Punj Lloyd coming with spectacular turnaround results?

In punj Lloyd, some thing cooking positively? Yes, technically when observing all the data it tells us the same. Before results the stock rallies on the expectations of the better results and it is happening from last several quarters. This time things looks little different and the data too suggests that! Punj lloyd likely to rebound, along with the broader markets.

What are the new findings?

Punj Lloyd:

1. Below Rs.100/- heavy accumulation going on.
2. Heavy buying seen when it drops below the Rs.100/- and the delivery quantities too increasing means big goons start accumulating it and some weak hands going out.
3. The average ten day delivery quantity in terms of percent is 25.5 whereas the five day is around 31.
4. In this very sharp correction interesting point in this stock is that there is no ‘shorting’ in Futures. OI is hovering around the 50% in Feb series till now. The stock is falling from Rs.101/- to Rs.95/- + but will not be any significant shorts in this stock right now which indicates that big guys thought that it is not prudent to short below Rs.100/-
5. On fundamental side, in the recent interviews after the Q2FY11 results by the Atul Punj stating that ‘Worst is behind us’
6. Libya orders picking up, Oil rates are moving towards the northward direction, having huge order book etc., all are looking positive. Once, the one good quarter comes in with good execution the stock will be re-rated.

What is the current stance of FIIs & DIIs

In 2008, we observed that markets fell due to the huge unwinding of positions by FIIs due to the problems in US. Right now, markets also facing the same problems and technically charts also looking in the same way as we have in Jan 2008. Now, the big question is that we are going to have double dip? In my view, answer is NO. There are lots of difference between the fall in 2008 and 2011.

1. In 2008, FIIs pulled out their money from any type of instrument either it is equity or debt. They need money to sustain at their home…
2. In this fall, FIIs are selling heavily but they are NOT pulling out money from India. They are just converting the funds from equity to debt. Yes, it is a very good sign and gives lots of cushion for us.
3. In 2011, FIIs Net sell Rs. -5429cr from equity till now, whereas they bought Rs.9692cr in debt which is NET INFLOW. They are just shifting to debt to minimize their risk as Indian markets valuations are little expensive when compared to the global emerging markets.
4. So, when the global issues settles and valuations are attractive then they will shift from debt to equity.
5. when observed the DII data, it is also wondering that they are too interested towards the debt as for the 2011, they NET Buy Rs.199cr in equity and NET buy of Rs.37811cr in debt. Means there is liquidity but is shifting towards the safe instruments. 
6. There are some more items to talk about positively like positive global GDP growth, US data is positive right now when compared to the 2008 conditions etc.,

Conclusion: No need to switch the panic button, there might be some more sell off but it only for time being and rally likely to continue. Globally things need to settle down hence it takes time to have that V shaped rebound. In the mean time we may have some technical rebounds which finally end with another wave of selling. Don’t book losses in any counter you can hold your positions are the correction is already done more that 10% in broader indices we may have another 5-10% but once the rally starts it is V-shaped and you can not exactly find the bottom hence hold your positions. If you have cash, select the good stocks like Punj and start investing in SIP mode with a time base of 3 months.

With thanks

Be and make