Query Corner: ACC in medium-term downtrend

I have shares of Britannia Industries bought at Rs 493. Please let me know the prospects of the company.

J.P. Karthikeyan

Britannia Industries (Rs 489.4): Since taking support at its key base level at Rs 220 in late 2008, the stock has been in a long-term uptrend. However, after making an all-time high at Rs 599 in April 2012, the stock has been on a medium-term downtrend. But, significant long-term support in the band between Rs 450 and Rs 460 is cushioning the stock.

It is currently at an inflection point. Only a strong jump above Rs 510 will reinforce positive momentum and take the stock northwards to Rs 550 or even to Rs 600 in the long-term.

Conversely, emphatic decline below Rs 450 will diminish the stock's uptrend and pull it lower to Rs 400 initially. Further strong fall below Rs 400 will pave the way for a fall to Rs 350 which is the subsequent key long-term support.

Opto Circuits has been spiralling downwards. Can you please tell me the long- and medium-term supports and resistances for this stock?

Manohar, Rajeev, V. Rajaiah

Opto Circuits (Rs 60): The stock has been in a non-stop decline since peaking out at Rs 225 in January 2012. Trend in all time-frames for the stock is down. While trending down, the stock decisively broke through its key supports at Rs 140 and Rs 100 in August 2012 and late January 2013 respectively. It has been plummeting steeply for the past four weeks. The stock is currently testing its long-term support zone between Rs 55 and Rs 60.

Strong decline below this zone will strengthen its downtrend and drag the stock to Rs 46 and then to Rs 40 in the medium-term.

Subsequent supports below Rs 40 are at Rs 33 and Rs 18. Buying or averaging the stock at current levels is not recommended as there are no clear signs of trend reversal and downside risk of the stock is greater.

Important resistances for the stock are positioned at Rs 72, Rs 80, Rs 90 and Rs 100. A strong breakthrough above Rs 100 is required to alter the medium-term downtrend and take the stock higher to Rs 114 or to Rs 124 levels.

Kindly give long-term advise on Pantaloon Retail.

R.M. Kumarappan

Pantaloon Retail (Rs 219.6): The stock's medium-term uptrend that commenced from the September 2012 low of Rs 132, encountered long-term resistance at Rs 270 last month and the stock failed to break this resistance level. Short-term trend for the stock is currently down.

It is testing key long-term support as well as uptrendline at around Rs 216.

Strong decline below this support will pull the stock down to Rs 187 levels, where the next key long-term support is pegged.

Long-term trend for the stock has been down from its October 2010 peak of Rs 527 levels.

Strong downward breakthrough of Rs 187 will drag the stock down to Rs 150 and then to Rs 130 in the medium- to long-term. Next key support below Rs 130 is at Rs 105, the trough formed in January 2009.

On the other hand, the stock needs to make a decisive weekly close above Rs 270 to take it higher to Rs 300 and then to Rs 350 in the long-term.

I have been accumulating shares of ACC at an average price of Rs 1,437. What is the outlook for the stock in the short- and medium-term?

Panini Deshpande

ACC (Rs 1,255.2): Long-term uptrend of the stock that started from late 2008 low of Rs 369, appears to have come to a halt after registering a lifetime high at Rs 1,514 in October 2012. Subsequently, the stock formed a descending triangle pattern, a top reversal pattern in this scenario and made a downward breakthrough of the pattern in mid-January 2013. Medium-term trend for the stock is down.

Nevertheless, the stock is presently testing a significant long-term support at Rs 1,250. A decisive plunge below this support will strengthen its downtrend and pull the stock down to Rs 1,160 and then to Rs 1,100 in the short to medium-term.

Key long-term support below Rs 1,100 is positioned at Rs 950. As long as Rs 950 holds, long-term investors can consider holding the stock with the same price as stop-loss.

Immediate short-term resistance for the stock is at Rs 1,300. Next resistances are at Rs 1,350, Rs 1,380 and Rs 1,430.

Kindly give your view on Idea Cellular bought at 114. I can hold the stock for 6 months.

Sathya

Idea Cellular (Rs 109.7): The stock has been on a medium-term uptrend since taking support at around Rs 72 in August 2012.

This trend remains in place as long as the stock trades above its significant long-term support band between Rs 97 and Rs 100. Traders with a medium-term perspective can consider holding the stock with stop-loss at Rs 96 levels.

A conclusive fall below the aforementioned support band will mar the stock’s medium-term uptrend and pull it down to the long-term support positioned at Rs 89.

Further decline below Rs 89 will bring the stock down to Rs 80 or to Rs 75 in the intermediate-term.

However, an upward reversal from Rs 97 and Rs 100 support band will take the stock higher to Rs 117 or to Rs 125 in the medium-term. Next resistances are at Rs 135 and Rs 140 levels.

I bought Everest Kanto Cylinder at an average price of Rs 170. Please give the outlook for next 6 months.

Syed

Everest Kanto Cylinder (23.5): Everest Kanto Cylinder has been in a structural downtrend ever since making an all-time high at Rs 385 in 2008. Medium- as well as short-term trends are also down.

The stock is hovering around its lifetime low of Rs 23.4. It is difficult to envisage where the stock will find support if it breaks below Rs 23.4. Immediate resistances are at Rs 27 and Rs 30. Only a strong rally above Rs 30 can push the stock higher to Rs 35 in the medium-term. Next key resistances are at Rs 43 and Rs 50.

(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 featuredunder this column)

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