Realty Sector stocks – worth a look? Nah!

The realty sector has been in the doldrums for quite some time now. Builders are hanging on to their unsold inventory in a bid to keep prices from crashing. Buyers are in no great hurry to relieve the builders of their pain.

Many builders are now being forced to liquidate some of their land banks and unsold projects to try and keep their heads above water. The charts of most realty sector stocks are in long-term bear markets.

As in any sector, a couple of companies are able to swim against the tide. Does that make their stock worth buying? Their fundamentals don’t justify it. If you are really keen about the sector, you may be better off buying land.

Hubtown (Ackruti City)

The stock closed at a 52 week high of 194.50 and forayed into bull territory for about 4 months. But the good times didn’t last. The stock is back in a long-term bear market.

Ashiana Housing

Since a 5:1 stock split back in Oct ‘13, the stock has been climbing relentlessly, gaining 4 times from its post-split low. Though it is one of the few charts in a bull market, valuations are astronomically high.

DLF Ltd

The stock closed at a 52 week high of 241.30 back in Jun ‘14, but lost more than 50% due to strictures from the Competition Commission. The Vadra Haryana land deal is turning out to be another thorn in its flesh. Despite a rally from its low, the stock is back in a long-term bear market.

DS Kulkarni

The stock price closed at a 52 week high of 103.25 in Nov ‘14, more than doubling within a year. After a brief correction from its top, the stock is trying to resume its up move, and is clearly in a bull market. However, valuation is stretched and fundamentals are weak.

Ganesh Housing

The stock price closed at a 52 week high of 211.40 back in Jul ‘14, gaining more than 3 times from its 52 week low. Its subsequent correction is still ongoing. The stock price has dropped below its three EMAs and may soon be back in a bear market.

HCC

The stock gained almost 4 times from its 52 week low by closing at 48.45 in Jul ‘14. It has been correcting since then, and is struggling to stay in a bull market. A fall below 27 will mean a continuation of the bearish pattern of lower tops and lower bottoms.

Omaxe

The stock briefly entered bull territory and touched a 52 week high of 151.05 in Jun ‘14, but soon dropped below all three EMAs into a long-term bear market.

Purvankara

The stock price more than doubled from its 52 week low by touching a high of 123.95 in Jul ‘14. It has been in a corrective mode since then, and has dropped into a bear market.

Unitech

The stock touched a 52 week high of 37.80 in Jun ‘14, gaining more than 3 times from its 52 week low. It has been all downhill since then, as the stock slides deeper into a bear market.

Vijay Shanti Builders

The stock chart pattern isn’t much different from most of the others from the sector. A gain of about 70% from its 52 week low, and a brief entry into bull territory was followed by a steady slide back into a long-term bear market.

Related Post

Chart Patterns of 10 Realty Sector stocks (an update)

Technical updates – DLF and Unitech

Real estate stocks were all the rage during the later stages of the previous bull market in 2007. The term ‘land bank’ entered the stock market jargon dictionary. Companies were falling over each other in trying to acquire land parcels at any price. Banks and NBFCs joined the race of lending money against ‘land banks’.

Stocks of companies in completely unrelated businesses – particularly older companies in the doldrums – were getting highly valued on the basis of their ‘land banks’. Small investors relished the idea of making quick money and jumped on to the real estate band wagon.

A real estate bubble had been created, and it burst with a loud ‘pop’. Paper wealth of small investors vanished into thin air. Two of the most popular and high fliers among the real estate stocks were DLF and Unitech – despite the reported poor quality of their construction and unfavourable agreement clauses with buyers.

Both stocks have been in long down trends for the past 6 years. The moral of the story? Buy real estate; shun real estate stocks.

DLF

DLF stock had gone past the 1200 mark in Jan ‘08 before the bottom fell out. In just over a year, it fell almost 90% from its peak. The subsequent rally saw the stock cross the 450 mark in Oct ‘09 – giving 3-bagger returns from its Feb ‘09 low, but failing to retrace even 50% of its huge fall. That kept the stock technically in a bear market.

That was a signal for bears to take charge. The stock price has formed a bearish pattern of lower tops and lower bottoms that dropped the price to 122 in Aug ‘13 – which was lower than its Feb ‘09 low. The rally to a high of 241 gave almost 100% gains from its Aug ‘13 low. The stock is undergoing a price consolidation, and may try to breach the resistance level of 241. Only a convincing move above the Mar ‘13 top of 285 will negate the ‘lower tops-lower bottoms pattern’.

