QUERY CORNER - Sterlite Industries trying to build a base

I bought shares of Fresenius Kabi Oncology at Rs 82. Should I hold or sell at the current price?

Jayalakshmi

Fresenius Kabi Oncology (Rs 109.3): You have been prescient enough to purchase Fresenius Kabi Oncology, formerly known as Dabur Pharma, at a critical long-term support level. The stock has critical support around Rs 80, from where it bounced higher in November 2011 and then again in December that year.

Since this level occurs around 61.8 per cent retracement of the up-move from the October 2008 trough of Rs 28, long-term investors can consider declines to the zone around Rs 80 as a long-term buying opportunity. Stop-loss for such buys can be at Rs 70.

Medium-term targets for the stock are at Rs 117 and Rs 140. Investors with short- to medium-term perspective can divest part of their holding if the stock is unable to get past the resistance band between Rs 117 and Rs 120. That will imply that the stock will remain in a sideways zone between Rs 80 and Rs 120 for a few more months.

Long-term outlook will turn positive on close above Rs 140 paving the way for a rise to a new life-time high.

What is your advise regarding medium- and long-term outlook of Sterlite Industries.

Anil

Sterlite Industries (Rs 119.9): A fresh leg of the long-term downtrend began at the peak of Rs 232 in Sterlite Industries.

This down-move is still in motion. It breached the long-term support at Rs 115 and went on to halt around Rs 86. It is currently attempting to form a base in the zone between Rs 85 and Rs 131.

This sideways move, that is on since the last week of 2011, keeps the long-term outlook under a cloud. Key resistance from a long-term perspective exists at Rs 142 for the stock. Inability to move beyond resistance will signal that the stock can keep vacillating in the region between Rs 85 and Rs 145 with the likelihood of the stock declining below Rs 85 over the long-term.

It would, therefore, be best for investors to divest their holdings on close below Rs 85. That said, move beyond Rs 142 will take the stock to Rs 160 or Rs 177 over the year ahead.

The stock needs to move beyond Rs 177 to enable it to move on to the long-term ceiling between Rs 250 and Rs 285.

I would like to know the prospects of Subex purchased at an average price of Rs 15. I am willing to hold the stock for the long-term.

Ajith Thomas

Subex (Rs 14.2): This stock is in the grips of a long-term bear phase. The rebound in 2009 was quite ineffective in taking the stock price higher and the stock was once again in a vicious decline since the end of 2011.

It is currently trading close to its life-time low of Rs 11 recorded in August 2012.

Though there was a minor recovery from this low, it is far from convincing.

The stock will need to move beyond Rs 27 to signal that the medium-term outlook is turning positive.

It would be best for investors to either switch out of this stock at this juncture.

They can consider re-entry, purely from a trading perspective only on close above Rs 27.

Subsequent targets would be Rs 46 and Rs 67.

Please give me your advise on PSL.

Suresha Gupta

PSL (Rs 59.1): PSL is also in a long-term decline since the peak of Rs 188 recorded in January 2010. This decline halted at the long-term support at Rs 50 in January 2012 and the stock has been moving in a sideways band between Rs 50 and Rs 72 since then.

Investors can hold the stock as long as it trades above Rs 50. But the outlook will turn positive only when the stock closes above the upper end of its current trading band at Rs 72. Subsequent targets are Rs 97 and Rs 103.

It is hard to envisage a break-out beyond Rs 100 over the next 12 months in the stock.

It will therefore be best to switch out of the stock in rallies.

I am holding Balrampur Chini Mills purchased at Rs 65 please give your short- and medium-term technical view on the stock.

Boominathan

Balrampur Chini Mills (Rs 51): Balrampur Chini has long-term support around Rs 30. The stock reversed from this base in December 2011 but the rebound could not take the stock beyond Rs 78 that is a key medium-term resistance for the stock. The stock is currently in a deep decline from this level.

Long-term investors can hold the stock with stop loss at Rs 29. The stock can also be bought in declines with a long term perspective with the same stop-loss. Key short-term support is however at Rs 50.

Balrampur Chini will face a strong medium-term hurdle around Rs 80.

Inability to move above this level can make the stock vacillate in the zone between Rs 30 and Rs 80. Those wishing to buy the stock should do so only on a close above Rs 80. Subsequent targets are Rs 92 and Rs 105.

It is hard to expect the stock to move above Rs 105 in the coming year. But if it manages to do so, it can move on towards the long-term targets of Rs 138 and Rs 150.

Could you please advice on Foseco India for a long term buy?

Srinivasan N

Foseco India (Rs 569): The structural trend continues to be up for Foseco India. Despite the stock being in a corrective phase since last April, this decline is halting at the long-term support at Rs 540.

Investors can buy the stock at current levels with stop at Rs 520. Reversal from these levels will be positive and will indicate that the stock can surge to Rs 790 or Rs 900 over the long term.

Conversely, investors should avoid buying the stock on decline below Rs 520. Next halt for the stock can be at Rs 471 or Rs 411.

Lokeshwarri S.K.

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.

Related

This article is closed for comments.
Please Email the Editor