Sunday, December 19, 2010

HCC Buy on declines


HCC (Rs 45.9): Hindustan Construction Company formed the recent trough at Rs 37.5 when the stock was hammered in the ‘bribe for bank loan' scam. When we had reviewed this stock in August, we had written that it faced long-term resistance at Rs 81 and Rs 92 and the stock needed to close above Rs 92 to achieve the former life-time high at Rs 139.


We had also opined then that a sideways move between Rs 45 and Rs 80 was possible over the ensuing months. The stock is currently testing the lower end of this trading band. Investors with a higher risk appetite can buy in the band between Rs 38 and Rs 48 with stop at Rs 36. Medium-term targets for the stock would be Rs 55, Rs 65 and Rs 80.

Investors should, however, desist from buying this stock on a close below Rs 36. That would imply an impending decline to March 2009 low of Rs 14.

OUR RECOMMENDATION :

The scrip is finding good support around 38 levels and is finding it difficult to go through 70 levels. This present excellent trading opportunity to buy around 38 levels and exit at 60 which gives you an upside of 45% holding period of 3-4 months

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Ingenious Investor

Equity Research Division


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