QUERY CORNER: Suzlon Energy at the last bastion

I have bought shares of Reliance Communications at Rs 120. Should I sell at current market price?

N Gopalakrishnan

Reliance Communications (Rs 62.6): This stock is spiralling down a bottomless pit and the long as well as the medium-term trends in the stock are currently down. That the stock is down 14 per cent this year even as the benchmark indices are up over 20 per cent accentuates the bearish sentiment prevailing here.

Short-term targets for the stock are Rs 70 and Rs 86. But failure to reach the first target will mean that the stock will trudge to a new low soon, hence it will be best to exit the stock. Another signal that the medium-term trend is reversing for the better will be if the stock manages a close above Rs 110.

Short-term investors can hold the stock with stop-loss at Rs 53 while others should keep the stop-loss at Rs 45. An alternate strategy would be to exit the stock at current level and consider re-entry when it records a strong close above Rs 110.

During April 2008, I purchased Suzlon Energy at Rs 295. Please advise if there is any point holding on to this share or is it better to sell the same — if so, when? Since my holding is not very high, I can even hold it indefinitely, if there is some hope.

P.R. Somaskandan

Suzlon Energy (Rs 15.9): You have lost almost 95 per cent of your investment in this stock already. There isn’t much value to be recouped by selling the stock at this level. The stock is in a long-term downtrend and it has also breached the March 2009 low of Rs 33. But the stock is attempting to hold above the next support at Rs 15 since last December. This could, however, be the last bastion and you should divest your holdings on a move below this level.

The medium-term view will improve only on strong close above Rs 33. Next medium-term hurdles will be at Rs 48 and Rs 67. You can either hold the stock with stop at Rs 15 and exit in short-term rallies or exit the stock now and consider re-entry on a close above Rs 33. Key long-term hurdles for the stock are at Rs 146 and Rs 187.

I am holding shares of Karnataka Bank bought at Rs 155. I am a medium-term investor. Should I exit or hold for another three more months?

Usha R. Shetty

Karnataka Bank (Rs 119.7): This stock is in a strong uptrend since the low recorded at Rs 78. The stock is up 58 per cent in a short span of four weeks. This uptrend can take the stock higher to Rs 128 or Rs 144 in the upcoming weeks. Investors with a short-term perspective can exit at either of these levels.

The medium-term view will turn positive only on a strong close above Rs 144. Subsequent target is Rs 193. Stop-loss for medium-term investors can be at Rs 105 while medium-term investors can hold the stock with deep stop at Rs 78.

Please give technical advise on Everest Industries.

Ayush

Everest Industries (Rs 222.7): The long-term decline from the August 2010 peak halted at Rs 102 for Everest Industries, and the stock has been in a strong uptrend since then. This uptrend faces key hurdle at Rs 216. The stock is halting slightly above this level.

Investors should tread with caution as long as the stock hovers in the band between Rs 210 and Rs 240. Reversal from this zone can result in the stock falling to Rs 186 or Rs 155 in the months ahead. Investors with short- to medium-term horizon should, therefore, exit the stock if it reverses from this band.

Conversely a strong break above Rs 240 will result in the stock moving on to its previous high at Rs 285.

I have bought Thinksoft Global at Rs 60. Should I hold this stock or book profit?

Sudhir Padhue

Thinksoft Global Services (Rs 109.3): Thinksoft Global has been in a vicious downtrend since its November 2010 peak and it lost more than 93 per cent to the August 2011 low at Rs 33. But the stock formed a base between Rs 30 and Rs 50 and is attempting to move up following a rounding bottom formation. The current uptrend faces resistance at Rs 130.

Investors with a short-term horizon can sell the stock on failure to move above this level. But strong break beyond Rs 130 will take the stock to its key medium-term hurdles at Rs 186 and Rs 228.

Stop-loss for short-term investors can be at Rs 85 while medium-term investors can hold with deep stop-loss at Rs 65.

Please advise about the future prospects of Kotak Mahindra Bank.

M. Ramana

Kotak Mahindra Bank (Rs 624.1): This stock has defied market trend since the beginning of last year. Even as rest of the stocks in India were declining, Kotak Mahindra Bank was in a steady uptrend and has gained 88 per cent since its February 2011 low. Immediate target for the stock is the peak of Rs 718 recorded in January 2008. Since long-term target of the up-move from 2009 low also gives us the target around Rs 760, there could be some turbulence in the zone between Rs 700 and Rs 760. Investors with short- to medium-term perspective can cash out around this region.

Short-term stop-loss can be at Rs 560 while investors with medium-term perspective can hold the stock as long as it trades above Rs 530.

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