November 19, 2011:
I have bought shares of State Bank of Travancore at Rs 800 and MOIL at Rs 310. Can you please give your views on whether I can keep the same or average them?
N. Raman
State Bank of Travancore (Rs 556.7):In August 2010, the stock skyrocketed and registered its life-time high at Rs 1,080. Since then, the stock has been on an intermediate-term downtrend. Both medium- and short-term trends are down for the stock. However, the long-term significant support and the trend deciding level for the stock is in the band between Rs 510 and Rs 530. This also coincides with 61.8 Fibonacci retracement level of its prior uptrend. As long as the stock holds above this band, long-term investors can prolong their holdings with stop-loss at Rs 500. Breach of this level will reinforce the downtrend, which will be the primary trend, dragging the stock down to Rs 400 and then to Rs 350 in the long-term.
An upward reversal from the aforesaid support band will take the stock higher to Rs 640 and then to Rs 675. A conclusive break-through of key resistance range between Rs 675 and Rs 700 will alter the medium-term downtrend. This will be the cue for averaging as it can lift the stock northwards to Rs 755 or to Rs 800. Strong move above Rs 820 is required to reverse the intermediate-term downtrend and lift the stock to Rs 950. Short-term supports are at Rs 530 and Rs 510. Resistance are pegged at Rs 584 and Rs 610.
MOIL (Rs 226.8):
Since its listing in mid December last year, the stock of MOIL has been gently sloping lower. Trends in across time frames, long, medium and short are down for the stock. Though the stock has been trying to find support at various levels, it has not been successful in finding one yet and is marking new life-time lows.
Its daily volumes are diminishing. Moreover, there are no clear signs of a reversal in the daily as well as weekly indicators and oscillators. Hence, envisaging a halt in the stock is difficult at this juncture. Averaging or fresh investment at this point is not advisable in the stock.
Strong move above its immediate short-term resistance level of Rs 256 will take the stock higher to Rs 270 and then to Rs 285. Significant medium-term resistances for the stock are at Rs 300 and Rs 320. Investors with medium-term perspective can consider entering in to the stock on an emphatic jump above Rs 320 that will take the stock higher to Rs 350 and Rs 375.
What are the prospects for Tata Chemicals and Container Corporation purchased at Rs. 367 and Rs 1,170 respectively. Can I hold them for a period of 2 months to achieve a target of 5 to 10 per cent profit at least?
Ambarish P.
Tata Chemicals (Rs 329.1):
After peaking out marking an all-time high at Rs 446 in October 2010, the stock has been on an intermediate-term downtrend. However, the support zone between Rs 300 and Rs 320 provided cushion in the first quarter of this year and in October as well. The stock is currently reversing upwards from this support zone and hovering just above it. If the stock manages to trade above the said zone, it will be positive from a long-term horizon and improve the likelihood of a rally to Rs 360 or Rs 390 in the upcoming months. Strong move above Rs 390 will give a target of Rs 415. Since the stock is trading 10 per cent below your purchase price, you may have to continue to hold the stock for the 2 months stated by you, for the expected returns.
However, a decisive fall below Rs 300 can pull the stock down to Rs 274 and to Rs 233. Long-term investors can hold the stock with stop-loss at Rs 230. Immediate resistance for the stock is at Rs 350.
Container Corporation of India (Rs 949.6):
Even since the stock of Container Corporation encountered resistance in the zone between Rs 1,450 and Rs 1,500 in April 2010, the stock has been on an intermediate-term downtrend, shaping lower peaks are lower troughs. However, after retracing the 61.8-percent fibonacci retracement level of its prior up-move, the stock found support at its long-term base level at around Rs 900 in September 2011. If the stock holds above this support and break through its immediate resistance at Rs 1,000, a rally to Rs 1,150 or to Rs 1,200 is possible.
Strong move above Rs 1,200 is needed to reverse the downtrend and lift the stock northwards to Rs 1,300 and then to Rs 1,370 in the long-term. Investors with long-term perspective can hold the stock with stop-loss at Rs 875. Conversely, an emphatic fall below Rs 875 will strengthen the ongoing downtrend and pull the stock down to Rs 800 or even to Rs 750 in the long-term.
Please give your technical views on the stock of Indian Hotels.
John Paul
Indian Hotels Company (Rs 59.9):
The stock of Indian Hotels resumed its long-term downtrend after encountering resistance around Rs 118 in May 2010. Across all time frames — long, medium and short term, the stock has been on a downtrend. Last week the stock plunged almost 13 per cent penetrating key support level and 61.8 per cent fibonacci retracement level of its prior up move at around Rs 65. This has reinforced the stock's downtrend and can drag it down to next long-term support at Rs 53 and then to Rs 45. A fall below Rs 45 will pull the stock down to Rs 40.
Nevertheless, an upwards reversal from Rs 53 will encounter resistance at Rs 65 and Rs 68. Next key resistances are at Rs 75 and Rs 86.
I would like to know your analysis on Aban Offshore stock from a 2- to 3-year perspective.
M. M. Faquih
Aban Offshore (Rs 394.7):
The stock has been on a structural downtrend from its life-time high of Rs 5,555 registered in late 2007. In October 2009, the stock resumed its long-term downtrend, following encountering resistance at around Rs 1,680. Since then, it has been an intermediate-term downtrend.
Inability to move above the key resistance band between Rs 650 and Rs 700 will confine the stock moving in the range between Rs 330 and Rs 700. Strong break through of Rs 700 can take the stock upwards to Rs 900 and then to Rs 1,200 in the long-term. Key resistance from Rs 1,200 will be Rs 1,500 and Rs 1,680.
On the other hand, a tumble below its immediate support at Rs 330 will drag the stock down to Rs 224, its March 2009 lows, in the long-term. Next support below Rs 224 is at Rs 100.
Can you kindly give the medium-term outlook of Opto Circuits and Rallis India?
Pattabhi
Opto Circuits (Rs 224.5)
The stock reversed lower and has been on a medium-term downtrend from its key resistance level at around Rs 300 in early July 2011. Nevertheless, the stock is hovering above a significant long-term base at around Rs 210 from where it bounced up in early October this year.
Conclusive breach of Rs 210 will pave way for the stock to decline to Rs 180 and then to Rs 165 in the medium-term.
Conversely, a strong rally above Rs 250 will push the stock higher to Rs 270 and to the Rs 290-300 resistance range.
Rallis India (Rs 145.5)
Rallis has been on a structural bull-run after bottoming out at around Rs 18 (stock split adjusted) in December 2008.
However, the stock started to decline after peaking out from its all-time high, registered at Rs 185 on October 4. Since then it has been on a medium-term downtrend. It is trading well below its 21 and 50-day moving averages and testing its 200-day moving average at around Rs 150.
Following a 10-percent plunge in the previous week, the stock is testing key medium-term support range between Rs 140 and Rs 145. Strong fall below Rs 140 will pull the stock down to Rs 130 and to Rs 120 in the medium term.
A fall below Rs 100 will be threat for its long-term up trend. But an upwards reversal from the support range will take the stock higher to Rs 157 and to Rs 170 in the same time frame. Subsequent important resistance is at Rs 180.
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