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What stocks to buy if FDI in railways go through?

Pritesh Mehta, Sr. Technical Alayst at IIFL tells whether it is advisable to go long on some of the railway stocks

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Manu Kaushik Mumbai
Last Updated : Dec 30 2013 | 12:46 PM IST
Railway stocks are on a firm track today and trading up to 7% higher on reports that the government may allow foreign direct investment (FDI) in the sector.
 
Kalindee Rail Nirman, Titagarh Wagons, Texmaco Rail and Engineers, Hind Rectifiers, Kernax Microsystems and Stone India are up between 3-7% on the Bombay Stock Exchange (BSE).
 
The Cabinet Committee on Economic Affairs (CCEA) is likely to approve a proposal on this, albeit slightly watered down, early next month, according to a Business Standard report.
 

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The 100% FDI limit proposed by the Department of Industrial Policy & Promotion in its draft has been scaled down to 74% in certain areas of the railways. The foreign money would be allowed only in construction and maintenance of railway projects, and not in operations, added report.
 
Among the individual stocks Kalindee Rail Nirman has surged 7% to Rs 71, followed by Titagarh Wagons and Kernax Microsystems are up 6% at Rs 110 and Rs 47 respectively.
 
Pritesh Mehta, Sr. Technical Alayst at IIFL tells whether it is advisable to go long on some of the railway stocks
 
Also, Power grid and Idea Cellular got their respective shareholder's nod to for increasing the aggregate investment limit of foreign institutional investors (FIIs). Should you buy these stocks?
 
SmartInvestor : Market erased its early gains quickly after opening in green, Nifty is holding onto 6300 mark. What are the near-term levels to watch out on key indices?
 
Pritesh Mehta : Despite a major breakout at the start of the month, Nifty is unable to build on the gains. Current run up is lacking participation from the leadership stocks. Index is struggling to close above the previous breakout levels of 6,360 for three consecutive weeks now. In order to confirm trend reversal, Nifty needs to surpass and sustain above the congestion zone 6,300-6,350 where steady supply is visible.
 
SmartInvestor : Broader markets are on the move. What would be your top picks from among small-caps and mid-caps?
 
Pritesh Mehta : India Cements: India Cements has gone through a sharp correction Since May 2013, it built a base at lower levels and has now broken out. It is one of the few stocks that has the potential to move up even if the Nifty runs into a hurdle or it goes back into a trading range. Buy for target of 72, 75
 
SmartInvestor : How is Sesa Sterlite placed on technical parameters today? The stock is in focus after the Supreme court allowed mining to be resumed in Karnataka
 
Pritesh Mehta : A close above 207 would lead to a bullish H&S breakout on the daily chart. Buy above 207 for target of 230 with SL of 199.
 
SmartInvestor : Is it ok to go long on Power Grid stock? It got shareholders' approval to increase the limit of FII to 30% from 24% currently

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First Published: Dec 30 2013 | 12:32 PM IST

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