The market closed at a new 17-month high. This week the Bank Index advanced 8.3%, SBI zoomed 17.8%, ICICI Bank gained 6.5%. The Metal index surged 8%, Jindal Steel & Power rallied 16%, SAIL and Tata Steel surged 6.8% and 6.5% respectively. The top index gainers this week were Cairn India up 11.8%, TCS up 6.3% and RIL up 5.3%. However, telecom stocks like Reliance Comm and Bharti lost 6% and 5.3% this week respectively. Mehraboon Irani, VP-PMS, Centrum Broking, Technical Analyst, Sudarshan Sukhani and Dipan Mehta, Member, BSE/NSE discussed various stocks. They were bullish on Unitech, Torrent Power, Hindustan Unilever (HUL), Jindal Steel & Power, LIC Housing Finance and SBI while were bearish on Bharti Airtel. However, they had mixed views on Larsen and Toubro.
Bharti Airtel
Mehta told CNBC-TV18, "Telecom has been on underperformer over the past two-weeks or so since the news came out that Reliance itself was offering at very competitive rates for outgoing and on the whole we are seeing that there could be regulatory change as far as shifting from per minute to per second billing takes place. That could impact the profitability in the short to medium-term quite drastically and therefore my sense is that one should remain underweight on the sector. My specific advice would be to look at exiting out of Bharti Airtel and the other telecom stocks. But then again it could be at a trading bounce and need not necessarily be at this price.”
Irani told CNBC-TV18, "The one space we are advising investors really exit is the telcom. It is not fair to state that Bharti is a great company – no doubt about it – but buy this stock if it gives you an opportunity. It has come down so sharply because this is not the way you look at stocks. The fact of the case is as far as telcom goes, according to me the story for the time being is certainly over. So, a bounce back here and there of 5-10% not ruling out but for an investor I don’t think this is the way one should be looking at stocks. One can definitely wait for a bounce back but learn to exit at higher levels. There are better opportunities elsewhere.”
Sukhani told CNBC-TV18, "My sense is that telecom stocks are on the verge of bottoming out, which means Bharti Airtel may not be Rs 330 but it could be Rs 300 or Rs 290. That’s a different issue. For a long-term investor, this is the right time to go and invest in telecom stocks; I would say that on the basis of long-term views on the charts.”
Unitech
Sukhani told CNBC-TV18, "I don’t think Unitech is going to outperform the market. What we saw was a bounce in what is essentially a downtrend and my assumption is that if the market were to remain cheerful we could see Rs 140 or Rs 150. But at this point it looks very unlikely that Unitech would touch Rs 200 again.”
Irani told CNBC-TV18, "I feel that when Unitech managed to raise funds for itself some month’s ago – the problems for Unitech were behind it. At that time we started liking the stock and we had a target of Rs 125 for it. At the present level it is more of a trading play but we don’t enter a stock for a 10-15% return at this particular level of the indices. For the last seven months the company has made bookings of nearly Rs 40 billion (Rs 4,000 crore) which is ahead of most estimates. They are also concentrating more on the affordable homes, which could bring down the rate per square feet with the company books it had. But all said and done according to me the stock could possibly definitely move at least 10-15% up from here. The problems for the entire real estate are going to continue for some more time to come.”
Torrent Power
Sukhani told CNBC-TV18, "In a bull market everything goes up and so will Torrent Power. So, I am looking at a level of around Rs 370 as a price target. My stoploss is Rs 260 so if the price comes close to that and in a correction it could then you average because you know that at Rs 260 you might as well get out of the averaged quantity.”
HUL
Irani told CNBC-TV18, "In Hindustan Unilever (HUL) we have a price target of slightly over Rs 300 for the stock and I personally feel that in this market conditions, which have been very buoyant over the last couple of months FMCG normally has taken a back seat. Normally as and when possibly this shows signs of petering out as FMCG is going to come back into focus and Lever is going to be a decent player in that particular segment as far as the stock price performance goes. I think it is taken a back seat as a stock right now but sooner or later it will attract attention. The management has done wonders over the last 7-8 months as far as taking measure to improve sales volumes goes and those types of measures is going to offset the possible loss because of rural consumptions slightly coming down because of the kharif crop failure. On the whole we are quite positive on HUL and I would advise the investor to hold on to it.”
Sukhani told CNBC-TV18, "Hindustan Unilever (HUL) has been in the trading range for almost 5 years now. It is just coming out of that range but it has been a clear under performer. As it comes out of that range it promises higher levels, somewhere around Rs 350 and that is assuming the market does what it is already doing now but I do not see it going more than that, then that could be a painful ride up. So unless you are fascinated by the stock you might as well move to some other momentum shares.”
