Please let me know the view on ITC.

Sivakumar T

ITC (Rs 293.1): ITC appears to be existing on a different planet, if the chart of this stock is compared to rest of the traded universe. The ongoing correction has scarcely dented the structural up-move in the stock that is in motion since the October 2008 trough at Rs 66. This uptrend will reverse lower only if the stock goes on to record a strong weekly close below Rs 215.

The medium-term trend in the stock is sideways in the band between Rs 270 and Rs 310 since last October. Investors with a short- to medium-term horizon can buy the stock on declines with stop-loss at Rs 260. If the stock manages to hold above this level in this leg of the market decline, it can be expected to move higher to Rs 330 or Rs 345 in the months ahead.

That said, the medium-term view will deteriorate on close below 260 with subsequent targets at Rs 250 and Rs 235.

Can I purchase MMTC and Reliance Capital at current levels? What are the medium- to long-term prospects of these stocks?

Rajeev

MMTC (Rs 209.4): The stock of MMTC is dropping like a stone. It fell from the high of Rs 649 recorded in mid-February to the current levels, losing two-third of its value in two months. Buying the stock at this juncture is akin to catching a falling knife, to use a cliché. The stock had strong long-term support around Rs 500. This level halted the stock’s decline in December 2008 and again in December 2011.

The fall has accelerated since this level was breached in March. There are no signs of a reversal in the stock yet and it is likely to move lower to the zone around Rs 100 that cushioned the stock for an extended period between 2006 and 2007.

Medium-term resistances are at Rs 500 and Rs 700. Risk-averse investors can wait for a move above Rs 500 before buying the stock. The bravehearts can buy on declines with stop-loss at Rs 90.

Reliance Capital (Rs 323.2): Reliance Capital is in a vicious downtrend since November 2008 when it recorded the high of Rs 2,925. The stock has a long way to go before it drags itself out of this mire; it will need to move to Rs 1,000 before the long-term view turns positive.

That said, the stock is attempting to form a long-term base in the zone between Rs 250 and Rs 500 since last December. Investors with medium-term perspective can buy the stock with stop at Rs 275. A rebound from here can take the stock to Rs 378 or Rs 430 in the months ahead.

However, avoid purchases with a medium-term horizon on decline below Rs 275. That will imply that the stock is headed towards Rs 200.

Please advise on EIH purchased at an average price of Rs77. The share has been falling and is at 5-year low at present.

Shrikant Wagh

EIH (Rs 55.3): EIH is on a slippery terrain, currently trading at a multiyear low. The stock had reliable support around Rs 65, the level from where it had rebounded in November 2008. This level was breached in the first week of March. Next support on the long-term charts is quite some way away, at Rs 38.

The stock is hanging on to the frail support at Rs 55 over the past three weeks. This attempt at stability is not convincing. But those holding the stock can do so with a stop at Rs 52. Alternate strategy would be to sell the stock at current level and consider buying it back once it moves above Rs 65.

Medium-term resistances are placed at Rs 73 and Rs 84. Long-term view will improve only if the stock manages a strong weekly close above Rs 100.

I hold shares of Elecon Engineering and Sintex Industries. I wish to hold them for six months to one year. Kindly advise on their prospects.

S. Sankaran

Elecon Engineering (Rs 33.2): Elecon Engineering is positioned slightly above its 2009 trough at Rs 23. You can hold the stock as long as it trades above this level. But it would be best to exit the stock on breach of this level since it can then plunge to sub-Rs 10 levels.

Any rally in the stock will stutter at Rs 60 or Rs 80 in the months ahead. Investors with short- to medium-term perspective can divest their holding at either of these levels. The long-term outlook will, however, improve only on a close above Rs 110.

Sintex Industries (Rs 45.2): This stock is moving in a wide trading band between Rs 30 and Rs 300 over the last five years.

The stock is currently nearing the lower end of this trading band. Investors can, therefore, hold on to the stock as long as it trades above Rs 30. A rebound from here can take the stock to Rs 115 in the months ahead. The outlook for the stock will, however, turn very adverse on a close below Rs 30.

Please advise on the prospects of Natco Pharma. Can I buy the stock at current levels?

Rohit

Natco Pharma (Rs 438.7): The long-term trend in Natco Pharma is up. But the stock is in a mild correction since the December 2012 peak of Rs 505 that is also the lifetime high for the stock. Key medium-term support for the stock is at Rs 386. Investors with a medium-term investment horizon can buy the stock at current juncture with stop at Rs 380.

If the stock manages to hold above Rs 380, it can move higher to Rs 581 or Rs 700 over the long-term.

The support that long-term investors need to watch out for is at Rs 325.

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