How to trade Tech Mahindra, Aurobindo Pharma before Q2 results

Also, should you be selling or holding BHEL, Ashok Leyland after the duo dissapointed the street with their Q2 results yesterday

State-run capital goods major Bharat Heavy Electrical Ltd posted weak Q2 numbers yesterday after which the stock was downgraded by many brokerages. BHEL's Q2 FY14 numbers were quite weak due to one-off items worth Rs 5oo cr and high fixed costs. The profit after tax (PAT) declined by 64% YoY and 2% quarter on quarter (QoQ) to Rs455 crore while sales at Rs8,980cr shrunk by 15% yoy, and were marginally lower than street expectations. Operating margins sipped by 13.4% yoy due one-offs related to BHPV merger (Rs1.9bn) and provisioning for doubtful debtors worth Rs3bn.

India Infoline has a 'sell' rating on the stock with a target of Rs123 while Sharekhan has a 'hold' with a target price of Rs.150. At 11:34am, the stock was trading at Rs136.05 down by Rs 4.40 or 3.13% on the BSE.

Auto major Ashok Leyland which also came out with its results yesterday, reported a net loss of Rs 25.05 crore in the second quarter ended September, with the commercial vehicles segment remaining hit by a demand slump. The stock crashed 4.075 yesterday and is down 3.11% at Rs. 17.

Tech Mahindra, which is India's fifth biggest software manufacturer by market capitalisation, and pharma major Aurobindo pharma are set to come out with their September quarter results later in the day. Market disounts earnings in a big way and valuations ahead will be determined by earnings today. So, Mohit Gaba, Independent technical analyst & trader while speaking to Manu Kaushik, shares his strategy for trading the counters ahead of their Q2 numbers.

SmartInvestor: Market is on a consolidation for the past two sessions now. What are the key levels to watch out now?

Mohit Gaba : The Market is in a broad range of 6030 - 6350, until we don't break out of this range it will be difficult to trade the index, We have see a choppy market the last 2 session

SmartInvestor : What do charts indicate for the BSE mid-cap and small cap indices today. What are your top picks from mid-caps for a short-term perspective?

Mohit Gaba : The mid cap and small cap index look stronger than the Nifty, this could be due to the big FII exposure the front line index has. Some mid cap picks are Sun TV, ABirla Nuvo, Rpower, Tata Global Beverages. Have a 10% kind of stop loss on these stocks as the market is on shaky ground

SmartInvestor : How should one approach Aurobindo Phar, Tata Coffee, Eicher Motors, Tech Mahindra today. All counters are expected to come out with September earnings results?

Mohit Gaba : Aurobindo pharma is in a strong up trend and long positions could be held. one can have a trailing stop loss at 235, Eicher motors also looks good one can have a stop loss at 3850 and continue to hold longs, Tech Mahindra is also in an uptrend and the rupee falling is helping it, have a stop loss of 1520 and trade on the long side.

SmartInvestor : How are you trading BHEL, Ashok Leyland post results?

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