7 Indian companies in future giants list

Morgan Stanley picked 7 Indian companies among the Asia Pacific’s best 20 companies by their future growth potential. It is clear signal for Long term investors (3-5 years) to make strategic investments in these companies. You should accumulate these stocks on every fall. Safe 7 Indian companies according to growth potential:

1. Reliance Industries: There is so much value left unlocked in this giant. It is a safe investment in terms of growth potential and value.

2. Reliance Capital: This Company made good investments in high growth sectors whose value will be unlocked in 2-3 years.

3. Pantaloon Retail: I have some doubts over this stock due to increase in competition and high valuations.

4. Larsen and Toubro: My favourite company which will give at least 200% returns within 3 years just due to value unlocking. If you add growth potential, sure jackpot. I will accumulate this stock as long as it stays below 3,500.

Short term target: 2,900-3,200 (Face value-2)

3-year target: 4,500-5,000 (Face value-1).

5. Bharti Airtel: It is making big investments over bandwidth which will play crucial role in future. Reliance Communications is also a good bet.

6. IDFC: Another safe stock for investors.

7. Sobha Developers: I have some doubts over this stock.

Can Anil Ambani beat Mukhesh Ambani?:

If you search for Reliance in Google, first result is Reliance Communications but not Reliance Industries. Can he repeat this performance in real life?

Please share your opinion on these 7 companies.

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.

When will investors stop behaving like fools?

Even after facing rude shocks in recent sessions, most of the investors are once again repeating same mistakes by investing in stocks like RNRL, Neyveli Lignite and Essar oil etc.

Why don’t they invest in good companies with strong fundaments which are trading at reasonable valuations?

Why don’t they do basic research on companies before putting their hard earned money?

Why do they think stock markets as speculation centres?

Investors will continue to lose money in stock markets as long as they want to make big money in small time period without basic knowledge on companies.
Popular theory: Indian economy will less likely be affected by American economic crisis. So our stock markets are safe heavens for investments. Is it really correct?

My opinion: As they are saying, our economy is less dependent on American economy unlike Japan (Except sectors like IT and Pharma). But our stock markets are no longer representing our economy. They are the “bubbles” created due to irrational investments by foreign and domestic institutions. So they will be definitely affected by American financial crisis. Don’t believe in “decoupling theory”. If you believe in it, you will face the similar fate of BJP in 2004 elections (India Shining campaign).

Severity of American crisis:

1. US Federal is aiding in increasing American crisis as it did in 2001 by cutting interest rates. Instead of taking long term measures, it is opting for stop gap measures like rate cut which will further aggravate crisis.

2. When a company like “Apple” after announcing superb results gave cautious growth signs. It is a clear sign of future growth problems.

3. When a company like “Google” shed 30% of its stock price (good fundamentals, growth opportunities etc.), we should understand the severity of the problem.

4. Soros: "World is facing worst ever economic crisis after world war 2". When an experienced expert gave that statement, we should understand the problem.

5. United States housing sales fell first time in 25 years and prices are declined for the first time since 1929 great American depression.

Note: Stock Markets will see ups and downs until President George Bush comes with great relief package. These are more testing times for world stock markets due to lack of confidence in investors.

My advice: Indian stock markets (BSE SENSEX) will move between 14,500-18,500 points with extreme volatility. It is difficult for ordinary investors to plan their investments in such an extreme volatile situation.

If you are a long term investor, invest in good companies which are less dependent on United States like Reliance Communications, Tata Motors, L&T, and Reliance Industries etc.

Stay away from penny stocks and overvalued stocks like RNRL, Ispat, and Essar Oil etc.

Save your money for upcoming wonderful IPOs like ATPL.

Long term investors should continue to accumulate good stocks and forget about them for 1-2 years. Speculators will bite the dust in these unpredictable times. Conservative investors should stay away from markets until “recession” fears are cleared.

Please share your opinion on Indian share markets.

Extreme volatility will continue in Indian Stock Markets

US subprime market crisis is spreading its wings from one country to another and creating tremors in the stock markets. Central Banks are releasing more money to protect financial markets from liquidity crisis. But no one is giving clear picture on the magnitude of this crisis. Unknown devil is more dangerous than known one. So fear will cause more danger than real problem. This uncertainty and volatility will continue until the magnitude of this crisis will be revealed. Stock Markets are now only for speculators not for investors. Don’t do technical trading, just depend on news based trading in these volatile times.

Global Markets: US markets like Indian Markets ended with minor loss after sharp recovery in the late session on Friday due to pumping of funds by Central Banks to curtail liquidity crisis. Asian Markets are in positive momentum with sharp volatility.

Market Movements: Volatile trading with more than 100 points intra-day swings.

1. BSE Sensex:
CMP: 14868.
Resistance: 14980
Support: 14660.

2. NSE Nifty:
CMP: 4333.
Resistance: 4400.
Support: 4250.

Significant Views:

1. S&P included IT giants, Infosys, Wipro and Satyam, in Warren Buffett model portfolio.
2. Indian Stock Market is the most expensive one in Asia-Pacific region. India is the least attractive one for Investments – Citi Group.

