Stocks to watch: Infosys, Neyveli Lignite, Indoco Remedies

The markets took the surging inflation number and the seesawing rupee in its stride. The indices, however, experienced a choppy session.

At closing bell, the Nifty stood at 5,158 up 43 points, while the Sensex shut shop at 17,435 up 81 points.

Sudarshan Sukhani of Technical Trends said there is a visible target of 5,300 for the Nifty.

“The short-term trend, which was down for most of last week and early this week, has now changed. The intermediate term uptrend was still intact because 4,950 was never broken. So, the market is essentially aligned with the short-term and the intermediate-term trends, both looking upward. Beyond this, it is very difficult to forecast. We are in volatile times, the markets have been choppy earlier but there is a visible target of 5,300, which became the resistance last time. We have to find out if the Nifty is able to cross this hurdle. But slowly, it should reach this number,” he said.

Technical Analyst Sudarshan Sukhani is positive on Neyveli Lignite and Infosys.

Here’s how Sudarshan Sukhani views the stocks on board:

On Neyveli Lignite and Gujarat NRE Coke:

Neyveli has corrected far more than anticipated. I am assuming that the correction in Neyveli is finally over. This is a stock that investors need to simply buy and forget and traders need to buy, sell at higher levels and try to buy again. The same applies to NRE Coke. Between the two, I would prefer Neyveli. 

On PNB:

We have seen the big run up in the last 2-3 days. Apparently, there has been a pleasant surprise in terms of news. But beyond that I don’t see the charts outperforming the other PSU banks or the midcap or smallcap private banks. I would prefer that segment rather than PNB or SBI.

On Nagarjuna and Chambal:

They are in long-term uptrends. Every time we see these stocks fall, as we seen that recently, there is an investment buying opportunity and a trading buy there. Once the uptrend is intact, the long-term push is on the upside. Dips are to be bought for both stocks now.

On Infosys:

Infosys still has higher targets. The fact that it hasn’t had a good session does not mean much because all stocks will go up and come down and sometimes have choppy days. But that is all right. As a sector, I would approach Infosys and technology both as a buy on dips sector: buy whenever there is an opportunity to buy it at lower levels. 

Disclosure:

I have delta neutral positions in Nifty and investments in shares.

Sanjay Chhabria is positive on Paper Products and Indoco Remedies.

Here’s how Sanjay Chhabria views the stocks on board:

On Paper Products:

It is India’s a leading manufacturer of primary consumer packaging and labelling materials with a 65% market share in the organized segment. The company is a 59% subsidiary of Huhatamake Vanleer of Finland, who is the global leader in consumer packaging. The parent is amongst the top 10 consumer packaging companies in the world. In India, Paper Products serves as a one-stop shop for a wide array of consumer packaging catering the packaging needs of the entire FMCG segment.

The company’s esteemed FMCG clients include names like Hindustan Unilever, Britannia, Nestle, Cadbury and Marico.

Looking at the Q1 results, the company is likely to post an EPS of Rs 5,70 for the year-ending December 2008. I have a price target of Rs 80 for the stock. It is the derived play on the FMCG Industry; it’s a play on India’s long-term GDP growth and the performance of the FMCG sector

On Indoco Remedies:

Indoco Remedies is a midsize pharma company manufacturing and marketing branded and prescription formulations and APIs in the domestic market. The company has a well built up brand portfolio of 120 products across various therapeutic segments including high growth lifestyle segments.

Some of the companies known brands include: Cyclopam, Febrex Plus, Vepan and Karvol Plus. The top 6 brands of the company are growing at 15% in the domestic market. The company has recently changed its financial year from June to March. So, for the nine months ended March 2008 the company posted a 50% rise in net profits to Rs 30 crore on a 16% rise in the net sales to Rs 263 crore. The trailing 12 month EPS of the company is around Rs 43. So, at current level the stock is trading at around 6.3 times expected FY09 earnings.

My price target for the stock is Rs 450, which would be around 10 times expected FY09 earnings. The company is undergoing a transition phase; it is graduating from Contract Research and Manufacturing Services (CRAMS) to increasing its focus on regulated markets of US, UK and Europe.  

In US, the company is looking at niche areas of Ophthalmology and Dermatology, and it has formed a JV with Amneal Pharmaceuticals and is developing 10 molecules in ophthalmic segment

Disclosure:

In my personal portfolio I do not hold these stocks but the subscribers to my newsletter might be holding these stocks.