Stock Outlook: Stocks that signal the sell trend

by khalid on 12/09/2011 · 0 comments

The signs of weakness remain strong within the markets, both Nifty and Sensex, as they signal strong sell bias in some of the major stocks. The global macro scenario combined with the absence of any major and significant trigger in the markets, the pessimist sentiments shall prevail for some time before things normalize.

Despite strong fundamentals and great prospective growth paths, certain companies have faced a large stoop in their stock prices and appear as weak stock mainly because of the industry in which they function. The situation for such stocks is likely to prevail for some time and they include the cement and the power sector primarily.

Ambuja Cements, Ultratech Cements and ACC are the most affected within the cement sector owing to overcapacity of the segment but stocks like Grasim Industries; India cements etc still find favor. Sluggish demand in real estate, lack of government projects, excess capacity has plagued the sector while high interest rates pressurize the supply side further.

Power sector stocks face the issue on the supply side while demand continues to rise. Capacity addition and growth are the major hurdles in the path of power sector presently.

‘Bell the Bull’ says that it would be a mistake to sit on these stocks and wait for them to bounce back in the near future. The sector is more likely to underperform and appear unattractive in the coming times. Therefore it is advised to sell and utilize the proceeds into other quality stocks in the Nifty which are at a good bargain level.

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