Positive News:

1. JSW Steel acquired 2.5-acre property of Orbit Corporation in Mumbai for Rs 800 crore.
2. ONGC-Mittal won gas block in Trinidad-Tobago.
3. TTML won bid for coin operated telephones.
4. Government will sell 10% stake in Oil India to Oil refineries.
5. Wipro is in JV with Boeing MRO facility.
6. Government will announce new Aviation policy in this week.
7. Bisleri will enter into International markets by September.

Negative News:

1. More delay in Tata Motors 1-lakh car project due to problems in Singur project.
2. Hindustan Oil Exploration shut down well at PY-3 field.

Stock Market Analysis:

1. Central banks are pumping more money into the financial markets to save from liquidity and credit crisis in the short term but it will have negative implications in the medium to long term.

2. IFCI stake sale news will continue to give strength to this stock. Be cautious around Rs 68-69 level. IFCI should break its strong resistance level of Rs 68-69 for the future rally.

3. Reliance Communications will bounce back at any time. Accumulate this stock in SIP way.

4. Nifty may bounce back today but short term target is 4100.

5. Biggest problem is no one exactly knows the severity of Subprime market crisis. Unless this is solved, markets will continue this current volatile run. Domestic Financial Institutions are saving the market from collapse by buying in equities. Will this continue?

6. RNRL and JP Hydro will consolidate in the short term due to their vertical run-up.

7. Banking Stocks: Benefits of new ECB norms are nullified by Subprime crisis.

Best Stocks for Day Traders:

1. IFCI:
CMP: 65.3
Target: 68.

2. Reliance Communications:
CMP: 520.8
Target: 529 and 536.

3. Reliance Energy:
CMP: 748.
Target: 760.

4. Most stocks will open on positive note but gradually move down due to profit booking. Real investors should stay away from Markets up to August 16. August 15 is the last date for current hedge withdrawals.

My opinion is implications of subprime crisis are more severe than analysts’ estimates. But strong economic growth is saving the markets from melt down. It will be better to stay away from Stock markets for some more time. Short term spikes are not sustainable. August, 2007 will be remembered forever in the Stock Market history due this crisis. Sit on cash for better opportunities in blue chips in the coming days.

Note: I hve holdings in some of the stocks discussed here.

Please share your views and Stock Recommendations.

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.

IT stocks will hog limelight

It is a golden day for Export Companies but dooms day for many companies. FII selling pressure will gradually impact market in the short term. Will mutual funds and domestic buyers save the market? Markets are at crucial stage and I will closely watch the FII inflow and out flow. Rupee appreciation will be halted against dollar. Major boost for export companies like IT, Textile etc.

Global markets: US Markets ended on positive note after the intra-day volatility. But FIIs will spoil Indian Markets by moving funds from Indian markets to US markets due to dollar appreciation. Lack of liquidity is a concern. Falling crude oil price is the positive cue from global markets.

Market movements: If investors immediately understand the impact of ECB tightening, it will be a sharp fall. If investors temporarily buoyed by IT stocks rise, markets may sustain for some more time.


Sector of the day: IT Sector. 5-10% gains may be possible for these battered stocks.

Stock of the Day: Infosys.

Significant News:

1. No change in fed interest rates. Inflation is a real concern.
2. Fresh restrictions on External Commercial borrowings (ECB). Maximum limit is $ 20 million for rupee.
3. More sops for exporters by this month end. Accumulate these laggards.

Positive Stock news:

1. City Union Bank announced stock split in 1:10 ratio.
2. TTML, Bharti Airtel and R-Com are in race for 51% stake in Kenya Telkom.
3. Telecom companies will get tax benefits due to tower sharing.
4. Take Solutions IPO oversubscribed 59.4% times but retail portion got 23% over subscription.
5. Great Offshore will buy a Scandinavian company for $ 500 million.
6. ICICI Bank cuts deposit rates by 25-50 bps.
7. Punj Lloyd will place a QIP for $ 400 million.
8. India is now the 5th largest crude steel producer.

Negative Stock News:

1. Left Parties blocked Indo-US Nuclear deal.
2. Due to tightening of ECB norms, Companies will have to pay extra money for loans.
3. Falling crude is a positive sign while dollar appreciation is a negative signal for oil marketing companies.

Stock Recommendations for Day Traders:

1. City Union Bank:
CMP: 237.
Target: 242.

2. Infosys:
CMP: 1878.
Target: 1930.

3. Satyam:
CMP: 463.
Target: 478.

4. TCS:
CMP: 1109.
Target: 1140.

5. IFCI: If it breaks 68 resistance.

Please share your views and stock recommendations.

Stocks rebound temporarily

Indian stocks will see sharp temporary rebound on the account of strong global cues. Sustainability of this rise will depend on future course of global markets.

Market movements: Dow Jones gained 286 points after initial volatility and Asian markets are rising from global cues. Indian markets will follow their global peers. Global markets are in a precarious situation. It is not an ideal time for retail investors to take short positions in markets. Stay away from futures and options. BSE Sensex may settle around 14,300-14,500 and Nifty at 4,100-4,200 in the near term. Take positions in over corrected stocks.

