Buying opportunities in mid cap space. Bharat Forge, Indian Bank Buy - 08th August 2011

The Global Equity Markets had a horrendous time last week. US and European Indices fell by ~ 10%. The ripple effect of USA Debt Downgrade, European default, imminent slowdown in the economies and this list may go on and on and on....

Indian Equity Markets too melt down by 5%. Though the pain on Dalal Street was much more than this. Mid-cap stocks fell down much more than that. Interest Sensitive sectors like Real Estate, Infrastructure fell down too. DLF, Unitech, BHEL, L&T - all big and small names fell down. Reliance too down below 800 Rs mark. One can't count the dead on this battle field.

Amid such scenario, our recommendations did a bit better. Cummins India hit its Buy target of 640. Wow! Rare Buy target achieved in this market. The recommendation is still open @ 605 with target price of 640 and Stop loss of 578.

India Cements fell down but managed to stay above its SL of 64. It closed @ 65. The hope still alive... :) Geodesic Systems too managed to float above its stop loss of 53. It closed @ 55.25. The buy recommendations still intact.

For this week, one may Buy Indian Bank @ 215 with Stop-loss of 208 and target price of 228. The stock has fallen down steeply till Thursday. But on Friday, it shows resilience in the support range of 210-220. Open Interest too was positive too which is a good indication.

Bharat Forge too can be bought at around current levels of 270-275. The stock has fallen steeply from 340 Rs and looks into over sold range. One may buy this stock with Stop-loss of 264 and target price of 292.

Wishing you best of luck for the challenging week!!! 

Tremendous buying opportunity in mid-cap stocks amid macro issues - 03rd August 2011

Indian Equity Markets are having nightmare sessions now a days. At macro levels, things have become scary - US Debt Downgrade which can have cascading effect on the world economy, Europe slowdown, Inflation issue in India, Corruption in Government, High Commodity Prices... The list is endless.

But the bigger question is on how to change this Threat into Opportunity?? For this, we just need to go to the basics and find out stocks which have no or minimal impact from these issues, yet they have fallen with the market. The time is ripe to find out stocks which are going down with the flow, yet their fundamentals intact. And surely, you will lot many such stocks in mid and small cap like GTL Infra, GMR Infra, KS Oils, JP Associates, HCC, IFCI, Geodesic, India Cements...

1) Cummins India - Cummins India has fallen steeply in the last few days from 680 odd levels to 610 levels (~10%). The company is due to announce results tomorrow. Its sales have risen consistently. The business model is intact and has very less interest expenses. Technically too, RSI is around 20 odd levels. One may buy this share in 610-615 Rs range with approximate targets of 640, 660 levels. Stop Loss can be placed at 590 and 570.

2) Geodesic Systems - Geodesic Systems is an IT company that develop software into telecom, financial services and power. The company's revenues have been increasing steadily and has been making efforts to reduce the debt expenses. The company is in run to acquire a company in US and likely to make final announcement in August. It has a good range of applications which has been getting good demand from the clients. Technically too, the stock is trading at 2 year low. RSI is also close to 20 which indicates over-sold range. One may buy this stock in 60-61 range with targets of 65, 75. One may place Stop-loss at 53.

3) India Cements - India Cements has been under consistent pressure for last few quarters and no doubt, has some fundamental issues. But the current stock price suggests more digestion than what is required. The valuations have become really attractive at the current levels. Though the current monsoon season will have a negative impact on the sales, but that will be counted in the next quarter. One may buy the stock in 68-69 Rs with target price of 75, 80, 90, 105 and Stop-loss of 64, 59 and 55.Hope you have a great year of investing!!