Query Corner: Amara Raja Batteries in structural uptrend

Please advise if I can invest in Unitech at current prices.

Hemanth Kadiri

Unitech (Rs 24.3): The long-term downtrend in Unitech that began from January 2008 peak of Rs 546 continues to be in force and it would take a few more years and a move above Rs 200 to reverse this trend. That the stock has moved below its March 2009 low at Rs 24.6 is also a negative from a long-term perspective.

That said, investors can take heart from the fact that the stock is attempting to form a base, just below the current price, in the range between Rs 17 and Rs 18. It is hovering just above this support zone since May this year.

Investors can buy the stock at these levels with stop at Rs 16. Short-term target for the stock would be at Rs 38 and Rs 41.

Key medium-term resistance would be at Rs 55. If this level is crossed, rally to Rs 80 or Rs 118 is possible. It is hard to envisage a move beyond Rs 118 just yet.

I am holding shares of JSW Energy purchased at an average price of Rs 58. Should I hold these shares or sell them?

Raju Byati

JSW Energy (Rs 60.8): JSW Energy is nearing its short-term resistance at Rs 63. Investors who have purchased the stock with a short-term perspective can divest their holding on failure to move beyond this resistance.

The stock is in a medium-term downtrend since the February peak at Rs 77 and resumption of this trend can drag the stock lower to Rs 48 or Rs 40 over the upcoming weeks.

That said, breach of the resistance at Rs 63 can take the stock to the long-term resistance at Rs 74.

The stock is likely to reverse from this level even if it gets past the short-term hurdle.

Long-term investors can, however, watch out for buying opportunity in the band between Rs 35 and Rs 40.

Please share your technical view on Amara Raja Batteries bought at Rs 207.

Kaushalendra Pratap Singh

Amara Raja Batteries (Rs 219.4): This stock is in a strong structural uptrend since the March 2009 trough at Rs 15.

Having doubled in price, it is one of the strong performers this year since the beginning. Key long-term support for the stock exists in the band between Rs 130 and Rs 160. You can hold the stock as long as it trades above this zone.

Corrections to this level will also provide an opportunity to accumulate the stock.

Supports on breach of this level would be at Rs 120 and Rs 97. Investors with a short-term investment horizon can hold the stock with stop at Rs 195.

Investors should, however, tread a little carefully as long as the stock does not move past the Rs 220 level emphatically. Presence of long-term target at this level makes reversal from this level likely.

Target on move beyond Rs 220 is Rs 277.

What is your advise regarding medium- and long-term out look on Omax Autos and Orient Paper and Industries? Can these stocks be bought at current level.

Anil

Omax Autos (Rs 47.5): The long-term trough formed at Rs 15 in March 2009 in Omax Autos remains unchallenged. But the stock is in an extended sideways move between Rs 32 and Rs 70 since early 2010.

The medium-term trend in this stock is up since the December 2011 low at Rs 32. Investors can buy the stock in declines with stop at Rs 32. Medium-term targets for the stock are Rs 64, Rs 71 and Rs 76. In other words, the zone between Rs 65 and Rs 76 is a strong long-term resistance and the stock could struggle to move beyond it just yet. Inability to clear this hurdle will confine the stock in the broad trading band between Rs 20 and Rs 70 over the long-term.

Orient Paper and Industries (74): This stock is also in a protracted sideways move between Rs 45 and Rs 65 since May 2009. The stock has just moved above the upper boundary of this trading range and is attempting to stabilise in the narrow band between Rs 66 and Rs 73. Investors with short- to medium-term perspective can buy at these levels with stop at Rs 66.

Immediate target would be at Rs 76 and the next target would be at 85.

It, however, needs to be borne in mind that these are long-term resistance levels and the stock could turn volatile as it nears these levels.

Supports on move below Rs 66 would be at Rs 55 and then at Rs 46. Fresh purchases are not recommended below this level.

I am holding shares of Firstsource Solutions bought at Rs 18.50. What is the outlook for this share?

Sanjay Lokeshwar

Firstsource Solutions (Rs 9.4): The long-term trend in this stock is extremely weak. Though it is attempting to trade in the zone between Rs 8 and Rs 10 since this May, there are numerous hurdles for the stock in the days ahead. Immediate resistance is at Rs 15 and the next hurdle is at Rs 19. Strong close above the second resistance is needed to signal that the short-term trend is reversing higher. Inability to do so will drag the stock lower towards Rs 8 again.

That the stock failed to participate in the market rally since May implies that the short-term trend is bearish.

Investors can either hold the stock with stop-loss at Rs 7.5 to exit in minor rallies or they can exit at current levels and re-enter on a firm close above Rs 40.

Medium-term view for the stock will turn positive only on weekly close above Rs 40.

(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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