1. BSE Sensex:
CMP: 14903.
Target: 15060.

2. NSE Nifty:
CMP: 4339.
Target: 4403.

Positive Stock News:

1. Hindustan Unilever will announce winners of bids for real estate projects in Bengaluru and Mumbai on next Tuesday.
2. Wal-Mart and Bharti enterprises announced 50-50 joint venture for retail.
3. Bharti Airtel received LOI for DTH service and will launch its DTH services by March 2008.
4. Hindalco and Tata Power will jointly develop a coal block in Jharkhand.
5. Government should approve gas price before marketing – Cabinet secretary.
6. GVK Power announced financial closure for its Uttarakhand project.
7. Strides Arcolab acquired Italian company.

Negative Stock News:

1. Novartis lost Glivec case and will not appeal.
2. Surge in International crude oil price is a real concern.
3. Volumes are declining gradually in the last three days.
4. Sales of Ashok Leyland were down by 19% in July.
5. DCM Shriram announced massive loss in its Q1 results.

My Stock views:

1. FIIs are selling in a big way while Domestic institutions are using this opportunity to accumulate. Mutual funds are waiting in the sidelines.
2. Don’t underestimate the impact of US Subprime market. Global markets are closely interlinked in these days. FIIs will spoil in Indian party in the coming days but long term story is intact. Accumulate good stocks on every dip.
3. Sugar stocks will temporarily rise in this week due to disruption of supply (heavy rains).
4. Indian Real estate stocks are the most expensive ones. Accumulate DLF in the 500-530 range for long term investment.
5. Oil refining companies will announce surprise results in the next quarter due to earning s from oil bonds. Accumulate these companies.
6. I think stocks like Suzlon and Sterlite are over corrected due to weak earnings but its long term prospects are good.
7. Acquisition of Infocrossing by Wipro will benefit it in the next financial year.
8. If rupee stabilizes due to weak markets and RBI measures, IT stocks will see some contra buying.
9. Accumulate Sesa Goa and Mount Everest as promoters will announce open offers in the coming days.

Best Stocks for Day Traders:

1. Bharti Airtel: Wal-Mart, DTH, Google tie-up news.
CMP: 866.
Target: 878 and 889.

2. IFCI: If it breaks 64 (strong resistance).
CMP: 63.7
Target: 65.7 and 67.6

3. Reliance Communications.
CMP: 531.5
Target: 538 and 546.

4. GVK Power.
5. DLF, HDIL and GMR Infra may bounce back.
6. Hindustan Unilever.

Please share your views on my stock views.

Black Monday for Indian Stocks

Indian stocks will suffer heavy selling due to weak global markets especially US and Japan. Volatility and range bound sessions will continue in this week. Investors should closely watch the movements of sound stocks like SBI, R-Com, DLF, REL and GMR-Infra Etc to accumulate at attractive price. IFCI, ITC and Hindustan Lever are some stocks that are looking strong with some risk in these volatile markets.

Conservative investors should stay away from Indian share markets for some more time. Traders may have money making chances in these range bound sessions. Indian markets will follow global markets especially US, Japan and China.

Indian Stock Market Movements:

Indian stocks will lose heavily due to weak sentiment in global markets. They will range bound tomorrow if US markets will end on positive note on Monday evening. Risk taking investors may buy in the late session for quick returns on Tuesday. Markets will continue its volatile run. Don’t take long term calls in major stocks and stay away from futures and options.

1. BSE:
CMP: 15138.
Target: 14885.

2. NSE:
CMP: 4401.
Target: 4294.

Courtesy: Bloomberg.

Significant Views:

1. India will be among the top 3 global powers by 2050 – World Economy study.
2. India is the fifth most preferred business destination – World Economy study.

Significant event: Us federal bank meeting on Tuesday.

Positive Stock News:

1. Anant Raj Industries is going for stock split.
2. IFCI board approved 26% stake sale.
3. Reliance has big plans on semiconductor space. It will also invest $ 14 bn in the oil business.
4. Sun TV will launch Sports and Documentary channels. Accumulate this media heavy weight in the 430-450 range for long term benefits.
5. Reliance Communications will launch money transfer scheme through its mobile retail outlets.
Negative Stock News:

1. Oracle will not delist I-Flex Solutions until its price falls below Rs 2,100. CMP: 2,169.
2. Real estate builders with more than 5 crore turnover are under IT scanner.
3. Puravankara IPO revised price band due to poor subscription from 500-525 to 400-450.
4. Reliance Fresh will sell Diageo wine brands through Reliance Fresh. It is taking all the wrong steps in these days. Can any woman go to retail store that is selling wine?

Best Stock picks for Day Traders:

1. Buy IFCI: Heavy interest for IFCI stake.
CMP: 60.7
Target: 63.9

2. Sell SBI.
CMP: 1635.
Target: 1595.

3. Sell Reliance.

4. Sell GMR Infra.
CMP: 832.
Target: 760.

5. Sell DLF.

6. Sell Reliance Communications.
CMP: 547.
Target: 534.

7. Sell L&T and BHEL.

8. Sell I-Flex Solutions – Oracle will not delist I-Flex.

9. Buy Hindustan Lever and ITC in the late session.

Stock in the F&O ban period: Nagarjuna Fertilisers.

My views:

1. Sorry for not posting regularly in the last week. I will post regularly in the coming days.

2. An NRI reader from United States sent me his Portfolio for analysis. He has selected very good stocks like L&T, RPL, RNRL, Tata Investment Corporation, Praj Industries, and First Source etc with long term view. This indicates the growing knowledge about stocks among the retail investors and also among busy persons who have little spare time for research. Long term investors with good portfolios always become millionaires irrespective of short term fluctuations in the markets. Just imagine the benefits of L&T investors after the demerger of its businesses in 2009-10.

