Please suggest if it is the right time to buy Essel Propack and Bajaj Electricals from a two-year perspective.

Binay Bist

Essel Propack (Rs 40.8): Essel Propack is in a steady up-move since the low of Rs 23 recorded in December 2011. But the long-term trend in the stock continues to be down. Key resistance from a long-term perspective is at Rs 50. Investors need to watch out for the entire zone between Rs 45 and Rs 50 since a reversal is possible here.

The stock formed a peak at Rs 46 in December 2012 before reversing lower. This level has once again thwarted an up-move in June this calendar. Investors need to wait for a strong close above Rs 50 before buying the stock. Else you can buy at current juncture with a stop-loss at Rs 36 with the target of Rs 45 or Rs 50.

The stock needs to move above Rs 50 to indicate the possibility of a move higher to Rs 65.

Medium-term supports are positioned at Rs 37 and then Rs 32.

Bajaj Electricals (Rs 179.9): Bajaj Electricals is also in the grip of a bear market since the October 2010 peak. But the point in the stock’s favour is that it is halting at key long-term support around Rs 150. T

he stock bottomed just below this level at Rs 132 in December 2011 and is moving in a sideways range between Rs 150 and Rs 240 since then.

It is highly likely that the stock is building a base from where it can launch its next long-term up-move. Investors with a greater penchant for risk can accumulate the stock in declines with the stop-loss at Rs 130. The stock can move higher to Rs 230 or Rs 270 in the months ahead where investors with short- to medium-term perspective can divest their holdings. Risk-averse investors can buy the stock on move above Rs 270.

This will signal an impending move towards its previous high of Rs 347.

I have bought BHEL at Rs 230 and Ashok Leyland at Rs 28. Let me know the medium- and long-term outlook for these stocks.

V. Dileep Kumar

BHEL (Rs 173.7): Last time we had reviewed Bharat Heavy Electricals Ltd, we had written that the stock was hovering above its long-term support at Rs 200, making it a good point where investors can buy the stock.

This support occurs around the 61.8 per cent retracement of its prior uptrend from the 2003 low. The stock had also bounced from this level twice in the past, in March 2007 and then in October 2008.

The stock moved below this support in March 2013. But investors can draw solace from the fact that it is halting just above the next long-term support at Rs 150. This can, therefore, serve as a stop-loss for those investors who continue to hold on to the stock. Investors are, however, advised to divest their holding on decline below Rs 150 since the next support on the long-term chart is below Rs 100. An alternate strategy would be to sell the stock at this juncture and consider re-investment on a strong close above Rs 200.

Key resistances for the medium-term would be at Rs 305 and Rs 395. Long-term views will be under a cloud as long as the stock trades below Rs 305.

Ashok Leyland (Rs 15.2): Ashok Leyland has been battered and bruised since June this year, with the stock declining 37 per cent from its peak at Rs 24. This decline has made the stock decline below its critical support at Rs 19.5 also.

Next support on the long-term chart is at Rs 14. The stock also has psychological support at Rs 15. So investors can look forward to a reversal from the zone between Rs 14 and Rs 15.

That said the stock has to travel some distance before it is able to pull itself out of the mire it is currently stuck in. A strong weekly close above Rs 19.5 will be the first indication that the stock is on the path to recovery. Subsequent hurdles are at Rs 24 and then Rs 29.

Long-term view will turn positive only if the stock goes on to close above Rs 33.

I have purchased Glenmark Pharmaceuticals at Rs 300. I am a long-term investor and can hold for at least 3 more years. Should I book profits or buy more shares in declines? Also let me know if I can purchase ITC for long-term investment.

Vimal Bhatia

Glenmark Pharmaceuticals (Rs 602.6): Glenmark Pharmaceuticals is in a steady uptrend and there is no sign of weakness in the charts. You could, therefore, be exiting the stock too early if you sell it at this point. Since you have a tidy profit in the stock, you can continue to hold it with stop-loss at Rs 460.

If the stock continues to trade above this level, it can move on to Rs 680 or Rs 730 in the months ahead. Stop-loss for long-term investors can be at Rs 400.

ITC (Rs 369): ITC has been in a gravity-defying run since 2009. The quandary that most investors face at this juncture is whether the trend will reverse soon and hence they should book out or if the rally can continue.

It is difficult to answer this question on the basis of technical analysis. But what investors can do is to maintain a trailing stop-loss, which means adjusting the stop-loss as the stock keeps moving higher so that they do not miss out on a large chunk of the rally. A suggested stop-loss is 10 per cent below the current price.

Short-term support on ITC chart is placed at Rs 311 and the short-term trend will stay positive as long as this level holds. The long-term trend will not be under threat unless the stock dives below Rs 288.

comment COMMENT NOW