The core sector and cyclical stocks are back in the reckoning. With the signs of economic revival round the corner, the party has begun in many core sector stocks. Core sector, banking and heavy engineering stocks like Reliance, State Bank, Larsen & Toubro, Tisco, BHEL and Telco have been in the limelight in the past few sessions. Further, the firming up of the aluminium prices overseas has prevented primary aluminium producers in the country from withdrawing the discounts being offered earlier, thereby resulting in higher realisations. Select aluminium scrips like Hindalco have responded well and have staged a comeback on the bourses.Reliance: Back in favour
The stock is back with a bang and has attracted heavy institutional interest in the past few sessions. The stock has, in the past 6 trading sessions, zoomed from a low of Rs 120 to high of Rs 154 and is close to its 52-week high of Rs 159. Factors like the upward revision in polymer prices, re-rating by foreign institutions like GoldmanSachs and the company's appearance in the top 50 list of Unctad has helped the stock stage a comeback on the bourses.
Goldman Sachs has upgraded the rating of Reliance shares to `Asia recommended list' from `Market Outperformer' list and Reliance is the first Indian company to be raised to this level. There has never been any doubt about Reliance's strong earnings growth and its ability to service a large equity. The stock took a tumble partially due to the shift to the fast growing pharmaceutical, FMCG and software sector stocks. Even after the recent rise in the prices, Reliance's stock trades at an attractive price-earnings multiple of less than 10.
L&T: FI-driven rally
Hopes of an economic turnaround have seen the construction and engineering major Larsen & Toubro make a smart comeback on the bourses. The stock has risen by a whopping 36 per cent in the past seven trading sessions from Rs 175 to the current level of Rs 239 on the BSE. The stock, even after the recent spurt, is currentlytrading at an attractive price-earnings of just 12.5. The stock, however, is still far off from its 52-week high of Rs 280. The rise in the stock has been sudden and driven by heavy institutional buying.
Tata duo back in reckoning
Tata Steel and Telco, have bounced back on the bourses. Telco, on the back of a successful launch of its small car Indica, has shot up from Rs 129 to Rs 163.8 on the BSE. The scrip froze at the upper end of the circuit filter at Rs 163.8 on the BSE. Tisco, too, has seen renewed buying on the back of a revival in industrial activity and has zoomed from Rs 75 to end close to the three-figure mark. Although Telco is currently available at a very high price-earnings of around 120, improvement in the company's financials has led to buying at the counter. Tisco's stock is currently going cheap at Rs 99 and is being discounted by a low price-earnings multiple of around 17.5.
Copyright © 1999 Indian Express Newspapers (Bombay) Ltd.
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