Sify Technologies: Sell Into Ill-Fated Momentum Rally

(6min)

Summary

  • Months ago, a heavily discounted and highly dilutive rights offering caused Sify Technologies U.S. exchange traded ADS to crater by 75%.
  • On Tuesday, the ADS recovered a good chunk of their recent losses in an epic momentum rally after the company disclosed a certification by AI-bellwether NVIDIA Corporation.
  • While there's certainly nothing wrong with becoming "India's first DGX-Ready Data Center partner certified for liquid cooling", near-term benefits to the company's financial performance are likely to be limited.
  • With momentum traders likely leaving for assumed greener pastures sooner rather than later, I expect the ADS to give back most of Tuesday's gains over the next couple of weeks.
  • Consequently, I am downgrading the company's ADS from "Sell" to "Strong Sell".
  • Looking for a helping hand in the market? Members of Value Investor's Edge get exclusive ideas and guidance to navigate any climate. Learn More »

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Note:

I have covered Sify Technologies Limited, or “Sify” (NASDAQ:SIFY), previously, so investors should view this as an update to my earlier article on the company.

Almost three months ago, I advised investors to participate in a heavily

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This article was written by

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I am mostly a trader engaging in both long and short bets intraday and occasionally over the short- to medium term. My historical focus has been mostly on tech stocks but over the past couple of years I have also started broad coverage of the offshore drilling and supply industry as well as the shipping industry in general (tankers, containers, drybulk). In addition, I am having a close eye on the still nascent fuel cell industry.

I am located in Germany and have worked quite some time as an auditor for PricewaterhouseCoopers before becoming a daytrader almost 20 years ago. During this time, I managed to successfully maneuver the burst of the dotcom bubble and the aftermath of the world trade center attacks as well as the subprime crisis.

Despite not being a native speaker, I always try to deliver high quality research to followers and the entire Seeking Alpha community.

Analyst’s Disclosure:I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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