With the advent of civil aviation, the contribution of the shipping companies in passenger transport has become negligible. For example, about 1,200 passengers travelled from Chennai Sea Port to Port Blair (Andaman & Nicobar Islands) every week in the year 2004. This is very negligible when compared to rail transport or air transport. However, shipping companies carry heavy cargo, including dangerous and inflammable liquids like crude oil. This is not possible by air transport.
In our previous “Hot or Not?” articles we discussed about Indian automobile and aviation stocks. In this article let us discuss about shipping companies.
Listed companies in India:
At NSE, following shipping companies are listed:
- ABG Shipyard
- Bharti Shipyard
- Great Eastern Shipping
- Great Offshore
- Mercator Linings
- Shipping Corporation of India
- Shreyas Shipping & Logistics
- South East Asia Marine & Construction
- Varun Shipping
Of these, Mercator Linings belongs to ‘S’ group of BSE; Shreyas Shipping belongs to ‘B2’ group. We discuss the rest of the stocks.
Great Eastern Shipping’s offshore business was demerged in 2006 and Great Offshore was formed. Accordingly, for every 5 shares of GE Shipping held on record date, 1 share of Great Offshore was allotted. This was done by deducting Rs.2 from face value of Rs.10 of GE shipping. 5 shares of Great Offshore with face value Rs.2 were consolidated to form 1 share of face value Rs.10; similarly 5 shares of GE shipping with face value of Rs.8 were consolidated to form 4 shares of face value Rs.10.
Because of this demerger, GE Shipping was relisted in November 2006.
The following table lists percentage loss these stocks witnessed during the huge correction in May and June 2006.
| Scrip | % fall May ‘06 | % fall June ‘06 |
| BHARTISHIP | 22.87 | 17.30 |
| SCI | 13.93 | 0.15 |
| SEAMECLTD | 1.37 | 25.46 |
| VARUNSHIP | 0.24 | 16.53 |
| NIFTY | 13.68 | 1.86 |
It can be seen that, except Bharati Shipyard, the other companies did not lose much compared to Nifty in May 2006.
After the correction, the stocks have gained reasonably, as shown in the following table:
| Scrip | 3 month % gain | 6 month % gain |
| ABGSHIP | 45.17 | 67.01 |
| BHARTISHIP | 15.84 | 59.55 |
| GESHIP | 14.30 | 69.92 |
| GTOFFSHORE | 8.44 | 69.37 |
| SCI | 0.53 | 24.76 |
| SEAMECLTD | 17.85 | 25.45 |
| VARUNSHIP | 17.71 | 20.67 |
NONE of the shipping stocks returned negative results in the last 6 months.
Bharti Shipyard:
Bharati Shipyard’s monthly chart shows that the stock had completed its 2nd wave (corrective decline). It is still bullish for the long term, as can be seen below.
This stock went up from a low of 108.80 to a high of 528 or or by 485%. After a year’s consolidation, it has broken out in July 2007, but without much volumes. It just implies that further uptrend may not be as strong as the previous one. Nevertheless, the stock is likely to move up from these levels; For the long term investors, 854 should be the target.
GE Shipping:
This stock too, is bullish in medium term chart. It appears to have completed wave 2 as it has already closed above 61.8% retracement. A weekly close above 369 with good volumes will ensure an upside breakout. The stock may be expected to achieve a target of 597.
Great Offshore:
The stock is in consolidation pattern, with a possible upside breakout. When that happens, it will be a confirmation of “bullish flag” pattern. See my earlier article “Top 10 Hot India Stocks for July 2007” in which we discussed about this pattern with the daily chart of Evenix Accessories Limited. So medium term investors can stay invested in the stock.
Shipping Corporation of India:
The stock had broken out in February 2007 as can be seen in the chart. In the last few months it has formed two lower highs and lower lows; but it can be seen that the stock has not yet closed below the support trendline even once. This is an indication that the stock is still bullish. Also, at support levels, a bullish “three outside up” candlestick pattern has been formed. This is yet another confirmation of bullishness. The stock can be expected to touch 291 in the medium term.
South East Asia Marine & Construction:
This stock has had a “rising channel” pattern in the weekly charts as shown below.
The prices fluctuate between two parallel trendlines which have positive slopes (moving upwards). The stock will continue channeling upwards until it is able to break either the upper or lower trend line. An upside break is bullish, while a downside break is bearish. There is no downside breakout yet, and we have to look for a confirmation on the upside.
Varun Shipping Company:
This is the only stock that is yet to encounter a resistance breakout in the medium term charts. It has made higher highs and higher lows; prices have penetrated the resistance trendline; but the stock has failed to close above the resistance line.
The stock had fallen from a high of 99 in May 2006 to a low of 49.40 in March 2007 (50% fall when the Nifty gained about 25% during this period!). Higher highs and higher lows have been formed, indicating the stock is bullish; but the stock failed to break its resistance at 68.30 on weekly close basis. But it is still bullish in medium term charts.
Conclusion:
All the seven stocks discussed above are good for investment from a medium term perspective.