MC Inside Edge: Another battery story finds takers, Polycab bulls have last laugh, Berger loses sheen, friendly deals under strain

Know what stocks veteran bulls are eyeing and all the inner goings-on from Dalal Street.

Charged up

A section of HNIs is piling on to battery maker Amara Raja's shares, most likely inspired by the recent rerating of the Exide stock. And what could be a better vote of confidence than the promoter himself hiking stake in the company. Fund houses are not biting yet. In fact, they used the rally in the stock to trim their positions during the March quarter. Bulls are unfazed by this. More than a demand-driven rerating story, they are also betting on a regime change in Andhra in the upcoming state elections, with the return of a party that is believed to be favourably disposed to the battery maker.

Super conductors

Wealthy investors who bet on Polycab in the aftermath of the I-T raid seem to be having the last laugh for now, with the stock having made a fresh high. Domestic fund houses have been steadily cutting back on the stock, expensive valuations being one of the reasons. I-T raids in January gave them another reason to avoid the stock. But some HNIs argued that the company was not inflating profits, but only hiding them. So, the company would have to show them in the books henceforth.  Bulls are counting on fund managers to resume their purchases. But trading volumes of late have been average, indicating that bulls may be skating on thin ice.

Wet paint

Outstanding short positions in Berger Paints have risen to over 2.8 million shares. In October last year, the stock was on a tear on the assumption that the company would be able to hold market share even after Grasim’s entry into the paint market. Local funds have been nibbling at the stock in the last couple of quarters, but seem to be getting enough stock from market operators who were the driving force behind the rerating last year.

Under pressure

As sentiment for mid and small caps turns cautious, some promoters are believed to be facing 'margin calls' from friendly operators who helped juice up their stocks. Promoters will need to provide more funds to ensure the 'support' continues.

And not all these promoters are the fly-by-night type. This holds true for even some well-respected names, who took help to boost their valuation multiples, while the market may have thought it was well-deserved. Watch out for some arrangements unravelling here.