How Gujarat based company stocks are riding high on the Modi wave?

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How Gujarat based company stocks are riding high on the Modi wave?
Gujarat Gas: Quotes, News
BSE 791.50BSE Quote23.75 (3.00%)
NSE 793.45NSE Quote22.4 (2.82%)
Gujarat Mineral Development Corporation: Quotes, News
BSE 139.00BSE Quote2.25 (1.62%)
NSE 138.70NSE Quote1.75 (1.26%)
After the Gujarat based Adani Group of companies rallying to phenomenal highs in the past few weeks, it's now time for other Gujarat based company stocks to rally on hopes that Gujarat Chief Minister, Narendra Modi would be anointed Prime Minister in May.

On Friday, Gujarat Gas was up a whopping 20 per cent and was locked at the upper end of the circuit limit with only buyers in the counter. The company supplies piped gas to as many as 413,000 retailers and CNG to around 200,000 customers.

Gujarat Mineral Development Corporation also joined the bandwagon rallying 4 per cent on Friday and Gujarat NRE coke was up 3 per cent.

The Adani Enterprises stock has rallied from Rs 373 on April 7 to a close of Rs 437 on April 11. Ditto for other Adani Group companies including Adani Power and Adani Ports. Now most of these stocks have seen a heavy surge in volumes implying renewed interest.

The hope is that the country would get a Gujarati Prime Minister in Narendra Modi has fueled a rally in these stocks.

It's not known how these Gujarat based companies would benefit from Modi becoming the Prime Minister. What is clear though, speculators have got one more opportunity to make hay while the sun shines.

Dealers say that some of the stocks are highly over valued and it's best to avoid them. These stocks are priced at price to book value that are way over that of peers. But, bulls are unlikely to bother about fundamentals as it is actually easy pickings at least until the elections results are known. What happens after the elections would be another story altogether. However, until then it is best to swim with the tide.

Story first published: Monday, April 14, 2014, 8:51 [IST]
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