Technical indicators have corrected overbought conditions and are in bullish zones. Another test, and possible breach of 241 is likely. The company is saddled with massive debt and valuations are sky high. Best to avoid.

Unitech

Unitech stock had touched headier heights in the 5-figure range in early 2006. A huge bonus and stock split brought the price down to more reasonable levels. The stock price continued to rally and tripled to cross the 600 mark in May ‘07. A 1:1 bonus could not stem the rush to buy and took the stock price up to the 550 level in Jan ‘08.

The crash was extraordinary, as the stock price dropped more than 95% to touch a low of 22 in Nov ‘08. The subsequent rally took the stock price to 118 in Sep ‘09 – more than 400% gain from its Nov ‘08 low – but retracing less than 20% of its massive bear market fall. It has been all down hill since then.

The stock touched a low of 11 on Mar 3 ‘14 – 50% lower than its Nov ‘08 low. The recent rally saw a sharp rise to 38 last month – 3-bagger returns in 3 months! Daily technical indicators had become extremely overbought. The stock price corrected below the support/resistance level of 30, and is struggling to move up again.

Interest expenses were more than twice the reported net profit last year and P/E ratio is 88. Don’t be swayed by budget sops. Avoid with a capital ‘A’.

Chart Patterns of 10 Realty Sector stocks (an update)

If you have the money, buy realty, not realty sector company stocks. Why? Because most realty sector companies lack transparency, need lots of capital, have poor governance and a tendency to take buyers for a ride. Not to forget the nexus of local politicians and the underworld that usually leads to substandard quality of construction.

In the previous bull market, the sector was a favourite of big and small investors, and provided astounding returns to some. Those glory days are long gone, and unlikely to return. If you are stuck at higher levels, use the current rally to exit or switch.

In a previous post more than a year back, brief technicals of 10 realty sector stocks were presented. Not for suggesting investment, but to point out that even in a not-so-great sector, there are a few stocks that can swim against the tide. If you are enamoured by the real estate sector, pick those few exceptions.

Hubtown (Ackruti City)

A change of name and branding hasn’t changed the fortunes of Ackruti City – now known as Hubtown. The stock has provided no returns for the past year, and is technically still in a bear market. It is showing some signs of life, but the technical indicators are pointing to a correction from overbought condition.

Ashiana Housing

In complete contrast to the Ackruti City/Hubtown stock chart, the chart pattern of Ashian Housing is in an uptrend in a bull market, and touched a 52 week high last week. Note that the Dec ‘11 low, from which the current rally started, was actually a higher bottom than those touched in May ‘11 and Oct ‘11. Technical indicators are looking overbought, but looks like there is some steam left in the rally.

DLF Ltd

The big daddy of the real estate sector, DLF has provided almost zero returns over the past year and is trying to emerge from its 15 months long bear market. The stock dropped more than 50% from its Oct ‘10 peak, underperforming the Sensex, and is looking overbought.

DS Kulkarni

The stock traded within a rectangular band between 46 and 66 during the past year, before breaking out above the 66 level on a volume spurt last week. The stock price immediately pulled back to the 66 level, but the 50 day EMA crossed above the 200 day EMA indicating a possible return to a bull market.

Ganesh Housing

This was one of the better performing stocks in 2010, but suffered badly as the bears took their toll in 2011. The stock has given no returns during the past year and is technically still in a bear market, and the bearish pattern of lower tops and lower bottoms continues. The stock had shaved off 70% from its Oct ‘10 peak.

HCC

The Lavasa controversy nearly dropped the stock into single digits, as it fell 80% from its Jan ‘10 peak. The current sharp rally, backed by strong volumes, has caused a 100% jump from its Dec ‘11 low but the stock is technically still in a bear market. Technical indicators are signalling an overbought condition.

Omaxe

This is another stock that has been in a bull market, after forming three intra-day bottoms at 120. It has climbed above its previous intra-day high touched in Nov ‘10, and is trading above all three of its rising EMAs.

Purvankara

The stock is desperately trying to get out of a strong bear grip after providing negative returns over the past year. Technically, it is still in a bear market.

Unitech

This is one stock that tried to fly too high, like Icarus, and came crashing down to lose 80% from its Oct ‘10 peak. It provided negative returns over the past year and is still in a bear market technically.

Vijay Shanti Builders

A favourite stock of small investors, it lost more than 75% from its Jan ‘10 peak. The current rally has seen a spectacular parabolic rise, but the stock is looking extremely overbought.

