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Uncategorized | Portfolio Yoga - Part 21

Category: Uncategorized

Stock of the Day – Amtek Auto

Amtek Auto is one of those stocks that hasn’t seen a bull rally in a really long time. Amtek peaked a bit before the 2008 market fall and while the stock has currently seen a very strong rally, its still 82% below its all time high.In fact, even after the 43% move we have seen in February, the stock trades at a price which was seen in 2004.

The trigger for the recent rally seems to be the release of quarterly earnings which came in pretty strong. Technically, as the chart below shows, we have broken a long term trend-line as also the high of 2013.

If the turnaround in the company is for real, technically we are at a stage where the risk seem small for the potential reward.

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Stock of the Day – Bajaj Electricals

Bajaj Electricals made a high of 148 in the year 2008 before it plummeted down to sub-30 levels when markets crashed in 2008 / 09. The next top was made in 2011 at 347, a move of 134% above the 2008 high. But since 2011 it reacted a bit and then from 2012 onward it has more or less got stuck in a range. 

The stock is once again at the cusp of a breakout of this range and seeing the kind of momentum this stock has shown in the past, it would not be surprising if it manages to regain its 2011 high in double quick time

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Stock of the Day – Finolex Pipe

Yesterday, I had written about the Cup pattern we were seeing in MindTree (Link). A similar pattern can be found in Finolex Pipe as well. While the stock has participated in both the 2003 and the 2009 / 2010 rallies, the returns were not too great since there has always been a concern on the quality of management. It now seems that the company has seen a re-rating as it has been a strong performer 2013 and seems set for continuation in the current year.

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Stock of the Day – MindTree

Mind Tree has been one of the stronger performers in the recent rally that was seen in IT stocks. The daily chart seems to show a classical pattern of a Cup. Now, this can evolve in two ways

1. We can see a reaction and if the reaction is not more than 50% of the size of the cup, the pattern will become a cup and handle formation

2. The stock can just brush across the high of the cup in which case, this will be a pure breakout of a Cup formation with target comign to around 2000.

Or it can just react from the current juncture and break the low of the cup which will be indicative (and not a clear case of ) double top formation.

Of the three, I currently favor the first option looking at the strength of the stock with the probability of this being a top being pretty low.

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Stock of the Day – Voltas

On the weekly charts, Voltas is still pretty much in bearish territory with the stock yet to cross above the highs it made in 2012. All time highs made in 2007 / 08 and 2011 remain pretty far away for even consideration.

But its on the daily charts, that we see some substantial action indicative of a change in trend. The stock is placed just below its short term resistance and a move above 130 should give a clear breakout on the medium term charts as well. Above 130, 155 is the next level of resistance for the stock.

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Stock of Day – Muthoot Finance

Muthoot Finance and Manapuram Finance are the two major NBFC companies that deal with loans backed with Gold. But RBI restrictions combined with falling gold price has had a impact on the stock price in recent months. The first sign of change of trend came about in January when RBI eased the norms for extendingloans against gold jewellery as collateral.

Today, once again, both gold companies have broken out of short term zones with good volumes. On the longer term charts though, the chart of Muthoot appears much better compared to Manapuram which is still very much in the bearish zone on the medium to long term.

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Stock of the Day – Godfrey Phillips

Godfrey Phillips is India’s second largest tobacco company and recent results have resulted in a strong upward trajectory for the stock though as the chart indicates, this is not the first time we have seen such huge gains over a single week. While ITC has since 2011 nearly doubled in price, Godfrey has moved nowhere ( a stagnation which if accompanied by good resuolts would mean that the stock is cheaper than it was in 2011.

The current move has been accompanied by volumes higher than when we last jumped up giving credence to the possibility of this rally continuing further. But with the stock already having risen by more than 25%, a ideal entry point will be when we see a correction unless this turns out to be a run away rally.

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