Friday, September 15, 2006

Hindustan Zinc - Divergence



The divergence between the rational and the irrational seems to be showing slowly in the market. a classic example of this case would be in Hindustan Zinc. A stock, which has always been my favorite in the metal segment, mainly because of volatality and a strong co-relation to international prices. Having seen this occuring in the past, I prefer LME to give me a cue on the price movement in Indian markets. The prices in the London Metal Exchange has fallen from its high of approximately 3650 to 3250, a fall of roughly 11%. However, over the past few days, Hindustan Zinc has actually rallied from its earlier fall. Defies my idea, but however, there seems to be some irrationality. The stock fell from a high of 660 to current levels of 606, a fall of approximately 9%.

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