3. My sectors for long term investors – Power, Logistics, Shipping, Finance and Banking, Capital Goods and Infrastructure. One should allot 60-70% of their portfolio to these sunrise sectors.

4. I recommend 5-10% allotment to wild cards (future stars) like Wire and Wireless, Dish TV, Fortis Healthcare, Meghamani Organics, Celestial Labs, Ispat etc. They will give tremendous returns in the long term.

5. Invest 5-10% of your money in Government finance companies like TFCI, IFCI, IDBI, IDFC and PTC and PFC. Value unlocking and growing sentiment in these companies will help investors.

6. I recommend 5% allotment to cyclical stocks like Auto and Sugar for long term investors.

7. This is the worst results season in the last 2 years. IT and export stocks are the real culprits. Media, Construction and power sectors are saviours.

8. I don’t comment much on IFCI stake sale and its effects due to my large holding. This is my principle.

Stocks for long term investors:

MRPL and some bank stocks are my dark horses. Rolta and Northgate Technologies are my favourite IT stocks while Dr Reddys is a safe bet for 2011. PFC and IDFC are safe finance stocks along with Reliance Capital. Indo Tech transformer may follow Voltamp in the coming days. Closely watch Dhanalaxmi bank and accumulate on declines. Accumulate Maruti on declines. Reliance Communication is the safest blue chip for medium term investors.

Note: 25% of my holdings in IFCI at an average price of Rs 51. I also have holdings in L&T, RPL, ISPAT, Wire and Wireless, Dish TV, Fortis, Reliance Communications, PFC, RNRL and Praj Industries. 90% of my investments are for long term and 10% is for short term and day trading. I believe in the long term potential of India’s economic growth.

Please share your views on my stock picks and views.

Is there any method in this madness?

Indian stock markets along with global markets are witnessing most volatile intra-day sessions in the recent days. Investors are repeating same mistakes by investing in weak stocks when fundamentals and valuations are big worrying points. Investors ignored the negative implications of credit policy on Indian companies in the yesterday session. Volatility will continue in the coming sessions.

Global Cues:

1. US markets lost 146 points after trading in the positive zone in the early session. Crude is in the $ 77-78 zone. Asian stocks are following their global peers.

Market Movements: All the global markets are in negative zone.

1. BSE Sensex:
CMP: 15,550.
Target: 15,330.

2. NSE Nifty:
CMP: 4528.
Target: 4465.

Stock of the Day:

1. Everonn Systems – It will list around Rs 450-500 and may cross Rs 550. Long term prospects are good for this stock but may be volatile in short term.

Significant views on Economy and Stock Markets:

1. RBI Credit policy will be misfired. Instead of decreasing liquidity, it may increase liquidity and also impact balance sheets of companies. Investors will realise the negative impact of credit policy within a short term. Volatility will continue in markets.

2. It will be difficult to keep Rupee above 40 against dollar. Rupee appreciation will continue in the long term. If RBI tries to keep rupee above 40, there will be negative implications due to rise in inflation. No government wants this situation just before elections. IT Midcaps and Textile stocks will be affected.

3. Hindustan Sanitary ware is a contra pick for long term investors while Meghamani Organics is a safe best for long term investors.

4. One investor asked me about Jain Studios. Don’t concentrate on such penny stocks without fundamentals and growth prospects. One should buy stocks with either strong fundamentals or better growth prospects. There will be no buyers for such stocks if markets go into bearish zone.
5. Sectors like food processing, Electronic hardware, Hotel and leather companies will get more sops in the coming budget – Finance Minister.

6. Q1 Results – Decrease in sales growth but increase in profits growth compared to recent quarters. Decrease in growth is a worry.

7. There will be no hope for Sugar, Textiles and Midcap-IT companies in the medium term except Government sops.

Positive Stock News:

1. Imerys may acquire ACE Refractories.
2. Satyam got big orders from FIFA. Satyam is getting more orders from Europe in the recent days.

Negative Stock news:

1. RBI hiked CRR by 0.5%.

Best stocks for Day Traders:

1. Satyam Computers.
CMP: 480.
Target: 485

2. Everonn Systems.
Target: 550.

3. Sell BHEL and L&T.

4. Sell DLF.
5. Sell Tata Steel and Hindalco.

Things I can’t understand:

1. How can the good showing by companies like L&T and Reliance will change the fortunes of bad companies? Why investors are buying these companies?

2. Why BHEL is rising despite poor results?

3. Why banking stocks rose despite credit policy effect?

4. Is there any change in fundamentals between 550 points crash and 290 points rise?

5. Is there any change in US subprime market worries?

6. Are investors watching the poor results by Indian companies in the recent quarters in the most sectors?

7. Can Investors understand the crude price rise on Inflation?

8. Why RBI announced worst credit policy ignoring major problems? Is it a stop gap policy?

9. Why RBI doesn’t allow rupee appreciation despite benefits to common man like fall in inflation and benefits to balance sheets of most companies except exporters?

10. Why investors can’t wait for the settle down of this volatility?

Is there any method in this madness? Please share your views.

