Can I buy Eros International at current levels? I want to hold it for a year. Also, please advise on the medium- to long-term trend of SKS Microfinance bought at 145.

Sathya

Eros International Media (Rs 171.7): After marking a 52-week high at Rs 235 in early December 2012, the stock peaked out and has been on a medium-term downtrend. The stock is currently hovering above its key long-term support at Rs 160. In the past, the stock has reversed higher from this level. It can be bought if it reverses higher from this key support level with stop-loss at Rs 160.

Alternatively, wait for the stock to conclusively rally above the significant long-term resistance at Rs 190 for a buy. An emphatic up move above Rs 190 can push the stock higher to Rs 220 or to Rs 235 level. Short-term resistance and support is at Rs 180 and Rs 160 levels respectively. A strong fall below Rs 160 will reinforce bearish momentum and pull the stock down to Rs 135 in the medium-term.

SKS Microfinance (Rs 124.2): Long-term trend for the stock has been down from its October 2010 peak of Rs 1,490. After encountering resistance at Rs 198 in December 2012, the stock started declining, resuming its downtrend. Since then, the stock has been on a medium-term downtrend. Exit from the stock in rallies while maintaining stop-loss at Rs 118. An emphatic decline below its long-term support at Rs 118 will pave the way for a decline to Rs 100 and then to Rs 80 in the medium-term. Significant support below Rs 80 is pegged at Rs 55.

The stock has significant resistances at Rs 130 and Rs 148. A decisive up move beyond Rs 148 will take the stock higher to Rs 170 and Rs 200. However, we do not envisage a move beyond Rs 200 in the next 9-12 months.

I bought Tata Communications at Rs 227. Can I consider holding the stock for a year?

Ramachandran

Tata Communications (Rs 229): Tata Communications has been on an intermediate-term sideways consolidation phase since January 2012, in a wide range between Rs 210 and Rs 260. In late March this year, the stock rebounded from the lower boundary of the sideways consolidation range. Investors with medium- to long-term perspective can consider holding the stock with stop-loss at Rs 205.

Investors can consider booking partial profits at the upper boundary of the aforementioned sideways range, at Rs 260, if the stock struggles to surpass it. A conclusive breakthrough of the upper boundary will strengthen the stock's bullish momentum and take it northwards to Rs 300 and Rs 350 in the long-term.

Conversely, strong fall below the lower boundary will pull the stock down to Rs 180. The next important long-term support is at Rs 150.

What is your advice regarding medium-and long-term outlook on Dr Reddy's Laboratories? Can this be bought at current levels?

Anil, JK Sarawgi

Dr Reddy's Laboratories (Rs 2,001): Ever since bottoming out at March 2009 low of Rs 357, the stock has been on a long-term uptrend shaping higher peaks and higher troughs. Both medium- and short-term trends for the stock are also up. On May 2, the stock registered new all-time high at Rs 2,035.

We do not recommend buying the stock at current levels. The stock is testing key resistance at Rs 2,000. A downward reversal from the resistance can pull the stock down to Rs 1,940 and then to Rs 1,850 in the short-term.

The stock has significant long-term supports at Rs 1,800 and then at Rs 1,650 levels. Investors with a medium-term perspective can consider holding their long positions with stop-loss at Rs 1,800. Long-term investors can keep stop-loss at Rs 1,650. A strong decline below Rs 1,650 will weaken the stock and drag it lower to Rs 1,500 levels, which is the next important support level.

I bought shares of Sterlite Industries a year ago at Rs 98. Please suggest your long-term opinion on this.

Kailash M

Sterlite Industries (Rs 96.6): The stock has significant long-term support in the band between Rs 86 and Rs 89, from which it has reversed higher in December 2011 and June 2012. Recently, the stock tested this support band and appears to be reversing higher. Last week, the stock gained 7.7 per cent with good volume. We notice that there has been an increase in weekly volume in the past four weeks.

Long-term investors can consider buying the stock while maintaining stop-loss at Rs 85. The stock can trend higher to Rs 110 and then to Rs 120 in the medium-term. A conclusive rally above Rs 120 will pave the way for an up move to Rs 150 in the long-term. On the contrary, failure to rally above Rs 110 will jail the stock to a sideways band between Rs 86 and Rs 110. Investors should exit it if it declines strongly below Rs 86. In that case, the stock will trend down to Rs 72 or Rs 55 in the long-term.

(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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