Tuesday, November 16, 2010

Trading strategy for 3 buzzing stocks

Indian markets witnessed a huge fall on Tuesday erasing earlier gains. At the close, the benchmark 30-share index, BSE Sensex declined 444.55 or 2.19% at 19,865.14 with 29 components posting drop. Meanwhile, the broad based NSE Nifty fell by 132.90 or 2.17% at 5,988.70 with 50 components posting drop.

In an exclusive interview with Myiris.com, Prashanth Tapse, Sr Research Analyst, Mehta Equities has provided views on 3 buzzing stocks as on Nov.16, 2010 which are as under:

Dabur India

Shares of the company declined Rs 3.85, or 3.96%, to settle at Rs 93.30. It touched a high of Rs 101.50 and a low of Rs 92.05. The company has acquired US-based personal care firm Namaste Laboratories and its three subsidiary companies for USD100 million.

Prashanth Tapse: The stock has been under the eye of the sellers due to profit booking attempts irrespective of healthy 2QFY11 numbers and news on overseas acquisition. It has reported healthy 2QFY11 numbers with revenue and net profit growing 14.7% and 15.2% respectively. The company has reported volume growth of 12%, with price hikes accounting for 2.7%. The 12% volume growth is the lowest in the past nine quarters. Health supplements and digestives have reported strong revenue growth of 31% and 14% respectively. Technically we believe that the stock is in the oversold zone and can see a further fall up to the 89-92 levels. And then we expect the stock to rebound from its support at that level to reach an upside of 10-15% over the short term.

Maruti Suzuki India

Shares of the company declined Rs 38.05, or 2.65%, to settle at Rs 1,399.80. It touched a high of Rs 1,450 and a low of Rs 1,385.20. It is learnt that Skoda may partner with Maruti Suzuki for developing a new small car.

Prashanth Tapse: The stock was buzzing after the news which says Skoda Auto India may take the help of Maruti Suzuki India in building its India-specific small car. Technically if the stock closes below 1425 today, then we can witness further dip to its support level of 1325. But if the stock closes above the 1425 level, then we believe that the stock can go up to the level of 1575, hence we advice traders to trade with a stop loss of 1365 for short term.

Shree Renuka Sugars

Shares of the company declined Rs 2.6, or 2.77%, to settle at Rs 91.30. It touched a high of Rs 95.80 and a low of Rs 89.95. The company posted a consolidated profit after prior period adjustments of Rs 1,169 million for the quarter ended Sep. 30, 2010 as compared to Rs 1,012 million for the quarter ended Sep. 30, 2009, growth of 15.51%. Total income has increased 2.36 times to Rs 25,712 million for the quarter ended Sep. 30, 2010.

Prashanth Tapse: In the past 2-3 session sugar counters were trading lower reacting to the recent crash in raw sugar prices in the international markets. Coming back to the Indian markets we see early start in domestic crushing which will lead to higher supply that can be a constraint for the prices to rise. Irrespective of the above scenario, Shree Renuka was in limelight on the back of better than expected numbers. The company`s total revenue jumped to Rs 25.71 billion, as against Rs 10.87 billion and net profit of Rs 1.17 billion for the quarter ended on September, 30, 15.5 % growth as compared to the similar quarter on YoY basis. Technically the stock can witness more selling pressure before taking support near 82-85 levels, hence we advice traders to avoid this counter as we expect the weakness to continue in the near term.

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