Technical Analysis

Reliance Cap continues in bear's grip

Lokeshwarri S.K. | Updated on February 06, 2011 Published on February 05, 2011

I would like to know the prospects of GMR Infrastructure bought at Rs 52 and Reliance Capital bought at Rs 700.

S. Sankaran

GMR Infrastructure (Rs 38.4): The trends along all time-frames are down in GMR Infrastructure. This stock faces long-term resistance around Rs 90 and a strong weekly close above this level is required to negate this downtrend.

Medium-term trend has also deteriorated after the stock closed below Rs 50 last November.

Next supports for the stock are at Rs 33 and Rs 23.

Medium-term view for the stock will turn positive only on a close above Rs 50.

Investors can, therefore, divest their holdings at these levels and try to repurchase on a close above Rs 50. Subsequent resistances are at Rs 58 and Rs 71.

Reliance Capital (Rs 493.2): Reliance Capital in one of the stocks that is yet to recover from the battering it received in 2008 and early 2009.

The recovery in 2009 could not take the stock past the resistance at Rs 1,300 that is the first requisite to signal the end of long-term bear market.

The long-term downtrend resumed from June 2009 and the stock is once more in a sharp decline.

Breach of the key medium-term support at Rs 550 is a cause for concern since the next support for the stock is much below at Rs 430 and then at Rs 275.

Any medium-term bounce will face resistance from the zone between Rs 600 and Rs 650. Long-term resistances are at Rs 760 and Rs 880.

Please let me know the prospects of Shiv-Vani Oil and Gas purchased at Rs 380.

P.N. Vasudevan

Shiv-Vani Oil and Gas Exploration Services (273): We had advised investors to buy Shiv-Vani Oil and Gas Exploration Services only on a close above Rs 500 in our review of this stock in October last year.

We had then given the lower targets at Rs 350, Rs 295 and Rs 248. The stock is sliding continuously since then and it is currently below the second target. Investors can hold the stock as long as it trades above Rs 248.

Reversal from here can make the stock rally to Rs 365 or Rs 415 over the ensuing months. Conversely a close below Rs 248 will imply that the long-term trend has reversed lower and the stock could then decline to the March 2009 low at Rs 88.

What is the short- and medium-term outlook for Kohinoor Foods and JHS Svendgaard?

Vijay Guru Prasadh

Kohinoor Foods (Rs 45.5): This stock is very volatile in the broad band between Rs 40 and Rs 130 since 2003. Kohinoor Foods is currently close to the lower end of this long-term trading range.

There is strong support in the band between Rs 40 and Rs 43. Investors can hold the stock with stop at Rs 40. Bounce from this zone can take the stock higher to Rs 70 or Rs 81 over the next 12 months. Investors should divest their holdings on failure to close above the first resistance.

The long-term trend is down in the stock and weekly close below Rs 40 can drag it down to Rs 31 or even to Rs 14.

JHS Svendgaard Laboratories (Rs 92.1): JHS Svendgaard is reacting lower since the November peak of Rs 128. This down-move is retracing the entire rally from the March 2009 trough. First retracement support for the stock occurs at Rs 83 that is 38.2 per cent retracement of this up-move. Investors with short- to medium-term perspective can hold the stock as long as it trades above this level. Reversal from here will retain the bullish long-term view for the stock and pave the way for rally to Rs 128 or even Rs 155 over the next 12 months.

That said short-term investors should divest their holding on a decline below Rs 83 since that will imply an impending decline to Rs 69 or Rs 55 over the long-term. Stop-loss for long-term investors can be at Rs 54.

Please analyse Gujarat NRE Coke for the long-term.

R. Sandhyalakshmi

Gujarat NRE Coke (Rs 55.4): This stock has not done much since May last year; moving in a narrow range between Rs 50 and Rs 70. The medium-term trend is currently down. The stock will receive support from the zone around Rs 46 in the months ahead. Investors with long-term perspective can hold the stock as long as it trades above this support. Decline below can drag the stock to the March 2009 low of Rs 16.8.

However, recovery above Rs 46 can take the stock to Rs 78 or Rs 95 in the next 12 months. Key long-term resistance for the stock is at Rs 90 and the stock needs to record a strong close above this level to signal the intention of moving towards its previous life-time peak.

I had purchased shares of Compucom Software at an average price of Rs 32. Will I be able to get some return on this stock in the next six to eight months or should I book loss and switch?

Rajni Bhola

Compucom Software (Rs 17.1): Stocks that move up very sharply in the last leg of the bull market and decline equally sharply once the reversal happens with a tower formation take many years to regain their peak values.

Compucom Software moved up from Rs 14 to Rs 34 between August and October last year and the stock erased all these gains in the ensuing two months.

Key support for the stock is at Rs 15. Investors can hold the stock with stop at Rs 14.5 and try to divest their holding in a bounce to Rs 22 or Rs 27 in the months ahead. It is hard to envisage a move above Rs 27 in the next 12 months.

Kindly discuss the technical trend in Phillips Carbon Black.

Manoharan N

Phillips Carbon Black (Rs 129): Philips Carbon Black is in a medium-term downtrend from the September peak of Rs 242. This move will receive support from Rs 108 in the days ahead. Investors can, therefore, hold the stock as long as it trades above this level. Decline below will drag it down to the support zone between Rs 26 and Rs 35 over the long-term.

Medium-term resistances for the stock would be at Rs 170 and Rs 200.

Please highlight the short- and medium-term outlook for Rallis India.

M.D. Altaf

Rallis India (Rs 1,304): The structural uptrend that began in 2001 continues to be strong in Rallis India. This up-move accelerated from March 2009 as the stock yielded over seven-fold returns in the period between January 2009 and September 2010.

The stock is in a medium-term correction currently that is making it move sideways between Rs 1,250 and Rs 1,600.

Investors with short- to medium-term perspective can hold the stock with stop at Rs 1,200. If the stock manages to move in a range between Rs 1,200 and Rs 1,600 over the ensuing months, it can break higher to Rs 1,800 over the long-term.

Conversely, decline below Rs 1,200 can drag the stock to Rs 1,090 or Rs 970. Long-term view will turn negative only on a close below Rs 970.



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