Heavy selling in the initial session

Indian stocks will see heavy selling in the initial session due to fall down in global markets. If late buying is not seen in the late session, today will become black Wednesday. Capital goods will see heavy selling due to vertical rise in the recent days. This correction is good for markets and real investors who are waiting in the sidelines for fresh investments. New inexperienced investors should stay away from markets until RBI announced credit policy. Weakness in global markets, rising rupee, drop in earnings, derivative expiry, crude price will make the stock markets a dangerous territory in the coming days. I am always against CNBC analysts who change their words according to market moments. Long term investors need not worry about these short term fluctuations. Invest in good stocks with strong growth prospects.

Market sentiment: Bears will finally dominate. Indian markets will follow their global peers. Late buying may be seen in some stocks.

Global cues: All markets suffered heavy losses. Indian ADRs are in red with Sterlite lost 5%.

Stocks of the day:

Allied Digital - Will list around Rs 250 and may touch Rs 320. Bear market may spoil sentiment.

1. PNB and Reliance Capital– Results. With risk.
2. Reliance Energy – Lanco loss, Reliance gain.
3. JSW Steel – Wonderful results. With risk.

Rumours of the day:

1. NDTV may sell 26% stake to NBC.

Positive News:

1. BILT – Stock split from Rs 10 to Rs 2. Buyback of 40% equity after split at Rs 25.
2. RIL will setup 4,000 MW power plants for 10,000 crore.
3. Aditya Birla will raise stake in Hindalco to 40% from 31.4%.

Negative News:

1. Lanco bid for Sasan project is invalid. Investors are thinking that the project will be awarded to Reliance Energy. Government is yet to take the decision.
2. Cement companies under MRTPC lens.
3. Textile exports will fall short by 36% due to rupee appreciation in Q1.
4. Hero Honda posted unimpressive results. Future is bleak for this company. Management lacks the vision.
5. Novartis and Dr Reddys are in legal battle over Lotrel patent.

Results:

1. Hindustan Zinc announced 36% rise in net profit.
2. Britannia net profit increased by 19%.
3. Kotak Mahindra bank net profit rose by 99%.
4. Idea announced 540% rise in net profits.

Stock advice:

1. Accumulate Reliance Communications on declines. It will rebound at anytime.
2. Buy Hindustan Lever for short term gains. 15-20% returns within one week.
3. Accumulate Praj Industries in 150-180 range for long term investment. Praj is the back bone for Bio-Fuel industry equipment and Technologies.
4. Investors will book profits in BHEL, L&T, GMR Infra and DLF at any time. Keep strict trailing stop losses.
5. Long term investors should start accumulating fundamentally good stocks like Bharat Forge.
6. Companies sitting on land banks may surprise with their results in the coming quarters due to selling of land banks. Ex. VST Tillers, DCM Shriram, Atlas Cycles, Zandu Pharma, RPG Cables. RPG cables is the best stock for any patient investor. It will give 300% returns in 2 years. Low valuations, high growth, turnaround story, land bank make this a safe stock.
7. IFCI may not sell stake in the coming days. It is trying to create good business model to unlock its real value. It is a bad news for short term investors and very good news for real long term investors. It will give 200% returns within 12-15 months.
8. Raymond and Cipla are contrarian buys with limited downside but results are disappointing.

Stocks for day traders:

1. Sell ACC.
2. Sell BHEL.
3. Sell L&T.
4. Sell Lanco.
5. Sell Hero Honda.
6. Buy these stocks if sharp fall is seen – Reliance Communications, Reliance Energy and PNB.

Please share your views on Indian stocks.