Market Strategy

Query Corner - Hindustan Zinc in structural uptrend

Lokeshwarri S.K. | Updated on November 15, 2017 Published on June 02, 2012

Please share your views on IndusInd Bank and Sun TV Network.

Jayarami Reddy

IndusInd Bank (Rs 295.1): IndusInd Bank is in a stellar uptrend since its March 2009 low at Rs 26. The correction between December 2010 and February 2011 halted after the stock retraced one-third of its prior up-move. The stock consolidated sideways between Rs 200 and Rs 300 between December 2010 and February this year. The stock is currently testing the support at Rs 300.

Short-term support for the stock would be at Rs 275. Stop-loss for long-term investors can, however, be at Rs 190. If the stock manages to hold above Rs 280, it will mean that the stock can move on to Rs 387 or Rs 428 in the weeks ahead. Long-term target for the stock is Rs 506.

Sun TV Network (Rs 226.7): Sun TV Network is in a long-term downtrend since December 2010 when it reversed from the peak at Rs 550. This decline has made the stock breach its key long-term support at Rs 290. The stock is, however, attempting to stabilise just above Rs 200 that is the next psychological support for the stock.

Investors can hold the stock as long as it trades above Rs 200. But breach of this level can make the stock accelerate downward towards Rs 150 or Rs 122. Medium-term resistances will be at Rs 350 and Rs 430.

Inability to move beyond the first resistance will denote weakness and the possibility of the stock declining below Rs 200 in the weeks ahead.

I wish to buy Grasim. Kindly advise the level as well as the medium-term target for this stock.

Narendra Palnitkar

Grasim Industries (Rs 2244.1): Grasim faces a strong long-term hurdle around Rs 2,828. This occurs at 61.8 per cent retracement of the previous decline from the November 2007 peak. The stock has been struggling to move above this level, despite repeated attempts since July 2009. The stock is once again reversing lower from this level since this February.

Investors with lower risk-taking ability can wait for a firm close above Rs 3,000 before buying this stock. Subsequent target is the previous peak at Rs 4,051. Key medium-term supports are at Rs 2,105 and Rs 1,613. Investors can buy this stock in declines as long as it trades above Rs 1,600.

Fresh purchases are not advised on a decline below this level since next targets would be at Rs 1,111 and Rs 875.

I have purchased Reliance Communications at Rs 92. Please advise me on the prospects for these shares. Pavan Makarla

Reliance Communications (Rs 62.6): Reliance Communications is in a vicious downward spiral and the stock is currently trading at its life-time low — 52 per cent below the trough recorded in March 2009. The series of lower peaks and troughs recorded by the stock since its June 2009 peak implies that the long-term trend is down, as is the medium- and short-term trend.

Immediate resistance for the stock is at Rs 110. Near-term outlook will turn positive only if the stock moves above this level. Investors wishing to bottom-fish should also wait for a close above this level before beginning to accumulate the stock.

Those holding the stock can continue to do so as long as it trades above Rs 60. It is hard to predict where the slide can halt once the stock starts slipping below this level.

Long-term resistances for the stock are at Rs 175 and Rs 250. Investors with a medium-term perspective can divest their holdings if the stock reverses lower from either of these levels.

Please discuss the long-term outlook of Hindustan Zinc and Sterlite Industries.

Anil

Hindustan Zinc (Rs 116.6): The structural uptrend that began at Rs 21.7 in October 2008, continues to be in force in the stock of Hindustan Zinc. Though the stock is pausing after recording the life-time high at Rs 155, there has not been a serious decline. The stock is pausing above Rs 105 which is a key fibonacci retracement support.

Investors can buy the stock in declines with stop at Rs 104. Next long-term supports are at Rs 90 and Rs 73. The stock could, however, continue to face resistance around Rs 155 in the upcoming months. Break-out above this level will take the stock to Rs 188 over the long-term.

Sterlite Industries (Rs 91.2): Sterlite Industries is in a structural downtrend since December 2007. This down-move resumed in January 2010 after a brief recovery from the bear-market low recorded in October 2008. The point of concern is that the stock is currently trading below its medium-term support at Rs 120. There is a short-term support around Rs 88. But breach of this level can drag the stock lower to 2008 low at Rs 41.

Medium-term resistances are at Rs 142 and Rs 177. Key long-term resistance will, however, be in the band between Rs 195 and Rs 235. The stock needs to clear this hurdle to move towards the previous life-time high at Rs 287.

I bought Geodesic at Rs 62. Please advise on the future view.

Mahesh Thadani

Geodesic (Rs 39): Geodesic is currently poised at significant long-term support at Rs 38. The stock bounced from this level in January 2009 and again in December 2011. Investors can hold the stock with the stop at Rs 35.

It would, however, be best to divest your holding on a decline below Rs 35, since the next support for the stock is way below at Rs 24. Medium-term resistances would be at Rs 84, Rs 113 and Rs 160. Long-term view will turn benign only on a close above Rs 160.

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

c:set var="prUrl" value="https://premium.thehindubusinessline.com" />

Read further by subscribing to

The Hindu Businessline

What You'll Get

  • Web + Mobile

    Access exclusive content of the Hindu Businessline across desktops, tablet and mobile device.


  • Exclusive portfolio stories and investment advice

    Gain exclusive market insights from the Hindu Businessline's research desk.


  • Ad free experience

    Experience cleaner site with zero ads and faster load times.


  • Personalised dashboard

    Customize your preference and get a personalized recommendation of stories based on your intrest.

This article is closed for comments.
Please Email the Editor