Wednesday, May 20, 2009

Mid-cap Mania: Videocon Target Achieved

Momentum Tapering from Large-caps to Mid-caps:

In my posting dated May 14, 2009, it was clearly mentioned that the current market rally will gradually taper in favour of mid-caps as large-cap stocks are increasingly getting over-valued at upper levels. Comparatively, mid-caps are big under-performer in terms of Valuations and that the 'Valuation Gap' needs to be filled to some extent.

Unless a majority of the mid-cap universe with sound fundamentals does the catching-up game in terms of valuations, we would gradually witness tapering of the current rally amongst large-caps in favour of mid-cap counters where there is still a cushion of 'Valuation Gap'.

At some point of time, even if the current momentum is to survive, the rate of appreciation amongst large-caps would cool-down and slowly pass-on the baton to mid-cap counters. When such a phenomenon of rally tapering from large-caps to mid-caps would take place, the markets are expected to take a breather and settle into range bound movement. (Posted on May 14, 2009)

This will see most of the large-cap stocks cooling their heals around current levels. This will also lead to a small consolidation pattern in Nifty and Sensex as major market movers cool-off. But the momentum will shift to mid-caps for some period of time unless there is consolidation among large-cap counters to some extent.

However, some selective PSU, Infrastructure, Education and Agricultural related stocks will continue to remain in limelight irrespective of the large-cap or mid-sector they fall in. This selective out-performance is expected to on the back of prospects of stable government at centre which would lead to some positive reforms, divestment, boost to infrastructure spending, etc. as may be likely announced in the upcoming Union Budget which is 35-45 days away from now.

Videocon Industries: Target Achieved

Videocon Industries: Buy Videocn in the range of Rs.105-120 with a quick target of Rs.150-160 with in few sessions. Strict Stop loss for this diversified conglomerate should be placed at Rs.90. CMP Rs.122.
(Posted on April 24, 2009)

The stock did not make any substantial move even on markets rising continuously since Sensex 8000 levels. The stock had under-performed big time since market recovery a couple of months ago. Traders were time and again reminded in my subsequent postings to persevere with the trading call with a strict SL of Rs.90/- where the stock rests at a strong support zone.

Finally, the stock has made a move post-election results now that mid-cap mania has just started. The first target of Rs.150/- is achieved on intra-day basis just as I am writing this post over here. Anyways, the idea, over here, is not book full profits in Videocon as the momentum may have just started in the counter. I would like to recommend traders to book profits in Videocon on below mentioned criterions:

Criterion for Traders depending on their Risk profile:

Low Risk Traders: Book 70% Profits @Rs.150/-
Medium Risk Traders: Book 55% Profits @Rs.150/-
High Risk Traders: Book 40% Profits @Rs.150/-

Book profits depending on the category you fall in and ride the upside momentum in the ongoing mid-cap momentum. For all traders the Trailing SL strategy to be used at Rs.125/- instead of our original SL of Rs.90/-. This will ensure that even if the stock reverses its gains, traders could still exit at nominal profits @Rs.125/-.

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Antriksh Patel said...

Hi Viral,

I think L&T is slowly and gradually gaining momentum. Till the results it can touch 1700. What is your say?

Viral Rajnikant Dholakia said...

Dear Antriksh,

Your query on L&T is replied to in a new Posting dated May 20, 2009.