November 12, 2011:
What is your view on Corporation Bank? Is it a good stock for long-term investment?
Swaminathan
Corporation Bank (Rs 418.9): The structural trend in Corporation Bank continues to be up despite the steep correction witnessed since last November.
Key long-term trend deciding level is at Rs 400. Presence of the 200-day simple moving average at that level adds to its significance. Strong decline below Rs 400 will put the long-term outlook in jeopardy and the stock can go on to decline to Rs 275 or even lower. Therefore, fresh purchases are not recommended on a close below this level.
Conversely a reversal from this level will take the stock higher to Rs 560 or Rs 660 in the upcoming months.
The stock needs to move beyond the second resistance to signal that it is on its way to a new high again. Investors with short- to medium-term perspective can divest their holding at either of these levels. Investors can wait for a weekly close above Rs 460 before buying the stock.
Please discuss the medium- and long-term outlook of Marico and Dabur India.
Anil
Marico (Rs 147.3): Marico belongs to the privileged bunch of stocks that have been unscathed by the ongoing correction. It is currently trading close to its record high of Rs 172. Key medium-term support for the stock is at Rs 135 and if it manages to hold above this level, sideways movement between Rs 135 and Rs 170 can follow for few months.
Breach of the support around Rs 135 will take the stock to the next support zone between Rs 125 and Rs 110 and then to Rs 95. Long-term investors can buy the stock on declines with a stop at Rs 95.
The area around Rs 170 is acting as a strong resistance currently. However, breach of this level will take the stock up to Rs 200.
Dabur India (Rs 98.5): Dabur is yet another stock that had been cocking a snook at the ongoing correction this year, going on to a record high at Rs 122 this June.
But, it is in a mild corrective phase since then, that has pulled the stock close to its psychological support at Rs 100. Key medium-term support is, however, lower at Rs 87 and investors can utilise declines to buy the stock as long as it trades above this level.
Sideways move between Rs 87 and Rs 125 will in fact be construed as a positive long-term base-building move by the stock. However, decline below Rs 87 will mean that the stock will slide lower to Rs 76 or Rs 65 in the months ahead.
Long-term target on a break-above Rs 125 is Rs 136 and Rs 170.
Could I consider buying SAIL and ONGC at current levels from one to two years perspective?
Chayan Sarkar
SAIL (Rs 105.3): SAIL has been badly battered in the market fall since this April. The stock is down around 40 per cent since the April high of Rs 177. It is currently trying to stabilise itself around Rs 100 but this is a tenuous support. The stock has already breached the key long-term trend decider at Rs 133 and is currently trading well below this level. The attempts by the stock to move higher since August have also not been successful.
Investors with long-term perspective can wait for a move above Rs 160 before buying this stock. Investors with greater risk-taking ability can buy at current levels. The stock can also be accumulated if it declines to the next long-term supports at Rs 70 or Rs 59.
Resistances for the medium-term would be at Rs 160 and Rs 200. Long-term resistance is in the zone between Rs 260 and Rs 280.
ONGC (Rs 265.8): The structural trend in ONGC is still up, and the stock is attempting to stabilise after retracing half the gains made since January 2009. Immediate support for the stock is at Rs 260. If this level is breached, the stock could halt around Rs 225.
Investors with long-term horizon can, therefore, buy the stock on declines with stop at Rs 220. Halt above this level can make the stock move higher to Rs 314 or even Rs 370.
The long-term picture will, however, deteriorate if the stock declines below Rs 220. That will imply that it can move lower to Rs 200 or even Rs 153 in the medium-term.
Please give the short- and long-term outlook of Rolta.
Krishnamurthy K.S.
Rolta India (Rs 76): In our review of Rolta in May, we had written that the stock could be accumulated in the zone between Rs 110 and Rs 150 with stop at Rs 100. The support at Rs 100 was firmly penetrated in the last week of September, and the stock recorded the trough of Rs 69 last month.
Needless to add, the long-term trend in the stock is down. It could head lower towards the long-term support at Rs 40 or Rs 42 in the months ahead. Rs 40 can act as the stop-loss for long-term investors.
Key medium-term resistances are at Rs 124, Rs 157 and Rs 210. The long-term view will turn positive only if the stock records strong weekly close above Rs 260.
Please let me know the long-term prospects of Kansai Nerolac and Clariant Chemicals.
Deepak L. Pai
Kansai Nerolac Paints (Rs 861.1): Kansai Nerolac is in a strong secular uptrend since its bear market low at Rs 178. Though the stock is in a corrective phase since last October, this correction is a sideways-moving shallow one rather than a deep one. This correction is halting at Rs 720 that occurs at 38.2 per cent retracement of the rally from March 2009 lows.
Investors can continue to hold the stock with stop at Rs 700. Sideways move in the band between Rs 700 and Rs 1,050 will mean that the stock can break higher to Rs 1,260 or Rs 1,595 over the next two years. The zone between Rs 1,000 and Rs 1,050 will, however, continue to act as a strong medium-term resistance.Fresh purchases are not recommended if the stock declines below Rs 720. Subsequent targets are Rs 620 and Rs 514.
Clariant Chemicals (Rs 655.1): Clariant Chemicals is also in a long-term uptrend despite the correction since last October. This decline is halting at the key long-term support around Rs 600 and long-term investors can continue to hold the stock with a stop-loss slightly below, at Rs 580.
If the stock manages to bide its time in the range between Rs 600 and Rs 850 for a few more months, chances of a break-out of the upper ceiling to Rs 1,030 are bright.
If the stock breaches the buttress at Rs 600, investors should brace themselves for further declines to Rs 500 or Rs 420.
Please let me know the technical prospects of IDBI Bank.
Vivek Agarwal, Shantha. D. Pai, Kavitha Jegadesh.
IDBI Bank (Rs 107): This stock has strong long-term support around Rs 100. It declined slightly below this level to record the low of Rs 95 in October. Investors can hold the stock with stop-loss a little below, at Rs 85. Breach of this support will spell disaster as the stock can then move down to Rs 58 or even lower.
Rebound from current levels will take the stock up to Rs 137 or Rs 162 over the medium-term. Investors with short- to medium-term outlook can book some profits if the stock reverses from either of these levels.
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