Query Corner: Wipro swings in a broad range

Please let me know the long-term prospects of Subex bought at Rs 57?

Neeraj

Subex (Rs 77.8): Subex has been vacillating sideways in a broad range between Rs 50 and Rs 94 since September 2009. In mid-March 2011, the stock took support from its lower boundary and started to rally. Last week, the stock skyrocketed 24 per cent accompanied by extra-ordinary volume. In the medium-term, the stock can move higher and test resistance between Rs 95 and Rs 100. Failure to surpass this zone will confine the stock's movement within the aforementioned range for some more time. If that happens, investors can take partial profits off the table.

A strong breakthrough of the resistance zone will give a long-term target of Rs 122 and then Rs 150. Investors with long-term perspective can hold the stock with stop loss at Rs 60. Supports for the stock are positioned at Rs 70, Rs 60 and Rs 50. Emphatic fall below Rs 50 can pull the stock down to Rs 35 or Rs 25 in the long-term.

I purchased DCM at Rs 95. Please let me know its short- and long-term prospects.

S. Sudarsan

DCM (Rs 88.2): After bottoming out in March 2009 around Rs 14.5, the stock was on a steady long-term uptrend until November 2010 peak of Rs 170. However, the stock changed direction encountering resistance in the band between Rs 160 and 170. Its downtrend accelerated and the stock declined steeply, breaking through its long-term support around Rs 100 in December 2010. As long as the stock hovers below Rs 115, the stock's medium-term downtrend stays in place.

In the short-term, the stock can move higher and test its resistance at Rs 95 and Rs 100 range. Breakthrough of this band will lift the stock higher to Rs 115. Supports are positioned at Rs 80 and Rs 70.

Long-term investors can consider holding the stock with stop loss at Rs 63. Target for the stock is Rs 100 and a decisive move above this level will lift the stock higher to Rs 130 and then to Rs 160 in the long-term. On the other hand, strong slump below Rs 63 can drag the stock down to Rs 45 which is its next long-term support level.

I am holding TT Ltd stock invested at Rs 32 a share. When is the right time to exit from the stock?

Suresh Rathod

TT Ltd (Rs 34.9): After bottoming out in early 2009 around Rs 5, the stock started trending higher and has been on a long-term uptrend ever since. This uptrend remains in place as long as the stock trades above the significant long-term support band between Rs 28 and Rs 30. Investors can consider holding the stock with stop loss at Rs 30. However, the medium-term trend is down for the stock which has come down from its November 2010 peak of Rs 46.

The stock is currently testing its key resistance level around Rs 36.5. Inability to move above this level will drag the stock down to Rs 28-30 band in the medium-term.

Strong weekly close above Rs 36.5 can take the stock higher to Rs 41 and then to Rs 46 where investors can consider exiting. Key supports below Rs 28 are pegged at Rs 23.5 and Rs 19.

Please let me know the long-term prospects of Texmaco purchased at

Rs 42.

Mukesh Kumar

Texmaco (Rs 30): The stock was on a long-term uptrend from its March 2009 low of Rs 15 until it encountered significant long-term resistance in the range between Rs 75 and Rs 80 in October 2010. However, the stock changed direction subsequently and has been on an intermediate-term downtrend. It has retraced more than 61.8 per cent fibonacci retracement level of its prior uptrend. It broke through its long-term support at around Rs 44 this January, and is now testing its next key support level around Rs 30. Decisive dive below this level can pull the stock down to Rs 24, Rs 20 and Rs 15 in the long-term.

Conversely, reversal from Rs 30 will lead to a corrective up move to Rs 36 and then to Rs 44. Subsequent important resistances are at Rs 50 and Rs 70.

Kindly give long-term forecast of Gujarat NRE Coke and Wipro.

RM Kumarappan, Amit

Gujarat NRE Coke (Rs 56.4): After encountering long-term hurdle in the zone between Rs 90 and Rs 95 in March 2010, the stock began to decline and has been on a long-term downtrend since then. This downtrend stays as long as the stock trades below Rs 68. However, taking support from its long-term buttress around Rs 40 this February, it has been on a corrective up move. The stock has a key long-term resistance around Rs 60, from which it had reversed down many times in the past. Reversal from this resistance will pull the stock down to Rs 52 or Rs 45 in the medium-term.

Nevertheless, strong breakthrough will take the stock higher to Rs 68. Only a decisive move above Rs 68 will mar the downtrend and take the stock higher to Rs 75 and Rs 83 in the months ahead.

Wipro (Rs 463.2): The stock took support at Rs 120 in March 2009 and bottomed out. The stock however, encountered resistance at Rs 500 last October and has been swinging sideways in the broad range between Rs 400 and Rs 500 since then. Wipro's uptrend remains in place as far as it hovers above Rs 310. Long-term investors can hold the stock while maintaining stop loss at this level. Conclusive upward breakthrough of the sideways range can take the stock higher to Rs 550 and Rs 590 in the long-term.

In the medium-term the stock can prolong its range bound movement. Within this range, a tumble below its immediate support at Rs 440 can drag the stock down to Rs 420 or Rs 400 in the ensuing months. Next support is at Rs 372.

I bought Patel Engineering at Rs 233. Please let me know if I should exit or average.

Manish

Patel Engineering (Rs 175.5): The stock remains in bears' grip since its January 2008 peak of Rs 1,070 levels. Intermediate and medium-term trends are down for the stock. But the stock found support around Rs 130 in mid-March 2011 and rallied sharply to encounter resistance at Rs 200. The stock can consolidate in the bigger range between Rs 130 and Rs 200 for a while before moving in either direction. Investors with long-term perspective can hold the stock with stop loss at Rs 130.

Conclusive jump above Rs 200 can lift the stock higher to Rs 247 and then to Rs 295 in the long-term. On the other hand, plunge below Rs 130 will pull the stock down to March 2009 low of Rs 103 eventually.

Please discuss technical prospects of NIIT.

Jatin Shah, Altaf

NIIT (Rs 56.7): NIIT changed its trend after recording a 52-week low of Rs 42.7 on February 10. Since then, it has been on a medium-term uptrend. However, the stock is facing significant long-term resistance at Rs 60 and its 200-day moving average is poised at this level. Strong breakout of this resistance will give targets of Rs 65 and Rs 75 in the medium-term. Inability to exceed above Rs 60 can pull the stock down once more to Rs 53 and Rs 47 in the same period.



(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.

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