Market Strategy

Query Corner: Oil India reversing from key support

Lokeshwarri S.K. | Updated on November 15, 2017 Published on January 14, 2012

I hold Dabur India purchased at Rs 100 and Oil India at Rs 1,150. What is technical view on these stocks?

R.N B Rao

Dabur (Rs 97.5): You seem to have purchased the stock recently since it is still trading close to your cost. The long-term trend in the stock is up since 2003 and it is still going strong. If you are in the stock for the long-haul, the level that you need to watch is at Rs 70. The healthy long-term view will be under threat only if this level is breached.

If the stock manages to hold above Rs 90 in the months ahead, it we can assume that the bulls continue to have the upper hand in this counter.

It can then spend few months moving in a sideways band between Rs 90 and Rs 120 before breaking higher. Break-out targets are Rs 142 and Rs 175. These will, however, be achieved over the long-term, that is in the next two to five years.

Investors who have a shorter perspective can hold with stop-loss at Rs 90. Next supports are at Rs 80 and Rs 70.

Oil India (Rs 1,156.9): Oil India does not have a long trading history, so it is not possible to give a long-term view on this stock. The stock is moving in a wide band between Rs 1,100 and Rs 1,600 over the last two years.

Since it has moved close to the lower end of its long-term trading range, you have bought the stock at the apt juncture. The stock can reverse higher from here to move on to Rs 1,310 or even Rs 1,372 and Rs 1,435.

Long-term trend will turn positive on a rally above Rs 1,435.

Next target is Rs 1,600.

Investors can hold the stock with stop at Rs 1,050. It would be best to divest your holding on a move below this level since it is hard to pin-point where the next halt can be given the stock's short history.

Please let me know the prospects of Ester Industries and Kilburn Engineering.

Amol

Ester Industries (Rs 24.1): Ester Industries recorded a spell-binding rally in 2010 when it spiralled up from Rs 17 to Rs 105. The stock succumbed to gravity after November 2010, and has given up almost all the gains since then.

Investors holding the stock can continue to do so as long as it trades above Rs 17. If it moves below this level, a fall to the October 2008 low of Rs 7 is possible.

It would be best if investors give a wide berth and do not make any fresh purchases in this counter. It is hard to envisage the stock moving back to its 2010 highs.

Rallies are likely to face strong resistance at Rs 52 or Rs 55. The outlook for this stock will turn positive only if it moves beyond Rs 55. Subsequent targets are Rs 62 and Rs 72.

Kilburn Engineering (Rs 26.5): Kilburn Engineering is in serious correction since December 2010. This fall has reversed the long-term uptrend and the stock appears headed towards its 2009 low of Rs 11.5.

This level can act as stop-loss for long-term investors. If you belong to the camp that is averse to risk then you can divest your holding at this point.

Consider jumping in again once the stock moves above Rs 42. Short-term resistances for the stock would be at Rs 30 and Rs 35. Medium-term view will turn positive only on a move above Rs 48.

Please let me know the prospects of Jyoti and Surya Roshni.

Amol Chavan

Jyoti (Rs 56.6): Jyoti is also in a strong medium-term downtrend since the April peak of Rs 104. The stock has dipped below the key medium-term support at Rs 65 and is currently trading below this level.

The psychological support at Rs 50 is currently cushioning the stock. If you are holding on to the stock, this should be your last bastion. For it is difficult to say where the next halt can be. Supports below are at Rs 40, Rs 35 and Rs 25.

Jyoti will face hurdle at Rs 77, Rs 97 and Rs 130 in the months ahead. If you are a short- or medium-term investor, these levels will be the points at which you can watch out for a reversal to jump out.

Key long-term resistance is at Rs 140. The stock needs to move beyond this level to suggest that it is heading towards it former life-time high at Rs 208.

Surya Roshni (Rs 55.8): This stock plummeted in 2011, declining 59 per cent in this period. Surya Roshni, however, halted just below its key medium-term support at Rs 42 and is currently attempting to move higher.

If you are still holding on to the stock, move the stop-loss to Rs 40.

Move below this level will, however, spell trouble since the next supports on the chart are at Rs 34 and then Rs 22.

The rally that began last week can face obstacles at Rs 73, Rs 83 and Rs 92. Long-term view will turn positive only if the stock surpasses the third resistance.

I bought Meghmani Organics at an average price of Rs 16. Can I hold this stock for the long term?

Mohan M

Meghmani Organics (Rs 8.7): A common practice among all of us is to convert loss-making investments into long-term holding. This is an easy way out to stop feeling guilty about the investment.

It also spares us the pain involved in booking losses. But it is better to keep a stop-loss, even for long-term investments.

This can be a general 20 or 30 per cent stop or based on technical study.

You can always buy the stock back once its prospects improve. Coming to the prospects of Meghmani Organics, the stock is inching close to its March 2009 low of Rs 5.

This level can serve as stop-loss for investors holding the stock.

But a runaway rally in the stock is not possible, since it is stuck in the range between Rs 5 and Rs 24 over the last two years.

This range will continue to thwart its up-moves over the next couple of years. So investors should look to exit it as it nears the zone between Rs 20 and Rs 25.

Resistances for the medium-term would be at Rs 12, Rs 14 and Rs 16.

I request you to let me know the prospects of GVK Power.

Leena

GVK Power & Infrastructure (Rs 14.3): Investors in GVK Power would have undergone a nightmarish period watching it slide relentlessly since September 2010.

The stock reached its long-term support at Rs 10 in December 2011.

This is also the place from where it reversed in October 2008. A fledgling rally is on since then.

If you are holding the stock, you can look for exit around Rs 26 or Rs 35. Long-term hurdles for GVK Power are at Rs 42, Rs 54 and Rs 62.

Investors wishing to make a quick buck can also buy in declines with stop at Rs 9.5. The targets are same as given above.

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