Plantations - Stay away until the direction is clear

Plantations were the best performing sector in 2017. But the exuberance created by way of price action in the Stocks has not been able to be supported by Profit growth. Additionally the newly emerged tension between Iran and the US has made the Iranian currency to be highly volatile. Apart from this how our Exporters maintain the shipments flowing to the country needs to see clarity in the short term. The effects of adverse dry whether in our closest rival producer i.e. Kenya is back in business better than  last year. As they were faced with the drought last year the prices for all elevations fetched above averages primarily during April and May of 2017. Comparatively this year it is not so. Traditionally the volumes of tea at the Auctions increase in May, which sparks a momentum to follow through in the months ahead. With lower prices it is not encouraging to expect higher tea volumes coming to the auctions throughout this month. On a positive note the Prices between Jan and March of this year had helped the plantations to record a higher turnover but the reflection of this performance may come in the results in the Quarter ending June 2018. Even then the the important factor will be the annualized performance. For those Plantation companies with a combination of Tea and Rubber, the bullish world oil prices is a positive signal. But it has not turned into Profits at Estate level as yet. These practical issues  are reflecting at the moment in the Price Chart of the Plantations sector, where a long consolidation is taking place since the retracement that took place in October of 2017. At present it is important for the Index to find support between 900 and 920 points. Any breakdown below will test the next support area of 800 and 845 points. For the index to head higher, a break out above 973 must take place. As such it is ideal to stay out and watch.

ALUMEX - Under pressure

Momentum in the Market has a telling effect on Alumex for the moment. Any positive sign in fundamentals will test the fate of the counter in the short term. An important support was broken. Paving the way for the stock to be under threat by the bears. 16/- acts as a psychological support. It is still early to initiate a buy after the trend failure. Let's watch.