Tuesday, December 21, 2010

Myiris.com: Trading strategy for 3 buzzing stocks

In an exclusive interview with Myiris.com, Prashanth Tapse, Sr. Research Analyst, Mehta Equities gave views on 3 buzzing stocks on Dec 20, 2010. The same are as follows:

Hero Honda Motors:

Shares of the single largest two-wheeler company gained Rs 302.1, or 17.99%, to settle at Rs 1,981.20. The total volume of shares traded was 1,508,108 at the BSE (Monday). It touched a high of Rs 1,997.90 and a low of Rs 1,766.

Prashanth Tapse: The stock was in action mainly on the back of its recent dialogues between Hero group and Honda. In the last meet Hero group board approves new licensing pact with Honda which says Hero group to acquire 26% stake from Honda- All existing products to continue - Company free to export products to new markets -Company free to set up own research and development, product development operations -Company, brand name to be changed `over time` -Company, Honda Motor to ensure gradual, smooth transition. As per the reports royalty rate to start declining from January 2011 and end on existing model by 2014. Hero Group and Honda are expected to sign a definitive agreement for the stake transaction in the next three-four weeks. Technically the stock is likely to outperform the broad market and expect 8% to 12% more upside from the level. Fresh position should be traded with a stop loss of Rs 1,950 with a medium term target of Rs 2,075.

Ispat Industries:

Shares of the integrated steel maker, gained Rs 2.4, or 10.64%, to settle at Rs 24.95. The total volume of shares traded was 48,402,311 at the BSE (Monday). It touched a high of Rs 26.15 and a low of Rs 23.

Prashanth Tapse:Ispat has been in action and has also outperformed the market in past one quarter, soaring 11.08% as against 2.30% rise in the Sensex. Investors continue be positive on reports saying that JSW group, Tata Group, LN Mittal group, Steel Authority of India and Welspun Corp has emerged as strong contenders for acquiring the steel maker. However, management had earlier denied plan to sell any stake. We believe the stock is under Acqusition radar which acts as a major trigger for outperforming the broader markets. Technically the stock looks attractive with a target of Rs 29, which if broken can lead to significant gains. Hence we advice investors to hold on or trade for medium term prospective with a stoploss of Rs 23.


Shares of the company gained Rs 6.60, or 5.85%%, to settle at Rs 119.45. It touched a high of Rs 121.90 and a low of Rs 117.

Prashanth Tapse: EIH gained momentum in last couple of days mainly on the back of SEBI nod for rights issue which may spark open offer that is mandatory as per SEBI takeover norms if holding goes beyond 15% from both RIL and ITC. RIL holds 14.80% stake in EIH, while ITC has 14.98% stake in the Oberoi group firm. Technically using 2 moving average crossover, 14 day moving average is about to cut the 28 day moving average from bottom to top giving a buy signal after almost 3 months which gives a medium term target Rs 145 with a stop loss just below 112. We are positive on overall trend.

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