Portfolio

Query Corner: Near-term prospects cloudy for Dewan Housing

Lokeshwarri S.K. | Updated on May 05, 2012 Published on May 05, 2012

I am holding shares of Dewan Housing Finance bought at Rs 275 and JM Financial bought at Rs 35. Should I continue to hold or sell at current price?

Pragdas Mathuradas

Dewan Housing Finance Corporation (Rs 218.5): Dewan Housing still appears to be on strong foundation. It has key long-term support at Rs 155 and the stock bounced off the low at Rs 176 last December. Investors with long-term perspective can continue to hold the stock as long as it trades above this level.

If it manages to hold above Rs 176 in the upcoming months, investors can look forward to a rally to the previous peak at Rs 347 or even higher over the long term.

The near-term prospects for the stock are, however, under a cloud. Medium-term resistance for the stock is at Rs 280. Since the stock is reversing lower from this level, it can decline to Rs 175 or Rs 155 in the upcoming months. If your investment horizon is short-term, then exit the stock on a close below Rs 210.

JM Financial (Rs 13.5): This stock is in a vicious downtrend and it is advisable to switch over to some other stock. JM Financial recorded its long-term trough around Rs 19 in March 2009.

This trough was breached last September, and the stock is currently trading below this level. Since the stock is currently close to its multi-year low, it is hard to predict where the downward spiral can halt.

Immediate support for the stock is at Rs 11.6. If this level is breached, it may fall to Rs 5.1. Medium-term resistances will be at Rs 32, Rs 45 and Rs 65.

Please advise on the outlook for Symphony and S.E. Investments. Are these stocks worth holding?

Rakesh Duggal

Symphony (Rs 250.8): This stock moved out of wilderness, below Rs 20, in 2010 to move to the peak of Rs 334 in April 2011. Since then, the stock is moving sideways in a broad band between Rs 200 and Rs 300.

Long-term outlook is positive for the stock and investors can hold with stop at Rs 190. If the stock holds above this level, it will open the possibility of break out to Rs 400 over the next two years.

That said, breach of the support at Rs 190 will drag the stock down to Rs 168 or Rs 130. Therefore, investors should divest their holding on fall below Rs 190.

The medium-term trend in the stock is, however, sideways.

It could continue to oscillate in the band between Rs 200 and Rs 300. Investors with a shorter investment horizon should, therefore, exit the stock close to Rs 300 and look for buying opportunities near the floor of the current range.

S.E. Investments (Rs 319.9): This is an extremely volatile stock recommended only for the brave-heart.  It is currently close to its long-term resistance between Rs 350 and Rs 400. S.E. Investments has reversed sharply from this band twice in the last two years.

Since the reversals can be very sharp giving little opportunity to investors to exit, it would be best to take some money off the table, if you have some in front of you.

Hold the rest with stop at Rs 285.

What is the long-term view on Bajaj Hindusthan?

R.N.B. Rao

Bajaj Hindusthan (Rs 29.2): Bajaj Hindusthan is hardly in a sweet spot, wallowing close to eight-year low. Needless to add that the long-term view on the stock is currently down.

Decline below the December 2011 low at Rs 24 will take the stock below the Rs 10 mark.  

The stock needs to do a lot of work before it moves to a position of relative stability. The first requirement would be a strong close above Rs 60.

Investors with lower risk-taking ability should exit the stock at current juncture and consider re-investing on a strong close above Rs 60. Subsequent medium-term targets would be Rs 93 and Rs 136. 

Long-term outlook for the stock will turn positive only on weekly close above Rs 200. Inability to move beyond this level will keep the stock in the Rs 25-200 band for a few more years. 

I am holding shares of Gammon India purchased at Rs 123. Please advise on the prospects of this stock.

P.M. Rao

Gammon India (Rs 44.4): Gammon India has given up all the gains recorded in the 2009 rally and is currently trading near its 2009 trough. The trend across time frames — long, medium and short — are currently down for this stock. 

Investors can hold the stock with stop at Rs 40. But given the fact that many stocks are currently trading well below their 2009 lows, the stock can head lower to Rs 33 or Rs 19 in the upcoming months.

Resistances in the upcoming months will be at Rs 130, Rs 180 and Rs 271. The long-term trend will, however, turn positive only if the stock manages a close above Rs 270.

Please advise on the future outlook of Sundram Fasteners.

Sajahan 

Sundram Fasteners (Rs 53): Sundram Fasteners faces strong long-term resistance in the zone between Rs 65 and Rs 75.

The rally from 2009 lows halted in this zone and the stock is currently consolidating in the band between Rs 45 and Rs 65. Key long-term supports for the stock are at Rs 44 and Rs 36.  

If the stock manages to hold above Rs 44, it will denote the propensity to break out higher to Rs 85 or Rs 94 in the next couple of years.



 

 

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