RECENT EVENTS: Positives yet Factored

• 25 February 2012: Welspun expanding Little Rock pipe manufacturing facility in US
• 19 March 2012: SEBI revokes ban on Welspun Corp promoters
• 22 March 2012: Welspun Corp wins Rs 1,217 cr orders

We believe that the recent positive news flows in Welspun Corp are well factored in its current market price and one holding long positions in Welspun Corp should book profits.

The stock has given big move on all the news flows and & we do not see any trigger left in the short term to give rally to the stock.

BUY THE RUMORS SELL THE NEWS: The stock was bought on the rumors in advance and has given a run of around 130% (Low: Rs 65, High: Rs 150), we believe the positive news flowing in the market are well factored and provides an opportunity to sell the news and take some money off the table.

Technical View

• Prices have spurted from a low at 65 in Dec 11 to a recent high of 156, making for an almost perfect 62% retracement of the last big leg of decline.
• This big rise, more or less accounts for all the positive news that has collected in the stock in recent times. At the Feb 12 high, the stock improved by 140% over the low.
• To its credit, the decline from the highs at 156 has been rather slow and so far prices have dropped only to 127, which accounts for only 25% erosion of the recent gain.

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