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.

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.

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.

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 India announced wonderful results. Good stock for medium term.

4. Kernex Microsystems announced stock split and bonus.

5. Aurobindo Pharma announced 108% rise in net profit.

6. Tata steel will sell aluminium business of Corus.

7. GMR Infra announced 1:5 stock split.

8. CMC and Tata Technologies may merge with TCS but not Tata Elixi.

9. Emami posted good results and 63% increase in net profit.

10. Reliance Communications tied up with PBTL for international roaming.

11. Moser Baer will take price war to even new titles.

12. Wipro will buy Unza of Singapore.

13. Simplex Infrastructure bagged $11.1 million contract and rise in 29% profits.

14. Biocon will announce overseas listing by the end of next year. Long term investors should closely watch this stock to invest on dips.

15. Telecom companies may announce good subscriber numbers for the month of June.

16. Liberty shoes will dilute its stake in subsidiary to raise funds.

17. ICICI Bank approved $200 million loan to Videocon for acquisitions.

Negative stock news:

1. IPCL Q4 results are disappointing.

2. Bajaj Auto sales were down in June by 12%. Auto stocks will continue to feel the heat.

3. Infosys bidding is a speculation- Capgemini.

4. Tata steel lost bidding battle for Vietnam steel companies.

5. Dr Reddys is the lone Indian company in the SEC list of terrorist link companies.

6. Jewellery companies will be hit by US orders of withdrawal of concessions. Titan Industries will see selling pressure.

Stock advice:

1. Sugar stocks will continue to rise due to change in the fortunes of sugar prices. Keep trailing stop losses.

2. As I said in earlier posts, Investors at last recognised the true potential of GMR infra. You may exit the counter after another 15% rise and re-enter into wonderful stock on dips.

3. Financial stocks like IFCI, IDBI, IDFC, TFCI and PFC will continue to gain in the coming days. But you may get exceptional returns in IDBI and IDFC.

4. I suggested EID Parry for long term investors 10 days back. It already gave 10% returns within 10 days.

5. Capital goods index is at all time high. We may see some selling in this sector in July in spite of orders.

6. Medium term investors can enter into HUL –They will announce wonderful results and dividend. Bonus gossips are spreading.

7. Hinduja TMT will see some positive news within a short term. Risk taking investors can bet on this stock for short term.

8. You can accumulate Cairn India and RPL for long term.

9. Deepak fertilizers will give 10% returns in July due to monsoons and gas supply news.

10. Ranbaxy and Cipla may continue their positive momentum on Monday and Tuesday.

11. Global players want to buy some stake in Jet Lite. Buy Jet Airways on dips for short term gains.

Value stocks for long term investors: Best stocks in correction time.

1. Wire and Wireless.
2. Dish TV.
3. Cheviot.
4. RSWM and Welspun.
5. Raymonds- strictly long term.

Stock picks for medium-short term:

1. HDFC.
2. TCS-Results will not be as disappointing as analysts are thinking.
3. Kernex Microsystems-High risk and high returns.
4. Hindustan Lever.
5. Eastern Silks.

Stocks for day traders:

1. IFCI-Stake sale.
2. Aurobindo Pharma – Wonderful results.
3. RNRL and Tata Tele.
4. IDBI-Stake in IFCI.
5. Tricom India- Good results.
6. Renuka sugars and other sugar stocks – Positive momentum.
7. Unitech, Parsvanath and Sobha.
8. Ranbaxy and Cipla - with risk.
9. Sell IPCL.
10. Sell Bajaj Auto.
11. Sell Titan and Gitanjali Gems.
12. Sell HPCL and BPCL- Crude is above $70.

Why markets will crash in July?

Investors are in euphoric mood due to unexpected rise in the past 2 days. But future is looking bleak due to negative triggers. Except some sectors, most companies will announce disappointing results. It will be difficult for RBI to keep rupee value above 41 against dollar. If RBI will not hike interest rates, inflation will again move northwards. Crude price is another worry.

My advice: Some good stocks are at or near 1 year low. Take long positions in those stocks. Don’t take long positions in the sunrise stocks, most of them are near 52-week high. If markets undergo correction, they will suffer heavily. Sit on cash and buy on dips.

Please share your views on my analysis.

volatile week due to expiry of derivatives

Indian stock markets will trade in the negative zone due to weakness in US markets and expiry of derivative contracts. PSUs like BEML, NTPC and other public sector companies may hog limelight in this week. There are no significant triggers to propel markets into higher zones.
Caution of the week: Derivatives expiry will make this week extremely volatile.