Black Friday for Indian share markets

Black Friday arrived for stock market investors. I gave red signals in the last column about unliquidated derivatives, unsustainable valuations, drop in earnings and euphoria among new investors. All these are clear signals for a heavy correction. FIIs are the most dangerous people for the Indian markets. Unlike mutual funds, they don’t sit on their investments in difficult times. They just sell their shares and go to another country for better options. But this correction is good for fresh investments and real investors.
Courtesy: NASDAQ.

Index Movements:


1. NSE Nifty:
CMP: 4619.
Target: 4560 and lower. Nifty will lose around 80 points and follow their global markets.

2. BSE Sensex:
CMP: 15776.
Target: 15530 and lower. Today we will see bloodbath in the market due to heavy selling from panic investors.


Advice for Investors:



This is the day everyone is waiting for. We will get wonderful opportunities for entering into good stocks. This selling is mainly due to withdrawal of funds by FIIs and new investors who invested heavily in the recent days by giving a damn to the valuations. Investors who invested in value stocks should not sell their holdings. If you read the balance sheets of Real estate companies like DLF and Unitech, you will know the underlying seriousness and the danger in their accounting practises. SEBI should monitor these companies and the value of their land banks. I can’t understand the rationality behind investments in high valued stocks like DLF, TV 18, Divis Labs, ABB, GMR Infra, Kotak Mahindra Bank etc. Even though these are good stocks, valuations are unreasonable and unsustainable.

Global markets:


Heavy selling was seen in all the global markets with 2-5% loss in various indices. Recent rise in the global markets is due to high liquidity and entering of new investors who lack basic knowledge about stock markets.


Stock of the day: Shree Renuka Sugars with high risk.

Sector of the day:

1. Sugar Companies – Exports relief. Be careful before taking exposure as market sentiment may spoil the moment.

2. Oil Refining Companies - Declining crude prices, Rupee appreciation, Petrol-diesel price hike rumours make BPCL and HPCL as hot stocks but with risk.


Significant views:


1. If Inflation data is lower than expected, late buying will be seen in Banking stocks and vice versa.


Positive stock news:


1. Subex Azure announced wonderful results. 381% rise in net profit.
2. Teledata posted wonderful results.
3. ABB announced wonderful results with 51% rise in net profit. Use today’s correction to take fresh exposure.
4. 500% rise in Q3 net profit of MRF while Dena Bank net profit rose by 201%.
5. Tata Motors is the front runner for Rover and Jaguar.
6. Maruti announced better than expected results with 35% surge in net profit.
7. Bharti Airtel Q1 net profit rose by 100% while Tata Power announced 51% rise in net profit.
8. Ranbaxy regained number one slot after the recent quarterly results.


Negative stock news:


1. Indian companies are announcing worst results among the last 5 quarters. Rupee appreciation saved some companies by increasing other income.
2. Punjab Tractors posted decline in net profit by 81%.
3. Bisleri selling is not true.


Best stocks for Day Traders:


1. Sell Reliance.
CMP: 1941.
Target: 1892.

2. Sell Infosys, Wipro TCS and Satyam.
3. Sell DLF and Unitech.
4. Sell Divis Labs.
5. Sell GMR Infra.
6. Sell SBI.
7. Sell HDIL.
8. Buy HPCL and BPCL with risk.


Please share your views on Indian stocks and my analysis.

Profit booking in the late session

Indian share markets rise in the early session due to strong cues from global markets. Profit booking will be seen in the late session due to rise in inflation and unsustainable valuations. FIIs are buying in the Indian stocks while Retail investors and domestic institutions are selling for the last 2 days. Just imagine the plight of Indian markets if FIIs withdraw money from Indian markets as in May, 2006. I will not recommend fresh investments in stocks like Reliance, SBI, ICICI, GMR Infra, L&T etc. Markets may rise in the short term but single negative news is enough to spoil the market sentiment.

Global cues: US markets rose on strong earnings. Crude price is stable.

Stock of the day: Satyam Computers.

Rumour of the week:

1. Reliance will buy stake in Cipla. Talks are going on. Watch out for news.

Significant news:

1. ABN Amro downgraded Reliance with a target of Rs 1,300. My target for Reliance is 1,500. I can’t imagine the market movement when Reliance is really in such a precarious condition.

2. Finance minister cautioned the investors about risks involved in stock markets.

3. Biggest risk in the Indian stock market is valuations. High valued stocks are rising further making the current markets extremely vulnerable to correction.

Positive News:

1. Jindal steel bagged $ 2.1 billion dollar contract from Bolivian government.

2. Reliance Communications sold 5% stake in tower business for Rs 270 billion rupee.

3. Renuka sugars board meet on July 26 to mull GDR issue.

4. L&T posted 130% rise in net profit. All the good news are factored in this stock.

5. Ashok Leyland posted 28% increase in net profit.

6. Ranbaxy announced wonderful results with 118% increase in net profit.

Negative News:

1. ACC reported 15% fall in net profit in Q2. Decrease in other income is the major reason.

2. Wipro will continue to lose its value for another 30-40 days. If rupee continues to appreciate, mid-sized IT companies will be worst hit.

3. Spice Communications valuations are unsustainable. It got premium listing just on account of positive sentiment in the telecom sector. Book profits.

