Technicals- HDIL, CORE Education, Godrej Ind, Zee Entertainment, Indraprastha Gas, SIB, :: Business Line

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Should I hold, sell or accumulate HDIL bought at Rs 83 and Core Education at Rs 83.50?

Rukmani

HDIL(Rs 40.7): HDIL could not free itself from the bear’s grip and is in a vicious downtrend since the January 2008 peak at Rs 1,114. This down-move halted at Rs 52 in December 2011 and the stock moved in a trading band between Rs 50 and Rs 100 since then. The bad news is that the stock breached the lower boundary of this range in March this year and the stock is still trading under this level.

Investors with a lower penchant for risk can exit the stock at this juncture and consider re-investing once it moves above Rs 65. Key medium term resistance will however be at Rs 135. The stock needs to record a weekly close above this level to signal that it is out of the woods.

Long-term resistances are placed at Rs 184 and Rs 268.

Core Education & Technologies (Rs 38.2): This stock took a deep dive in February this year along with other mid-cap stocks that crashed on rumours of shares pledged by promoters being offloaded in the market. The stock fell from Rs 295 to Rs 50 in just four weeks.

The stock is currently attempting to find its feet close to the long-term support at Rs 40. But the short- as well as medium-term trends in the stock are currently down. It also has a long way to go before the medium-term outlook turns positive. It would be best for investors to switch out of this stock at this juncture.

Fresh investments can be considered only if it manages to close above Rs 150. Short-term trend in the stock will turn positive on a close above Rs 67.

Please explain as to what actually is the time period of the short-, medium- and long-term often used in these columns. This will be useful for understanding the contents of this column effectively.

Prabhakar Rao Erabelli

There is no specific definition for the short-, medium- and long-term referred to in technical studies. When we use these terms in the technical analysis columns of Business Line, by short-term we mean period up to one month. Medium-term refers to period between one month and one year and long-term refers to period beyond one year.

What is your advise on Godrej Industries bought at Rs 315 and Zee Entertainment bought at 232?

Ganapathy

Godrej Industries (Rs 297.3): You have purchased Godrej Industries close to its key long-term resistance. The stock faces strong resistance around Rs 330 that occurs at 61.8 per cent retracement of the down-move from the December 2007 peak. Inability to move above this level can see the stock decline to Rs 220 or Rs 157 in the months ahead. Conversely break above this level will pave the way for a sharp spike towards the 2007 peak at Rs 503.

That said the probability of the stock racing up towards this peak is quite low as this high was formed in the last stage of the former bull-market. The resistance zone between Rs 300 and Rs 330 can prove to be a strong impediment for the stock in the next couple of years at least.

Zee Entertainment (Rs 231.9): Zee Entertainment is reversing lower from its life-time high at Rs 255.

This decline will find support around Rs 200. Investors with short- to medium-term horizon should hold the stock only as long as it trades above this level. Reversal from this zone will imply that the stock could move in the range between Rs 200 and Rs 250 for a few more months before breaking higher to Rs 280.

On the other hand, decline below Rs 200 will drag the stock towards its next significant support at Rs 170.

This level can serve as a stop-loss for long-term investors.

The long-term trend in the stock will not be under threat as long as it trades above this level.

What is the outlook for IGL?

Dinesh

Indraprastha Gas (Rs 282.2): Indraprastha Gas is in a steady uptrend from the low of Rs 187 recorded in April 2012. Key long-term support zone for the stock is in the band between Rs 200 and Rs 230.

Long-term investors can, therefore, hold the stock as long as it does not record a weekly close below Rs 200.

The uptrend from the April 2012 low, however, faces resistance at Rs 320 and Rs 350. That the stock is reversing lower from the first resistance level is a point of concern. Medium-term supports for the stock exist at Rs 270 and Rs 240.

Investors with short- to medium-term perspective should exit the stock on close below Rs 240. Long-term view will turn positive only on close above Rs 350.

What is your long-term outlook on South Indian bank?

Narayanan C.V.

South Indian Bank (Rs 25.1): This stock is trading in a broad based trading range between Rs 20 and Rs 30 since August 2010. Investors can play within this trading range by buying at the lower boundary and selling at the higher level.

The stock is currently attempting to reverse from the low at Rs 22. Investors can hold the stock with stop-loss at Rs 21 and try to exit at Rs 27 or Rs 30.