Stock recommendations for 2008-09

After a long time, I am giving stock picks for my blog readers. All these stocks will give good returns if you give them 1 year time. Forget short term fluctuations in these stocks and invest for long term. Accumulate more of these stocks on every dip.

RBI credit policy once again disappointed Indian stock market investors. Why are you expecting rate cut in the election year? Which government will want to see rise in inflation at this crucial time? Upcoming budget will also disappoint investors. Better prepare for that.

Indian stock markets will see more volatility from February 1st onwards due to short selling by big institutions. 500-1000 point intra-day swings will become common due to SEBI’s new policies. What happens if US Federal will not announce rate cut? Markets will crash. I am waiting for this crucial decision before making fresh investments.

Best Stock picks for long term investors:

1. Reliance Communications:

• Due to its GSM foray, number of subscribers will rise.
• According to rumours, apple may give iphone contract to R-Com. So, it will attract high end customers and ARPUs will rise.
• Due to aggressive management (proven capabilities), it may go any extent to attract GSM subscribers from other networks.
• Its business is less dependent on American financial system. Weakening dollar will boost its other income.
• Indian telecom story will continue for some more time.

2. Reliance Petroleum:

• It is almost like a bank fixed deposit.
• It will unlock its true value 2-3 months before the commencement of refinery.
• You need to forget short term fluctuations.

3. Glenmark Pharma, Educomp solutions and Divis Labs: • All of them have just announced wonderful results.
• All are maintaining good performance for the last 2 years.
• High P/Es are concern. Enter into them on any correction.

4. Wockhardt: • Upcoming IPO will boost this stock price.
• Good stock for short-medium term investors.

5. L&T:
• Only for high risk investors due to its high valuations.
• Demerger of L&T in 2010 will surely benefit long term investors.
• L&T may be risky stock for short-medium term investors.

6. Reliance Industries:
• Accumulate more of this stock (below 2500) and wait for 1 year.
• Reliance Retail and Reliance Life Sciences may list in the markets in the coming days.

7. Welspun Gujarat:

It continues to remain my favourite stock irrespective of market situation. Fundamentally sound stock like this will never give negative returns.

8. Among metal companies, I prefer Jindal Steel while ABG Shipyard is a good one in the shipping sector.

9. IDFC is my stock pick among financial stocks. IFCI is a good bet with risk. If Banking stocks get corrected more, enter into ICICI bank and Axis bank.

10. BHEL and ACC may give decent returns for long term investors.

My views on Stock Markets:

1. SEBI allowed FIIs for short selling in Indian Stock markets from February 1st onwards. So better prepare for more volatile markets.

2. Stock investments may not give you stunning returns but if you invest in accumulating manner for long term, you will get decent returns.

3. Subprime crisis will rise in America will rise in the second half of 2008 due to arrival of floating interest rates. If there is no significant rise in household income, American market will go into recession. If that happens, stock markets will crash (BSE-14,000&NSE-4,000).

4. It is better for short term investors to stay away from markets. After 4 years of Bull Run experience, Indian investors are finding it difficult to change their mindset for bear market situation. They are still expecting miracles due to lack of awareness about looming crisis in the United States.

5. Retail investors should stay away from derivatives and penny stocks. Invest in fundamentally good stocks at reasonable valuations.

6. According to my opinion, upcoming budget may not give boost for stock markets. UPA government may present “Election budget”. In my view, stock markets will crash after the budget. I can’t rule out pre-budget rally.

7. Investors in Tata Steel (corus), Hindalco and Tata Motors (Nano) will need to wait 2-3 years to get real benefits.

8. Tata Chemicals, Matrix Labs, Infosys and Indian hotels are my wild bets for long term investors.

9. Zylog systems is a good stock among the new businesses. I have doubts over Everonn valuations.

10. Gateway Distriparks may bounce back at any time. It has good prospects in the logistics.

Accumulate the above mentioned stocks at reasonable prices and wait for 1 year to get decent returns.

IT and Banking stocks will continue to rule

Indian stocks will continue to rise due to positive clues from global markets. Investors are following this herd mentality for many years. They will continue to buy/sell irrationally and feel sorry after some time. My advice is use caution before buying and stays away from penny stocks. Book partial profits in sound stocks. Banking stocks are in better position to gain more.

Global Markets: All the global markets are in euphoric mood. Use this opportunity to exit worst stocks. Are you ready for some shocks in the next week?

Market Movements:

1. BSE Sensex:
CMP: 15,307.
Target: 15, 400 and 15,490.

2. NSE Nifty:
CMP: 4,462.
Target: 4,500 and 4, 540.

Courtesy: Reliance Money.

