Eye Hindustan Zinc, Hindalco: E Mathew

Q: How are you reading the charts of Dr Reddy’s Laboratories technically?

A: This uptrend in Dr Reddys Laboratories started in February; around 12th February we had seen a low of around Rs 507-508. This stock has never looked back because it has certainly been almost a classical pattern of higher bottoms and higher tops. Right now this looks like a tradable move though we had a sharp spike up yesterday. I would be more comfortable buying this stock around Rs 650 zone and I would be comfortable buying this stock around Rs 625. But the stock has broken out above good resistance at around Rs 655-660 zone and surely it’s heading towards the first target of Rs 690 and if it’s able to sustain above Rs 690, I wouldn’t be surprised if we see the stock around Rs 760. Incidentally this price of Rs 760 is what we saw when the market was at its peak in January.

So one can understand how the pharma stocks have been under performing for quite sometime and now this era of under performance is over and pharma is certainly one sector which one would certainly look at as an out performer at least for the coming 6-12 months.   

Q: You had a look at the charts of Lanco Infratech?

A: It is another stock which saw major spike up yesterday. I think the problem here of course is that at these levels one would hesitate to initiate a buy but certainly around Rs 470; it’s been a big breakout above Rs 470. My stop loss unfortunately is little low around Rs 470 zone.

I would look for a big target here because after a long time the stock has seen this sort of a volume build-up and this sort of a major price hike. My initial target for Lanco would be at least around Rs 588 to 590. A good stock undoubtedly but the problem is this for traders with a deep stop losses.     

Q: Have you taken a look at the charts of Mercator Lines?

A: I hold a large position in this stock and therefore I would not like to comment on this stock.

Q: What are the levels that you are watching both on Gail and ONGC on the downside? How much more pressure can both the charts see?

A: ONGC has been one of the biggest disappointments. In fact quite a bit of the weakness in the Nifty, I would attribute to ONGC. It broke some very crucial levels yesterday also and the way it is trading now consistently below Rs 950-960 is very disappointing. What is scary now is the last possible support, we have got critical support now about Rs 920-925 zone and if that breaks then we could see ONGC possibly slide all the way initially to Rs 878-880 and it could even go all the way to Rs 834 and this is in a scenario where oil is more than USD 120. 

Q: Trading below 5,050. You would continue to trade long as a Nifty trader?

A: There are so many negative calls on theNifty but what most people are forgetting is we are still in an uptrend which started from 4,620-4,630 and that higher-bottom, higher-top scenario has not vitiated. I would say that the negative bias only comes if 4,800 is broken; right now of course we have got resistance at 5,050-5,060 and more important at 5,160 which is a 200 day simple moving average.

In my opinion what the market is trying to do is climb huge walls of worry which are there and gradually sustain above 5,160 and head towards 5,400 and that’s not wishful thinking, I think it would be interesting for those who are following the Nifty to watch the rupee charts and also to watch the crude oil charts; one will get indication from there. 

Q: One specific stock from the midcap IT space, if you had a look at the charts of NIIT Tech?

A: My view is this is not going to be a sustainable rally in IT as far as IT space as such is concerned but NIIT Tech seems have formed a very strong bottom, in fact it’s a beginning of a good move at around Rs 95-96 which we saw the bottom being hit around 24th March and the breakout past Rs 138-139 is certainly impressive. So the stop loss is well defined now and we have a stop loss at Rs 138-139.

I would say that NIIT Technologies chart is possibly much stronger than that of even Infosys because this move looks like a sustainable move and the ultimate target for this particular move which has started on 24th March is Rs 200-214 that would be an area where a lot of profit taking is expected. So traders would do well to keep a short-term target of around Rs 200-214 and certainly exit at that particular point of time and of course your stop loss is defined as Rs 138. 

Disclosure

It is safe to assume that my clients & I may have an interest in the stocks/sectors discussed.