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Tuesday, November 9, 2010

3 year charts of some Sensex 30 stocks trading below all-time highs

The BSE Sensex is trading near its all-time high. That doesn’t mean all the 30 stocks that comprise the Sensex index are trading near their all-time highs. Here are the charts of some of the Sensex stocks that are trading below their earlier peaks:

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BHEL is a PSU star and a leader of the infrastructure pack. Despite power being a priority sector and BHEL being the major supplier of large capacity steam turbines and boilers that form the heart of thermal power stations, the stock is yet to reach its 2007 peak.

The 200 day EMA is rising and the stock is trading above it, which is a bullish sign. But volumes have trailed off as the stock is trying to move higher, which is not so encouraging. Add on dips.

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The realty sector was most favoured by investors in the previous bull market, with DLF being the undisputed king. Questionable business practices and opaque financial statements had a disastrous effect on the stock’s fortunes. Though it is trading above its 200 day EMA, it has failed to regain even 50% of its bear market fall. Avoid.

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NTPC is one of the better managed PSUs and the largest power generation company in India. But that hasn’t translated into superior stock performance. Despite all the hype surrounding the power sector – specially during the previous bull market – most power generation companies are not highly profitable. One of the major reasons being that growth in power generation is dependent upon frequent and huge capital expenditure.

The stock is trading below the 200 day EMA and falling. Avoid.

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Jaiprakash Associates is one of the leading companies undertaking large infrastructure and real estate projects that require massive capital outlays, which have been mainly financed through debt. The huge interest burden has proved a detriment to the stock’s performance. After retracing 50% of its bear market fall, the stock has been making a bearish pattern of lower tops and bottoms. Avoid.

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Tata Steel’s large debt burden caused by the Corus acquisition was compounded by the economic slowdown in Europe (where Corus sells most of its output). The stock is trading well below its Jan ‘08 peak, but has formed a bullish cup-and-handle continuation pattern. It is trading above its rising 200 day EMA and can be added on dips.

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