Sunday, June 29, 2014

Bajaj Hindustan: Sugar Sector Review

The government on Monday, June 24th, announced several measures to bail out the ailing sugar industry: While the rate of import duty was more than doubled from 15 per cent to 40 per cent, the mandatory ethanol-blending cap was increased from five per cent to 10 per cent. The notifications in this regard will be issued shortly after the industry assures of clearing farmers’ Rs 11,000-crore dues at the earliest. (Source: Business Standard)

While such measures could act as sweeteners for Sugar companies, it is also known that sectors like sugar undergo cycles of high and low performance. I feel it is time to review one of the seemingly promising stocks from the Sugar Sector right now, Bajaj Hindustan here:

image

If we look at its last 3 years chart, it is just shows the pain is has been undergoing, from Rs. 80 to around 10. But since last 6 months, that trend seems to be somewhat changing. Looking at its long term chart of 8 long years starting 2007, it shows the volatility it saw:
 
image

But to me, the most eye catching part is the base that the stock has been forming. Around Jan 2009, BajajHind took support at the price of around 37-38 twice and from it again reversed its trend then to touch around 250 levels. From there, it saw a one way down trend to around the price of 10, 37-38 now acting as a resistance. Also, it shows that BajajHind is seemingly forming a rounding bottom, and if it breaks above its long term resistance price of around 37-40, it may well imply breaking out of the rounding base, and also change in its trend. As Sudarshan Sir keeps telling us, no stock can change its longterm trend overnight. It first needs to form a base. That is exactly what this stock seems to be doing. May be too early to say, may be not! Time will tell..

In any case, isn't it worth keeping a watch on?

No comments: