Your Stock Portfolio. Cairn India on an energy drive

Here are some answers to readers’ queries on the performance of their stock holdings.

What are the prospects for Elecon Engineering? Can I buy at current levels?

Urmila Kabra

Elecon Engineering Company (₹67.1): After a strong rally in May 2014, the stock encountered significant long-term resistance in the band between ₹67 and ₹70.

The stock is now testing this resistance zone. It lacks the bullish momentum to breach this resistance band. A decisive fall below the immediate support at ₹60 and then at ₹57 can drag the stock down to ₹52 and eventually to ₹42 in the medium term.

Therefore, wait and buy at lower levels with a stop-loss at ₹42. Subsequent long-term supports are placed at ₹35 and ₹25 levels. Conversely, an emphatic breakthrough of ₹70 can push the stock northwards to ₹75 and then to ₹84 in the long term.

I am a long-term investor who bought Pricol shares at ₹38. Kindly give your outlook.

Jayalakshmi

Pricol (₹41.6): Since taking support at ₹25 last August, Pricol has been on an intermediate-term uptrend. Medium- as well as short-term trends are also up.

Last week, the stock surged 10 per cent with extraordinary volumes, breaching its key immediate resistance at ₹39. Investors can hold the stock with a stop-loss at ₹35.

But a fall below ₹35 can alter the stock’s medium-term uptrend and pull it down to ₹30. The next important support is at ₹25.

The stock is now heading towards the next key barrier at ₹45. An emphatic breakthrough of this level in the medium term can push the stock northwards to ₹56 or even to ₹61 in the long run.

Can I buy Cairn at ₹335 levels for the medium term?

Prasad Kalavar

Cairn India (₹370.7): The stock has been on a long-term uptrend since reversing higher from its March 2013 low of ₹267 levels. Both medium- and short-term trends are also up for the stock.

After encountering resistance at ₹380 in recent times, the stock is experiencing some selling pressure.

However, to alter the short-term uptrend, the stock needs to decline below its immediate support at ₹355.

Such a fall can pull the stock to its next supports at ₹345 or ₹335 in the short and medium term.

Declines such as these can be used to buy the stock with a stop-loss at ₹330 levels.

Subsequent supports below ₹335 are placed at ₹320 and ₹310.

Conversely, a breakthrough of ₹380 can push the stock higher to ₹400 and then to new highs in the medium term.

What is the outlook for Meghmani Organics and Birla Ericsson Optical? What is the right level to buy these shares?

Ganesh MS

Meghmani Organics (₹11.3): The long-term trend has been down for the stock since its 2008 peak of ₹53. Only a strong up move above ₹24 will alter its downtrend and take the stock higher to ₹30 or ₹35 in the long term.

However, after forming a strong base at ₹4 in mid-2013, the stock started to trend northwards. Since then, it has been on a corrective uptrend, which recently encountered resistance at ₹15. Investors with a high risk appetite can consider buying the stock on declines with a stop-loss at ₹9.5.

An upward reversal from ₹10 can take the stock to ₹15 once again. The next key long-term resistances above ₹15 are at ₹18 and ₹20. But, a decisive tumble below ₹9.5 can drag the stock down to ₹8 and then to ₹7.

Birla Ericsson Optical (₹58): The stock breached its important resistance at ₹30 in May 2014 and moved higher, hitting upper circuit limits. But the stock faces a key long-term resistance ahead at ₹60.

The indicators and oscillators on the daily as well as weekly charts feature in the overbought levels, signalling a downward reversal.

On such reversal, the stock can decline by hitting the lower circuit limits without any opportunity to execute a trade.

Therefore, desist buying this stock. Key supports to note are at ₹50, ₹40 and ₹30 levels. On the upside, resistances above ₹60 are at ₹70, ₹75 and ₹80 levels.

Send your queries to techtrail@thehindu.co.in

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