Bottomline? The broader market rally from Dec ‘11 lows has propelled beaten down realty sector stocks above their 200 day EMAs, but that doesn’t mean their fundamentals have improved. Caveat emptor.

Chart Patterns of 10 Realty Sector stocks

Readers of this blog may be aware that the realty sector is not my favourite for a number of reasons. The single most important one is the lack of transparency in their financial statements. At the risk of generalising, annual reports of most realty sector stocks tend to hide more than they reveal.

Once again, realty sector companies are under scrutiny for all the wrong reasons. Their insatiable appetite for capital were being satisfied by obtaining loans using agents with questionable methods. Some of the money may have been diverted to the stock market. Environmental and government clearances were fudged to speed up projects or indulge in illegal constructions.

However, it would not be fair to paint all the companies in the realty sector with the same black brush. Here are the chart patterns of 10 realty sector stocks, some of which have done quite well despite the adverse publicity. Some are muddling along trying to keep their noses above water. The less said about the rest, the better.

I don’t really trust the fundamentals of these companies to recommend buying or selling. It is an effort to demonstrate that even in one of the worst sectors for investing, there are always a few stocks that stand out from the crowd.

Ackruti City

The stock has been in a year long bear market – failing to stay above its falling 200 day EMA for any length of time. It had started to fall rapidly even before the news about the circular trading hit the market.

Ashiana Housing

The contrast with the Ackruti City stock is startling. The stock has been in a strong bull market for the past 12 months, dropping briefly below the 200 day EMA during the recent correction. On the upward bounce, the stock is facing resistance from the entangled 20 day and 100 day EMAs. It may correct some more.

DLF Ltd

 

The stock of the biggest player in the sector hasn’t performed at all. The recent correction took it well below its 200 day EMA. The subsequent upward bounce halted at the falling 20 day EMA which is below the long-term moving average. Sign of a bear market.

DS Kulkarni

The stock drifted sideways for almost 8 months before rising to a new high in Aug ‘10 on good volumes. It has been in a down trend since then, and is facing resistance from the falling 20 day EMA. The 50 day EMA has slipped below the 200 day EMA and the 100 day EMA is likely to follow – confirming a bear market.

Ganesh Housing

Like the Ashiana Housing stock, Ganesh Housing has been one of the better performers in the sector. The recent correction took the stock below the 200 day EMA. The upward bounce faced resistance from the falling 50 day EMA. The stock has dropped below the entangled 20 day and 100 day EMAs. The correction may continue.

HCC

The controversy surrounding the Lavasa project could not have come at a worse time for the company. The high volume fall deep into bear country seems to have extinguished all bullish hopes.

Omaxe

After moving sideways just below the 200 day EMA till Jun ‘10, the stock had a sharp rally to touch a new high last month. The recent correction received support from the rising 100 day EMA, and the stock is poised above the 20 day and 50 day EMAs. Technically, the stock is in a bull market.

Purvankara

The chart pattern is similar to that of DS Kulkarni. It moved sideways till Aug ‘10. In Sep ‘10, the stock touched a new high and started a down trend immediately. The recent upward bounce found resistance from the falling 20 day EMA. The stock remains below the 200 day EMA, in a bear market.

Unitech

 

Another large realty sector stock with more hype than performance. The recent correction dropped the stock deep below its 200 day EMA. The upward bounce hasn’t provided much respite and the stock is back in a bear market.

Vijay Shanti Builders

This stock is a favourite of many small investors because it is ‘cheap’. But cheap can get cheaper. Vijay Shanti has been making lower tops and lower bottoms throughout the past year, and is in a bear market.

Bottomline? All 10 realty sector stocks are under bear attacks. But Ashiana, Ganesh and Omaxe have fared better than the others. If you have holdings in any of the other stocks, this may be a good time to switch. Small investors may be better off by avoiding this sector.

Does real estate really qualify as an investment?

For most small investors with only a few lakhs to spare, investing in real estate is out of the question. If you want to buy a piece of land and build a house to live in, or buy an apartment for personal use - it really doesn't count as an 'investment'.

The online Merriam-Webster dictionary defines 'investment' as an outlay of money usually for income or profit. From that perspective, the house or apartment that you live in does not qualify as an investment because it neither produces any income (unless of course you rent out a portion) nor any profit (unless you sell it).

Buying a house and renting it out completely can qualify as an investment. Some people book or buy apartments only for the purpose of selling at a profit. This type of 'investing' requires serious amounts of money - upwards of Rs 3-5 Million - which puts it beyond the reach of small investors.

