NHPC rebounding from key support

What are the prospects of Reliance Power bought at Rs 430, and NHPC at Rs 35? Should I continue to hold these shares?

Surendran

Reliance Power (Rs 84.6): You have purchased this stock close to its all-time high recorded before the 2008 crash. Reliance Power reached its nadir in October 2008 when it declined to Rs 82. The recovery from this level was unable to take the stock past Rs 200, which is the key long-term trend–decider for this stock.

As long as the stock trades below this level, it is likely to move in a broad trading range between Rs 80 and Rs 200. Close above Rs 200 is needed to pull the stock higher to Rs 230 or Rs 264.

Investors can hold the stock as long as it trades above Rs 70. Rebound from here can take the stock higher to Rs 121 or Rs 148 in the months ahead. Investors with a short- to medium-term perspective can consider switch out in such rallies.

NHPC (Rs 24): We had reviewed NHPC in February this year when we had written that investors should hold the stock only as long as it traded above 22. We continue with the view that stop-loss for investors should be at Rs 22 since it is hard to foresee where the decline can halt once this trough is breached.

That the stock has rebounded from the zone between Rs 22.4 and Rs 22.6 thrice since February also reinforces the importance of this support (around Rs 22).

The stock could, however, face resistance at Rs 25.8, Rs 26.3 and Rs 27 in the months ahead. Investors with short- to medium-term perspective can divest their holdings if the stock reverses from either of these levels.

Long-term outlook will, however, turn positive only on a strong close above Rs 27. Subsequent targets are Rs 28.3 and Rs 29.7.

I bought shares of Indowind Energy at an average of

Rs 23.1. Should I hold them or exit?

Shriguru

Indowind Energy (Rs 12.8): This stock was decimated in the 2008 crash as it plummeted from the high of Rs 217 to Rs 17 by March 2009. This long-term support was breached in August and the stock is currently trading close to its all-time low at Rs 11.8.

The short-term trend in the stock continues to be down and a decline to sub-Rs 10 level cannot be ruled out.

The long- and medium-term trend in this stock is also down. Investors should divest their holdings at current level and consider reinvestment once the stock goes on to close above Rs 18.

The medium-term trend in the stock continues to be down and rallies will face resistance at Rs 21 and then at Rs 27 in this period. The long-term view will turn positive only on a close above Rs 90.

Please elaborate the short- and long-term outlook for Akzo Nobel India.

R.M.D. Altaf

Akzo Nobel India (Rs 933): This stock appears indomitable and was hardly scratched in the broader market correction that is raging since last November. The stock recorded a life-time high at Rs 1,045 in July, and is currently in a short-term correction.

Short-term supports are at Rs 900 and then at Rs 820. Investors with short-term perspective can hold the stock as long as it trades above Rs 820. Short-term resistances will be at Rs 990 and Rs 1,045.

The long-term trend is robust in this stock and long-term investors can continue to hold as long as it trades above Rs 780. If the stock manages to hold above this level, there is the possibility of break-out to Rs 1,280 over the long-term.

Please comment on the long-term prospects of Nelco and Hyderabad Industries.

Anil

Nelco (Rs 57.5): Long-term trend of Nelco reversed lower in January 2008. Since the recovery in 2009 could not take the stock past the long-term trend decider at Rs 167, this down trend continues to remain in force. What is more worrying is the fact that the stock has breached its medium-term support at Rs 70 as well.

There is psychological support around Rs 50. But it is quite likely that it declines further to Rs 39 or Rs 21 in the months ahead. Investors should, therefore, divest their holding on a decline below Rs 50. Resistances that can thwart the stock in the months ahead are at Rs 67 and Rs 95.

Hyderabad Industries (Rs 313.9): This stock recorded a peak at Rs 628 in August 2005 after which it slid incessantly to reach the trough at Rs 87 in October 2008.

The recovery from this low helped the stock surpass its previous peak to take it up to Rs 761 in October 2010. But the stock is once more in a serious correction from this peak.

Key long-term support is around Rs 330. The stock hovered above this level between February and August this year.

But this support was breached in August and the stock is trading below this level at the next psychological support at Rs 300.

Investors can hold the stock with stop at Rs 300. If this level is breached, the stock could slide lower to the zone between Rs 200 and Rs 220. Next long-term support is between Rs 100 and Rs 120.

The stock will face resistances at Rs 400 and Rs 476 in the months ahead. Long-term view will turn positive only on a close above Rs 580.

What is the prospect of Century Enka bought at

Rs 199?

Mohanan K.A.

Century Enka (Rs 158): Century Enka was on a dream run between January 2009 and January 2010 when it raced from Rs 50 to Rs 331. But the long-term trend reversed downward from this peak and the stock is currently testing the key long-term trend deciding level between Rs 140 and Rs 160.

Investors can watch out for reversal from this zone and those still holding the stock can continue to do so as long as it trades above Rs 140.

It would, however, be prudent to pare your holding on a decline below Rs 140 since subsequent supports are Rs 100 and then Rs 60.

Resistances for the months ahead will be at Rs 220 and Rs 260. Investors with short- to medium-term perspective can divest their holdings on failure to clear the first resistance.

Can I buy Mastek at current level?

Mukesh Kumar

Mastek (Rs 93.9): Mastek couldn't get anywhere close to the dizzying height of Rs 1,544 recorded in February 2000 and the stock has been vacillating wildly in a broad range between Rs 100 and Rs 400 since 2001.

It is obvious that the stock is close to the lower end of this trading range. So investors with a higher risk appetite can buy the stock at current levels with stop at Rs 85.

Short-term targets are Rs 136, Rs 168 and Rs 218. Medium-term view will turn positive only on a close above Rs 218 and investors with lower risk appetite can buy the stock only on a close above this level. Subsequent targets are Rs 258 and Rs 300.

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