Rally in Hindalco mere technical bounceback; further upside unlikely: Harendra Kumar

In a chat with ET Now, Harendra Kumar, Managing Director-Institutional Equities, Elara Capital, shares his views on Hindalco. Excerpts:

ET Now: The two stocks yesterday that really surprised the street with the move was Hindalco as well as Tata Steel. What is the sense that you are getting about fundamentals? Would you wait out for September 1, hear out what really happens and then perhaps jump in or are they a blind buy?

Harendra Kumar: No they are not. In fact if you see, we have had a sell in Hindalco right from 200 levels because fundamentally again like I mentioned, the stock was actually discounting FY17. So this event was only a trigger for the stock price to correct and you see significant topping around Rs 200 for Hindalco. What you saw yesterday was only a technical bounce, a bout of short covering which you will generally see when stocks correct sharply. So on every rise, you will see long term investors trying to come and sell their positions again. What it has done is structurally, it has broken the framework for investing in metal stocks. I do not think from here on, Hindalco will be such a secular run-up. You also have to see how the QIP will go through because we had some fundraising plans from here on as well. So lot of events there have to fall in place before the stock starts to move up in a secular manner.