October 8, 2011:
Please give me the technical outlook for Lupin.
S.K. Shah
Lupin (Rs 461): In our review of Lupin in January, we had written that the stock had strong supports at Rs 396 and Rs 360 and if it consolidates above these levels, there is a strong likelihood of a break-out to a new high over the long-term.
The stock bottomed at Rs 363 on February 25 and is in a medium-term uptrend since then. We continue to advise that long-term investors can hold this stock with stop at Rs 350.
Volatility can, however, rule in the near-term and decline to Rs 440, Rs 412 or Rs 360 cannot be ruled out. Investors can buy the stock in such declines with the stop mentioned above.
Lupin will face strong resistance at the previous peak of Rs 520 and the long-term view will turn positive only on a move beyond this level. Subsequent target is Rs 620.
Canara Bank and Indian Bank have been beaten down heavily. I have investments in these. Is there a prospect of recovery in the short term? Kindly advise.
J H K Murthy
Canara Bank (Rs 424.2): Canara Bank has taken a sharp hit since its November 2010 peak of Rs 844, declining 52 per cent from this level. The stock is, however, halting around Rs 400 which is a key long-term support, since it occurs at 61.8 per cent retracement of the ascent from 2009 low.
The recovery from this level is not too strong, but investors can hold the stock with stop at Rs 350. A bounce above the support zone between Rs 350 and Rs 400 can take the stock higher to Rs 572 or Rs 675, where investors with short- to medium-term investment horizon can divest their holdings. The stock could find it difficult to move beyond Rs 675 over the ensuing months.
Sharp move below Rs 350 will imply that the stock is moving to the next support zone between Rs 250 to Rs 260.
Indian Bank (Rs 197): Indian Bank too is in a serious correction since the October 2010 peak of Rs 316. This correction has made the stock give back half the gains made since the March 2009 trough.
The stock has supports at Rs 190 and then at Rs 160. Investors can hold the stock with stop at Rs 150. Recovery from either of the supports mentioned above will take the stock higher to Rs 240, Rs 260 or Rs 316 over the upcoming months.
Investors with short-term perspective should divest their holding on a failure to move above Rs 240. Moving beyond Rs 270 could be a struggle for the next 12 months for the stock.
What are the long-term prospects and technical outlook of the Piramal Healthcare and Universal Cables?
Anil Kumar Ray
Piramal Healthcare (Rs 350): The structural trend in Piramal Healthcare reversed higher in the first quarter of 2009 and this uptrend continues to be in force. Key trend deciding level for the stock is Rs 332 and investors can hold the stock as long as it trades above Rs 300. The zone between Rs 300 and Rs 330 can act as a cushion if the stock starts hurtling downwards.
Medium-term resistances for the stock would be at Rs 447, Rs 507 and Rs 600. Investors with short- or medium-term perspective can exit the stock if it reverses lower from the first two resistance levels. The down-move will accelerate once the stock declines below Rs 300. Subsequent targets will be Rs 200 or Rs 170.
Universal Cables (Rs 46.5): This stock faces a formidable resistance in the zone between Rs 120 and Rs 140. The stock made many unsuccessful attempts to move beyond this zone between September 2005 and January 2008. It once again reversed lower from this zone in September 2010 and is spiralling lower ever since. The key medium-term support at Rs 69 was breached in June. Immediate support for the stock is at Rs 40 and short-term investors can hold the stock with stop at Rs 39. If this support is breached, next halt would be at Rs 30. Investors with a lower penchant for risk should switch out of this stock at current level.
Can I continue to hold Onward Technologies?
J. Rajagopalan
Onward Technologies (Rs 39.4): Onward Technologies hit the astronomical height of Rs 980 in January 2000, but it has been wallowing below Rs 140 since December 2000. This is an extremely volatile stock that has turned in to a trading favourite in recent years. The faint-hearted can give this stock a wide berth since it has a tendency to rise and fall with great speed.
Key medium-term support for the stock is at Rs 27 and investors can hold the stock as long as it trades above this level. Resistance for the months ahead would be at Rs 44 and Rs 55.
I am a retail investor, and I have invested on Adhunik Metaliks around Rs 90. It is now down by almost 50 per cent. Can I continue to hold it?
Sunil S.K.
Adhunik Metaliks (Rs 44.5): The structural downtrend that began from the January 2008 peak continues to be in force in Adhunik Metaliks. The recovery in 2009 could not help in retracing even half the losses made in the previous decline and the stock is once again spinning downwards.
The trends along all time-frames — short, medium and long — are currently down, and the stock could move down to the March 2009 low of Rs 23 in the days ahead. Investors with a long-term perspective can hold the stock as long as it trades above this level. A rebound from here can pull the stock higher to Rs 77 or Rs 101 in the medium-term. Investors with shorter investment horizon can divest their holding in such rallies. Long-term target on a close above Rs 137 is Rs 165.
Could you please give the medium-term targets for HDFC?
Sudhin Bathija
HDFC (Rs 645.1): HDFC is in a sideways consolidation in the range between Rs 600 and Rs 750 since last September.
This move has retraced about one-third of the rally from the March 2009 low of Rs 223.
This is a positive as far as the long-term prospects of the stock are concerned.
Investors can continue to buy the stock in declines with stop at Rs 545.
Continued movement in the afore-mentioned range will imply that the stock can break out higher to Rs 950 or Rs 1,000 over the next 12 months. However, decline below Rs 550 will open the way for further decline to Rs 486 or even Rs 425 in the next year.
The stop-loss for long-term investors is, however, much deeper at Rs 420.
What is the long-term outlook for Ador Welding?
Anil Kumar Ray
Ador Welding (Rs 144 ): The long-term trend in Ador Welding continues to be down.
The 2009 rally could not take the stock past the key long-term resistance at Rs 250, and this level will continue to act as a ceiling for a few more years.
The stock is expected to stay volatile in the range between Rs 75 and Rs 250 in this period.
Key medium-term support is, however, at Rs 130, and this can be the stop for medium- and short-term investors.
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