Stock advice:

1. Invest in Omaxe IPO. Attractive pricing and low valuations are the major reasons.

2. Closely watch Tata Tele and Idea as they crossed resistance levels.

3. Long term investors should not invest in stocks like Divis, Reliance and other unrealistically valued stocks. Search for sound stocks at low valuations or keep your money in banks for some more time.

4. Hindustan Dorr-Olive is another good stock with strong growth prospects.

5. Consolidation in IFCI and IDBI is good for real investors. Accumulate on each decline.

6. Orchid Chemicals and Welspun Gujarat announced good results. Good growth.

7. Stay away from Zee News. Don’t take fresh exposure in this stock.

Safe stocks in this Bull Run: (Downside is limited)

1. Dr Reddys Labs and Ranbaxy.
2. IFCI and IDBI.
3. DCM Shriram is a contrarian buy. Land sale news will come at any time.

Best stocks for Day Traders and Investors:

1. Satyam Computers.
2. Tech Mahindra.
3. Reliance may continue to gain.
4. Reliance Energy may bounce back on orders.
5. Idea may continue its march if markets are strong.

Please share your stock recommendations here.

Export stocks will rule in the coming sessions

Export stocks finally got life line from the Indian Government. Government announced sops to the extent of Rs 1,400 crore to the sectors which were severely hit by rising rupee except IT. Underperformers like Textiles and other export stocks will rule the Indian share markets in the coming sessions. Short term investors should enter into these stocks to make huge profits in the short term.

Market sentiment: BSE Sensex will gain around 150 points due to inclusive rally from under performers. Profit booking will be seen in recent performers like GMR Infra.

Global cues: US markets made record gains with Dow Jones is making record gains in one day after 2002. Indian markets will follow their global peers to make new record highs.

Sector of the day: Export stocks especially Textile stocks.

Stock of the day: Textile stocks, KRBL, Hanung Toys, DLF, DCM Shriram and Raymond.

Rumour of the day:

1. Rupee may touch Rs 36 by the end of 2007. Stay away from IT stocks.

Pharma stocks that will be benefitted from Rupee rise:

1. Ipca Labs, Lupin, Ajanta Pharma, Nicholas Piramal and Elder Pharma.

News of the day:

1. Rs 1,400 crore sops package was unveiled for exporters to save them from rupee problems.
2. Commerce ministry reduced the exports target for 2007-08 to $ 125 billion from $ 160 billion.

Significant news:

1. Manufacturing sector suffered decline in growth to 11.9 from 13.3% of the last year.

2. Sectors that will be benefitted: Textiles (including handloom), readymade garments, leather products, handicrafts, engineering products, processed agricultural products, marine products, sports goods and toys.

Positive stock news:

1. DLF Ltd bagged DCM Shriram land in West Delhi for Rs 1,750 crore – Record deal in India.
2. Great Offshore bagged Rs 1,000 crore order from ONGC.
3. TVS Motors will roll out bikes from its Indonesia plant within 30 days.
4. Geojit financial services recorded 71% rise in net profit.
5. Mukesh Ambani’s SEZ got clearance from government.
6. UTI bank profit rose by 45% to Rs 175 crore.
7. Govt. Gave clean chit to Jet Airways chairman Naresh Goyal. Fly in Jet flights to US.
8. Essar bid is short listed for Stelco.

Negative stock news:

1. Bajaj Auto net profit was down by 18%.
2. IL & FS COO Girish Nadkarni resigned and will join Avendus.

Best stock picks for day traders and Investors:

1. Raymonds.
2. DLF.
3. DCM Shriram.
4. SRF.
5. Vardhman Textiles.
6. Himatsingka.
7. Century Enka and Century Textiles.
8. Bombay Dyeing.
9. Alok Industries.
10. Arvind Mills.
11. Welspun India.
12. RSWM.
13. KRBL.
14. Hanung Toys.

Please share your opinion on my stock analysis and share your views on Indian stock markets.

Concentrate on Mid caps in volatile period

Indian markets will trade in volatile zone due to exponential growth in sectors like Construction, Engineering, Telecom and Banking while weak growth in IT, Textiles, Sugar and Auto sectors. Biggest worrying point is high growth sectors are trading at high valuations while low growth sectors will feel the heat for another 2-3 months. So concentrate on Individual stocks of high growth sectors which are trading at attractive valuations. Risk taking investors can try in sound stocks like Reliance Capital, Dr Reddys, Reliance Communications, GMR Infra and Reliance Energy.

Global cues: US markets are in volatile zone due to good earnings and bad subprime market.

Sector of the day: FMCG.

Stock of the day: Reliance Industries – Court verdict on gas.

Significant News:

1. Indian stocks will fall on account of weak earnings and high valuations – HSBC.
2. BSE Sensex will touch 16,000 by the end of this year – Citi group.
3. Bombay high court will give verdict on RIL gas today.
4. Moody assigned stable rating for Indian banks.

