook is also bullish, investors who have entered at lower levels may settle for a relatively aggressive stop-loss of Rs 86.
Apollo Tyres (Rs 278): After a steady run up in the recent months, the stock has been in a corrective phase over the past few weeks. This corrective phase appears complete. The completion of a bullish "key reversal bar" in the weekly charts is an indicator of the trend reversal. Remain invested with a stop-loss at Rs 260. The stock is likely to dart back to the Rs 300-310 level in the near term. Investors holding a profitable position may consider partial profit booking on a move past Rs 295.
What is the outlook for Alok Industries bought at Rs 72.6? — Muthukrishnan
Alok Industries (Rs 62.2): The stock has been moving down steadily in the recent weeks. There are no signs of the reversal of this trend. A weekly close above Rs 66 would indicate that the stock could seek higher levels of Rs 78-80. Hold with a stop-loss at Rs 57. Investors with a high-risk tolerance may consider long positions on a move past Rs 66, with a stop-loss at Rs 60.
I bought Seshashayee Paper at Rs.114 and Elgi Equipment at Rs 64.95. What is your advice regarding these holding? — Sunil Date
Seshasayee Paper (Rs 76.8): The share price has been drifting aimlessly in the recent months. It has been confined to a narrow trading zone and the recent price pattern suggests that the stock could seek lower levels of the Rs 50-52 range. A drop below Rs 67 would confirm the bearish outlook. Remain invested with a stop-loss at Rs 66 and use price upward move to reduce exposures. Only a close above Rs 85 would reinstate positive trend. Till such time, it would be advisable to look for selling opportunities.
Elgi Equipment (Rs 46): The price movement in the recent months has been devoid of any significant trend. Though the overall trend has been bearish in the recent months, the rate of decline has been rather slow. The long-term trend appears bullish and a move to the Rs 65-68 range appears likely. The expected upward move would not commence unless the prevailing downward trend gets completed. A weekly close above Rs 52 would indicate that the downward move is complete and the next leg of rally is underway. Investors may remain invested with a stop-loss at Rs 39.8. Short-term traders may consider long positions on a move past Rs 49, with a stop-loss at Rs 42.
I have purchased shares of Gujarat Mineral Development at Rs 340. What is outlook for the stock? — Kandi Rajasekhar
Gujarat Mineral (Rs 324.1): The stock is ruling close to an important support level at Rs 297. A close below Rs 297 would result in the completion of a bearish "head and shoulder" pattern. A weekly close above Rs 350 would indicate that the stock is headed towards the Rs 400-410 range. Remain invested with a stop-loss at Rs 296. Fresh exposures may also be considered on price weakness, with a stop-loss at Rs 296.
I wish to have your advise on Amtek Auto purchased at Rs 188 and NTPC. — Krishnamohan
Amtek Auto (Rs 168.4): There appears to little downside risk from prevailing levels. The stock is in a protracted sideways corrective mode. A strong trend would emerge once the stock breaks out of this sideways price range. A close above Rs 183 would indicate that the corrective phase is over and the stock is in the next leg of a fresh upward move. This would help the stock move past the Rs 200 mark. A close below Rs 150 would have bearish implications. Hold with a stop-loss at Rs 150. A trailing stop-loss may be used in the event of an upward move.
NTPC (Rs 85.1): The historical price data is inadequate to arrive at a long-term outlook. From a short-term trading perspective, the stock is likely to move to the Rs 90-92 range and reverse direction subsequently. Hold with a stop-loss at Rs 80. Stop-loss may be tightened on a move towards Rs 90. Fresh exposures may be avoided.
What is the long-term view for Neyveli Lignite and Prism Cement? — S.K. Kapur & Sudha Shenoy
Neyveli Lignite (Rs 69.8): The outlook for the stock remains bullish. The share price appears to be preparing for the next phase of the upward move. A close above Rs 74 would indicate that the next leg of the rally is underway. A drop below Rs 63 would negate the positive outlook. Shareholders may place the stop-loss at Rs 63. Fresh exposures may be considered on a close above Rs 74, with a stop-loss at Rs 66. From a long-term perspective, a move to Rs 88-90 appears likely.
Prism Cement (Rs 20.2): Though the long-term outlook is bullish, the stock is likely to seek lower levels, as the corrective phase is not complete. After a drop to the Rs 17.5-18 range, the stock is likely to reverse direction. From a long-term perspective, the stock could move to the Rs 28-30 range. Long-term holders may have the stop-loss at Rs 17. Fresh exposures may be considered on a move above Rs 23, with a stop-loss at Rs 20. Those who are uncomfortable with long-term trading may remain invested with a stop-loss at Rs 19 for a portion of the holding and at Rs 17 for the balance.
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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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