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I bought Sundaram Brake Linings at Rs 255 and Bajaj Holdings at Rs 820. Can I average them now? Let me know the medium- and long-term view on these stocks. Can I ever exit these stocks with profit?
Vedavyas L. Pai
Sundaram Brake Linings (Rs 169.5): Sundaram Brake Linings is one of the stocks that has not given up too much ground in 2011. It spent the whole of last year vacillating between Rs 140 and Rs 200.
The zone between Rs 140 and Rs 170 is quite significant from a long-term perspective. As long as the stock trades above this range, there remains the chance of move higher to Rs 200, Rs 230 or Rs 285 in the months ahead.
You can consider averaging at current level with stop at Rs 130. That said, it will be best to divest your holding on a decline below Rs 125, since next target is Rs 88.
Long-term trend will turn positive only once the stock moves above Rs 280. Else the stock can remain shackled within Rs 100-300 range. Long-term target on a break-out are Rs 340 and Rs 395.
Bajaj Holdings and Investments (Rs 670.1): There is really no need to feel hopeless in Baja Holdings. This stock was quite resilient in the last correction. It has managed to hold above its medium-term support around Rs 600 which is the half-way retracement of the rally from 2008 lows.
Investors can hold the stock with stop at Rs 480. You can also buy the stock in declines with the same stop.
It is quite possible that the stock bottoms around current levels. If it does so, then it can move higher to Rs 950 or Rs 1,100 in the upcoming months where you can exit with profits.
There is, however, a strong resistance zone between Rs 1,100 and Rs 1,250 that the stock could not get beyond over the next couple of years. Short-term resistances would be at Rs 750 and Rs 830.
I have bought JSW Energy at Rs 88 in April 2011. What is the long-term outlook of this stock? I am willing to hold for a minimum five years.
Sundar
JSW Energy (Rs 52.9): This stock does not have sufficient history. So, it is difficult to express an opinion about its long-term prospects. JSW Energy is constantly trudging lower since the September 2010 peak at Rs 136.
A trough was formed recently at Rs 35 in December 2011. But it is too soon to infer if this is the end of the stock's woes. The up move will face hurdles at Rs 68 and Rs 75 in the months ahead. Inability to move above these levels will mean that the decline will resume.
Investors with a short- to medium-term horizon can, therefore, sell the stock if it fails to move beyond these levels. Subsequent resistances are at Rs 87 and Rs 98. Long-term view will turn rosy only on weekly close above Rs 100.
Please advise me on the long-term outlook for Karuturi Global. I purchased the stock at Rs 15. Can I average now?
K. Ramchandran
Karuturi Global (Rs 5.6): The long-term outlook for Karuturi Global is in doldrums. The stock could have bounced off its October 2008 low at Rs 6.4 but it didn't.
The fledgling up-move from December lows lacks conviction and it would not be advisable to average at this level. The stock could slide lower to Rs 3.7 or even lower in the upcoming months. The downside risk will be mitigated only on a close above Rs 10.
It will be advisable to exit the stock in short-term rallies to Rs 8 or Rs 10. The sharp rallies and equally steep declines in the stock make it unworthy for long-term investing.
But investors with short-to-medium term horizon can buy the stock with the intention of exiting when the stock is soaring upward. The stock is likely to face resistance at Rs 17 or Rs 25 in the months ahead.
Long-term view will turn positive only on a move above Rs 25. The long-term ceiling is between Rs 40 and Rs 45.
I am holding NHPC bought at Rs 18.9 and Dhoot Industrial Finance at Rs 14. Please advise on the future prospects of these companies.
Praveen
NHPC (Rs 20.5): The structural trend in NHPC continues to be down as the stock is constantly plumbing newer depths. Although a small uptrend is in progress since late December, it has not progressed sufficiently to qualify as a medium-term uptrend. Short-term obstacles for the stock are at Rs 22.5 and Rs 25.5. Investors with short-to-medium term horizon can exit the stock at either of these levels.
Key medium-term hurdle is between Rs 25.5 and Rs 26.5. Fresh purchases are recommended only once the stock moves above this level. Subsequent hurdles are at Rs 28.8 and Rs 31.5.
Investors can hold the stock with stop at Rs 17. It is hard to say where the next halt could be given the stock's short trading history.
Dhoot Industrial Finance (Rs 11.5): This is another stock that is not recommended for investors. The sharp intra-day swings imply a great trading interest in this counter.
The stock is attempting to move up since the low of Rs 8.9 recorded in January. This rally will face resistance at Rs 13.5, Rs 15 and Rs 16.5.
If you belong to the camp who prefer safe and steady stocks, then you can exit at either of these levels. Long-term resistances are at Rs 25 and Rs 31.
It is highly likely that the stock remains volatile in the band between Rs 10 and Rs 30 over the next couple of years.
Kindly advise on Sonata Software bought at Rs 56. Please let me know the short- and medium-term targets and supports for this stock.
J. Senthan
Sonata Software (Rs 23.2): Sonata Software is plumbing newer depths since November 2010. Both the long-term as well as the medium-term view in the stock is negative. A short-term uptrend is currently in progress but this rally faces hurdles at Rs 26 and Rs 31 in the immediate future. Key medium-term hurdle is at Rs 38. Failure to surpass this level will make the stock trudge lower towards its recent low again.
If the obstacle at Rs 38 is crossed, it can then move on to Rs 43 or Rs 49. That said, the recovery from the recent low lacks strength and it is quite likely that the stock moves lower towards the March 2009 trough at Rs 14. It would be best for investors to switch out of this stock and consider re-entry on a strong move past 32.
Please advise on the outlook for Archies bought at Rs 38.
Sunil Dutt
Archies (Rs 26.9): Archies has tumbled downhill seriously since your purchase.
But you can draw solace from the fact that the stock is attempting to hold above key long-term support at Rs 23.
The zone between Rs 21 and Rs 23 can cushion the stock in the days ahead. Stop loss level for investors can therefore be at Rs 21.
Reversal from this level can take the stock higher to Rs 32 or Rs 39 in the months ahead. Long-term view will turn positive only if the stock moves above the second hurdle.
That will clear the path for a shy at the previous life-time peak at Rs 48.6.
It would, however, be safe to exit the stock on decline below Rs 21 since the next targets are at Rs 16 and Rs 13.
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