This does not mean that other players in the sector have done well on thebourses. Bajaj Auto's scrip performance was far from impressive. For thelast eight months, the stock has been on a downward spiral, and touched afive-year low last month. For TVS Suzuki however, except for the last twomonths, the performance has been impressive.

For LML, while a fight at the management level was partly responsible for adepressed stock price, the fact that the financial performance was belowmarket expectations also had something to do with it. For instance, duringthe second quarter (July-September 1999), the company sold 69,138 units.

In the corresponding period last year, the same figure stood at 80,487unit. The fall was significant at 14.11 per cent. Not only this, even if onewere to compare the figure with the first quarter, there was a drop of 6.73per cent. Sales during the first quarter (April-June 1999) was 74,119 units.While the volume showed a significant fall, pressure on realisations, andrising cost also put a pressure on profit margins which took a severebeating.

During the first half, OPM stood at 6.93 per cent. Last year, the samefigure stood at 8.69 per cent. For LML, margins have worsened in the secondquarter. OPM have fallen from 8.2 per cent to 5.59 per cent. The primereason for decline a margins during the second quarter is an inability tocontrol cost and rising competition.

In the immediate future, the situation is unlikely to improve drastically.The company will be introducing new models of scooters and a 4 strokemotorcycle. While these steps are welcome and augur well for long-termsurvival, immediate results are unlikely.

From the stock market point of view, the main factor which had beenaffecting the stock in the last one year has been cleared. In any case, thesplit between Piaggio and the Indian promoters has already been fullyfactored in in the stock price. So this factor would not affect the stockmuch in the near future. The only thing that would determine the price wouldbe the company's own performance. And any improvement would be welcomed bythe stock market.

As far as the technical position is concerned, the stock has been in a majornegative trend. For a period of more than nine months, the stock has movedin a channel of Rs 44-Rs 66. A break-out on either side would decide itsmedium term direction. On the upper side, once it crosses the Rs 66, itwould face a major resistance at Rs 83. And above this level, the nextresistance for the stock is at Rs 172. As for the downside, the stock has astrong support at Rs 35.

Deepak Singh Tanwar