In several posts I've written about why investors should have an asset allocation plan (read Chapter 12: How to Reallocate your Assets in my FREE eBook) and then be disciplined about sticking to that plan. Several readers have asked me why I have not included real estate in an asset allocation plan.

The main reason is mentioned above - it costs too much. The other reason is the lack of liquidity. If you've ever tried to sell an apartment or a house, you will know that it is a long drawn out procedure with the involvement of property brokers, lawyers, local toughs (with each extracting their pound of flesh). Not to speak about the contrasting colours of money used in completing the transaction.

There are some real estate funds from HDFC, Kotak, ICICI. They are mostly targetted at high networth investors (HNIs) with a minimum investment of Rs 2.5 Million and are closed-ended funds of long duration that invest in real estate projects. Again, beyond the reach of most small investors.

ICICI has a hybrid real estate fund that invests in the equity and debentures issued by real estate companies like DLF, Purvankara and others but its performance is nothing to write home about. A couple of real estate venture capital funds have also been floated by DHFL (Dewan Housing) and Kshitij (Pantaloon) - meant for HNIs.

Last, but not the least, are stocks of real estate companies. Many such companies are emerging out of the woodwork of late with fancy-priced IPOs. They should be avoided like the plague. The leaders (in terms of market cap) like DLF and Unitech don't really have stellar reputations or track records either.

If you like and understand the real estate space (I don't) and want to invest in it, the best bet might be to go for stocks of companies that have already established a good reputation in other group activities - e.g. Godrej Properties, or Mahindra Lifespaces. The chances of incomplete projects or poor construction materials are likely to be less.

That was the long answer. The short answer is: it doesn't.

Stock Chart Pattern - Unitech Ltd (An update)

The stock chart pattern of Unitech Ltd was almost down for the count in end Mar '09, groggily raising its head above the 20 day EMA - after making a bottom at 22 in Nov '08 from a high of 547 in Jan '08. A whopping fall of 96%, from which most stocks are unlikely to ever recover.

The high trading volumes and a sharp rise in the slow stochastics indicated accumulation that could lead to an upward breakout. But I had cautioned investors about a strong resistance zone between 50-60.

Realty sector stocks are not exactly my favourite. Most managements show lack of transparency in transactions, try to take buyers for a ride, use dubious accounting practices, and generate tons of 'black' money. I doubt if Unitech is an exception.

Many investors fell for the hype about realty stocks in 2007 and joined the bandwagon late at highly inflated prices. Some may be holding on, hoping to get back their 'buy price'. The more adventurous among them may have 'averaged down' and put more good money after bad.

Let us look at the 1 year bar chart pattern of Unitech Ltd to check if there has been any significant improvement:-

The stock moved above the 50 day EMA shortly after I wrote the earlier post, and faced resistance at the 50-60 level twice before breaking above it. The resistance level then became a support level, as the stock corrected from 104 on Jun 5 '09 to 61 on Jul 9 '09. The 43 point drop corrected the rise from the bottom of 22 by 52% - close enough to the 50% Fibonacci retracement level.

The Unitech stock has subsequently been in a sideways consolidation pattern and made a higher top of 118 on Sep 8 '09. The rise from 22 to 118 is a spectacular gain of 436% in less than a year. But before one gets too excited about this rise, one should note that this 'spectacular' rise has merely retraced 18% of the entire bear market fall of 525 points.

The stock is just 6 points above its 50 day EMA, which in turn is just 7 points above the 200 day EMA. Even a mild correction can drop the stock below its long term moving average.

The RSI is just below the 50% level, but is rising. The MACD is barely positive. The on-balance volume is flat - indicating that buyers and sellers are evenly matched at current price. The slow stochastic has moved above the 50% level. The technical indicators are signalling the indecision amongst investors.

Bottomline? The stock chart pattern of Unitech Ltd has recovered well from its bottom, but is unlikely to give further huge returns any time soon. A stock to be avoided.

What exactly is the Margin of Safety?

The heading of Chapter 20 of Benjamin Graham's 'The Intelligent Investor' (4th edition) reads: "Margin of Safety" as the Central Concept of Investment.

What is the Margin of Safety as applicable to stock investments? It is the amount by which a stock's price is lower than the intrinsic, or underlying, value of the stock.

There are several methods by which one can arrive at the intrinsic value of a company's stock - and I plan to write a post about it in future. Suffice it to say that none of these methods can give an exact value. At best it will be a reasonably close approximation.