LIC Housing Finance
Sukhani told CNBC-TV18, "LIC Housing Finance charts are excellent. The stock built a base for 5-7 or 10 years then has broken out of it. I see it crossing Rs 1,000 very easily. It is a very good quality stock. One shouldn’t worry about the high price – don’t worry about correction – stick to it.”
Mehta told CNBC-TV18, "What we have observed over the past year or so is the valuation gap in LIC Housing and HDFC has narrowed and a large part of it is on account of there being some amount of stability coming into the earnings. Also, past 2-3 quarters earnings have surprised the street and our sense is that now it is getting into a nice rhythm as far as its performance goes and it is gradually building on its market share and in an environment at present were interest rates are benign and companies like LIC Housing and HDFC would find fund raising easier – at the same time with real estate prices the way there would be good appetite for real estate loans as well. Investor could remain invested – in fact look at aggregating or adding to the stock at every correction.”
SBI
Irani told CNBC-TV18, "We need to look at the overall market and if we are positive on the market – one cannot ignore SBI. I think 27% of personal loans in this country are from this largest PSU bank. Even at the present level which has gone up too sharply the fact that this stock is available just around 1.6 times its book value for 2010-11 as per our estimate. SBI has gone up too sharply. One should buy it. It should be in the portfolio and therefore as one cannot afford to ignore the market, you definitely need have SBI in one’s portfolio.”
JSPL
Sukhani told CNBC-TV18, "JSPL is a dream now that we know what it is done but I think the stock that moves up relentlessly is telling us that it is much more steam ahead we can look towards Rs 950-1000 and I would not be surprised if this is a conservative target."
Larsen and Toubro
Mehta told CNBC-TV18, "L&T is one of the few stocks which can classify to be as a part of the core holding of any portfolio. My advice would be to remain invested for the next 2-3 years or so. There could be corrections as the market corrects but by and large the company has gone from strength-to-strength and we are seeing decent pick up in the order book position as well. There is decent visibility as we go ahead.”
He further added, “The only problem is that valuation is bit on the higher side, so there could be a disappointment on that count and if the results are slightly below expectation one could see it correcting. Considering the stock has outperformed the market over the past few months one could expect sideways movement or mild underperformance but that should not deter long-term investors who should remain invested in L&T. I don’t think one should try and trade the stock – just keep it and the stock will give fantastic returns over the next 24-36 months.”
Irani told CNBC-TV18, "At the present level I personally feel that L&T as a stock definitely looks a little bit expensive for the time being. We have been very positive on the stock. We rank it as one of the best managements in the country. It is definitely the best play as far as the Indian growth story goes. But all said and done a lot will depend on the E&C order inflows. If we have an E&C order inflow of around 30-35% for 2010-11 then possibly the stock in a very bullish scenario can even go up another 15-20%. But at the present level valuation-wise the stock looks a little bit stretched. Investors can continue to hold on to it but I don’t think it is going to be an outperformer in the 3-6 months.”
Bharti Airtel
Mehta told CNBC-TV18, "Telecom has been on underperformer over the past two-weeks or so since the news came out that Reliance itself was offering at very competitive rates for outgoing and on the whole we are seeing that there could be regulatory change as far as shifting from per minute to per second billing takes place. That could impact the profitability in the short to medium-term quite drastically and therefore my sense is that one should remain underweight on the sector. My specific advice would be to look at exiting out of Bharti Airtel and the other telecom stocks. But then again it could be at a trading bounce and need not necessarily be at this price.”
Irani told CNBC-TV18, "The one space we are advising investors really exit is the telcom. It is not fair to state that Bharti is a great company – no doubt about it – but buy this stock if it gives you an opportunity. It has come down so sharply because this is not the way you look at stocks. The fact of the case is as far as telcom goes, according to me the story for the time being is certainly over. So, a bounce back here and there of 5-10% not ruling out but for an investor I don’t think this is the way one should be looking at stocks. One can definitely wait for a bounce back but learn to exit at higher levels. There are better opportunities elsewhere.”
Sukhani told CNBC-TV18, "My sense is that telecom stocks are on the verge of bottoming out, which means Bharti Airtel may not be Rs 330 but it could be Rs 300 or Rs 290. That’s a different issue. For a long-term investor, this is the right time to go and invest in telecom stocks; I would say that on the basis of long-term views on the charts.”
Unitech
Sukhani told CNBC-TV18, "I don’t think Unitech is going to outperform the market. What we saw was a bounce in what is essentially a downtrend and my assumption is that if the market were to remain cheerful we could see Rs 140 or Rs 150. But at this point it looks very unlikely that Unitech would touch Rs 200 again.”
