Myiris.com: How to trade in 3 buzzing stocks now? Source: IRIS (14-SEP-11)

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In an interview with myiris.com, Prashanth Tapse, AVP Research, Mehta Equities gave views on three buzzing stocks on Wednesday. The same is as follows:

Infosys: Infosys, India`s second-largest software exporter is the most active counter for the day on the back of news sating that it is said to be in advanced talks to buy a US technology firm with a deal size of around USD 450-500 million. If the buyout goes through, it will be the biggest acquisition in Infosys history.

We are cautious on the IT Industry looking at the global economic scenario to the worsening macro-economic situation in the world`s largest outsourcing markets, the US and Europe which is the major market for India IT exporters.

Technically the counter has bounced backed from its low 2,170- 2,200 and immediately we expect the stock can test 2,450 and thereon consolidate in the same range before underperforming the index.

Srei Infrastructure Finance: We remain cautious on the counter after the news hits markets stating that fund diversion allegations on Srei Group enterprise Quippo which run into a cloud of controversy over charges of financial irregularities. Reports states the Kanorias of the Srei Group diverted funds to the tune of Rs 3 billion to some private institutions. In 2009, the tower businesses of Tata Teleservices and Quippo were merged to form Tata Quippo, which was subsequently named Viom Networks. Initially, Tata had 51% stake and Srei the balance. The stake of Srei has subsequently come down to about 18%, but they still have management control over the company.

There is no clarity on the above news/reports; hence we hold are cautious outlook with a fundamental target of 43-45 keeping aside the above allegations. On overall basis it is better to avoid this stock and any run-up in the stock should be used as exit option in the counter.

Shares of the company declined Rs 1.15, or 3.04%, to trade at Rs 36.65. The total volume of shares traded was 3,029,020 at the BSE (2.17 p.m).

Reliance Capital: Reliance Capital, part of the Anil Ambani-led Reliance Group was in action for last couple of days mainly on the back of news stating that it had received approval from the insurance regulator to sell a 26% stake in its life insurance arm to Japan`s Nippon Life Insurance. Nippon Life Insurance will acquire the stake at an aggregate value of Rs.30.62 billion (USD 680 million). The transaction pegs the value of Reliance Life Insurance at about Rs.115 billion (USD 2.6 billion). Reliance Capital and Nippon had recently also signed an agreement to pursue further partnerships to provide a host of financial services in India. Nippon Life will be evaluating opportunities - including strategic partnership - across all Reliance Capital promoted financial businesses including asset management.

We believe the stock has already discounted the above rationale and the stock is fairly valued. Technically the stock can test 435-438 in near term.

Shares of the company gained Rs 7.55, or 1.88%, to trade at Rs 409.70. The total volume of shares traded was 680,134 at the BSE (2.19 p.m).

Shares of the company gained Rs 106.3, or 4.78%, to trade at Rs 2,330.70. The total volume of shares traded was 212,351 at the BSE (2.17 p.m).

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