HCC hovering around key support

I want to accumulate the shares of Rolta. Is it advisable to buy at this level?

A. Mayilsami

Rolta India (Rs 136.8): Rolta India continues to be in the medium-term downtrend that commenced at the peak of Rs 210 in 2010. In our review of this stock this February, we had indicated that medium-term supports would be at Rs 126 and Rs 106. The stock is yet to penetrate either of these levels. It can, therefore, be accumulated in the zone between Rs 110 and Rs 150 with stop-loss at Rs 100.

The stock can move higher to Rs 160 or Rs 180 over the ensuing months. Long-term view will turn positive only on close above Rs 260. Subsequent target is Rs 390.

Long-term view will deteriorate only on a close below Rs 105, paving the way for a decline to Rs 75 or even lower.

Please share the short- and long-term technical prospects for Varun Shipping bought at Rs 42. Can I buy SPIC at current levels?

Dashesh Desai

Varun Shipping Company (Rs 27.5): The long-term outlook in Varun Shipping is currently down since the stock is trading well below the key long-term trend decider at Rs 47.

Any rally will face resistance at Rs 43 or around Rs 53 in the months ahead. Investors should divest their holding on failure to move above the first resistance.

In that event, the stock can decline to Rs 18, Rs 13 or even below Rs 10 over the ensuing months.

Investors with lower risk appetite can switch out of this stock at current level.

SPIC (Rs 25.4): SPIC (Southern Petrochemicals Industries Corporation) has strong long-term resistance around Rs 40.

The stock reversed lower from Rs 40 in September 2005, May 2006 and again in early 2008. The recovery in 2009, however, stalled around Rs 35, and after a small correction, the stock is once more approaching the Rs 35 barrier.

It, therefore, follows that investors need to tread carefully since the stock is knocking at the ceiling of its long-term trading range.

It could find it difficult to get past the Rs 35-40 zone just yet. Decline from here can drag the stock down to Rs 22 or Rs 15 over the ensuing months.

Investors can therefore wait for either a decline to the above-mentioned support levels or a move above Rs 45 before considering investment in the stock.

I bought Gujarat NRE Coke at Rs 70 two years ago. Now it is at Rs 50. What should I do now, sell or hold or buy more?

Sreedhar B

Gujarat NRE Coke (Rs 48.7): This stock is in a corrective mode since the peak of Rs 93 recorded in April 2010. Key medium-term support where this correction can halt is in the zone between Rs 41 and Rs 46.

Since the stock is currently attempting to bounce off this level, investors can hold the stock with stop at Rs 40. However, it needs to be borne in mind that decline below this level can drag the stock to Rs 35 or even Rs 25.

Medium-term targets, if the stock sustains above Rs 40 are, Rs 63 and Rs 77.

Investors with lower investment horizon can divest their holding at either of these levels. Long-term view will turn positive only on a close above Rs 86, paving the way for a rally to the previous peak at Rs 130.

Please indicate the immediate and long-term prospect of Dishman Pharmaceuticals and Hindustan Construction Company.

Mukesh Kumar

Dishman Pharmaceuticals and Chemicals (Rs 91.5): The short- as well as long-term trend in Dishman Pharmaceuticals is currently down.

The stock is looking quite woebegone from a long-term perspective as it is currently at the trough last recorded in March 2009. There are no signs of reversal in the stock as yet, and it is likely to breach this low at Rs 87 and decline to the 2004 low of Rs 72 or even Rs 61 in the days ahead.

Investors should divest their holding on a decline below Rs 87.

On the other hand, a medium-term bounce can take it higher to Rs 160 or Rs 202 wherein also investors can exit their position. The stock would stay volatile as long as it trades below Rs 155.

Hindustan Construction Company (Rs 33.9): In our review of this stock in December last year, we had written that investors should desist from buying this stock on a decline below Rs 36 since that would indicate a propensity to fall to the March 2009 low of Rs 14.

HCC is currently hovering around the support at Rs 36, fluctuating in the band between Rs 31 and Rs 41. Near-term outlook is bleak and the stock appears on the way to its March 2009 low. This view will be rectified only on a strong close above Rs 50.

The stock could continue to move in the broad trading range between Rs 15 and Rs 80 for a few more years.

Investors with short or medium-term perspective should, therefore, exit the stock at Rs 50 or Rs 62 in the months ahead.

Please let me know about the prospects of FDC and Mukand.

Sayamsunder

FDC (Rs 102.2): The structural uptrend that began in October 2008 continues to be strong in FDC. The correction from November 2010 is also evolving in to a narrow sideways movement between Rs 95 and Rs 115 instead of a deeper cut.

The stock will receive support at Rs 80 and then at Rs 57 in the medium-term. Continued movement above Rs 80 will be positive from a long-term perspective and will signal a possible move higher to Rs 136 or Rs 172 over the next couple of years. Investors can, therefore, hold the stock as long as it trades above Rs 80.

Mukand (Rs 44.5): Mukand continues to be in a long-term downtrend. The recovery since the March 2009 low could not help the stock retrace more than half of the loss suffered in the 2008 decline and the stock is once more in a medium-term decline since last August. This decline has key support at Rs 45 and the stock is currently struggling to hold above it.

Investors can hold the stock with stop at Rs 40. A rebound from here can take the stock higher to Rs 60 or Rs 70 in the ensuing months. Long-term view will turn positive only on a close above Rs 103.

I have purchased MTNL at Rs 70.What should I do now? Should I exit at current market price or should I hold it?

Adepu Ravikumar

MTNL (Rs 45.4): MTNL is currently in a very vicious down-move. This move has taken it below its 1993 low at Rs 60. There is no sign of reversal yet and the trend along all time-frames, long, medium as well as short are currently down.

It would be best to switch from this stock at this point since it is difficult to figure out where the stock can bottom out.

Any rally over the medium-term can face resistance at Rs 110. Investors should consider buying this stock only on a firm close above this level.

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