Irani told CNBC-TV18, "I feel that when Unitech managed to raise funds for itself some month’s ago – the problems for Unitech were behind it. At that time we started liking the stock and we had a target of Rs 125 for it. At the present level it is more of a trading play but we don’t enter a stock for a 10-15% return at this particular level of the indices. For the last seven months the company has made bookings of nearly Rs 40 billion (Rs 4,000 crore) which is ahead of most estimates. They are also concentrating more on the affordable homes, which could bring down the rate per square feet with the company books it had. But all said and done according to me the stock could possibly definitely move at least 10-15% up from here. The problems for the entire real estate are going to continue for some more time to come.”
Torrent Power
Sukhani told CNBC-TV18, "In a bull market everything goes up and so will Torrent Power. So, I am looking at a level of around Rs 370 as a price target. My stoploss is Rs 260 so if the price comes close to that and in a correction it could then you average because you know that at Rs 260 you might as well get out of the averaged quantity.”
HUL
Irani told CNBC-TV18, "In Hindustan Unilever (HUL) we have a price target of slightly over Rs 300 for the stock and I personally feel that in this market conditions, which have been very buoyant over the last couple of months FMCG normally has taken a back seat. Normally as and when possibly this shows signs of petering out as FMCG is going to come back into focus and Lever is going to be a decent player in that particular segment as far as the stock price performance goes. I think it is taken a back seat as a stock right now but sooner or later it will attract attention. The management has done wonders over the last 7-8 months as far as taking measure to improve sales volumes goes and those types of measures is going to offset the possible loss because of rural consumptions slightly coming down because of the kharif crop failure. On the whole we are quite positive on HUL and I would advise the investor to hold on to it.”
Sukhani told CNBC-TV18, "Hindustan Unilever (HUL) has been in the trading range for almost 5 years now. It is just coming out of that range but it has been a clear under performer. As it comes out of that range it promises higher levels, somewhere around Rs 350 and that is assuming the market does what it is already doing now but I do not see it going more than that, then that could be a painful ride up. So unless you are fascinated by the stock you might as well move to some other momentum shares.”
LIC Housing Finance
Sukhani told CNBC-TV18, "LIC Housing Finance charts are excellent. The stock built a base for 5-7 or 10 years then has broken out of it. I see it crossing Rs 1,000 very easily. It is a very good quality stock. One shouldn’t worry about the high price – don’t worry about correction – stick to it.”
Mehta told CNBC-TV18, "What we have observed over the past year or so is the valuation gap in LIC Housing and HDFC has narrowed and a large part of it is on account of there being some amount of stability coming into the earnings. Also, past 2-3 quarters earnings have surprised the street and our sense is that now it is getting into a nice rhythm as far as its performance goes and it is gradually building on its market share and in an environment at present were interest rates are benign and companies like LIC Housing and HDFC would find fund raising easier – at the same time with real estate prices the way there would be good appetite for real estate loans as well. Investor could remain invested – in fact look at aggregating or adding to the stock at every correction.”
SBI
Irani told CNBC-TV18, "We need to look at the overall market and if we are positive on the market – one cannot ignore SBI. I think 27% of personal loans in this country are from this largest PSU bank. Even at the present level which has gone up too sharply the fact that this stock is available just around 1.6 times its book value for 2010-11 as per our estimate. SBI has gone up too sharply. One should buy it. It should be in the portfolio and therefore as one cannot afford to ignore the market, you definitely need have SBI in one’s portfolio.”
JSPL
Sukhani told CNBC-TV18, "JSPL is a dream now that we know what it is done but I think the stock that moves up relentlessly is telling us that it is much more steam ahead we can look towards Rs 950-1000 and I would not be surprised if this is a conservative target."
Larsen and Toubro
Mehta told CNBC-TV18, "L&T is one of the few stocks which can classify to be as a part of the core holding of any portfolio. My advice would be to remain invested for the next 2-3 years or so. There could be corrections as the market corrects but by and large the company has gone from strength-to-strength and we are seeing decent pick up in the order book position as well. There is decent visibility as we go ahead.”
He further added, “The only problem is that valuation is bit on the higher side, so there could be a disappointment on that count and if the results are slightly below expectation one could see it correcting. Considering the stock has outperformed the market over the past few months one could expect sideways movement or mild underperformance but that should not deter long-term investors who should remain invested in L&T. I don’t think one should try and trade the stock – just keep it and the stock will give fantastic returns over the next 24-36 months.”
Irani told CNBC-TV18, "At the present level I personally feel that L&T as a stock definitely looks a little bit expensive for the time being. We have been very positive on the stock. We rank it as one of the best managements in the country. It is definitely the best play as far as the Indian growth story goes. But all said and done a lot will depend on the E&C order inflows. If we have an E&C order inflow of around 30-35% for 2010-11 then possibly the stock in a very bullish scenario can even go up another 15-20%. But at the present level valuation-wise the stock looks a little bit stretched. Investors can continue to hold on to it but I don’t think it is going to be an outperformer in the 3-6 months.”
0 comments:
Post a Comment