Query Corner: Bajaj Auto's structural uptrend continues

Can I buy Punj Lloyd at current price? I can wait for three years from now on. Please advise.

Ramachandra

Punj Lloyd (Rs 55): Punj Lloyd is in the bear's stranglehold since January 2008. The stock hit a life-time low at Rs 37 in December 2011, and is currently in a nascent uptrend. This rally has not progressed sufficiently to infuse confidence.

The stock is likely to face resistance at Rs 77 and Rs 100 in the months ahead. The stock needs to move above Rs 100 to indicate that a sustainable medium-term uptrend is in progress.

Investors with a low risk-appetite can, therefore, wait for a strong weekly close above Rs 100 before buying the stock. The more adventurous can accumulate the stock at current levels with stop at Rs 40.

The stock faces strong long-term resistance at Rs 200 and then at Rs 250. It is quite likely that the stock vacillates in the range between Rs 50 and Rs 250 over the next couple of years.

I purchased shares of Sterling Biotech at Rs 105. Should I continue to hold this stock or book loss?

Chintamani

Sterling Biotech (Rs 9.8): Sterling Biotech is currently wallowing at a multi-year low. The stock was hit very hard last December when it fell from the peak of Rs 63 to Rs 9. Next long term support on the chart is at Rs 7.6 — the low recorded in October 2002.

Investors still holding the stock can continue to do so only as long as this support holds. Break below this level can turn the stock in to a penny variety.

Resistances for the upcoming months will be at Rs 33, Rs 47 and Rs 70. Investors can consider exiting the stock at current juncture and reinvesting once the stock moves above Rs 92. Subsequent targets are Rs 116 and Rs 142.

Can you advise short- and medium-term support and resistance for Bajaj Auto and Zydus Wellness?

Shekhar

Bajaj Auto (Rs 1,708.8): The structural uptrend that began from the low of Rs 131 in December 2008 continues to be in force in Bajaj Auto. The up-move from February 2011 trough is, however, very choppy and appears to be part of the long-term consolidation that is unfolding since November 2010.

The stock will receive support at Rs 1,586 and then at Rs 1,425 in the upcoming months. Investors with medium-term perspective can hold the stock with stop at Rs 1,400.

If the stock manages to hold above this level, it can move higher to Rs 2,066 in the months ahead. The stock will, however, continue to face strong resistance in the band between Rs 1,800 and Rs 1,850.

Inability to move beyond this obstacle will result in the stock vacillating between Rs 1,400 and Rs 1,800 in the upcoming months.

Move below Rs 1,400 will indicate a propensity to decline to Rs 1,180.

Long-term investors can hold the stock with stop at Rs 1,150. Breach of this level will mean that the stock is heading towards Rs 985 or Rs 800.

Zydus Wellness (Rs 382.1): Zydus Wellness has not been in the best of health since last July. It has more than halved from the peak of Rs 760 recorded last year.

This decline has pulled the stock below its key long-term support at Rs 413.

Immediate resistances for the stock are at Rs 451 and Rs 494. Investors with short-term perspective can sell the stock at these levels.

Inability to move above these hurdles will mean that the stock can decline to Rs 327 or Rs 275 in the upcoming months. Targets on a move above Rs 494 are Rs 545 and Rs 600.

Please advise on the outlook for Nakoda?

 J. Ganesh

Nakoda (Rs 9): This stock has key long-term support at Rs 10.5. Though the stock declined slightly below this level last December, it is currently attempting to hold just below. It is trading in a narrow band between Rs 8 and Rs 12 since then.

Investors with a short-term investment horizon can hold the stock with stop at Rs 7.8. Decline below this level can drag the stock to Rs 4 or even Rs 2.

Medium-term resistances will be at Rs 13 and then at Rs 16. Investors with a short-term investment horizon can exit the stock if it reverses lower from either of these resistances. Long-term resistance will continue to be in the zone between Rs 21 and Rs 24.

Please give your views on Ganesh Housing Corporation bought at Rs 268 in November 2010.

Prabha Sharma

Ganesh Housing Corporation (Rs 98.2): This stock is attempting to recover from last December's low of Rs 81. The recovery so far is, however, not convincing enough. The stock needs to move above Rs 157 to signal that a sustainable uptrend is in progress. Else it can slip down to Rs 81 or even Rs 63 in the upcoming months.

Medium-term targets on a move above Rs 157 are Rs 200 and Rs 280. Long-term view will turn positive only if the stock records a weekly close above Rs 340.

(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 featured under this column.)

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