Query Corner

One of my clients bought Godrej Property at Rs 178. Please let me know the technical prospects for the stock.

M.V. Naveen

Godrej Properties (Rs 167.5): Godrej Properties is on an extremely shaky ground. The long-term foundation for the stock at Rs 230, from where the stock reversed in August 2012 and March 2013, is breached. The stock is currently at its life-time low.

There are no signs of reversal yet and the outlook will turn conducive only if the stock manages a close above Rs 230. Inability to do so can pull the stock lower from current levels. Since your client has not incurred too much of a loss yet, he should be advised to reduce his position in rallies.

The medium-term resistances for the stock are present at Rs 210 and Rs 230.

Please indicate the technical trend of Ajanta Pharma bought at Rs 690.

Ajai Antony

Ajanta Pharma (Rs 965): Racing from Rs 252 to Rs 1,000 — a four-fold increase, this stock has been in the best of health since January this year. Investors, however, need to tread a little carefully at this juncture. If we extrapolate the up-move from the January lows, we get the first target at Rs 1,014. The stock has already achieved this target.

There can be a correction in the days ahead that may pull the stock lower to Rs 812 or even Rs 720. Investors with a short- to medium-term perspective can, therefore, take some money off the table at this point and hold the rest with a stop-loss at Rs 900. Key medium-term support for the stock is at Rs 805. Long-term investors can hold the stock as long as it trades above Rs 720.

Long-term target on a break above Rs 1,000 is Rs 1,323.

Please give me the short- and long-term view of Firstsource Solutions and Videocon Industries.

Chandrakumar D

Firstsource Solutions (Rs 22.1): The long-term outlook for Firstsource Solutions is quite bleak. The down-move that began from the May 2007 peak of Rs 93.5 continues to be in force. The stock needs to record a firm close above Rs 40 to make the long-term view positive. Else the stock can continue to meander in the zone between Rs 6 and Rs 40.

Long-term target above Rs 40 are Rs 50 and Rs 60.

The short-term trend in the stock has been up since the July-trough. This uptrend will face resistance at Rs 27 and Rs 40. Investors with a short-term investment horizon should exit the stock on failure to move above Rs 27.

Videocon Industries (Rs 176.6): Videocon Industries formed a long-term trough at Rs 82 in March 2009. But the rally from this level could not progress beyond Rs 300, and the stock has been vacillating in a trading range of Rs 160 and Rs 300 since October 2009. Key long-term support exists at Rs 150. Investors should get cautious since it has been ambling just above the key long-term support since August. Breach of this level can cause a steep tumble to Rs 109 or below.

Medium-term resistances are at Rs 250 and Rs 300. Key long-term resistance for the stock is placed at Rs 348.

I bought Coromadel International for Rs 182. Shall I hold it or sell?

Sakthi

Coromandel International (Rs 232.8): Whether you wish to hold or sell Coromandel International depends on your investment horizon. If you are a long-term investor, you should continue to hold the stock as long as it trades above Rs 160.

This is a key long-term support for the stock and it has rebounded exactly from this level, underlining the strength in the long-term trend. There will be resistance at Rs 300 for the long-term. But once the stock clears this level, it can move on to its previous life-time high at Rs 376.

That said, if you are a short-term investor, it would be best to book some profits now. The stock faces resistance in the band between Rs 240 and Rs 260.

It is currently reversing lower from this zone. Inability to move beyond this impediment can make the stock reverse back to Rs 200 or Rs 160.

I have been wanting to invest in Federal Bank and Exide Industries. Can I know the prospects of these stocks?

Prasad K.B.

Federal Bank (Rs 84.3): Federal Bank has recorded a smart reversal from the September low at Rs 44. But the stock is currently poised at key medium-term hurdle at Rs 85. It would be best to wait for the stock to move emphatically above this level before taking position. Next target would be Rs 110.

But reversal from current levels can pull the stock down to Rs 70 or Rs 60 over the coming months. You can consider buying the stock in declines with a stop-loss at Rs 58.

Exide Industries (Rs 121): The long-term trend in Exide Industries has been up since the 2009 trough. Within this structural uptrend, the stock has been in a consolidation phase between Rs 100 and Rs 180 since October 2010.

Since the stock is approaching the lower end of this long-term trading band, investors with long-term perspective can buy the stock with a stop-loss at Rs 98.

Reversal from this zone can take the stock higher to Rs 136 or Rs 153 in the months ahead. Target on a move above Rs 153 is the previous life-time peak at Rs 180.

Long-term supports for the stock are present at Rs 99 and Rs 89. Long-term investors need to start worrying only if the stock declines below Rs 89.

Lokeshwarri S.K.



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