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Apr 29, 2012, 12.49 PM IST
This weeks moneycontrol.com's initiative, 'Know Your Investment' with technical analyst Hitendra Vasudeo brings you answers to the queries you asked us on our Facebook page this week.
According to Vasudeo, medium-term investors willing to take risk can buy on retracement level of the rise from 4531 to 5629. "The retracement levels are placed at 5080 and 4950. The stop loss for this strategy would be 4800," he told moneycontrol.com.
Below are Vasudeo's answers to all the investor queries this week. Visit our FB page every Friday to participate in Know Your Investment.
Saravanan Thangavelu: Where is the Nifty heading?
Vasudeo: Nifty currently is in the sideways band of 5378 and 5135 as per Nifty Cash. It is under the clutches of 50 day average and 200 day average. These averages are placed at 5317 and 5129 respectively. The 50 day us offering resistance and 200 day average is offering support.
In such kind of condition, oscillator like stochastic start performing the best and the strategy broadly remains to exit long in overbought and enter long in oversold zone and till strong directional movement is not being witnessed such strategy performances the best. The same has proved to be good since March 7, 2012 to as of date.
Support broadly is at 5100-5080. Till these levels are held the bias remains for possible upside movement. The confirmation of the trended movement will be witnessed on breakout above 5400 as per Nifty Cash. Now if the Gun is put on the forehead and asked then following can be some strategies for near term, short term and medium term. Early clue of a likely up trend will be above 5250 as per Nifty cash. Traders can buy on breakout and close above 5250 to exit at 5400 or above. If close is above 5400 then re-enter long to exit at 5500-5650. Bull traders may keep the stop loss at 5100.
For medium term investors willing to take risk can buy on retracement level of the rise from 4531 to 5629. The retracement levels are placed at 5080 and 4950. The stop loss for this strategy would be 4800.
Conclusion: It is sideways and till either side breakout or breakdown, out of the range of 5400-5000 is not witnessed further directional bias can be undertaken for short term.
Tehria Harinder: Is this the right time to invest in equity market?
Vasudeo: The weekly chart of Nifty on stochastic has not hit the oversold zone and daily chart suggest indecisive price action on Nifty. Therefore, better opportunity to invest may be witnessed at 5000-4800 selectively. For traders they move with the price therefore even current level could be for buying with a stop loss of 5000 or buy above 5250 as mentioned in the earlier answer.
Abhi Agarwal: I have Indraprastha Gas at Rs. 233. What should I do?
Vasudeo: The entire strength of the chart got damaged as a result of the strong fall in last couple of week.
The stock had rallied from the low of 55.65 (June 2004) to 454 (September 2011). The 61.8% retracement of this rise was 207 and the low made in this month is 187.70 and the fall has halted to remain above 207. This could be the opportunity for buying with a stop loss of 187. Upside gets capped to 250-289-300. The stock may get to 250 or 289 but to go anything further in short to medium term will be difficult for the stock. If 187 gets violated then slide continues down to 140 at least and may be to an outer extent to 101. Therefore, any buying must be with the stop loss of 180.
For long term investors who can accumulate then may look at 180, 140 and 101 to accumulate in a pyramid style and wait for stock to reverse or recovery from these lower level in long term to get long term returns. In short to medium term unlikely to outperform as a result of such sharp fall.
Umesh Vashistha: What about Delta Corp ?
Vasudeo: Keep the stop loss at 50 if long or any buying to be undertaken on the hope of likely support will also have to be with a stop loss of 50. Violation on 50 on sustained basis may spell out trouble for the stock. If that happens then expect a slide towards 31 or below. Therefore, these lower levels are likely to held by the stock.
Ravi Kumar A: What is your view on Educomp ? I bought it at Rs 500. Should I wait?
Vasudeo: The listing low for the stock was 31 after all adjustment and rallied to 1135. The 88.6% retracement level is 156 and the stock has made a low at 162. This is the last hope for the stock. It sentimentally created bull who has been unwilling to perform in market in terms of price.
Investors have got trapped in the stock without providing any relief. On every fall it provided hope since October 2009 but never delivered. It is the hope that some day it will deliver but the average cost of most of the investors has been at higher level now. Range of movement is 150-288. Till 288 is not crossed the price performance in the secondary market will not be seen. However, off the market it may create atmosphere of bullish behavior. Currently, you don’t have much choice but to hold. Red alert for the stock is below 150.
Investor may choose to buy now to 160 range and keep the stop loss of 150. For new position. Old position nothing much can be said now apart for the hope to keep in mind some day it will perform and get to your cost. If buying now to 160 keep stop loss. Wait for reversal and may climb back to 280 and take the check later again.
Tags: Indraprastha Gas, Delta Corp, Educomp, DLF, TCS, Kingfisher, L&T Finance, Zee Learn, RComm, JP Associates, India Infoline, Adani Power
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