India’s Hottest stocks for September 2007

Sundaramurthy Vadivelu

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In this article let us review the stocks that witnessed the most and least demand from the market participants and also how some of The India Street stock picks performed during this month.

Top 10 gainers during the month are given below.

NSE Ticker	BSE Scrip code	BSE Group	% Gain
RIIL	523445	B1	178.14
STCINDIA	512531	B1	115.08
RNRL	532709	B1	90.54
WALCHANNAG	507410	B1	82.62
REIAGRO	532106	B1	79.70
MRPL	500109	A	70.37
IVC	511208	B1	64.44
AFL	532774	B1	60.13
KKCL	532732	B1	57.87
BINANIIND	500059	B1	55.47

RIIL and RNRL: We discussed about these stocks in my previous article “Hot or Not? Ambanis on a dream run!”

State Trading Corporation of India: This stock had broke its resistance after one year consolidation pattern, as seen from the chart below. The stock moved between 130 and 170 before breaking out on the upper side.

http://groups.google.com/group/theindiastreet/web/STCINDIA_D_280907.jpg

On September 18 the stock had a 20% upper freeze after breaking out. It was followed by another 18% rise and 3 consecutive 10% upper freeze sessions. There is a higher degree of risk in stocks like this – prices rise vertically, but they may also fall in the same way, leaving the sellers stranded.

Walchand Nagar Industries: The operating range (upper or lower freeze limit) was revised for the stock from 5% to 20% in August.

http://groups.google.com/group/theindiastreet/web/WALCHANNAG_D_280907.jpg

Technically the stock broke its resistance on September 18 and it was followed by a vertical rise.

REI Agro: This stock had ended a 21 month consolidation pattern in June. It has gained more than 160% since then. In the last 6 weeks it has gained 140%.

http://groups.google.com/group/theindiastreet/web/REIAGRO_W_280907.jpg

It can be seen that the stock had no correction at all over the last 8 weeks.

Mangalore Refinery and Petrochemicals: This was The India Street short term pick. However we indicated that there was an inverse head and shoulder pattern in weekly chart, meaning it could be good for medium term too.

IL & FS Investment Managers: This is a medium term pick by The India Street.

Access Frontline: We discussed this stock in my earlier article “5 India stocks to avoid (short term perspective)” dated August 7. From 51.40 it came down to 45.10 on August 24. It bounced back and touched a high of 56.75 on September 5. After the price band revision from 10% to 20%, it broke the resistance on September 24 with 20% freeze. This was followed by another 20% freeze and 11% rise. However yesterday it lost 10%.

Kewal Kiran Clothing: This was a low volume stock with a 21 day moving average of around 3000 shares. The risk in such stocks is low liquidity.

Binani Industries: From a low of 144.05 on September 4 it has touched a high of 241.30 on September 19, with just 2 days of correction in between (each about 5%). In the absence of clear waves, it is not advisible to pick such stocks.

The crowd was least interested in the following stocks. Interestingly, many of them belong to IT sector.

NSE Ticker	BSE Scrip code	BSE Group	% Loss
MAGNUM	532896	B1	(32.69)
SELMCL	532886	B1	(26.66)
GEOINFO	503699	B1	(21.15)
SUBEX	532348	B1	(17.74)
AARVEEDEN	514274	B1	(16.54)
CYBERMEDIA	532640	B1	(15.96)
TRENT	500251	B1	(15.63)
TELEDATAIN	532358	B1	(14.70)
AZTECSOFT	532385	B1	(14.12)
ALLSEC	532633	B1	(13.57)

Magnum Ventures: It is a new issue and got listed on September 20.

SEL Manufacturing company: Again a new issue. IPO price was 90 and after 3 days of listing it closed at 218.65 but since August 24 it is on a downtrend.

Geodesic Information Systems, Subex Azure, Aarvee Denim & Exports, Cybermedia, Trent, Teledata Informatics and Aztec Software have been on downtrend.

Allsec Technologies has been very bearish in medium term chart and it has fallen from a high of 373.85 in February to a low of 148 this month.

Some of the stock picks by The India Street have gained reasonably this month as shown in the table below.

Scrip	% Gain	Scrip	% Gain
GVKPIL	20.92	SREINTFIN	27.49
RPL	30.47	NAGARFERT	34.73
ADANIENT	44.21	ROHITFERRO	30.04
ISPATIND	38.14	JINDALPHOT	37.42

Sundaramurthy Vadivelu

Suggested Reading

India's Hottest stocks - Winners and Losers for June 2007 Top 10 Hot India Stocks for July 2007 India’s hottest stocks for August 2007 Top Ten Signs a Stock is Going to Move up or down

5 India Stocks to Avoid in the Short Term

Disclosure

We have discussed about bullish stocks in my previous articles. Even in bull markets there will be some bearish stocks. Similarly, in bear markets or sideways markets there will be some bullish stocks. In this article let us discuss some stocks which are bearish from a short term perspective.

