STOCK WATCH
(Courtesy: CIL Securities,Hyederabad)
In these columns let us watch out for the Stock behaviour pattern for the immediate future of several leading stocks besides our 'Core concentration' stocks. Our assumptions are based on Techno-Fundamental considerations influencing the stock movements over a short-medium term.
RELIANCE INDUSTRIES
A leading player representing the cyclical sectors of Petrochemicals, Polymers, Polysters etc., this gaint of a stock is amongst the spearheads of the recent bull run. Not withstanding the bloated size of its equity the stock of this evergreen market favourite raced ahead in huge trading volume. The stock is surely driven by the heartening news of the price-rise of its major products. In fact, there has been as many as Four upward price revisions in the past 6-7 weeks. The stock deserves a 'BUY' rating at every decline. We expect the stock to reach Rs. 250 in 2-3 months.
L & T
This stock has turned out to be a hot favourite amongst FIIs, Particularly Morgan Stanley. All the three divisions of the Company - Cement, Engineering and IT are now amongst the most favored sectors. The reshuffle in the Company's top management has been welcomed by the marketmen. Technically huge short positions has been built up indicating the possibility of a sharp flare-up in its stock price. We expect an upward possibility of Rs.360-375 in a matter of 4-6 weeks.
GRASIM
Another major conglomerate which is enjoying a thorough re-rating by the big market players. The Company's restructuring exercise seems to be successfully carried out and its consolidation in strong areas like Cement seems to have been well timed and is poised to yield handsome returns. We expect the stock to gain further momentum in the coming weeks. However there may be sharp corrections from time to time during the steep rise. The stock should cross the Rs.300 mark and may settle around Rs.325-340 levels.
TELCO, ASHOK LEYLAND AND M & M
This trio of stocks being the major representatives of Automobile sector promise to be on an upward ride. They will be the major beneficiaries of the economic upturn that seems to be in the offing after a lapse of almost 3 years. While we expect the stocks of TELCO and ASHOK LEYLAND to yield anywhere between 100% to 200% over the next 12-18 months, the stock of M & M may be growing just a trifle shower.
SATYAM COMPUTERS & PENTAFOUR SOFT
These major momentum stocks have already shown a tendency to slow down and we expect them to slide further in the coming weeks. With a general consensus amongst the marketmen regarding the slowdown in the growth pace which was hitherto hectic in the IT Industry, both these stocks may gradually witness a steady slide interrupted by upward corrections from time to time. Our medium term forecast for these stocks is a trading range of Rs.400-500 (on ex-bonus) based on an assumption of growth rates being 30-40% in topline and 40-60% in bottomlines as against the 100% plus in the previous years.
DIGITIAL EQUIPMENTS
This is surely amongst the more fancied of the Tech stocks then many of its peers. The recent restructuring makes its a pure Software player and a cash-rich, resourceful, leading MNC parented Company at that. All these qualities warrant a 'hot favourite' status to the stock amd that is exactly the rating the stock is beginning to receive from the big-time FIIs. Under the circumstances we are convinced that the stock would command a Four-figure price tag, sooner than later.
HINDALCO
This Aluminium major is riding a crest in tune with its global industry fortunes which are witnessing a major revival after almost three years. Being inherently a strong company, Hindalco is bound to be a major beneficiary. The stock is already on the move and looks set to crack the magic Four-figure mark before the turn of this century.
HPCL, BHEL & MTNL are in our opinion, the best trio of PSU Stocks worth investing at current levels for medium terms. HPCL with an inevitable bonus issue is poised to reward its shareholders smartly while MTNL & BHEL are bound to attract better valuations due to their sheer intrinsic worth.
STERLITE & FINOLEX both look attractive medium term bets. Already they seem to be on the buy list of many funds. The current year prospects for the jelly filled cables industry is reported to be good. As such, the stocks are quoting at a relatively low P/Es. We expect the stocks to cross Rs. 300 and Rs. 400 repsectively over the next couple of months.
The second rung momentum stocks like SILVERLINE & ROLTA have lost a fair bit of their sheen due to obvious reasons. We expect these stocks to languish further. Investors are better advised to cut exposure to them at every rally.
RAYMOND & BOMBAY DYEING may be considered as good picks due to the possible re-rating the stocks may get due to the strong brand name and good retailing network. Especially Raymonds may be a good dark-horse which could emerge a clear winner with a stock price of Rs. 200/- quite shortly.
Although the pharma stocks are taking a back-seat, RANBAXY may witness a flurry of fireworks at its counter. The restructuring of its top-level management and the possibility of discovery of a Molecule have kept the Company in hot news. With a bit of a push from somewhere, the stock may yet flare up anytime in the short run.
The stock of an emerging gaint AUROBINDO PHARMA has been taking a long breather after the hectic run of its earlier days. However, with an extra-ordinary financial performance in the recent past and a possibility of recording further healthy growth in the immediate future, the stock at current levels can be a good bet for accumulation. Technically, the stock has a strong support at Rs. 435/- while there is stiff resistence at Rs.525/-. We expect the stock to be range bound for a while before decisively breaking the upper resistence levels.
Another midcap stock which had performed exceedingly well during the FY'99 but is taking a breather currently is AMARARAJA BATTERIES. However reports that the first quarter results of current financial year may be disappointing due to the delay of orders by Government run bodies seems to have dampened the spiritis somewhat. We expect the stock to sail adrift before the fresh support forthcoming only towards the later part of the second quarter.
INFOTECH ENTERPRISES, a medium-cap tech stock moved into limelight by its acquisition of a couple of overseas Companies in a similar business. However, due to the sustained lacklustre mood in the Software stocks, its stock met with resistence at higher levels. We expect this stock to be range bound for a while but in the medium term should do exceedingly well as the Company should be posting better growth rates then its overall industry, possibly growth rate of 100% as against 40-50% of the IT Industry.............
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This Newsletter is meant for information only, and not to solicit or offer any business deal regarding buying /selling of any investment. The information provided in this document is collected from publicly available sources and, to the best of our knowledge, from Reliable channels. However, we shall not be responsible for their completeness or accuracy.
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