Friday, February 25, 2011 Trading strategy for 3 buzzing stocks

In an exclusive interview with, Prashanth Tapse, Sr. Research Analyst, Mehta Equities gave views on 3 buzzing stocks on Feb. 24, 2011. The same are as follows:

Jubilant FoodWorks (JFL):

Shares of the company gained Rs 16.50, or 3.22%, to settle at Rs 528.55. The total volume of shares traded was 1.45 million at the BSE.

Prashanth Tapse: JFL, India`s largest food service company, is in action on the back of announcement saying that it has signed franchisee agreement with the international subsidiary of Dunkin Donut`s to bring Dunkin` Donuts restaurants to India. With the beginning of this new agreement with Dunkin Donuts, JFL, which already has rights for Domino`s Pizza, has now significantly strengthened its portfolio. JFL is well poised to address two distinct non-competing segments of the Food Service Industry in India, namely the home delivery of Pizza`s market and the all day part dine-in restaurant, food and beverage market. Dunkin` Donuts is the world`s leading baked goods and coffee chain with total global system wide sales of USD 6 billion. Dunkin` Donuts has more than 9,700 restaurants globally in 31 countries. Dunkin Donuts has rapidly expanded in 2010, opening Rs 574 net new global locations, making it the fastest growing QSR in the world last year. Technically the stock has shown positive breakout at Rs 510, hence we advice traders to hold on to it with a target of Rs 601 for medium term.


Shares of the company declined Rs 23.95 or 4.26%, to settle at Rs 538.85. The total volume of shares traded was 0.16 million at the BSE.

Prashanth Tapse: Oil Marketing Companies (OMC) counter in action ahead of Crude prices which continues to climb higher as turmoil intensifies in Libya and West Asia. Indian basket of crude oil has risen to USD 105.05 a barrel, which is an alert for fuel retailers like IOC, HPCL and BPCL. Hence they are awaiting government decision on duty cuts before they take a call on raising the price of petrol. After petrol price was decontrolled in June last year, retail price has gone up 22% but still, retailers are suffering losses as they have not raised the price to the extent the crude price appreciation had warranted. Since the last price revision in petrol in mid-January, crude price has sharply risen by USD 10.48 a barrel, necessitating another round of price increase by retailers. The petroleum ministry has asked the finance ministry to cut taxes on fuel - both on the excise duty as well as on customs, so that retailers can raise the price to the extent of duty cuts without making the consumers pay more from their pockets. Technically the stock has strong support near Rs 510 levels which if tested one can expect a decent pull back with positive momentum anywhere near Rs 580-590 levels. Hence we advice traders to wait and watch the space and accumulate the counter near its support level.

Aurobindo Pharma:

Shares of the company declined Rs 34.45 or 16.81%, to settle at Rs 170.50. The total volume of shares traded was 5.91 million at the BSE.

Prashanth Tapse: The stock extended its losing streak due to heightened concerns over the U.S. Food and Drug Administration ban on shipments from the company`s unit. USFDA had imposed a ban on shipments from its Andhra Pradesh unit. This particular unit contributes about 5-6% to the total sales of Aurobindo. Out of this, certain portion would be coming from the U.S. Exports to other markets such as Brazil, South Africa and Canada would continue. We believe overall business impact would not be significant from the above alert the USFDA is under review which is part of business dynamics. Technically the stock is under selling pressure with ongoing regulatory issues and USFDA alerts to pharma space, on the current chart the stock can test Rs 165, before heading for fresh positive movement. Hence, we advice investors to accumulate the stock for decent gains on medium term prospective.

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