Rumour:

1. Entegra may come with rights issue in 2-3 months.

Stock advice:

1. Stock markets will continue to fall as most of the companies will fail to justify their valuations.
2. Prajay Engineers, Dr Reddys, HCL Tech are few stocks that will beat analysts’ expectations. Satyam is the dark horse.
3. NTPC is the safe bet for short and long term investors on account of massive investments and bonus rumours. Target for short term investors is Rs 180.
4. It may be difficult to expect exceptional returns from GMR Infra at this level.
5. KS Oils is counting on its massive gains ahead of stock split.
6. Praj Industries is struggling due to F&O ban ahead of bonus issue.
7. Deccan Aviation will touch 150 within 3-4 trading sessions.
8. Even though UTI Bank will announce good results, valuation are little bit stretched.
9. Dena bank may continue its upward journey.
10. CMC is the one of the rare stocks looking good in IT space on the back of to be announced results. Profit booking will be seen after results.

Positive stock news:

1. Unilever may be taken over by Colgate. Watch out HUL and Colgate.
2. Dabur foods will merge with Dabur India.
3. Megasoft bought Boston Communications for $65 million.
4. Cipla became the number 1 company in domestic retail market overcoming Ranbaxy.
5. Dr Reddys launched Glimmy MP1& MP2 diabetic drugs.
6. Bajaj auto finance will enter into truck business by October, 2007.
7. Chennai petro announced good results.
8. Country club announced wonderful results.
9. Sintex Industries announced 54% rise in net profit.

Negative stock news:

1. Infosys missed its guidance first time in 14 years due to rising rupee. It failed to estimate the rupee impact in March and gave wrong guidance to investors. Infosys lowered its guidance by 5-8%.
2. 14 public sector banks will lose around Rs 930 crore due to RBI guidelines on IFCI investments.
3. Bajaj Auto will announce disappointing results today and stock may lose once again.
4. S&P lowered Tata steel’s credit rating from BB to BBB.
5. iGate solutions posted disappointing results. More such news will come in this quarter.

Best stocks for day traders and investors:

1. HUL and Colgate.
2. Dabur India.
3. Geojit Financial services – with risk.
4. Pyramid Saimira – Good results.
5. Dr Reddys Labs – Momentum is strong.
6. Chennai Petro – Good results.

Results today:

1. Bajaj Auto, UTI Bank, Technocraft India, Reliance Infrastructure, Geojit Financial services and Pyramid Saimira.
c
Please share your views and advice on Indian stocks.

Stock markets again into volatile zone

BSE Sensex crossed 15000 mark on Friday and again rising fears of correction. In my opinion, markets move sideways until Wednesday (Infosys results) before falling/rising in a big way. Don’t take long positions in blue chips especially capital goods, IT and Banking. Concentrate on few sound stocks which are trading at low valuations before making major investments from Wednesday onwards. Pharma stocks like Ranbaxy and Dr Reddys are looking attractive in these volatile times.

Risk taking investors may bet on Ispat Industries. Teledata at last moved into BSE Midcap index. Momentum will be around stocks which will post wonderful or surprise results in the coming days like Dr Reddys, Reliance Communications etc. Praj Industries is in a precarious state before bonus date while KS Oils may give good returns in the medium term due to stock split. Major factor saving the markets from fall is liquidity in the markets.

Significant News: Asian markets are in buoyant mood. Will Indian markets follow them?

Stock of the day:

1. Roman Tarmat – This stock may list around Rs 225-250 and will cross Rs 300. Book profits around Rs 280-300.
2. Reliance Communications – Qualcomm deal.
3. Closely watch IFCI and PTC – Stake sale. F&O ban in IFCI.
4. MRPL – LOT OF POSITIVE NEWS.

Rumour of the day:

1. Tata may take stake in Praj Industries.
2. Mallya may acquire Spicejet.

Positive stock news:

1. Hindustan Zinc raises zinc prices by Rs 1200 and lead prices by Rs 1000.

2. Gujarat state petroleum discovered oil block.

3. Reliance energy-Sobha consortium is the successful bidder for Rs 6,400 crore business district project in Hyderabad.

4. MTNL will acquire Suntel in Sri Lanka.

5. Reliance Communication and Qualcomm buried their differences and will continue to work in cohesion.

6. Reliance retail will sell Cipla drugs. But outlook for Cipla is bad.

7. UP government will sell all government mills to private bidders. Tremendous boost to UP private sugar mills. More consolidation is on the cards.

8. Bharti Airtel ranked third in the Business week list of top 100 companies in share holder returns.

9. Kamadhaenu Ispat posted 339% increase in net profit.

Negative stock news:

1. Telecom companies will struggle as ARPU are at Rs 200 mark.

Negative triggers:

1. Inflation rise will spoil party. Interest rate hike will haunt markets again.

Stock advice:

1. Dr Reddys and Ranbaxy will surprise analysts with their fantastic results. These are the safe stocks in volatile markets.

