Query Corner: HDFC Bank in stellar uptrend

Can you please advise on the short and medium-term trends in HDFC Bank?

Shekhar

HDFC Bank (Rs 621.9): This bank appears to be operating in another planet. Even as most bank stocks are trading well below their 2008 peaks, this stock trades 72 per cent above this peak. Both medium and short-term trends are up in the stock.

Investors should therefore ride this uptrend with suitable stop-loss to protect their profits. Stop-loss for short-term investors can be at Rs 580 while medium-term investors can hold with deep stop-loss at Rs 520.

The third leg of the uptrend from the 2009 low of Rs 156 is currently in motion. This leg has the targets of Rs 615 and then Rs 748.

If the stock manages a clean break beyond Rs 650, it can move on to Rs 748 over the long-term.

Long-term investors can stay invested as long as the stock trades above Rs 450.

Corrections to this level can also be construed as an opportunity to accumulate this stock by long-term investors.

What is your advice regarding medium and long-term outlook on Ambuja Cements. Can the stock be brought at current level?

Anil Kumar Ray

Ambuja Cements (Rs 216): This stock is in a strong uptrend since the trough at Rs 135 formed this May. Ambuja Cements is up 60 per cent since then. Investors already holding the stock with a short to medium-term perspective can do so with the stop-loss at Rs 188.

Stop-loss for long-term investors can be much lower at Rs 152.

The stock is now in an up-move following long-drawn consolidation from the end of 2010 to May this year.

Immediate target for this rally is Rs 258. But only the agile and the quick ought to jump in at this juncture.

Others can wait for a correction to Rs 188 or Rs 170 before buying the stock.

I have shares of Claris Lifesciences purchased at average price of Rs 223. What are the prospects of this company?

Madhu Gupta

Claris Lifesciences (Rs 250.4): Claris Lifesciences has been in an uptrend since the low of Rs 98 recorded last December. But if we extrapolate the rally from this low, we get the first target of Rs 260. The stock has already achieved this target.

Therefore investors ought to stay wary and book partial profits if it fails to move beyond the recent peak of Rs 272 in the weeks ahead. That said target on a strong move above Rs 260 is Rs 322.

Medium-term investors can hold the stock with the stop-loss at Rs 205 while long-term investors can stay invested as long as the stock trades above Rs 164.

I am holding shares of GVK Power and Infrastructure purchased at Rs 35. Please advise on the future of this stock.

Arun Gupta

GVK Power and Infrastructure (Rs 14.4): This stock is in a severe structural downtrend. It made a life-time low at Rs 9.5 last December and is currently trying to stabilise in the region between Rs 10 and Rs 20.

The stock has long-term support around Rs 10 and it is also a psychological support. Therefore investors still holding on to the stock can do so only as long as it trades above Rs 9.

But the stock could find it quite difficult to dig itself out of the hole it is currently in. It will face resistance at Rs 20 and then at Rs 27 over the medium-term. Investors can switch out of this stock in such rallies.

The outlook will begin improving only if the stock manages a close above Rs 27. Subsequent targets will be Rs 32 and then Rs 37.

Please advise on Everonn Education purchased at Rs 195 and Uflex at Rs 125. I can hold for one year.

Tapan Panda

Everonn Education (Rs 166.1): This stock staged a brilliant fight-back from Rs 79 to Rs 756 in 2009 and 2010.

But the long-term downtrend that is in force since 2008, resumed from August 2010 and the stock is once again spiralling lower.

It hit the recent low at Rs 135 this July and is attempting to hold at this level.

That said the recovery from this low is extremely feeble and lacks conviction.

It is highly likely that the stock goes on to hit its 2009 low of Rs 79 again. It would be best switch out of this stock and consider re-entry on a close above Rs 376.

The outlook for this stock will turn benign only on close above this level. Subsequent targets are Rs 450 and Rs 500.

Uflex (Rs 106.7): This stock is also in a strong structural downtrend as reflected in the lower troughs formed since last July. Although the stock has recorded strong gains this week, it needs to make further headway before this reversal can be taken seriously. Key short-term resistance is at Rs 122.5.

If this level is crossed, the stock can attempt to move to the medium-term trend deciding level at Rs 142.

Investors can hold the stock with stop at Rs 90 and try to exit at the above mentioned levels. Subsequent targets are Rs 175 and Rs 226.

It is hard to envisage a move above Rs 235 in the next couple of years. Investors will do well to exit the stock on decline below Rs 90.

I hold Tata Communications bought at Rs 256. What is the outlook of the stock?

Thomas Mathew

Tata Communications (Rs 248.2): Tata Communications is trying to lift itself up from the October 2011 trough at Rs 182.

But the stock faces resistance at Rs 265 and Rs 287. Investors with short to medium-term perspective should book some profits at these levels.

Target on move beyond these hurdles is Rs 360. This is the key long-term resistance for the stock.

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, 859/860 Kasturi Buildings, Anna Salai, Chennai 600002.

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

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