Stock of the week: BEML- IPO may boost sentiment in this counter.

Watch out sector: Textile sector.
1. Government will announce sops to revitalise this sector. Most of the stocks are near their 1 year low.

Stock advice:

1. Amara Raja Batteries may dip on Monday and again continue its march basing on wonderful results.
2. Spicejet will be in news (acquisition) in this week also.

Significant news:

1. SEBI barred Karvy broking for 3 months and no new demat accounts till December 31, 2007.
2. India will be the fastest growing market in entertainment &Media over the next 5 years –PWC.

Positive news:

1. Ranbaxy received tentative approval for Tamsulosin.
2. Satyam signed multiyear contract with hawker Beechcraft to provide design services.
3. NTPC entered into JV with TELK for transformers.
4. TV18 will announce bonus shares on July 5 in its board meeting.
5. Kalyani steel forged JV with Gerdau of Brazil.
6. HCL Tech announced $15 million contract with Alenia Aeronautica.

Negative stock news:

1. The drug control administration recommended ban on 1,105 drug brands. Cipla, Alkem, Nicholas Piramal, Lupin and Zydus Cadila are worst sufferers.

Companies in the Business Week’s top 100 list:
1. Bharti Airtel.
2. TCS, WIPRO and Infosys.
3. Satyam and HCL Technologies.

Value picks for Investors:

1. Alok Industries.
2. ITI Limited.

Best Pharma stocks for short-medium term:

1. IPCA Labs.
2. Matrix Labs.


Stock picks for long term investors:

1. Tata Chemicals: Betting on bio-fuels.
2. Wire and Wireless: Growth lies ahead.
3. Dish TV: Can it capitalise on DTH growth?

Stocks for day traders and investors:

1. Adlabs.
2. Network 18.
3. NTPC.
4. IFCI- Selling of malavika steel will boost value.
5. Ranbaxy.

Please share your views on Indian stock markets.

Volatility will return to Indian stock markets

With uncertain cues from global markets, Indian stock markets will again return to volatile zone today. BSE Sensex and NSE Nifty will find it difficult to break resistance zones. Rupee depreciation is the only factor that can move these indices into higher zones. Will it happen? Watch out.

Global Markets: US Markets are ended in negative zone while Asian markets are in positive zone.

Sector of the day: IT Stocks may bounce back id dollar appreciates.
Stock of the day: State Bank of India- Merger of 4 wings with SBI.

Warning News:

1. The Directorate general of Hydrocarbons slashed the estimates of gas discoveries by GSPC and ONGC.

Significant news:
1. Government is planning to auction 80 oil blocks for exploration in August.
2. Government is planning to disinvest 10% stake in Oil India along with IPO later this year.
3. Cabinet may give nod to Mittal-HPCL deal.
4. Wadias (Britannia) will end their dispute with DANONE.
5. Tata Motors will launch 1 lakh car in early 2008.

Positive stock news:

1. Melstar will buy 14.4% stake in GE Shipping.
2. PSL bagged Rs 380 crore order.
3. UB Holdings make an open offer to the equity shareholders of Deccan Aviation. Offer price is Rs 155 a share and open between July 25 - August 13, 2007.
4. Ranbaxy got tentative US FDA approval for Amlodipine.
5. BHEL is increasing power equipment manufacturing capacity.
6. Yahoo partnered with Idea cellular in Mobile search.
7. Gillette sold Gurgaon property for Rs 78 crore.
8. BEML may bounce back today.

My stock picks for medium term investors:

1. Hindustan Construction Company.
2. Hitachi Home.
3. Royal Orchid Hotel – Safe bet even for long term.

Stock picks for value investors:

1. FDC Pharma.
2. ITI Ltd.
3. Himachal Futuristic Communications.
4. RSWM.

Safe stocks for Long term investors:

1. Bharti Shipyard.
2. Wire and Wireless – with some risk.
3. Nagarjuna Constructions – Wait for correction.
4. Tata Motors.

Stocks of the Day:

1. State Bank of India.
2. Ranbaxy.
3. Melstar.
4. Tata Power.
5. Tech Mahindra-watch out for rupee.
6. Satyam-watch out for rupee.
7. Deccan Aviation.

Please share your views on my stock picks.