Dhanlaxmi Bank

Sahil:

Long-term: Either I want the Bankex to reverse its current downtrend or I would really have to be convinced in Dhanbank's ability to create value for me. I'd have to do a complete bottom-up analysis of Dhanbank to determine its value creation potential (which will take a significant amount of time to do...). I could overlook sector conditions to a certain extent if there is tremendous value creation potential. BUT, I need the ability to withstand a negative or stagnant position for possibly a significant amount of time. Not my style of investing 'yet'.

The shorter-term: Technicals
Not looking too pretty if you want to go long.
1) I'd consider a long position only above 125. Not really interested in parking my money as I wouldn't know whether we'll witness a pick up in momentum if I buy at a lower price. But, once the 125 barrier is breached, there should be greater buying interest.
2) I'd also recommend a buy at around the 95 region and anticipate a bounce upto 110-115. But this would be like catching a falling knife. If you do, have a tight SL.
3) You can buy at a lower price once we see that the trend has reversed. But, going off of today's chart, I don't see any such signal.

Remember, the market price is at a certain level for a certain reason. Personally, I'm not interested in being the genius who spotted the true potential of a company and bought in with the accumulators. I'm looking for a level when there will be greater interest. Targeting a return potential of 20-50% in 1-3-6 months. There's no guarantee that there will be greater interest at 125, but I'll be much more comfortable taking that risk.

Sanjeet

Patni

Utpal: How do you see SESA GOA in 3 months time?
Patni is signing the deal with iGate this week. What is your take on a 1-2 week time frame?

1) Sesa Goa: As of now I'm long. I really want to see it break 350 and 386 so that I can hold it till we see 490 and breakout above that. But will not be interested if we breakdown below 280. In that case, the current rally will only be corrective in nature.

2) Technically, Patni looks pretty ugly because its been consolidating in a 200 point range since September 2009. Not a very pretty picture. Very simply, if you're long, you don't want Patni below 400. If you're short, then you don't want it over 600. I do not know the details of the deal, but if the information is already public, then it should be factored in the current market price. Future price action will depend on new information. So, for some serious action within 1-2 weeks, we'll may need some sort of a surprise. Or may be just an upside breakout above the downtrend trendline in shown in Chart 1. If you are willing to risk a bit, then I'd suggest buying once price breaks out above 500 with the following profit targets: 520, 550, 600.

Chart 1. Patni Daily

Having said that, I may well be interested in Patni for the longer term given that we see a convincing breakout above 600 (and if the fundamentals are fairly decent as well). 600 was the peak formed in May 2007 and was retested in May 2010. So guess what, we break that after this year long breather that Patni has taken, then we could potentially witness a nice up move.


Chart 2. Patni
-Sanjeet Parab