Here is a definition from the master:

'Over a ten-year period the typical excess of stock earning power over bond interest may aggregate 50% of the price paid. The figure is sufficient to provide a very real margin of safety - which, under favorable conditions, will prevent or minimize a loss. If such a margin is present in each of a diversified list of twenty or more stocks, the probability of a favorable result under "fairly normal conditions" becomes very large.'

Some terms may require a bit more explanation. By 'bond interest', Graham means yield from strong corporate bonds. Since the bond market in India is underdeveloped, we will use Fixed Deposit(FD) interest in a public sector bank as an equivalent guideline. 'Stock earning power' is the same as earnings yield, which is the inverse of the P/E ratio.

Enough talk. Time for some concrete examples.

(a) Company XYZ has declared its results and has an EPS (i.e. earnings per share, calculated by dividing the net profit by the number of equity shares) of 10. The recent market rally has taken the stock's price to 150. That gives a P/E ratio of 15.

The earnings yield is E/P= 1/15= 6.7%. This is lower than the current FD interest rate of 8%. The Margin of Safety is a negative 1.3% (=6.7-8). What does it mean? The current yield from the stock is less than that from a risk free FD.

(b) Company PQR also has an EPS of 10. But its price hasn't moved up as much as XYZ, and is currently trading at 100. The P/E is 10 and the earnings yield= E/P= 10%. The Margin of Safety is 2%. That gives an excess of only 20% over the FD interest, which doesn't meet Graham's criterion of 50% excess over a 10 year period.

(c) Company ABC has a lower EPS of 9, and its price is also lower at 63. The P/E is 7; earnings yield= E/P= 14%; Margin of Safety is 6%. This meets Graham's criteria, because the excess of stock earning power over FD yield is 60% over 10 years. The greater risk of owning the stock is adequately covered by the margin of safety.

Does it mean that you rush out to buy Company ABC? Not yet. You still have to perform a detailed fundamental analysis using Graham's criteria mentioned in my earlier blog post about stock picking (link given below).

These examples have been simplified by excluding the effects of inflation and any tax incidence. But the 'Central Concept of Investment' is de-risking your portfolio by maintaining adequate margin of safety for each stock that you select.

Even by using the Margin of Safety method, you may pick a stock or two that go down. That is why Graham has mentioned owning about 20 stocks, so that in aggregate, the portfolio will gain over the long term.

Graham passed away in 1976. How relevant are these figures and methods in today's environment? Apparently, they work just as well, as John Reese has mentioned in his book, The Guru Investor.

Individual investors can tweak the figures to suit their investment style and risk tolerance. Remember that it is just as important to protect the downside of your portfolio while you try to build long term wealth through stock investments.

For those readers, who are beginning to get a little tired of my exhortations towards the slow but steady value investing concept of wealth building, I have some good news.

By keeping a higher margin of safety, even fundamentally weak stocks can be bought when they sink to abysmal depths during bear markets. Just look at the prices of Satyam, Suzlon, Unitech when they hit their recent bottoms, and compare with current prices. But that would be succumbing to the 'greater fool' theory!

Related posts

How to pick Stocks for Investment - Part III

How to build wealth using a buy and hold strategy

Stock chart pattern discussions - hits and misses

In my individual stock chart pattern discussions on Wednesdays, 10 stocks have been covered so far. It may be worthwhile to do a reality check to find out what I had observed and inferred and how the chart patterns actually shaped up.

1.  ICI India - ICI had pierced and closed above its 200 day EMA before dropping below, and was consolidating between the 50 day and 200 day EMAs around the Rs 416 level. I had suggested: Good stock to accumulate in small quantities for conservative, long term investors.

The stock has slowly but steadily moved up well above its 200 day EMA and added about 15%. Nothing great, but can be counted as a 'hit'.

2.  Suzlon Energy - The stock was looking oversold. There was a possibility of a bounce up, but it could also go lower. My advice: Investors should not go anywhere near this stock. Adventurous traders may want to make a punt with very tight stop losses.

After going marginally lower, the stock moved up rapidly with the global rally and jumped up by almost 150%! It is still well below its 200 day EMA in spite of the sharp rise. A 'miss'.

3.  State Bank - SBI was looking like a value buy as it was trading at its book value. I observed the strong support at 900, but did not expect an up move to go beyond 1100.

SBI moved up 40% with the global rally before facing resistance at a previous top of 1400. Another 'miss'.

