Query Corner - Maruti Suzuki is in sideways consolidation



I am interested in buying Century Enka and Diamond Power at current levels. Kindly throw light on their prospects.

Navendu Sharma

Century Enka (Rs 110.8): The long-term trend in Century Enka is down and the stock is attempting to stabilise itself after recording the trough at Rs 88. If you are one of those investors with a greater risk appetite, you can buy the stock at current levels with stop at Rs 85. If it manages to hold above this level, a move higher to Rs 140 or Rs 180 is possible in the days ahead.

Medium-term view on the stock will, however, turn positive only on a strong close above Rs 180. Investors who prefer to play safe can buy on a strong close above this resistance. Subsequent targets are Rs 210 and Rs 240.

Fresh purchases should be avoided on close below Rs 85. The stock can then move lower to Rs 62 or even to Rs 50.

Diamond Power Infrastructure (Rs 99.1): Diamond Power too is languishing close to its 52-week low at Rs 74 recorded in December 2011. But the trends along all time-frames, long and medium and short, are currently down. The stock’s slide can continue to pull it lower to Rs 74 or even Rs 48 in the medium-term.

Investors should, therefore, wait for firm signs of reversal before buying into this stock. A weekly close above Rs 150 will indicate that the stock could launch into a medium-term uptrend. Subsequent targets for the stock would be at Rs 200, Rs 250 and Rs 300.

The stock needs to go on above Rs 300 to imply a reversal in the long-term downtrend. Else, the stock can continue to vacillate in the region between Rs 100 and Rs 300.

I have bought McNally Bharat Engineering at Rs 194 and Reliance Media Works at Rs 900. Should I sell them at current levels?

N. Gopala Krishnan

McNally Bharat Engineering (Rs 95.3): The structural trend in McNally Bharat is down since the April 2010 peak of Rs 385. The stock is currently attempting to halt this slide above the recent low at Rs 81.

You can hold the stock with stop at Rs 80. If the stock manages to hold above this level, it can attempt to move up to Rs 196, Rs 233 or Rs 270 in the medium-term. You can divest your holdings at any of these levels.

But sharp decline below Rs 80 will mean that the stock can plunge to its long-term trough at Rs 29, formed in March 2009. Long-term outlook will turn positive only on a strong close above Rs 270. Next target is Rs 385.

Reliance MediaWorks (Rs 56.5): Reliance MediaWorks is also in a vicious downward spiral and the stock has been decimated since January 2008. The sequence of lower peaks and troughs since October 2010 is unbroken. This implies that the worst is not over for it and it can trudge lower to its life-time low of Rs 37.2 recorded in March 2003.

Since you have purchased the stock at higher levels, it would be best to switch to another stock at this juncture. The stock is likely to struggle to move past Rs 450 in the next couple of years. Long-term trend deciding level for this stock is even higher, at Rs 750.

Medium-term resistances for the stock would be at Rs 210, Rs 260 and Rs 310.

Can I hold Maruti Suzuki bought at Rs 1,185?

Nilesh Patil

Maruti Suzuki India (Rs 1,169.7): The long-term uptrend that commenced from the bear-market low of Rs 446 in Maruti Suzuki continues to be in force. One leg of this uptrend ended at Rs 1,740 in October 2009 and the stock has been in a sideways consolidation phase since then.

Key long-term support zone for this stock exists around Rs 940 and the stock reversed from this level in December last year.

Long-term investors can buy the stock in declines with stop at Rs 850.

Those holding the stock can also continue to do so as long as it trades above this level. Maruti Suzuki will, however, face medium-term resistance around Rs 1,400.

Volatility will continue on this counter unless the stock makes a strong move above this level. Targets on a breakout will first be the previous peak at Rs 1,740. Strong move above this level can take the stock to Rs 2,100 over the long-term.

I am holding Gati purchased at Rs 56. Please advise on the medium- and long-term outlook for this stock.

Sreenivasu

Gati (Rs 40.6): Gati recorded a long-term trough at Rs 30 in October 2008. After a brief uptrend, the stock once again moved close to this low in December 2011. The stock has not displayed a significant inclination to move higher thereafter and has been moving in a sideways band between Rs 30 and Rs 50 since then.

Near-term outlook for the stock will turn positive only on a strong close above Rs 50. Subsequent targets are Rs 65 and Rs 90.

Medium term hurdle for the stock exists at Rs 100. The stock will stay volatile as long as it trades below this level.

The stock can retreat to sub-Rs 10 level once it moves below Rs 20.

Please let me know the one-year outlook of Sintex Industries.

T.D. Bhatia

Sintex Industries (Rs 61.5): Sintex Industries is currently in a strong downtrend. But the stock is drawing close to its long-term trough at Rs 35. This stock could bottom around this level in the upcoming months and investors can hold the stock with stop at Rs 32. The stock can also be bought with the same stop.

Medium-term resistances for the stock would be at Rs 121, Rs 144 and Rs 165.

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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