Analysis – Indian Stock markets in May

Indian investors lost heavily in the May for the past 3 years due to various reasons. Will the history repeat this year also? I don’t think so. If investors plan their investment strategy around mid caps, they may earn good money. Investors may book profits in some large caps.

Crucial Point: Don’t give too much importance to the movements of BSE Sensex or Nifty. Invest in good stocks at better price. Better stay away from small caps and rupee stocks. There will be no buyers when this bull phase is over. Book profits when you reach your goal. Never be sentimental with your stocks.

Following events may determine the stock movements in May:

Good News:

1. Inflation is under control. RBI may not take strict measures.
2. Good company results and better earnings forecasts.
3. Higher metal prices.
4. No major negative trigger points and political stability.
5. Good monsoon expectation.

Bad News:

1. Uttar Pradesh elections. Exit polls are indicating tough time for Congress and UPA.
2. Overvalued markets. No major trigger points that propel stock markets into higher peaks.
3. Appreciation of rupee. Along with inflation, this will determine the movement of stocks.
4. Higher prices of blue chip stocks like Reliance Industries, Bharti etc.
5. Better earnings in other emerging markets may decrease FII inflows.

If investors book profits, stock market may move downwards irrespective of any trigger points. If this happens, enter into good stocks at lower price.

My stocks for Long term Investors (2-3 years):

Future growth sectors:

1. Capital Goods
2. Shipping
3. Power

Select good stocks in these sectors for better returns.

Follow the following stocks carefully; invest them at better price (not at this level).

1. Tata Motors
2. Reliance Capital
3. Reliance Petro
4. Praj Industries
5. RNRL
6. Bharat Shipyard
7. Cipla (invest in this stock after 2-3 months)
8. Sugar Stocks (Invest in the shares after 6-9 months)
9. Hindalco and Tata steel will give excellent returns if you have patience.

My Stock Advice:

Never invest in sugar, Real Estate and IT stocks in the short term. This is my advice. You may not get good returns from large caps. Concentrate on good mid caps.

Following stocks will be dropped from MSCI Index:
1. Biocon
2. Matrix Labs
3. Bank of Baroda
4. Arvind Mills

Share your opinion on Indian stock markets.