Query Corner: Cloudy outlook for Aban Offshore

Please let me know the prospects of Aban Offshore as the stock is sliding down incessantly.

Kudiarasu C. Chidambaram, Bhaskar Parab

Aban Offshore (Rs 643.4):

Aban Offshore could not recover from the drubbing it received in 2008 since the recovery in 2009 could not help it recover even 30 per cent of the loss suffered in the crash.

The structural downtrend resumed from September 2009 peak of Rs 1,682.

In our review of this stock last September, we had written that a strong close above Rs 1,800 is needed to signal that the medium-term view has turned positive for this stock. We had also written that as long as it traded below this level, it can move in a wide band between Rs 500 and Rs 1,800.

Fresh purchases were recommended only on a close above Rs 1,800 with further targets of Rs 2,800 and Rs 3,400.

Aban Offshore recorded the trough of Rs 511 in February and is attempting a feeble recovery since then. Short-term view will turn positive only on a weekly close above Rs 960. Subsequent targets would be Rs 1,225 and Rs 1,680.

However, failure to move above Rs 960 will mean that the stock can move lower to Rs 390. Decline will accelerate on close below this level dragging the stock to the March 2009 trough of Rs 220.

Please give the technical view on Deccan Gold.

T. Thakur

Deccan Gold Mines (Rs 18):

Deccan Gold moved up very steeply from Rs 17 to Rs 142 in the period between October 2007 and January 2008. The decline from this peak was equally sharp and dramatic and the stock collapsed to Rs 12 by October 2008. Investors cannot expect the stock to re-attain this peak anytime soon since the surge took place in the final frenzied stage of a structural bull-market. A more reasonable long-term target for the stock would be the April 2008 peak of Rs 63. The stock could, however, find it difficult to move past Rs 44 in the ensuing months. The trend along the short- and medium-term time frame is currently down and the stock could drift lower to the long-term support around Rs 12. Investors should switch out if it moves below this level. Resistances in the month ahead would be at Rs 26 and Rs 33.

Please let me know the long-term prospects of EIH purchased at Rs 78.

Mukesh Kumar

EIH (Rs 82.3): Key long-term support for EIH that occurs at 61.8 per cent retracement of the stock's structural up-move from 2003 trough occurs at Rs 90. The stock breached this support in February and went on to record the low of Rs 74 in March this year. A strong weekly close above Rs 90 is the first requirement to signal that EIH is on the way to recovery. Else, the stock could move down to test the support zone between Rs 60 and Rs 65. A long-term trough is possible in this region. But investors need to exit the stock if this buttress is penetrated.

Any rally would face strong resistance around Rs 110 and investors with medium-term perspective can take some money off the table if the stock fails to move above this level. Next long-term resistance is at Rs 135.

I am holding Noida Toll Bridge purchased at Rs 48.50. What are the technical levels for the stock? Should I exit or hold?

Madoori Dass

Noida Toll Bridge Company (Rs 27.2): This stock has significant support in the band between Rs 24 and Rs 28. It is hovering in this zone over the last two months. Investors can hold the stock with a stop at Rs 22. There is a likelihood of the stock bouncing from here to Rs 33 or Rs 38. Medium-term view will turn positive only on a close above the second target. Next target is Rs 48.

Since the possibility of your holding moving into profit is highly unlikely over the next year, we suggest you switch out of this stock. Downward risk is also quite high since close below Rs 24 can pull the stock to Rs 20 or even Rs 16.

I hold shares of Mahindra Satyam. Please advise the long-term prospects as also whether the stock can now be purchased at lower level to average cost.

Unnikrishnan

Mahindra Satyam (Rs 66.2): This stock is sliding lower since the peak of Rs 128.6 recorded in September 2009. In our review of this stock in August last year, we had advised investors to hold the stock with stop at Rs 78. We had also indicated then that long-term view would turn negative only on close below Rs 60.

Though the stock has tested the support at Rs 60 several times since December, it has not breached this level strongly.

The strong rebound every time it moves below this level also implies that it is likely to cushion declines in future too.

We move our long-term stop-loss lower to account for short-term blips. Investors can hold the stock with stop at Rs 50. If this level sustains, the stock can move higher to Rs 85 or Rs 102 over the ensuing months. Next long-term targets are Rs 128 and Rs 135.

I have bought Amara Raja Batteries at Rs 181 for a period of six months for a potential upside of 10 per cent. I seek your view on this stock.

Chandra Patnaik

Amara Raja Batteries (Rs 188.6): In our review of this stock in July 2010, we had indicated that short-term traders should divest their holdings on a decline below Rs 180. We had also given the next support at Rs 150.

The stock recorded the low of Rs 150 in February this year and bounced sharply from this zone. Since this level occurs at 38.2 per cent (Fibonacci) retracement of its up-move from March 2009 to October 2010, the long-term view for the stock stays positive. Investors can hold the stock with stop at Rs 145.

The current rally, however, faces short-term resistance at Rs 200. Reversal from here can drag the stock down to Rs 170 or Rs 160 again. You can hold the stock with stop at Rs 180.

If the stock manages to hold above this level, it can rally to its previous peak of Rs 228 again.

What are the technical prospects of UCO Bank purchased at Rs 104 and Jain Irrigation Systems bought at Rs 212?

T.K. Chandrasekaran

UCO Bank (Rs 108.2): UCO Bank had a dream-run to the peak of Rs 152 recorded in November last year. The stock is, however, in a medium-term downtrend since then. Key medium-term support for the stock is at Rs 95 where it is currently halting. Investors can hold the stock as long as it trades above this level on a weekly closing basis.

The stock will face resistance at Rs 115 and Rs 130 in the months ahead. Investors with short- to medium-term perspective should divest their holding on inability to clear either of these levels. Next target would be the previous peak of Rs 152.

The long-term view will, however, deteriorate on a close below Rs 92 since the stock can then plummet to Rs 87 or Rs 72.

Jain Irrigation Systems (Rs 180.9): Jain Irrigation is also in a medium-term decline since the peak of Rs 264 recorded in August 2010. The stock is currently halting at the key support at Rs 180. If it manages to hold above this level, it would be construed as positive from a medium-term perspective and the stock can then move higher to Rs 264 and then Rs 310. Investors should, therefore, hold the stock with stop at Rs 170.

Supports on a move below Rs 170 are Rs 155 and Rs 130.

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