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Analysis of select India stocks (Medium term perspective)

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In this article let us analyze 5 India stocks that are technically bullish for the medium term. The discussion is based on weekly charts. Ispat Industries Limited (Group A, Scrip Code: 500305):

The company was promoted by the well known Mittal family. Lakshmi Mittal, the eldest of the Mittal brothers is the fifth richest person in the world, according to Forbes magazine. He branched out in 1994, taking over the international operations of the group. Pramod Mittal and Vinod Mittal look after the steel business in India. The company produces sponge iron, hot and cold rolled coils, galvanized and colour coated sheets. Sponge iron production capacity is 1.6 million tonnes per year while hot rolled coil steel plant capacity is 2.4 million tonnes per year.

http://groups.google.com/group/theindiastreet/web/ISPATIND_100907.j pg Ispat Industries reported a net loss of Rs.9.5 crores for the financial year 2006 – 07. In December 2005 the company had revised the capital structure of the company. 40% of the equity share capital of the Company was converted into 0.01% Cumulative Redeemable Preference Shares (0.01% CRPS). After it was relisted, it made a high of 25 in April 2006. Within about two months, it fell to a low of 10.10. The stock gained reasonably in the next 6 months and touched a high of 17.90 in January 2007. After almost 8 months of corrective decline/consolidation, it broke its resistance with record volumes last week. The stock is expected to test its previous high at 25 soon. Medium term target works out to 29. Jindal Photo Limited (Group: B1, Scrip Code: 532624):

Jindal Photo Limited is India’s largest manufacturer of photographic films and related products. The company produces colour roll films, analog & digital cameras, photographic colour paper, medical X-ray films & equipments, photo processing equipments, photographic chemicals etc. It has over 36% market share in the colour paper and colour roll Films. The other products such as X-ray Films, cine colour positive film, etc. have market share of about 25%. Jindal Photo markets the products under the brand name “FUJIFILM”. The company had reported a net profit of Rs.27.5 crores for the financial year 2006 – 07.

http://groups.google.com/group/theindiastreet/web/JINDALPHOT_10090 7.jpg This stock too, had undergone restructuring of capital like Ispat Industries. It made a highs of 418.95 on May 27, 2005 and 416.50 on August 26, 2005. It was on a steady decline for next one year – no real buying support from market. It has consolidated since then for about 11 months and broken out in August 2007 with reasonably good volumes. The next resistances for the stock are at 158.85 and 186.70. Ranbaxy Laboratories Limited (Group A, Scrip Code: 500359):

Ranbaxy is a well known pharmaceutical company headquartered in India. It has presence in 49 countries and there are manufacturing facilities in 11 countries. Ranbaxy manufactures and markets generic pharmaceuticals, value added generic pharmaceuticals, branded generics, active pharmaceuticals and intermediates. The company’s net profit for the financial year 2006 – 07 was reported to be Rs.386 crores.

http://groups.google.com/group/theindiastreet/web/RANBAXY_100907.j pg Ranbaxy is a constituent of both Sensex and Nifty. The stock had a torrid time in October 2005 when it fell by almost 33% in three weeks. This was just after Ranbaxy lost a UK lawsuit to Pfizer. For a stock analyst, this was not a surprise – a “Three outside down” candlestick pattern occurred in the monthly chart of the stock in February 2005, clearly indicating a long term reversal. The stock continued to make lower highs and lower lows since May 2006. The first wave in medium term charts apparently ended in May 2007. After a four month correction/consolidation pattern, the stock had broken out this week with reasonably good volumes. Please note the “three inside up” candlestick pattern prior to this week, formed at support levels. The stock’s next resistances are 452 and 530. Today’s Writing Products Limited (Group B1, Scrip Code: 531830):

Today’s Writing is one of the leading manufacturers of pens and other writing products. It has about 35 varieties of pens alone and recently they have extended their business to school and office stationery items. The company has been consistenly making profits ever since it went public 11 years ago. It declared a net profit of Rs.11.6 crores for the financial year 2006 – 07.

http://groups.google.com/group/theindiastreet/web/TODAYS_100907.jp g This stock has made a few “V” like patterns, two of which are shown above. ‘V’ formation is generally considered to be a quick reaction by the crowd to offset the steep fall in prices; Technical traders prefer a cup and handle type of pattern instead of this pattern. The stock has broken its resistance at 71.50. This has happened after 4 months of decline. Note the huge “upward gap” or “rising window” in the last week’s price. This gap, should act as a support in case the stock corrects from the current levels. The stock is expected to test its resistances at 88.40 and 97. Venky’s India Limited (Group: B1, Scrip Code: 523261):

Venky's (India) Limited was formerly known as Western Hatcheries Limited and belongs to Venkateshwara Hatcheries group. Its produces animal health products, pellet feeds, processed chicken products and specific pathogen free (SPF) eggs. There are about 30 units spread across the country. Recently the company has diversified into nutritional health products for human beings, pet food and health care products. The company’s net profits were worth Rs.11.5 crores for the financial year 2006 – 07.

http://groups.google.com/group/theindiastreet/web/VENKEYS_100907.j pg The stock had fallen from a high of 227.10 in August 2005 to a low of 91 in June 2006. It has been bullish since then, though it nearly tested its support levels. In June 2007 it did break its resistance but without much volumes. It got corrected slightly and now, it has almost come back to its previous close at 174.10. This confirms bullishness. The stock is expected to test its resistances at 212 and 227.10.

Sundaramurthy Vadivelu LABELS: MEDIUM TERM PICKS, INDIA STOCK MARKET, ISPAT INDUSTRIES, JINDAL PHOTO, RANBAXY, TODAYS WRITING, VENKYS INDIA Suggested Reading • 5 India Stocks You Should Own for the Next 6 Months • Buy These India Stocks and Hold for 6 Months • VIDEO: India vs China - Which is Better?