Sector of the Day: Banking and IT Stocks.

Stocks of the Day:

1. Omaxe: It will be listed today. Grey market premium is around 100-120.
CMP: 310.
Target: It will list around Rs 420 and book profits around Rs 430-440.

2. State Bank of India: Government gave its nod for stock split.

Significant Views:

1. Indian stocks will correct 10% more due to high leveraged position – Mark Mobius.
2. Get used to rupee rise which is inevitable – Finance Minister.
3. Gap is increasing between rich and poor which is not a good sign for Asian countries – ADB.

Positive Stock News:

1. RIL will buy stake in Modern Diaries.
2. Infosys got nod for 2 SEZs in Andhra Pradesh. Ispat Industries also got BOA approval for its multi product SEZ. Rs 10,000 crore Ispat project will be spread over 3,000 acre.
3. Motherson Sumi announced bonus issue – 1 share for every 2.
4. Alok Industries will sell stake in retail and garment divisions.
5. SBI got government nod for stock split.
6. Idea will start Mumbai operations within 3-4 months.
7. Tata Power is in talks with Areva to buy Nuclear power equipment.
8. Reliance Industries is in the short list to buy HUL’s Bengaluru property.
9. Apollo Hospitals will enter into health insurance business.
10. Opto circuits got SEZ approval.

Negative Stock News:

1. You have to wait for another one month for Petro price hike.
2. TTML will raise $ 200 million debt for expansion plans.
3. Australia Reserve Bank raised interest rates to 11-year high of 6.5%.

My Stock Views:

1. Markets discounted the negative impact of new ECB norms on major stocks like L&T, Tata Steel etc. This is a classic mentality of investors who overreacts to both positive and negative news.

2. IFCI is struggling due to RBI restrictions on FIIs and F&O ban. But it is showing classic signs of consolidation and gradual rise for the past 3 months which is beneficial for long term investors.

3. Hanung Toys is a safe stock for long term investors along with Celestial labs and Fortis Health care.

4. Despite ECB norms, rupee will continue to rise in the long term. RBI should stop these futile measures. Best exporters will only survive in the coming years. But dollar will appreciate in the short and medium term against rupee.

5. Banking stocks will get more benefits than IT stocks in the coming days due to ECB norms.

6. Reliance Vision fund bought IDFC, ICICI Bank in August and increased holdings in Indian Hotels, GSFL and Reliance group companies. Reliance Growth fund exited NDTV and BPCL and increased holdings in Reliance Energy, Divis and GSFL.

7. Expansion plans of DLF, Tata Chemicals, Kesoram Industries, IOC and Pharma acquisitions will be affected by new ECB norms.

Best Stock picks for Day Traders: IT and Banking stocks will continue to gain.

1. Modern Diaries: Reliance Retail stake buy.
CMP: 68.4
Target: 70.5

2. Ispat Industries: SEZ approval.
CMP: 14.15
Target: 14.58.

3. State Bank of India: Stock split approval.
CMP: 1705.
Target: 1760.

4. Reliance Industries:
CMP: 1875.
Target: 1923.

5. Reliance Communications:
CMP: 544.
Target: 551.

6. Idea Cellular: TRAI new proposals.
CMP: 126
Target: 128.3

7. Alok Industries.
8. Infosys Technologies.

Stocks in the F&O ban: IFCI and Nagarjuna Fertilisers.

Note: I have holdings in some stocks discussed here.

Indian stocks may range bound

Indian stock markets may range bound today due to weakening rupee and lower inflation data. Day traders can make good gains if they trade smartly. Expiry of derivative contracts is the major obstacle.

Sector of the Day: IT Stocks and Banking. Dollar appreciation will be a positive trigger for IT stocks.

Stock recommendations for Long term Investors:

1. Tata Tele – Good scope for growth (1-2 year horizon). It will touch Rs 50 within 12-18 months.
2. Wire and Wireless – It will touch Rs 200 within 2 years. This stock is strictly for long term investors.
3. Larsen & Toubro – I still believe in the growth of this stock. It will cross Rs 2200 in June. Safe stock for long term investors if they forget short term fluctuations.