4.  Unitech - The stock was being accumulated near its 52 week bottom and I expected a move upwards. But advised: Unless the strong resistance between 50-60 levels is overcome, there is no point in entering Unitech.

The stock did move up to the resistance zone of 50-60, but despite two attempts, was unable to cross it. A 'hit'.

5.  Hero Honda - This was one of the few stocks in a bull phase but at 1100 level was looking overbought and due for a correction. My suggestion: New investors may buy on dips. Existing investors should hang on tight and enjoy the ride.

After correcting to Rs 1000, the stock has steadily moved up to Rs 1200 and continues in its bull phase with all three averages moving up.

6.  Reliance Capital - I had expected the stock to face some resistance at 490-500 before moving up to 625 level, and had advised short and long term investors to get in at the next dip.

Reliance Capital sailed upwards to 580, reacted to 490 and then moved up to 625, where it faced resistance. I will count that as a 'hit', though the short term gain was only about 30%.

7.  Infosys - Despite a sell-off due to disappointing results that dropped the stock below its 200 day EMA, I had observed a 'rounding bottom' bullish pattern and advised: Wait for the selling pressure to subside before entering the stock on the dip. Be prepared for a longish wait for profits.

The stock smoothly moved up from Rs 1300 to Rs 1600, well above its 200 day EMA. Another 'hit'.

8.  DLF -  A 'rounding bottom' bullish pattern was observed but the failure to cross the resistance level of Rs 300 led me to suggest: If you haven't got rid of your DLF holding yet, you may get one more chance to do so. There is a possibility that this rally is taking a pause before trying to move higher again.

The stock moved down to Rs 220 before moving up to Rs 269 to provide one more chance for investors to get out. A 'hit'.

9.  Bharti Airtel - The upward rally looked too steep. The lower volumes remain a concern. The 20 day EMA did move up above the 200 day EMA as expected. My advice: An existing holder can keep riding the rally or book partial profits.

The stock has continued its upward move with a slight dip for 2 days. A 'hit'.

10. Balrampur Chini - The 50 day EMA did move above the 200 day EMA but instead of a correction, the stock is undergoing a triangular consolidation before the next up move. My suggestion: I would wait till the election results come out before entering.

It has been only five trading sessions since my discussion - too early to draw conclusions. A 'neutral'.

Without trying to be immodest, not a bad performance at all. Comments are welcome.

(Note: Please right-click on the charts and open them in a new tab or window for a better view.)

Stock Chart Pattern - Unitech Ltd.

This is the fourth in the series of stock chart pattern discussions on Wednesdays. Why did I choose an over-hyped but down-in-the-dumps real estate stock like Unitech? The answer will be apparent when we take a look at the interesting 6 months chart pattern below:-

(You can right-click on the image above and open it in a new tab or window for a better view.)

After falling off a cliff in Oct '08, Unitech rose sharply to above 50 on good volumes before falling rapidly again to make a new low in end Nov '08. Nothing remarkable so far - many other stocks behaved similarly in the Oct-Nov '08 period.

What happened next is the interesting part. The stock entered a sideways consolidation pattern - much like the Nifty, of which it is a part. But take a look at the volumes (overlaid on the price chart).

Significant increase in volumes without a corresponding rise in price level usually indicates 'accumulation'. The 50 day EMA is far below the 200 day EMA and the gap is increasing. That means, sooner or later the stock is likely to break up wards.

Who is doing the buying? Good question. A lot of retail investors stuck at higher prices may be buying at current low levels to average down - which is a risky policy. But that alone wouldn't have created the high volumes. My guess is that insider buying is happening as well.

Why? Because Telenor of Norway is interested in Unitech's nascent telecom business. Recently they made a substantial lump sum payment to Unitech. That will ease some of the liquidity problems in the real estate business.

The ROC is neutral. RSI is in the negative zone. MACD is also marginally negative. But the slow stochastics has moved up strongly from the oversold zone.

The stock has been facing resistance at the 20 day EMA since going above it briefly in Dec '08 and Jan '09. It has again penetrated the 20 day EMA from below. Penetration from below of the 50 day EMA and a couple of closes above it will indicate that the buying momentum is gaining control.

Bottomline? Unless the strong resistance between 50-60 levels is overcome, there is no point in entering Unitech. In the longer term charts, the stock has made a 'mountain' like pattern. That indicates that it will stay in the dumps for a long time and may never regain the previous highs. If I were you, I would stay far away from such speculative stocks.