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What should I do with Petronet LNG purchased at Rs 61? Should I purchase some more or just hold? S. V. Shanbhaug, Sasi Kumar, R. Kalyanasundaram

Petronet LNG (Rs 49): The stock has halted exactly at the long-term support of Rs 36 made in June and has gained 44 per cent since. The stock is currently facing resistance at Rs 52, which is 50 per cent retracement of the fall from the peak of Rs 68 made in May. The Rs 52-level needs to be crossed before the price can progress towards Rs 56. The price can move in a band between Rs 36 and Rs 56 over the next one year. Hold with a stop at Rs 30 if you are a long-term investor. Exit near the upper boundary of the range if you are a short-term investor.

I have two demat accounts. One is like a fixed deposit and another demat account is used for daily routine trading. Am I correct? Please advice. Mahesh

I hope you mean that you have reserved one demat account for the sole purpose of keeping long-term investments and another for holding the shares being held for trading purpose. Demat accounts cannot be compared to fixed deposits as the former do not earn any revenue. The shares held for the long term and short term can be held in one demat account. Having two demat accounts is not really necessary as it will only double your annual demat account cost.

What are the short-term and medium-term prospects of Syndicate Bank and Allahabad Bank?   M. Guhan, J.C. Virani

Syndicate Bank (Rs 76.4): The stock has had a spectacular run from the low of Rs 47 it touched in July. For the short term, the price is facing resistance from its long-term moving average positioned at Rs 79. The price will have difficulty rising above Rs 83 in the short term as the run-up has already been so sharp. Short-term investors can book profits at current level.

The medium-term prospects are, however, good for this stock. We can expect the stock to move between Rs 65 and Rs 80 in the medium term. Use dips to buy into this stock with a stop at Rs 60.

Allahabad Bank (Rs 81.1): This stock, too, has had a strong run since the low of Rs 53 hit in July. The price has short-term targets of Rs 80 and then Rs 86. The medium-term outlook continues to be bright for this stock. Medium-term support would be at Rs 62. Buy on dips with a stop at Rs 60.

At what rate should Titan be purchased?   Kanchan Garg, R. Parrivel Saravanan

Titan (Rs 790.9): The study of the volume on this counter throws up some interesting observations.

The volumes were at the highest between September 2005 and March this year.

The price was in a band between Rs 650 and Rs 895 during this time. The subsequent fall and recovery has been accompanied by low volumes. The inference is that the price will face resistance at its previous peak of Rs 895. If this peak is crossed, the price can go on to Rs 1,000 or even Rs 1,300. Buy this stock if there is a dip to the Rs 680-720 zone.

I am having positions in TCS at an average rate of Rs 900. What should I do? Can you give me the medium- and long-term targets for TCS and L&T? Nita Bhatija, Bikramaditya Roy

TCS (Rs 1,003.1): The stock is moving in an upward moving channel since July. The upper boundary of this channel is positioned at Rs 1,050. As the previous all-time high is also positioned at Rs 1,050, this is the target for the short term.

Short-term investors can book partial profit at these levels. A strong breakout beyond Rs 1,050 is required to propel the price to Rs 1,200.

The stock is expected to move in a broad range between Rs 850 and Rs 1,050 over the medium term. As your average cost is Rs 900, hold the stock with a stop at Rs 840. You can accumulate on dips with the same stop.

L&T (Rs 2,639.9): This stock has a strong correlation with the Sensex. Now that this stock has been included in the derivatives segment on the NSE, the correlation is expected to get stronger.

The wave pattern on the chart is identical to that found on the Sensex. The short-term target is Rs 2,728 and the medium-term target is Rs 2,915. Short-term support lies at Rs 2,300.

A fall below Rs 2,300 will drag the price to Rs 2,100. Investors can look out buying opportunity if the stock falls to the zone between Rs 2,300 and Rs 2,100.

Let me have your view on future prospects of Maruti purchased at Rs 879. I am a long-term investor.  Rama Gopal K.V.

