Query Corner: Sintex Ind faces key resistance ahead

I am holding shares of Jindal Poly at Rs 400 and UB Engineering at Rs 83. They are sliding in good and bad markets alike, without any respite. Please advise whether to hold or to switch.

Venkatraman Sitaraman

Jindal Poly Films (Rs 306.3): In our last review of this stock in early January this year, we had mentioned that it has short-term resistance at Rs 580 and investors with short- and medium-term perspective can divest their holdings on a failure to cross this level. The stock thereafter encountered resistance around Rs 575 and failed to move above this resistance level. It has been on an intermediate-term downtrend since its peak of Rs 700 recorded last October. The stock broke through its key supports at Rs 390 in May this year and is trending lower.

However, from a short-term perspective, the stock is reversing higher, taking support at Rs 280. It can encounter resistance at Rs 350 and then in the Rs 390-400 range. Failure to move beyond the first resistance will be a cue for short- to medium-term investors to divest their holdings. Resumption of the downtrend can pull the stock down to its significant medium-term support, which is in the band between Rs 220 and Rs 250. Subsequent long-term support is at Rs 150. Key resistance above Rs 400 are at Rs 450 and Rs 500.

UB Engineering (Rs73.4): The stock has been on an intermediate-term downtrend since its all-time high of Rs 239, marked last August. Both short- and medium-term trends are also down for the stock. Nevertheless, it is hovering just above its long-term support band between Rs 63 and Rs 65. Investors with short- and medium-term perspectives can hold the stock with stop-loss at Rs 60.

A reversal from this support band will mean encountering resistances at Rs 80 and then at Rs 100 in the medium-term. Next key resistance is at Rs 120. But the intermediate-term downtrend remains in place as long as the stock trades below Rs 160. Investors should divest their holdings on a fall below Rs 60; the stock can accelerate downwards and reach Rs 48 or even Rs 35 in the months ahead.

I bought Patel Integrated at Rs 23 and shares of Cravatex at Rs 585. Please give the outlook on these scrips.

Mangesh V

Patel Integrated Logistics (Rs 33.8): The stock found support at its longer-term base level at Rs 20 during late February and March this year and arrested its intermediate-term downtrend which had commenced in November last from its peak of Rs 47. Since its March trough, Patel Integrated Logistics has been on a medium-term uptrend. Investors with short- and medium-term perspective can hold the stock as long as it trades above its immediate key support level of Rs 25, while maintaining this level as stop-loss.

The stock has key long-term resistance in the range between Rs 40 and Rs 43. Inability to exceed beyond this range will be an indication for taking profits off the table as the stock can tumble to Rs 25 and then to Rs 20. On the other hand, an emphatic breakthrough of Rs 40 and Rs 43 range can take the stock higher to Rs 56 and to Rs 70 in the long-term.

Cravatex (Rs 788): Cravatex has been trending higher from its August 2010 trough of Rs 164. Medium-term trend is up for the stock from its March low of Rs 450. However, after marking an all-time high at Rs 892 on May 27, the stock started to weaken and is oscillating between Rs 700 and Rs 850. Moreover, we notice that weekly and monthly indicators are displaying negative divergence signalling that trend reversal is on the cards. Currently, two-week average volume traded is 339 shares. We advise at this juncture to exit from the stock.

Strong close below Rs 700 will pull the stock down to Rs 580 and then to Rs 450 in the medium-term. Further, decisive fall below Rs 450 can lead to sharp decline to Rs 300 or even to Rs 200 in the long-term. Key resistances ahead for the stock are at Rs 850 and Rs 900.

What is your outlook on Sintex?

Subrhamanyam

Sintex Industries (Rs 179.3): The stock's downtrend movement which had begun from its significant peak of Rs 237 registered in last November, got arrested at its important long-term support level of Rs 140 in January.

The stock subsequently managed to hold above this long-term level in February and March and started to move higher.

However, following a 50 per cent fibonacci retracement of its prior downtrend mark, the stock encountered resistance at around Rs 190 in May this year.

Sintex Industries is facing significant resistance in the zone between Rs 190 and Rs 200, which is also a key trend-deciding zone. Only a conclusive move above Rs 200 will signal that the stock has resumed its long-term uptrend and lift the stock higher to Rs 220 and Rs 238 in the longer-term.

Investors can initiate fresh long positions if the stock moves above Rs 200 with stiff stop-loss and exit at either level.

As long as the stock trades below Rs 200, its intermediate–term downtrend remains in place, and it can decline to Rs 165 and then to next support level of Rs 140 in the ensuing months.

Please let me know the medium- and long-term outlook of Gati purchased at an average price of Rs 71.

Mukesh Kumar

Gati (Rs 63.2): In July 2010, the stock met resistance around Rs 90 and resumed its long-term downtrend that has been in place since its life-time peak of Rs 215 recorded in early 2008. Intermediate-term trend is down for the stock since July 2010. As long as key resistance positioned at Rs 75 is not penetrated, the stock's intermediate-term downtrend holds and the stock can decline to Rs 58 and then to Rs 50. An emphatic fall below Rs 50 will be a sign of resumption of its long-term downtrend, and the stock can trend lower to Rs 40 initially, and then to Rs 30 in the long-term. Investors with long-term perspective can hold the stock with stop-loss at Rs 50 and for the medium-term with stop at Rs 57.

Conclusive move beyond Rs 75 will negate the intermediate-term downtrend and lift the stock higher to Rs 82 and Rs 90, a significant long-term resistance. Short-term support and resistance are positioned at Rs 60 and Rs 65 respectively.

Can I hold South Indian Bank and Indiabulls Power at current levels?

J. Rajagopalan

South Indian Bank (Rs 23.9): South Indian Bank has been on a medium-term uptrend from its February trough of Rs 17.5. This uptrend has been going on after the stock retraced 61.8 per cent — the fibonacci retracement level of its prior downtrend at around Rs 25, and it is currently hovering just below this level.

Investors with a medium-term horizon can hold the stock with stop-loss at Rs 21.5 and for the long-term with deeper stop at Rs 18 levels. Significant jump above Rs 26 can take the stock northwards to Rs 28 or even to Rs 30 in the long-term.

Conversely, a plunge below Rs 21.5 will drag the stock down to Rs 18 or Rs 17.5 range. Key supports below this range are at Rs 16 and Rs 15.

Indiabulls Power (Rs 18.5): The stock has been in a downtrend, in all-time frames — long-, medium- and short-terms. We do not see any initial signs of trend-reversal in this stock. Investors with a long-term perspective can consider stay invested with stop-loss at Rs 16. A fall below this level can pull the stock to new lows. Strong move above Rs 22 would be a positive cue for the stock and it can rally to Rs 26 and then to Rs 30 in the upcoming quarters.

Only a decisive weekly close above Rs 30 will mitigate the stock's long-term downtrend and push the stock higher to Rs 35 and later on to Rs 39.

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