Technical Analysis

Query Corner: Bharti Airtel in medium-term uptrend

Lokeshwarri S.K. | Updated on July 09, 2011 Published on July 09, 2011

I purchased Jamna Auto Industries in December last year at Rs 140. Please let me know the prospects of this share.

D. Manoharan

Jamna Auto Industries (Rs 125): This stock is sliding lower since last October's peak of Rs 174. But the magnitude of decline is not deep enough to cause worry. The stock is attempting to hold above the support at Rs 111 over the last three weeks. Investors can hold the stock as long as it trades above Rs 110. That would imply that the structural trend continues to be up and the stock can break out above Rs 174 over the long-term to Rs 211.

However, decline below Rs 110 would drag it lower to Rs 92 or Rs 72 over the medium-term. The long-term view will turn negative only if the stock goes on to close below Rs 72.

What is your outlook on Crompton Greaves?

Subrhamanyam

Crompton Greaves (Rs 252.9): This stock is also attempting to hold above the key medium-term support at Rs 235. Though the stock made an incursion below this level in January, it has not closed below it yet. Investors can continue to hold the stock as long as it holds above Rs 235. Sideways movement in the band between Rs 240 and Rs 340 will be positive from a long-term perspective and can be followed by the stock moving above Rs 340 to Rs 413 over the long-term.

That said, investors with short- and medium-term horizon should exit the stock on a close below Rs 240, since that will mean that the stock is heading lower towards Rs 201 or Rs 169. Long-term investors can continue to hold the stock as long as it holds above 165.

What are the technical suggestions for Bharti Airtel from a one-year horizon?

Vivek and JP

Bharti Airtel (Rs 398.1): In our review of Bharti Airtel in December, we had stated that the stock has strong long-term supports at Rs 300 and Rs 228 that occur at important Fibonacci retracement of the structural up-move from March 2003 to October 2007. These long-term supports continue to hold good and long-term investors can accumulate the stock on declines to these support levels.

The medium-term trend is up since the June 2010 low of Rs 254. This uptrend will face resistance at Rs 403 and then Rs 445. There is a strong resistance zone in the band between Rs 445 and Rs 500. Investors with a short- to medium-term perspective can cash some profits on failure to move beyond this zone.

Long-term view will turn positive only on close above Rs 500. Subsequent target is the previous peak at Rs 570. However, failure to move above Rs 500 will drag the stock lower to Rs 330 or Rs 300 again. Stop-loss for short-term investors can be at Rs 300.

I am holding shares of Petronet LNG. Let me know the short- and long-term prospects of this stock.

Krishnamoorthy Chandrasekharan

Petronet LNG (Rs 142.2): We reviewed Petronet LNG in July last year and opined that the outlook for the stock was extremely bullish and it has the potential to attain its previous peak over the medium-term. The stock out-did our expectation by moving beyond the previous peak of Rs 122 and attaining the recent peak at Rs 146.

Previous peak at Rs 122 can now act as a support for the medium- and short-term investors. Investors with a longer term perspective can hold the stock as long as it trades above Rs 100. The stock will face immediate resistance in the zone between Rs 140 and Rs 160. If this zone is surpassed, it can then move on to Rs 202.

I am holding shares of Mirc Electronics bought at Rs 26. Please let me know the outlook for this stock. I am a long-term investor.

Harsh Kumar Malhi

Mirc Electronics (Rs 24.1): This stock was largely moving in the band between Rs 15 and Rs 40 since 2001. It breached the lower boundary in the 2008 crash to bottom at Rs 8 in March 2009. The stock is in a structural uptrend since then that has taken it to Rs 30 by last July. Key medium-term support for the stock is at Rs 17. Investors can hold this stock only as long as it trades above this level. Close below this support will drag the stock down to Rs 11 or even Rs 8 over the ensuing months.

On the other hand, the ceiling at Rs 40 will continue to act as a strong hurdle in the years to come, and investors ought to divest their holdings if the stock struggles to surpass this level.

I purchased Allied Digital Services at a high of around Rs 180. Kindly advise me the strategy to be followed in this company. Also, please let me know the position of Ispat Industries in the long run.

Suriya

Allied Digital Services (Rs 49.7): Allied Digital made a strong recovery from March 2009 low to rally to Rs 280 by August that year. But the stock was unable to move beyond that level and struggled for more than a year to move above it. This stock was one of the worst performers in the correction since last October. It is currently down over 80 per cent since its October peak. It is also trading well below its previous life-time low at Rs 73.

The trends along all time-frames are currently down in the stock. It would have to close above Rs 75 to reverse the negative medium-term outlook. On the other hand, the speed of the decline in this stock implies that impact cost is very high in this counter and further erosion in investor capital cannot be ruled out. Investors are advised to switch out of this stock in minor rallies.

Ispat Industries (Rs 19.7): The long-term trend in Ispat Industries is down. It has not really recovered from the bludgeoning it received in 2008 and the stock has to record a weekly close above Rs 39 before the medium-term trend can reverse higher.

The stock is stuck in a sideways range between Rs 17 and Rs 29 since June 2009. Short-term investors can buy near the lower boundary and sell near the higher. It is hard to envisage a break above the resistance zone between Rs 28 and Rs 30 just yet.

I purchased Shetron at Rs 73 in 2009. Since then it has consistently gone down. Please let me know the outlook for this company.

Ranjitha

Shetron (Rs 17): This stock has not been able to shake off the bear's grip, and it received yet another setback last December when it plunged from Rs 46 to Rs 22 in just two weeks. Though the stock is currently attempting to hold above Rs 13, the rallies lack conviction. Move above Rs 26 is needed to yank it out of the mire. It could be a while before the stock reaches your purchase price. It is advisable to switch to some other stock with better prospects.

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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