Maruti (Rs 949.2): The stock has regained almost all the territory it lost in May and June. Some upheaval can be expected as the price nears its previous high of Rs 974. The price will find support at Rs 800 over the long term. Only if this level is breached, will there be a fall to the July low of Rs 691. The stock can move in a broad band between Rs 750 and Rs 1,000 over the next year. Long-term investors should accumulate this stock near the lower boundary.

I request you to advice me on Saurashtra Cements bought at an average rate of Rs 76 and SRF bought at an average rate of Rs 322. Should I hold these shares? What are their prospects over the next nine-12 months?  Rajesh G. Wadhwa

Saurashtra Cement (Rs 72.8): This chart is moving in an upward moving channel since the low of Rs 37 hit in mid June. Projecting this channel gives us a short-term target of Rs 85. This rally will face stiff resistance between Rs 80 and Rs 85. Exit in this zone if you are a short-term investor. If you are a long-term investor, hold with a stop at Rs 60.  

SRF (Rs 239.5): The stock has moved up smartly from the June low of Rs 136. The price has been consolidating in a narrow band between Rs 230 and Rs 260 over the short term, which looks like a positive consolidation phase.

The target on a breakout is Rs 310 and then Rs 348 for the medium term. Hold with a stop at Rs 210 and try to exit near your cost price.

Open interest is indeed a maze. While I do understand the basics of open interest in common parlance, but when it comes to tracking intra-day movement of open interest vis-?-vis volume traded in the same future counter, it is confusing.
Take the counter - Jet airways September 6 future, which recorded a huge volume of 40.50-lakh shares on September 8, whereas change in open interest was merely 1.19-lakh shares. Even intra day, maximum change was just 3-lakh shares. My question is ? on such eventful days change in open interest should be substantial, as speculators keep both long and short positions and therefore intra-day open interest should swing from one end to the other. On the contrary, change in open interest remains at dismally low levels. Can you please explain the rationale of this phenomenon?
 Srinivasan. K

It would be difficult to correlate the movement in volume to the movement in the open interest.

Volume at a particular point during the trading day would be a cumulative figure traded up to that point whereas the open interest would be the outstanding positions in the futures segment at any given time. If any future contract is squared up, it will not figure in the open interest, whereas it would be counted in the volume.

The example you are quoting of the movement of the Jet Airways share on September 8 is an interesting one.

The lack of significant change in the open interest means that the volume comprised entirely of intra-day trades based on the news. As the news that made the price move (rumours that a group of 1,000-odd travel agents had come together to buy a 30-per cent stake in Air Sahara for Rs 700 crore) was so absurd, no one was willing to rollover their position to the next day or even to keep their positions open for a prolonged period during the trading day. Monitoring open interest in such a day would give us pointers towards the credibility of the news that spurs price movement.

What are the prospects of JK Cement purchased at Rs 172 per share?   Sunny, Chandigarh

JK Cement (Rs 195.4): This stock is just breaking out from a long-drawn consolidation phase that has prolonged since mid August. The target over the next six months is Rs 211 and then Rs 229. You can keep a stop at Rs 160 and hold the stock.

What are the short-term and long-term targets for Zee &Rolta?  Dr Naiyar Alam, Rehan Azim, RoomiRehan, Alisha Shiakh, J. Saravanan

Zee Telefilms (Rs 319.5): Zee Telefilms has resumed the long term up trend that took off from a low of Rs 60 in April 2003.

The stock is currently above its May 2006 high of Rs 306. The long-term target for Zee Telefilms is 435.

Short-term target would be Rs 341 and then Rs 365. Buy in dips as long as the stock stays above Rs 250.

Rolta India (Rs 206.8): The stock has the short-term target of Rs 233 and a long-term target of Rs 285. Hold the stock with a stop at Rs 191.

Source: Hindu Business Line, New Delhi, September 16, 2006
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