Best Stock picks for Day Traders:

1. Idea Cellular:
CMP: 122.85
Target: 126 and 129.5
Stop Loss: 120

2. Dena Bank:
CMP: 42.9
Target: 45 and 47.5
Stop Loss: 41

3. Ranbaxy:
CMP: 389.45
Target: 397
Stop Loss: 382

4. Infosys:
CMP: 1906.15
Target: 1943
Stop Loss: 1880

5. Gitanjali Gems:
CMP: 189.3
Target: 191.7
Stop Loss: 187

6. Reliance Communications:
CMP: 501.5
Target: 514
Stop Loss: 490

7. Air Deccan:
CMP: 130.9
Target: 135
Stop Loss: 127

8. NTPC, SAIL and L & T: (With risk)

My Views:

1. Stay away from oil refining stocks like BPCL and HPCL.
2. Tata power and Reliance Energy may range bound.
3. IT stocks will hog limelight today.
4. Investors can enter into RPL, SAIL and Hindalco if these stocks suffer losses today.
5. Banking stocks may gain on inflation data.

Stocks to watch out for:

IT Stocks, Punj Lloyd, Cummins India, JP Hydro power, Wire and Wireless, Apollo hospitals, Fortis Healthcare, Tata tea and Tata chemicals.

Significant News:

1. SEZs of Ambani brothers are in trouble.
2. IDEA and Spice Telecom merger.
3. Kingfisher and Air Deccan merger.

Please share your stock recommendations here.

Money 4 You – New Financial Education Website

Indian Banks association in association with Master card and Indian cards council launched a financial education website “Money4you”. Master card launched similar websites in China, Taiwan, Australia and America. Money4you is an interactive website with financial tips and information about financial planning.
This site is a must visit for all the credit card holders. It includes comprehensive information on financial glossary. You can tell your grievances about credit card companies.

This site gave more importance to credit cards while neglecting other financial segments like Insurance, Equities and taxes. Frankly speaking, all the information is a basic one but it is a welcome initiative on part of banks and master card.

I hope that this beautifully designed website will improve the financial literacy there by helping to take wise decisions by adding more useful content.

Indian Stock Markets are shining

Indian Stock Markets are attaining new peaks as bulls are dominating the markets. Reserve Bank of India fuelled the market mood by not changing the interest rates in its annual credit policy. Bulls will dominate the markets in this whole week. Day Traders may gain profit by investing in rising stocks. Long term investors should stay away from Indian stock markets in these volatile times especially from blue chip stocks and banking stocks.

Breaking News: Dollar falls below 41 mark against rupee. Stay away from IT Stocks.

Observation of the day: Reserve Bank of India changed the inflation target from 5.5% to 5%. So, don’t take long term positions in banking and finance shares.

Global Markets: No significant clues are available from global stock markets.

Stocks of the day:
Banking and Auto shares may rise due to positive sentiment prevailing in these sectors (RBI policy).

IT stocks may lose heavily.

Positive news for Day traders:

1. Wockhardt Ltd. has received approval from the US Food and Drug Administration to sell lisinopril, which is used to treat high blood pressure and heart disease.

2. HDFC posted impressive Q4 results. It is the stock of the day.

3. Elder Pharma may gain slightly.

4. Bajaj Hindustan may rise again due to export subsidies and 3 new plants.

5. Indian oil companies may gain from price hike.

6. Reliance Energy will gain due to power tariff rise.

7. Jubliant Organosys to buy US based Hollister-Stier Labs.

Negative news for Day traders:

1. Rupee is continuously appreciating against Dollar. So, stay away from IT Stocks and Exports based stocks.
2. Stay away from MTNL. Its ADR lost around 7%.

Results today:

1. Grasim, Dena Bank, Idea Cellular, Glenmark, Patni, Godrej Conjumers, Reliance petro, RNRL, Mahindra Gesco and SRF.

Happy Trading! Never change stop loss and target without specific reason.

Analysis: Indian Stock Markets this week

Indian investors experienced most volatile week in which bears and bulls experienced similar situation. On black Monday, BSE SENSEX lost 616 points – it is the second biggest fall in the BSE history. But, Markets sharply recovered then onwards. This signifies the strength in the fundamentals of Indian economy. Courtesy: BSE India
Day Traders:

Except Monday, Indian stock markets responded similar to other Asian markets. Day Traders should closely watch US and Asian markets before taking investment decisions. Another significant fact is some stocks (Dr.Reddys, Infosys, Satyam, and TCS) are following similar pattern of their US ADRs.

Pharma Stocks:

This is the week of Pharma stocks. Aurobindo Pharma, Orchid Chemicals, Lupin rose heavily as they got orders and permission news from foreign shores.

Zee rose due to Subhash Chandra’s announcement on Indian cricket league. BHEL is the most positive stock in the market as its past and future are looking bright.
Bank stocks and Auto Stocks are the major losers this week due to hike in CRR and REPO rates.

Next week:

Markets gave no clues about the future direction in the week. Infosys results and predictions may give some clues about market direction.
Volatile markets are the ideal platforms for astute day traders.