7 stks that were buzzing last week & how to trade them now

SP Tulsian of sptulsian.com and Rahul Mohindar from viratechindia.com discuss various stocks and debate on whether last week’s buzzing stocks will continue to be winners going forward?

Mahindra Satyam

SP Tulsian told CNBC-TV18, “Upaid liability settlement at USD 70 million plus the appointment of auditors which will accelerate the finalization of the accounts of the company are definitely quite positive which has been resulted the stock to move from Rs 90 to about Rs 106. But one should not forget that eventually this company is going to get merged with Tech Mahindra maybe by June or July next year. Any company which is getting merged gets its upside capped. I do not see the share moving beyond Rs 110 or Rs 112 it is always advisable to go for making investments in Tech Mahindra instead of Mahindra Satyam so my call is not to make further investment in the stock those who are holding it can think of exiting it at a level of about Rs 110 with a view to shift to Tech Mahindra.”


Rahul Mohindar told CNBC-TV18, “Mahindra Satyam moved up with a gap which gives it some room to correct and fill up so there could be this venerability that we head down to levels of Rs 100 but closer to Rs 100 there is good support. Bottomline I would say let us hold on to the stock give it a chance, there is a support at Rs 100 mark, keep a stop loss below it which means let say Rs 97 stop loss. A price target I would set out on the medium term would be closer to about Rs 115.”


Reliance Industries

Tulsian told CNBC-TV18, “We all know that Q3 will be putting pressure on the GRMs of the company (RIL) and we may not expect the profitability for Q3 happening from that sector but yes the gas business from KG Basin will be the real kicker for the stock which I am quite hopeful that it will keep contributing and will be on a growing trajectory over next to 3-4 quarters. Coming on the LyondellBasell there seems to be on a strong footing which they are planning to acquire close to about USD 12 billion without much for dilution of the equity. They may fall back on the sale of the treasury stocks, all these things augers well for the stock. We have seen the absorption of the bonus shares which have already come in the market couple of days back so taking all this into consideration if those who have a six months view on the stock can remain invested in Reliance Industries Ltd.”

Mohindar told CNBC-TV18, “In the last couple of days Reliance Industries is holding Rs 1050 mark as good support so even short term keep a stoploss below Rs 1050 so let us say Rs 1040 could work as a stoploss. The real strength comes in beyond Rs 1095 so if we clear a Rs 1095 we get into this uptrend but all in all medium to long term I would say the target for this stock is past Rs 1100 so you could be looking at Rs 1150-1200 levels which you could stretch your time frame but certainly even from a short term or a long term I would certainly say this still remains on a buy list.”

Maruti Suzuki

Tulsian told CNBC-TV18, “The present position of Maruti Suzuki are already having vehicles sales of 1 million plus. Infact they have reached their capacity, they are the leader in the small car segment as well as in the petrol version. But with Volkswagen coming in and buying close to about 20% stake in the parent company will enable them to launch the diesel car which has been very much required or needed for the Indian market plus they may be able to increase the models in the upper segment where they did not have much success so all those things most likely entry in the diesel segment as well as in the upper car segments will give them a growth otherwise the saturation has been coming in. We have been seeing monthly sales of getting packed between 85000 to 90,000 vehicles per month so I think with this collaboration or this strategic investments one can expect the monthly sales exceeding one lakh mark per month. This will definitely be a value accretion for the stock and those who are holding it are advice to remain invested.”

Mohindar told CNBC-TV18, “On a short-term or a long-term count I think the Maruti Suzuki looks exceptionally positive. Overall the auto sector index itself looks pretty interesting so Maruti is a good choice. If I had to compare my self to a Tata Motors or Ashok Leyland I would certainly say Maruti stands out. Rs 1520 is good support for the stock so protect your capital by putting in a stoploss, if we break the Rs 1520 level in terms of a positive surprise yes there is a possibility that could happen because we have seen all the right triggers in terms of volume and price formations. I won’t be surprised if you see levels between Rs 1750 – 1800 within a 3-6 month timeframe."

Idea Cellular

Tulsian told CNBC-TV18, “I am personally negative on Idea Cellular, keeping a negative view on the telecom sector for a simple reason that the whole sector is getting commoditize, they will be requiring huge capex for the time to come in the form of 3G and the tower investments. If you see the rise in the share prices that has mainly happen because of a rise of about Rs 50 or maybe 17-18% rise in Bharti Airtel which generally gives the direction to the telecom stock. We have seen the similar kind of rise in the share price of idea Cellular also. Reliance Communication has not participated mainly because of the problems they have of their own. So in the present context if Bharti keeps on moving like this then Idea Cellular has some room left upside but I do not think the kind of things happening because we may start seeing profit booking which has been made by people in Bharti as well as in Idea. So Rs 60 seems to be fair price in the present circumstances and I do not advice buying from hereon in fact my call is a sell on the stock.”

