The
consolidation phase in Gail has come to an end with breakout from
formation of ‘falling wedge’ pattern on the daily chart. Hence forth the
positive momentum could accentuate further as stock has managed to
breach the resistance of Rs418 which corresponds to descending
resistance line of the ‘falling wedge’ pattern and also formed higher
high on the weekly chart. The stock is also showing a positive
divergence on the weekly chart, thus supporting buying argument in the
counter. We recommend buying GAIL above Rs418.5 with stop loss of
Rs408.5 for Target of Rs440. Duration 7 days.
Friday, October 28, 2011
Diwali Dhamaka 2011
The festive season is here and the overall environment
remains uncertain. This Diwali, we bring you 11 prime stock ideas (and a
couple of alternative assets too), which you can rely on to deliver
healthy returns. These recommendations reflect our strategy of sticking
to defensives and being selective with respect to cyclicals. It is
certainly not the time to be aggressive; instead adopt a pragmatic and
balanced investment approach. Safety will continue to assume importance
as structural issues both global and domestic are unlikely to get
resolved in the near term. We are hinting at Euro Zone debt issues,
looming risk of US recession, paralyzed domestic GCF, policy impasse,
sticky WPI and the overshooting fiscal deficit. In terms of sectoral
mix, we advise keeping equilibrium between defensive sectors FMCG,
Pharma, IT and cyclicals Banking, Auto, Metals. We are reasonably
confident that investment in the following 11 stocks on a portfolio
basis would provide higher return than the broader market over the next
year. Though in the near term Nifty could trade in the range of
4,700-5,200, it is likely to gradually move upwards in the medium to
long term.
We
also recommend investments in debt products especially NCDs as it
represents a great opportunity to get oneself locked-in at higher rates
and for longer time frame. Amongst the NCDs, we recommend instruments of
Muthoot and Manappuram due to their attractive yields and underlying
profitability of their business. As we believe that commercial interest
rate cycle has peaked, these NCDs may start trading at premium to par
value given the high coupons.
On
the commodity side, we believe Gold will continue to be a ‘Safe Haven’
and provide steady return for yet another year. The key factors that
would add to the shine of Gold would be heightened risk aversion on
deepening of crisis in Europe and US, loose global liquidity and
imperative weakening of the US Dollar. As the most economical and
convenient way of investing in Gold is through ETFs, we recommend Gold BeEs having the lowest expense ratio and high liquidity.
We expect this holistic investment approach during Diwali to not only give you smart returns but also ‘peace of mind’.
Happy Diwali!
Tata Motors Ltd – Call Closure, BANG on target
Reco
price Rs160, Call closure price Rs205
We had recommended a BUY on Tata Motors in our detailed
strategy note Conviction Buy Idea dated 16th August, 2011 with a target price
of Rs205 (post split). The stock has hit a high of Rs207.9 in today’s trading
session. We recommend investors to book
profit at current levels as the stock has rallied ~28% since our
recommendation. Although we remain bullish on the long term business potential
of the company, we see limited upsides from the current levels.
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