RESPONSE TO READER'S QUERY: @NR 16/9/11 SELAN EXPLORATION

Looking first at the TECHNICALS, we see that the Scrip is very close to a major support level at 277 which seems unlikely to break under normal conditions. In case of Market capitulation, the next strong support is at 266 levels. On the upside, the first resistance is at 300 followed by 310 and then 322. Confirmed uptrend only above 334 levels.

On FUNDAMENTALS, the Scrip looks  good at these levels having delivered a robust Q1 FY12 and with an expected substantial increase in topline as well as bottomline over the next couple of years. The space of operation, though niche, is exciting. On the downside, there is an undeniable business risk in terms of the very nature of activity contingent upon the success percentage of the oil prospecting activity that the Company primarily engages in. In addition, the activity expansion is likely to require large Capital inputs in the near future which could impact the Balance sheet adversely in the current hard interest rate regime. Thus , while there is comfort in the current price levels there is a certain amount of risk on account of uncertainty in the way corporate performance would pan out in the long term.

Overall, I feel that the Scrip is a bit of a punt, and in case you are an aggressive portfolio seeker you could look to get in at CMP and all dips, for the long term.