Mohindar told CNBC-TV18, “I think in terms of a resistance first of all there is a pressure point for Idea Cellular around Rs 61-63 belt, so at Rs 60 I think you are looking at another Rs 1-2 best case scenario to reach that pressure point. It is a very important resistance, I would rate this upmove more as a pull back rally and that is because it is not backed with very big volumes or something."

He further added, "It does not look like a up breakout or a medium or long term move to me so keeping that in mind and keeping the fact that we are heading to that Rs 62-63 pressure point, resistance point I would say one could sell on the stock I would expect the first target on the downside to be about Rs 56 breaking it which could be looking at Rs 47.”


KPIT Cummins Infosystems

Tulsian told CNBC-TV18, “I think exiting KPIT Cummins will be the right strategy because to support my suggestion if you see the FY10 EPS it is likely to Rs 10 that means it translates into a PE multiple of Rs 13. If I take the topline which is expected to be about Rs 700 crore for FY10 results into a market capitalization of 1.5 times, I think these two parameters are enough for any midcap IT stocks when you compare with the other peers available in the market. The company has good presence in auto sector and other areas for their IT space but I do not think that you have much upside available especially when you have the alternatives or comparable peers available in the segment so my call is to book profit or exit from the stock at the present level.”

Mohindar told CNBC-TV18, "I am a bit tempted to say that the stocks run up really well and book profits but again the strategy which is prudent and this point in time is to use a trailing stoploss and move ahead. So the way I look at it is Rs 115 is the support which we have seen is holding over the last couple of days and in fact before the shoot up last week we saw a good consolidation in that Rs 115-120 area so keep a stoploss below Rs 115. My sense we are heading to about Rs 145 levels so that would be the price target and that would be the point I would tell the investor to move out so a hold is what I put KPIT Cummins at."

Reliance Power

SP Tulsian told CNBC-TV18, “My call again on Reliance Power is to go for profit booking for the simple reason because investors are taking an execution capability call of each group. We have seen the lot of variety before the investors where the execution capabilities of many groups are getting established. Here we have seen the negative news is coming in for the company like Dadri and all that though they had no concrete plan for execution of Dadri projects when they went public but still the 7000 megawatt power projects which they have the plans or under pipeline for execution are going to take the time upto 2016 and you have much better ideas available on the secondary market when compared with the pipeline execution of the power projects. So my call is exit from this power stocks and you have the better opportunities available in the other stocks."

Rahul Mohindar told CNBC-TV18, “My view is also a bit in sync because technically also there is a variety of choice available you do not have to be with a Reliance Power this point. It largely looks like a sideways counter even if I look at the last 10-15 days of price movement. We have looked ourselves up in a small zone so the way I put it is if you still want to give this a shot you could hold on with a Rs 160-165 target but again that is not a very good risk reward ratio to be justifying considering if we break a Rs 142-145 again we will be dipping down so not a very comfortable stock to be in much better choice available but again only a short-term hold for a Rs 160-165 target."

Ansal Properties

Rahul Mohindar told CNBC-TV18, “I do not really think Ansal Properties is going to give you all that kind of a return, I would say at these levels it still looks a very sideways counter but having said that if someone is already into the stock I probably tell him to stay in it because you could see about a 5-8% upside. Personally I am not very comfortable in terms of going long at these levels but as I said it is clearly a short-term hold from my side."

SP Tulsian told CNBC-TV18, “Even if I take their call or the presence in NCR and Tier III there are concerns for Tier III but I do not think there is now any concern for NCR region because we have been seeing demand picking up and if I go by the Q2 results of the company they had a topline of Rs 175 crore of bottomline of Rs 32 crore resulting in an EPS of close to Rs 280 so one can extrapolate this and expect an EPS of close to Rs 11-12 for FY10 which translates into a PE multiple of 6. I do not think the market cap of Rs 850 crore which right now of the company is really stretched and especially when we see the issues of too many IPOs coming in like Godrej Property which had a very stretch valuations. Taking all this into consideration this can really give a breakout at any time. We can really see 25-30% jump in the share price if someone can keep a view of one month."