Expert views on stocks to add/remove from your portfolio

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Expert views on stocks to add/remove from your portfolio

CNBC-TV18’s Sonia Shenoy spoke to independent market strategist Rajesh Jain for his fundamental view and Angel Broking’s technical analyst Shardul Kulkarni for his technical view on specific stocks/sectors.

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Excerpts from Your Stocks on CNBC-TV18 Watch the full show » ALSO READ See what other experts are saying about markets See what FIIs are saying about the markets See what Udayan Mukherjee is saying about the markets

CNBC-TV18's Sonia Shenoy spoke to independent market strategist Rajesh Jain for his fundamental view and Angel Broking's technical analyst's Shardul Kulkarni and Manas Jaiswal of manasjaiswal.com for their technical views on specific stocks/sectors.

Here are their expert views:

On Inox :

Jain says he finds that the time has passed when an investor could have bought into Inox and says Reliance MediaWorks would be a better stock pick. "Now the only positive development that can happen is if Reliance continues to chase Fame, despite Inox having a higher stake and agrees to do a strategic buyout from Inox. But given the stake that both Inox and Reliance have in the exhibition business, it is very unlikely that Inox would sellout to Reliance even if Reliance offers a highly exaggerated price. I personally think the time to buy Inox in anticipation of such an outbidding by a competitor is over. Now in terms of pure business trends, Reliance is clearly the leader in the pack with a wider distribution model, more diversified, more balanced, more safety nets. Very clearly, whether it is film processing, film production, distribution and exhibition, Reliance MediaWorks is clearly the better pick of the two."

Kulkarni, however, looks at the charts of Inox and sees a horizontal channel in which the stock is trading. "The upside resistance is at around Rs 85 to Rs 87. On the downside, the support is at around Rs 55. It is bang in the middle of the range as of now. Any trader who would like to take a trading view, I would say yes, you can buy at current levels. If you have a downside stop loss at around Rs 65 your reward is not that great as you have a risk-reward of just 1:1.5 on the upside wherein you are having a Rs 10 risk and you are having a Rs 15 reward. If you would like to make the trade, yes, you can go and buy at current levels. The volumes are quite strong. I would expect the momentum to carryout going forward and the stock will move to Rs 86 or Rs 87 levels in probably around four-six weeks from now," he says.

On Bajaj Auto :

Jain says this is a good stock to hold. If an investor has bought it now, he has bought it at a time when the institutional space is looking at a potential downside. "Thanks to Hero Honda getting some relief on an anticipated increase in royalty following the separation with Honda and the fact that Hero Honda could be giving Bajaj some sort of a fight in the international markets; those are the triggers on the basis of which there has been some institutional selling pressure. One of the triggers which will help an investor get to a decent 20-25% gain over a two-year time horizon is that it has just completed a capacity expansion at Pant Nagar which makes it one of the first amongst the three two-wheeler players to have got rid of some capacity constraints which the entire segment is suffering from. Secondly, there has been input side pressure for all the three players. But Bajaj Auto has the benefit of having a superior product mix, it has the highest share of premium product sales and that works for it."

So while the stock has seen some selling because of expected competition from Hero Honda in a very smart launch track record by TVS in the last two quarters, Jain feels there is no reason to despair on Bajaj Auto because it has got its strength in place and all the three players would be facing the same competitive threats. "If an investor has bought it at around Rs 1,400 it gives him a decent margins of safety not certainly the kind that you can enjoy but an easy Rs 1,600 over the next 12 months on the ticker as possible. I suspect a good time to buy two-wheeler stocks, particularly, following the numbers from March. Late April is when you should start looking to accumulate such stocks because I think this sting of profit taking or positional unwinding, thanks to a smart run-up in autos. All this will have liquidated by mid-April and the market would have anticipated in digesting the FY11 numbers in the outlook for FY12. I suspect mid-April to pre-monsoon would be a good time to pick up two-wheeler stocks."

Kulkarni sees the stock is near to the 200 day moving average (DMA) which is the present level of Rs 1,330-1,340. "In the near-term, yes, a small bounce is something that I would probably expect around Rs 50 to 70 from current levels. Overall, if you see the weekly charts, the volumes are quite strong. Weekly volumes in the case of Bajaj Auto have never exceeded more than 25-30 lakh shares on a week to week basis. But this week alone you are seeing more than 50 lakh shares being traded and that too on a negative side when the stock has tanked 10%. Yes, a bounce in the near-term is something what I would like to look at but overall, the chart turns negative. I expect lower levels in the probably next six-eight weeks. The stock has seen a one way run-up since March 2009 to January which is the present month, from Rs 200 levels to around Rs 1,600. The stock has gone up eight times in just a matter of two years. A fall is something that I would expect but as Jain has rightly pointed out, the fundamental view if it is bullish then yes, one can look at entering at lower levels if he has a two-three year long-term perspective."

On Nagarjuna Fertilizers :

Nagarjuna Fertilizer very clearly reflects the wisdom of not chasing a stock after the news expectation is out because markets have very efficient discounting mechanisms, particularly vis-à-vis news and time, clarifies Jain. He sees this stock as a blend of two businesses. He adds, "There is a chemicals refining business and there is a fertilizer business. In the fertilizer business, there was clearly the expectation that there would be a urea price decontrol which has not materialized and given the current state of the governance in Delhi, it looks likely that for a change this year in the pre-budget markets we may not see the regular run-up in the railway and fertilizer and irrigation stocks in anticipation of the government deregulation. To an investor, I would suggest that the fertilizer sector is firmly on the government's reform drawing board and it has very little choice, given the fact that the government cannot invest in this sector which is so crucial for the country's economy. We import more than 50% of our requirements. So the sheer economics and the volumes demand that the government allow investments to take place in this space and let deregulation take its own course. An investor might have to expand his time horizon to perhaps until next year within which period he can make a 20% gain."

On Nagarjuna and Chambal Fertilizers :

Jaiswal finds Nagarjuna facing a lot of resistance in the range of Rs 34 and Rs 36. Today it has broken its 200 day moving average also, he says. "Now it has some support at Rs 31 that is a 50% retracement level of the recent rally from Rs 27 to Rs 35. He should keep a fixed stop loss of Rs 30.50 and if it breaks that then he should exit from long positions and buy the stock again if it breaks Rs 36, otherwise just avoid the stock at current levels."

He is bullish on Chambal in the long-term but for trading traders, he says, they should avoid the stock because the stock is trading near the 200 day moving average. "If it breaks Rs 75, then it will turn bearish for the short-term but if you are talking about long-term, Rs 75 and Rs 70 are very good levels to buy, especially for investors with a horizon of around eight-10 months time. The stock has potential to test around Rs 105-110 but this is for long-term call, short-term traders should avoid this stock."

On Jindal Steel and Power :

Jaiswal is bullish on the metal space, especially stocks like Jindal Steel and Power. "It made an inverse head and shoulder pattern and it is trading above that. Hindalco is moving in the uptrend and has broken its all time highs. So, Hindalco and Jindal Steel and Power are good stocks to buy for, say around two to three months time. The stocks can give around 15% to 20% kind upmove."