2. Bet on Biocon. This may appreciate another 10% in this month.

3. Stay away from Cipla. Invest in this stock at Rs 185-190 level.

4. Reliance Energy will post wonderful results compared to Tata Power.

5. Capital goods stocks are poised for minor correction due to extreme rise in the past few sessions.

6. Infosys guidance on Wednesday will trigger a major collapse or rise until then markets will be volatile.

7. Subscribe to Everonn IPO. You will get 100% returns on the listing day itself.

8. Don’t neglect Aurobindo Pharma, Lupin and Ipca Labs. They are sound stocks for medium term investors.

9. Closely follow MRPL, India Foils and Birla power.

Stocks for July :

1. Power trading corporation - safe stock for medium term investors.
Target – 90-95.

2. IFCI-safe stock for long term investors.
Target – 70-75.

3. Ranbaxy – excellent results.
Target – 400-420 (medium term).

4. Reliance Communication – Wonderful results. Buy on dips.
Target – 580.

5. Praj Industries – Bonus. High risk stock.

6. HCL Tech – surprise results.

7. Paper stocks like TNPL and BILT.

Best stocks for day traders:

1. Reliance Communications.
CMP: 550.
Target: 563 and 576.
Stop Loss: 541.

2. Roman Tarmat.
Issue price: Rs 175.
Target: 275-300.

3. Hindustan zinc.
CMP: 716.
Target: 725 and 734.
Stop Loss: 709.

4. GSPL.
CMP: 55.6.
Target: 56.8 and 58.
Stop Loss: 54.

5. Reliance Energy.

6. MTNL.
CMP: 163.4
Target: 167 and 170.
Stop Loss: 160.

7. UP Sugar stocks.

Why markets will fall in the coming sessions?

1. Q1 results of most sectors will disappoint the investors and cannot justify their high PE values.

2. Except capital goods, power and some other stocks, most companies will announce decrease in their earnings.

3. Rise in inflation will have major impact on the interest rate decision. Rise in crude price will lead to rise in petrol and diesel prices by Indian oil marketing companies which will again leads to further rise in inflation.

4. Rupee will continue to rise – Exports will continue to decline.

Please share your views on my stock recommendations and share your views on your favourite stocks.

Indian stock markets are in a precarious zone

Indian stock markets lost some points from their all time highs yesterday. In the past, Markets moved downwards from their highs due to profit booking by investors. But this time, bullish sentiment is prevailing in the sentiment. Most of the global markets are trading in the positive zone. US markets recovered from bearish zone after several flat sessions. Crude price above $71 is a real concern.

Market movements: Markets will open on positive note but may not sustain those levels. Profit booking will be seen in select counters. Stock specific trading will continue.

Significant news:

1. Exports slowed down to 18% in May compared to 23% in April.
2. CRISIL downgraded economic growth to 8.4% while NCAER predicted 8.3% economic growth. CII reduced projection for economic growth to 8.5%.

Positive stock news:

1. Leela group will sell garment business to Bombay Rayon.
2. Titan is entering into branded eyewear segment.
3. Maruti and Mahindra announced good sales.
4. Lanco Infra building world’s tallest residential complex in Hyderabad.
5. Tata Tele will hive off tower business.
6. Himatsingka Seide Acquires 80% stake in Divatex Home Fashions.

Negative stock news:

1. Steel companies reduced flat steel prices by 500-1,000 per tonne.
2. Oil companies rise ATF prices by 2.86%. Airlines will hike fuel surcharge.
3. Airlines will hike fuel surcharge by Rs 50.
4. Hero Honda June sales down by 8%.
5. Financial Technologies posted 28.33% rise in net profit.
6. Dish TV will break even by 2009.

Stock advice:

1. IT companies will announce 10% drop in their earnings in Q1 results. Long term investors should enter into IT stocks after results season. They will post better than expected Q2 earnings.
2. Satyam is only the only major IT company that will announce good results in Q1.
3. Aurobindo Pharma may regain some lost points if markets are positive.
4. Withdrawal of tax subsidy by Chinese authorities for their tyre exporters will help Indian tyre companies.
5. Gujarat Alkalies will continue its march upwards.
6. BSNL re-bidding withdrawn. Accumulate ITI shares.
7. Stay away from Pharma majors- Teva case and ban on 100 drugs.
8. Stay away from Britannia due to competitive bid from Kraft foods.

Stocks for day traders:

1. IFCI and RPL.
2. Lanco Infra.
3. Bombay Rayon- Results and Hotel Leela garment business.
4. Nicco corporation- stake sale.
5. Hotel Leela
6. Gujarat Alkalies.
7. Sell Hero Honda.
8. Subhash Projects.
9. Titan Industries.

Note: I have holdings in IFCI and Hotel Leela.

Indian stock Markets will make new highs

Indian share markets will open on positive note with selective buying in specific sectors like Real Estate, Sugar, Telecom and Financial sectors. Auto stocks will see heavy selling in their counters. Market indices will make new highs but may see some profit booking in the late session. Rising crude rate and mixed signals from Global markets are the only concerns.

Stock of the week: IFCI. Target is Rs 63-65.

IPO of the week: Everonn-Best stock for listing gains and Long term. Even though HDIL priced attractively, real estate sector may be in down trend at the time of listing.

Sector of the week: Real Estate due to DLF listing. DLF may not cross Rs 600 on listing. Book profits and exit.

Most significant news:

1. US federal reserve did not hike interest rates.

2. We will try to bring down the inflation to 3% - RBI.

3. DLF listing date is July 5.

4. BSE SENSEX may touch 50,000 by 2018- Morgan Stanley. Foreign investors are waiting for correction to enter into Indian stocks for long term.

Positive stock news:

1. IFCI board will announce stake sale in July 6 board meeting. There is enormous value left in this stock. Don’t book profits immediately.

2. Bank of Baroda sold 0.9% stake in NSE to Citi group at 2,282/share.

3. Tricom