Query - Colgate Palmolive and Allahbad Bank

I have received a query today from one of the investors for Colgate Palmolive and Allahbad Bank. Please find my observations below:

Colgate Palmolive:
Colgate seems to have retracted back and after falling from 1500 levels it is close to its base at 1200 and seems to have spent considerable time and energy. This suggests that there is enough in the stock to sustain it above 1200. While the stock may give time to provide profits the same should not be sold if you are holding it. But the stop should be below 1160 levels below which it might turn extremely weak.

Allahbad Bank:
The stock seems to be in a basing pattern after falling quite badly over last 4 months. There is a huge base between 65 and 75 which will give it enough strength and is very attractive for a long term investor. However it might not be suitable for momentum or swing trading.

October Idea - Reliance Industries

We are back to our low risk trading methodology with a mainstream recommendation. The script according to our statistical models look oversold. When we look into the charts we find that stock is sitting right at the upper trend line giving it support.

Over a period of time the stock might still go to 795-800 levels where we should further average. The stock should give good returns in the medium term up to 860 levels. Also stock has a huge base at 780 levels which should keep it good.

Book profits in BPCL and Yes Bank

Nobody has lost in the markets if he has booked profits. That is the principle I have learnt the hard way. Last week I recommended BPCL for a target of 335/- We recommend booking profits in the counter as it has met the short term targets. Also book profits on Yes Bank which was recommended 2 weeks earlier.

NRB Bearing - An ascending triangle in making

On the request of some of the fellow traders I am posting the chart of NRB Bearings. In the daily chart there is an ascending triangle in the making. In terms of  base the stock has a strong support at 31. The stock is all set to breakout of 34 area which will push the stock to 39 levels where there is a lot of resistance, Hence one should add the stock with stop at 31 and those with not so long term view can exit the counter around 39 levels.

Globus Spirits - Stocks not in limelight but attracts institutional interest

Another in the series of being an unknown yet closely followed by institutions is Globus Spirits Ltd. GSL is engaged in the business of manufacture, marketing and sale of Industrial Alcohol comprising Rectified Spirit
and Extra-Neutral Alcohol, Country Liquor, and Indian Made Foreign Liquor (IMFL). Globus Spirits Ltd (GSL) is amongst the leading players in the Alcohol industry in North India.

The stock is currently trading at Rs.80/- levels. Although comparision with McDowell or any of the premium brands is completely uncalled for since the branding is very rural and countryside hence the kind of premium associated with McDowell or any of the imported liquor will never be achieved by this company. Also many of the analysts point out that the penetration in Indian market is very low. To that my argument is simple - one, it is true of India for each of the industry such as Auto, retail or for that matter cigerrates as well. India historically always had lower penetration levels for almost every industry due to our local consumption pattern rather than a national one. Only in few consumption goods we have been able to achieve some sort of a national pattern. Also the income distribution or its inequality to be specific plays a role in this pattern. Secondly, even if there is an increase in per capita spending on liquor in India, Globus Spirits would not be best positioned to capitalise as the new consumers are normally attracted by premium imported brands and not really the local ones which are perceived to be of low standard.

Despite making the arguments above and considering that margins of Globus have been under pressure for some time resulting in lower year on year profits, the company has a lot of intrinsic value. The EPS for last year was 14.5/- which implies a very low P/E ratio of 5 levels. Also the book value of the stock is 120/- implying a P/Bookvalue of around .67 which implies that the stock has very limited downside. This might be the precise reason the stock has attracted significant institutional interest.

SBI and IDFC are particularly keen on the counter having holdings of around 8% each in the counter.

Shareholding belonging to the category : "Public and holding more than 1% of the Total No.of Shares"

No.	Name of the Shareholder	Total Shares held	Shares as % of Total No. of Shares
1	SBI Emerging Business Fund	1,916,091	8.33
2	IDFC Premier Equity Fund	1,823,068	7.93
3	Templeton Strategic Markets Fund IV, LDC	0	0
	Total	3,739,159	16.26

Also the promoter holding is healthy 67% which gives a lot of comfort to the investors in the stock. For anybody having a long term view can take position in the counter and take advantage of the consumption story. Again I am recommending a stock keeping in mind that there are substantial institutional investors around making the stock less risk prone to accounting frauds.