Thursday, November 11, 2010

Trading strategy for 3 buzzing stocks

In an exclusive interview with, Prashanth Tapse, Sr Research Analyst, Mehta Equities has provided views on 3 buzzing stocks as on Nov. 10, 2010 which are as under:

Indian markets ended lower today. The 30-share benchmark index, BSE Sensex opened flat with a decline of 14.94 points or 0.07% at 20,917.54, while the broad based NSE Nifty started with a fall of 20.55 points or 0.33%, at 6,281.

Tata Motors

Shares of the company gained Rs 42.65, or 3.36%, to settle at Rs 1,313.20. It touched a high of Rs 1,350 and a low of Rs 1,296.80. The company reported robust growth of 101 times growth in its consolidated net profit at Rs 22.23 billion for the second quarter ended Sep.30, 2010 as against Rs 220 million in the same period last year.

Prashanth Tapse: The stock was in action on the back of better than expected sept 2010 results. We believe TATAMO has been consistently beating market forecasts on strong results; the auto index rose sharply and was trading 1.39% higher mainly on the back of stellar earnings of Tata Motors. (Q,N,C,F)* Tata Motors led the Sensex stocks in terms of gains. The turnaround in the company`s consolidated net profit is mainly due to the domestic business, which registered a much better performance and strong profitability with healthy volumes in Jaguar Land Rover. Technically we believe that the stock is likely to outperform the broader market and expect 8%-10% more upside from current level. Fresh position should be traded with a target of Rs 1475 and stoploss of Rs 1250 for medium term. Overall trend remains positively biased in the medium term.

Astra Microwave Products

Shares of the company gained Rs 4.25, or 6.02%, to settle at Rs 74.90. It touched a high of Rs 78 and a low of Rs 70.90. The company`s board today approved issuing one bonus share for every two shares held.

Prashanth Tapse: Astra gained momentum in last couple of days after it swung into profit for the quarter ended September 2010 and followed by company`s board approval for issuing one bonus share for every two shares held. However, the board did not consider the stock-split proposal that was expected by the market. Recent results were more than market estimates and the company reported profit of Rs 48.39 million compared with a loss of Rs 61.24 million in the same quarter last year. Net sales for the quarter for quarter rose 2.57 times to Rs 366.05 million, while total income for the quarter jumped 2.50 times to Rs 368.89 million, when compared with the prior year period. Technically the stock looks attractive with a strong resistance at Rs 75, which if broken can lead to significant gains. Hence we advice investors to hold on or trade with a target Price of Rs 82-83 in the near term with a stoploss of Rs 71.5.

Divi`s Laboratories

Shares of the company declined Rs 29.15, or 3.93%, to settle at Rs 712.20. It touched a high of Rs 732 and a low of Rs 697.50. The company posted a consolidated net profit of Rs 719.30 million for the quarter ended Sept. 30, 2010 as compared to Rs 847.90 million for the quarter ended Sept. 30, 2009, decline of 15.17%.

Prashanth Tapse: Divi`s Labs, a Hyderabad-based drug-maker is facing selling pressure mainly on the back lower than expected performance in the recent quarter earnings. The company`s Q2 consolidated net profit was down at Rs 719 million versus Rs 848 million. Its consolidated net sales were up at Rs 2550 million versus Rs 2250 million. Technically the stock is facing selling pressure and hence we recommend investors to avoid the counter in the near term. We will re-visit the counter as and when the stock looks attractive.

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