Aarvee Denims & Exports Limited:

The company is a leading global player in readymade garment industry. The product range includes denim garments like jeans, trousers, shirts, jackets and cotton garments. The spinning capacity of the company is 30 metric tonnes per year, weaving capacity is 72 million metre per year and garment manufacturing capacity is 1.5 million pieces per year.

The company reported a net profit of Rs.30.35 crores in 2006 – 07 at an EPS of 12.35. Why someone would avoid a profit making company then? See the daily chart below.

http://groups.google.com/group/theindiastreet/web/AARVEEDEN.JPG

The stock has kept making lower highs and lower lows in accordance with the elliot wave theory. This indicates bearishness. The support and resistance trendlines are shown in the above chart. Recently, the stock has broken its support trendline. On July 11 it even closed below its horizontal support line. The stock is very bearish; It may be extremely oversold but that will be the case in bear markets. The direction, volume and momentum indicators are very negative. The stock has nothing to offer for those who wish to go long (buy first and sell later). This does not mean that one can short the stock for intra day trading. A stock can be bullish intra day but may be bearish in daily or weekly charts. So the day traders need to be very cautious in shorting stocks that are bearish for short term.

Dish TV India Limited:

This is India’s first direct-to-home (DTH) entertainment service which offers high quality digital TV programmes direct from satellite to the subscriber homes. Some 155 national as well as international digital channels are available. In the financial year 2006 – 07 the company has reported a loss of Rs.252 crores (with negative EPS of 5.9).

Technically what’s wrong with the stock? Let us analyze the price chart.

http://groups.google.com/group/theindiastreet/web/DISHTV.JPG

The support trendline has a positive slope during the uptrend. This was broken on June 5. All was not lost, though. But the most critical support or the horizontal support line was broken on July 11. Watch the resistance trendline with the negative slope. The stock has not been able to pierce this line and close above it. This confirms the bearishness of the stock in the short term.

iGate Global Solutions Limited:

iGate Global Solutions Limited is a Bangalore based IT services company. It is engaged in consulting, IT services, data analytics, enterprise systems, business process outsourcing / business services provisioning, contact center and infrastructure management services. The company has presence among capital markets, mortgage, insurance, manufacturing and retail segment. It posted a net profit of Rs.49.79 crores for 2006 – 07 with diluted EPS of 15.26.

http://groups.google.com/group/theindiastreet/web/IGS.JPG

Between 13 December 2006 and 4 January 2007 the stock moved up sharply from 221 to 432 (95%). This was followed by corrective decline upto 340. It has not been able to break its previous high since then. We can see the support line getting broken on 6 July 2007. The last support is at 221. But the stock is likely to test this level too.

We have seen in my earlier article “Sector wise performance : myth or miracle?” that market runs up on the expectation of some positive news. If this does not happen then the interest among investors seems to fade out. As a result the stock keeps falling. In this particular case, the support trendline has been drawn connecting 4 lows. Since this has been broken, we may expect further beraishness.

JB Chemicals & Pharmaceuticals Limited:

The company manufactures speciality pharmaceutical ingredients, herbal remedies and generic drugs. It has markets both within India as well as overseas and it is managed by the Unique group. Some of its brands are: Doktor Mom, Rantac, Metrogyl, Vermorex, Ofloxacin, Dicloran etc. The company has declared a net profit of Rs.62.17 crores with EPS of 7.38.

http://groups.google.com/group/theindiastreet/web/JBCHEPHARM.jpg

Both weekly and daily charts are displayed above. This stock has fallen from 139.80 in February 2006 to current low of 69.55 (almost 50%). One more example of a stock losing half its value in this fantastic bull market. Technically this stock is still not fit to enter. In weekly charts, watch the previous support at 74 being broken; in daily chart it has broken its short term support at 71.

Moreover there is a very strong resistance at 84.75 which needs to be comfortably pierced before one can really think of investing or trading in this stock.

Sundram Fasteners Limited:

Sundram Fasteners Limited belongs to the US $3 billion TVS Group based at Chennai. The product range consists of high tensile fasteners, powder metal components, cold extruded parts, hot forged components, radiator caps, automotive pumps, gear shifters, gears and couplings and iron powder. It reported a net profit of Rs.70.90 crores for 2006 – 07 with EPS of 3.37.

http://groups.google.com/group/theindiastreet/web/SUNDRMFAST.JPG

One can see the consolidation pattern in the above chart from 19 March 2007. On 10 July it broke its horizontal support and closed below it. The stock is expected to continue the bearish trend. Last support exists at 50.05 in the weekly charts. We will have to wait and see whether this one holds or not.

SUNDARAMURTHY VADIVELU

Suggested Readings: Chart Patterns and market’s reaction 'Sectorwise' performance: Myth or miracle? Top 10 Cheapest India stocks