Market Strategy

Query Corner

Yoganand D. | Updated on November 16, 2013 Published on November 16, 2013

I am holding Helios and Matheson at average price of Rs 77. Please let me know whether I can book profit now or wait.

B. Anjaneyulu

Helios & Matheson Information Technology (Rs 87.7): After hitting a low at Rs 18 in early 2009, the stock started to move sideways in a broad band between Rs 18 and Rs 60. The stock was in this range for almost five years and eventually broke out upwards in July. However, encountering a key long-term resistance in the zone between Rs 95 and Rs 105 in early this month, the stock began to decline. As you have waited for a very long period for the price recovery, it is time to book profits and re-enter at a later stage.

A strong decline below its immediate support at Rs 80 can drag the stock down to Rs 70 or even to Rs 60 in the medium-term. Further, a decisive tumble below Rs 60 will confine the stock once again to its long-term trading band between Rs 20 and Rs 60. On the upside, a strong rally above Rs 105 will reinforce bullish momentum and take the stock higher to Rs 120 and then to Rs 138 levels in the long-term.

I have shares of Hitachi Home at Rs 122. What is your technical view for medium- to long-term on the stock? Rajesh Reddy

Hitachi Home and Life Solutions India (Rs 102.9): Since November 2011, the stock has been in a sideways consolidation phase in a wide range between Rs 98 and Rs 160. Investors with both medium- and long-term perspective can hold the stock with a stop-loss at Rs 95. A strong fall below the lower boundary at Rs 98 will reinforce the stock’s long-term downtrend that has been in place from its July 2010 peak of Rs 404. In that case, the stock can decline to Rs 80 and then to Rs 66 in the medium-term.

However, an upward reversal from the lower boundary can take the stock higher to Rs 120 levels. Next key resistances are pegged at Rs 140 and Rs 160. A conclusive breakthrough of Rs 160 can give some relief for the stock and push it higher to Rs 180 in the long-term.

I hold shares of NMDC at average price of Rs 133. Please help me with the technical outlook for the next six months.

Prasad KB

NMDC (Rs 132.4): After retracing 50 per cent Fibonacci retracement level of its previous downtrend, the stock encountered resistance at Rs 145 in early this month. The band between Rs 145 and Rs 150 is a significant long-term hurdle. The stock needs to conclusively breach this band to strengthen further and accelerate northwards to Rs 165, Rs 180 and then to Rs 200 in the medium- to long-term.

Conversely, investors with a medium-term horizon should watch the stock’s key support at Rs 120. They can consider holding the stock with a stop-loss at Rs 117. A decisive downward breakthrough will mar the stock’s ongoing uptrend and drag it down to Rs 110 or to Rs 95 levels in the medium-term.

Please give your opinion about Gujarat Gas and Bajaj Finance. I plan to purchase these stocks.

T. Raveendran

Gujarat Gas Company (Rs 293.3): The stock arrested its long-term downtrend at its key support band between Rs 160 and Rs 170 in August. Since then, it has been on a medium-term uptrend and it appears to be promising. However, the stock is on the brink of encountering a key resistance ahead at around Rs 310. Strong rally beyond this level will pave the way for an up-move to Rs 340 and Rs 350 resistance zone in the medium-term.

Inability to rally above Rs 310 will jail the stock to hovering sideways in the range between Rs 270 and Rs 310. As long as the stock trades above Rs 225, its medium-term uptrend will stay in place. Important supports below Rs 225 are at Rs 195 and then Rs 160.

Bajaj Finance (Rs 1,423.9): Bajaj Finance has been on a long-term uptrend ever since bottoming out in early 2009. Both short- and medium-term trends are also up for the stock. It has important supports at Rs 1,350 and Rs 1,300. These supports can arrest any minor corrections in the stock. Strong rally beyond Rs 1,500 will take it higher to Rs 1,600 and Rs 1,700 levels in the medium-term.

Nevertheless, an emphatic fall below Rs 1,200 will mitigate the medium-term uptrend and pull the stock down to Rs 1,100 or to Rs 1,000 levels. Next significant long-term supports for the stock are Rs 870 and Rs 790 levels.

Please provide me with the technical outlook for Lanco Infratech.

Devaki, Atmadeep

Lanco Infratech (Rs 5.9): Lanco Infratech is in a downtrend in all time frames — long-, medium- and short-term. The stock is just hovering above its life-time low of Rs 4.9 registered in late July 2013. Strong rally above its immediate resistance at Rs 7 will take the stock higher to Rs 8 and then to Rs 10. Next key resistances are pegged at Rs 13 and Rs 15. The stock needs to decisively rally above these to alter its intermediate-term downtrend.

However, a fall below Rs 5.4 will pull it down to Rs 4.9 in the short-term.

Readers can send in their queries, on not more than two companies, to 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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