And being the largest player in the domestic sector, Ballarpur is well poised to take the full advantage of improved scenario.The demand for paper started showing an improvement in the second half of last year which provided the players with an opportunity to increase their selling prices.

Besides improving demand, what has helped the sector is an upward move in international paper prices which have risen steadily improved from $600 per tonne to $700 per tone.A recovery in South-East Asian economies has played a major role, and this has reduced the cheap imports drastically which has directly affected the domestic prices.The performance of Ballarpur Industries has already reflected the improvement. For the third quarter (January-March 2000), the company's performance has been extremely impressive.pThe company recoded a sales of Rs 316.94 crore for January-March 2000 period-a growth of 5.23 per cent over corresponding period figure of Rs 301.16 crore.While sales grew by 5.23 per cent, a smart jump in operating profit was impressive.Operating profit margins (OPM) improved from 11.20 per cent to 15.86 per cent. Overall, for the nine period (July-March), OPM stood at 15.05 per cent.For the latest quarter, profit at the net level risen from Rs 5.26 crore to Rs 15.24 crore.

The impressive performance was mainly on account of better cost control and better realisations.For the future, the outlook appears positive. With recent restructuring, the cost is likely to remain under control for the company, and with improved realisations, profit margins is likely to improve further.Benefits are also expected from the acquisition of AP Rayon's pulp business in form of raw material supplies. The company may also go in for a private placement of non-convertible preference shares to re-pay high-cost debt.

This should provide some cushion to its interest burden.Overall, with the outlook for the sector remaining positive, the company is expected to do well in the near future, and the stock market will have no option but to act accordingly.Technically speaking, the stock has managed to form higher bottoms, and crossed short-term resistances. On the upper side, it has a strong resistance at Rs 90, and above this, the long term outlook for the stock will turn bullish.On the downside, it has an immediate base at Rs 60, and and the next support is at Rs 45 below which one can make an exit.