Wednesday, October 5, 2011 How to trade in SBI, Punj Lloyd & SSWL now? Source: IRIS (05-OCT-11) How to trade in SBI, Punj Lloyd & SSWL now? Source: IRIS (05-OCT-11)

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

State Bank of India (SBI):

Country`s top lender, SBI took a beating on the bourses for the second consecutive session losing more than 3% after Moody`s downgraded its rating of the bank`s financial strength. Global credit ratings firm Moody`s on Tuesday downgraded its guidance on SBI`s financial strength by one notch to `D+` on account of the lender`s low Tier-I capital ratio and deteriorating asset quality. As per Moody`s, a `D` rating suggest ``modest intrinsic financial strength, potentially requiring some outside support at times``, while a `C` rating denotes ``adequate intrinsic financial strength. We compared with other leading bank the standalone rating for SBI`s private sector peers, like ICICI Bank, HDFC Bank and Axis Bank, stands at `C-`

On overall basis with the above rationale we are negative for short term prospective hence we expect concerns on greater margin compression, lower loan growth and sharp rise in long bond yields and pressure on the government to infuse capital in the country`s largest lender as soon as possible. Technically the stock can test 1,650, which could be an ideal level to ``Accumulate`` the stock.

Shares of the company declined Rs 64.7, or 3.62%, to trade at Rs 1,722.00. The total volume of shares traded was 1,270,623 at the BSE (2.41 p.m).

Punj Lloyd:

The stock is been in frontline from last couple of days on the back of winning EPC contract from Qatar Solar Technologies for the first polysilicon plant of Qatar and is scheduled to be commissioned by mid-2013. The contract is a part of Qatar Solar`s plans to set up a plant worth around USD 1 billion in Qatar, to manufacture 8,000 MTPY of high-purity solar grade polysilicon. The scope of work includes design, engineering, procurement, supply, manufacturing, fabrication, route survey wherever required for over dimensional consignments, installation, construction, testing, pre-commissioning and commissioning. Technically we advice investors to Buy on every dip as we see the stock is in extremely oversold position and one can expect bounce back a target of 60. On overall basis we are positive on the business scenario.

Shares of the company gained Rs 0.55, or 1.05%, to trade at Rs 53.10. The total volume of shares traded was 774,610 at the BSE (2.40 p.m).

Steel Strips Wheels (SSWL):

Automotive steel wheels maker SSWL was in action on the back of reports stating that it has bagged a long term contract with one of Europe`s leading Trailer manufacturer. This contract has a potential to reach 60000 wheels per year with an approximate value of 220 million per year. Supplies will start from Oct 2011 from the Company`s Jamshedpur plant. The Company is also in discussions with other OEMs in the same industry for similar volumes which will also start flowing in the current quarter. While last month we have seen sales have fallen 14.43% in September to 7.53 lakh vs 8.80 lakh rims as the domestic car sales has gone down.. We believe that the rise in petrol price and the interest rate hike by Reserve Bank of India (RBI) has drastically affected the domestic cars which in turn affected the steel strips rim sales. Steel strips have achieved a growth of 262% in sale of truck wheels and 50% growth in sales of tractor wheel rims but reported a decline of over 20% in the sales of car wheel rims for September.

Technically the stock is been one of the weaker stocks on charts and hence we avoid to take a call on this counter. We believe 190-200 level would be a strong support and 225 as resistance which if sustains the stock will perform well with a target of 252. Overall the stock is under pressure discounting the above news.

Shares of the company gained Rs 11.8, or 5.59%, to trade at Rs 223.00. The total volume of shares traded was 8,505 at the BSE (2.36 p.m).

Disclaimer: IRIS has taken due care and caution in compilation of data for its web site. Information has been obtained by IRIS from sources which it considers reliable. However, IRIS does not guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information. IRIS especially states that it has no financial liability whatsoever to any user on account of the use of information provided on its website.


No comments: