Is it advisable to stay invested Aarti Industries bought at Rs.80? Is it a right time to take exposure in Aban Loyd Chiles? Sachin Chaudhari

Aarti Industries (Rs 76): It would be better to reduce exposures, as the share price is not in a "trending mode". It has been confined to a trading range in the recent months.

Considering that there are quite a few stocks in a trending mode that could provide returns in excess of at least 25 per cent, we would advise switching a portion of funds from this company to, say, CESC, Jaiprakash Associates, Goldiam International, India Cements or Mangalam Cements. As always, have a suitable stop-loss in place before investing money in these stocks.

Aban Loyd (Rs 1,144): After spending the best of the year 2005 in a corrective phase, the stock has outperformed the major market indices in the past three months.

Despite the recent surge in price, there appears to be significant upside potential. A move to Rs 1,350-1,400 appears likely in the near term.

Considering that the stock is presently in a short-term corrective phase, this would be the right time to take fresh exposures.

Evidence of support in the Rs 1,050-1,100 range may be used to take exposures, with a stop-loss at Rs 1,000.

Please advice me that whether to sell or hold ICSA India and Arvind Mills purchased at Rs 680 and Rs 140 respectively. Tarun K. Gupta

ICSA India (Rs 514.2): The share price of the company (formerly known as Innareddy Computer Software Associates) has been in a major corrective phase from the recent high of Rs 754.

Though the stock is ruling close to the support zone at Rs 480-490, there are no signs of the completion of this corrective phase. Only a weekly close above Rs 540 would impart short-term bullishness.

On the contrary, a close below Rs 470 would result in the continuation of the downward move.

Investors need to have a close tab on the price action as the long-term trend is bullish.

The stock could resume its journey towards the target zone of Rs 825-850 on the completion of the ongoing corrective phase. Remain invested with a stop-loss at Rs 485 for a portion of the holding and at Rs 469 for the balance.

Fresh exposures may be considered on the evidence of support at Rs 440-450, with a suitable stop-loss in place.

Arvind Mills (Rs 91.5): The stock has been in a major downtrend since February 2005.

There are no conclusive signs of the completion of this downtrend.

Though we anticipated the correction to have been completed at the low of Rs 89, registered a couple of months ago, the subsequent price action has made us turn skeptical about the earlier positive view.

A close below the stop-loss level at Rs 89 would result in a drop to Rs 72-75.

Shareholders may remain invested with a stop-loss at Rs 89. Fresh exposures may be avoided.

Only a close above Rs 105 would reinstate positive trend.

What is the outlook for Scandent Solution bought at Rs 226 and Visual Soft at Rs 250? Gomathi, Bolla Subba Rao, G. Usharani

Scandent Solution (Rs 155): The recent fall in share price has pushed the stock closer to the support zone at Rs 150-155.

A close below Rs 149 is likely to result in a drop to Rs 110-115.

Remain invested with a stop-loss at Rs 149.

Fresh exposures may be avoided as we expect the stock to seek lower levels.

Visual Soft (Rs 136.4): The stock has been in a major downtrend in past few months. There are no signs of the completion of the downtrend and we expect a drop to Rs 95-100.

Stop-loss for long positions may be placed at Rs 129; use any upward moves to reduce exposures or have a trailing stop-loss to protect unrealised gains.

Based on your recommendation, I purchased Asahi India at Rs 114. What should I do now as the stock has not dropped to Rs 97? Shashi Kant Seth

Asahi India (Rs 97.4): The stock was covered under the "Focus of the Week" section in the edition dated February 5, 2006.

The subsequent price action did not pan out as we had anticipated and the stock has also breached the stop-loss level of Rs 100 that was mentioned along with the recommendation.

This effectively has negated the earlier short-term positive outlook.

As we have been emphasising, investors ought to have exited their position on the breach of the stop-loss.

Those who have not done so should look to reduce exposures at the earliest as the near-term trend does not appear positive.

The trend would turn bullish only on a close above Rs 115.

We again like to draw attention that a few of our recommendations could go wrong and investors should exit from such stocks when the stop-loss is hit.

If investors feel uncomfortable with the stop-loss given by us, they may use any other stop-loss of their liking.

The key is to use a stop-loss that is effective and results in a loss that is well within your psychological zone of comfort.

Please let me have your views on Ballarpur Industries and VSNL based on Elliott Wave theory. Shridhar

Ballarpur Industries (Rs 132): We will furnish a broad wave count based on the weekly price chart of the company. This wave count is the most acceptable one based on our analysis. The view would be subject to alteration if the price action in future warrants us to do so.

Coming to the specifics, Ballarpur Industries appears to have completed Wave 1 at Rs 93 in September 1999.

The sideways consolidation that lasted till March 2003's low of Rs 36 can be classified as Wave 2.

The subsequent rally that took the stock to the recent high of Rs 137.4 would form part of Wave 3.

At this juncture, we are not sure if Wave 3 has been completed at this high.

There is, however, a strong case for a significant correction to the earlier rally as the price patterns indicate the completion of a 5-wave impulsive pattern at the top of Rs 137.4.

We would not advise fresh exposures at prevailing levels. Consider exposures on the evidence of support at Rs 110-115. The wave count for VSNL would be featured next week.

Readers can send in their queries on not more than two companies to

techtrail@thehindu.co.in Queries can also be sent by post to Tech Trail, Kasturi & Sons, 859-860, Anna Salai, Chennai 600 002.

We would endeavour to answer as many queries as possible. However, constraints of space will limit the responses featured in this column.

B. Krishnakumar

© Copyright 2000 - 2009 The Hindu Business Line