As expected Monday lost another 300+ pts after S&P announced it's downgrade of US. Markets may continue to slide more depending on global cues. At the time of writing this post, Dow and Nasdaq are down 2.3% and 2.9% resp. Indian markets may open weaker on Tuesday. But it seems selling in the Indian markets may abate soon. As mentioned earlier investors may look for picking up stocks in a staggared manner. Stocks mentioned earlier continue to hold promise and are a buy on every decline.
Additionally, panic in the markets, as are being seen now, not only throws up profitable opportunities but relative outperformers are discovered also. Such corrections help us identify strong stocks which will outperform. Following are a few such stocks. They have declined only minimally so far and when the market turns they will surely give better returns. Fundamentals also support their outperformance.
ABG Shipyard, ACC, Dabur, GVKPIL, Idea Cellular, Petronet LNG, Powergrid
One can also consider BHEL. In view of its disinvestment plan it may be better to wait and buy the stock through its public offer. However if the price falls further one may even buy from the secondary market.
Disclosure: I hold all the above stocks except BHEL which I intend buying around 1600
level/through public offer.
Happy investing
Basudev
Monday, August 8, 2011
Saturday, August 6, 2011
Eventful week - Time to bargain hunt
Last week the markets gave the jitters literally. The sensex lost nearly 900 pts. and the nifty nearly 270 pts. As it is, investors deserted the markets after the last rate hike fearing a slow down in the economy. Such fear is not unfounded. Indian corporates are going to face margin compressions and it will be an uphill task to maintain bottomline growth.
With languishing markets, Govt's plan to raise money through disinvestment is already in a mess. Two big ticket disinvestment programs, that of ONGC and SAIL are in the back burner. Which means keeping deficits within target is going to be elusive. This has a direct bearing on how much Govt can spend on development. So much for infrastructure developmet. No wonder infrastructure stocks are a thoroughly crumpled lot.
On the international front S&P's downgrading of America is expected to have some effect on India. If debt servicing costs for America indeed goes up, it will have to cut expenditure. This will impact our exports both goods and services.
However in such a scenario commodity prices will also climb down and this includes Oil in particular. This is going to augur well for India as we can see inflation cooling off. This will prompt RBI to ease up on rate tightening. If that happens we can see our markets rejoicing in no time.
The crucial thing to do therefore is to keep an eye on commodities with crude in particular focus.
Now that markets have corrected significantly one can start accumulating blue chips
and other growth stocks. Sure prices may erode further, but thats a risk one has to take if one has to be in stocks. Over a period these will deliver profits. The stocks mentioned in this blog are still in profit/or a minimal loss inspite of the recent carnage. Additions can also be made in these. Few more stocks which can be money compounder are as follows
Coal India, L&T, JP Associates, Tata Steel, SBI, Infosys/TCS
Disclosure : I hold/intend to hold the above stocks.
Happy investing
Basudev
With languishing markets, Govt's plan to raise money through disinvestment is already in a mess. Two big ticket disinvestment programs, that of ONGC and SAIL are in the back burner. Which means keeping deficits within target is going to be elusive. This has a direct bearing on how much Govt can spend on development. So much for infrastructure developmet. No wonder infrastructure stocks are a thoroughly crumpled lot.
On the international front S&P's downgrading of America is expected to have some effect on India. If debt servicing costs for America indeed goes up, it will have to cut expenditure. This will impact our exports both goods and services.
However in such a scenario commodity prices will also climb down and this includes Oil in particular. This is going to augur well for India as we can see inflation cooling off. This will prompt RBI to ease up on rate tightening. If that happens we can see our markets rejoicing in no time.
The crucial thing to do therefore is to keep an eye on commodities with crude in particular focus.
Now that markets have corrected significantly one can start accumulating blue chips
and other growth stocks. Sure prices may erode further, but thats a risk one has to take if one has to be in stocks. Over a period these will deliver profits. The stocks mentioned in this blog are still in profit/or a minimal loss inspite of the recent carnage. Additions can also be made in these. Few more stocks which can be money compounder are as follows
Coal India, L&T, JP Associates, Tata Steel, SBI, Infosys/TCS
Disclosure : I hold/intend to hold the above stocks.
Happy investing
Basudev
Tuesday, July 26, 2011
Another monthly shocker for Indian markets
Things were going fine until this one had to come. Another rate hike of 50 bps. Sure enough markets felt the tremors and dived once again. Naturally the rate sensitives were the worst hit.
Best to wait for the outcome on US debt ceiling matter to clear up and if US can save the day, as it might well, for the stakes are too high, we can continue with our stock specific approach.
In the meantime appearance of L&T Finance Holdings IPO is truly providential. One can apply by all means.
Happy investing
Basudev
Best to wait for the outcome on US debt ceiling matter to clear up and if US can save the day, as it might well, for the stakes are too high, we can continue with our stock specific approach.
In the meantime appearance of L&T Finance Holdings IPO is truly providential. One can apply by all means.
Happy investing
Basudev
Sunday, July 10, 2011
Volatile markets
Indian markets made handsome gains past couple of weeks after Nifty touched a low of 5257 on Jun20. Thursday saw a whopping gain of 1.8%. However much of the gain of Thursday was wiped out on Friday as Nifty fell by close to 1.2%. Friday's fall could be because of the new mining bill mooted by Govt. If passed, it would mean mining companies would have to part with some of their profits as royalty, ostensibly to compensate people affected by mining activities. All these companies lost heavily on the bourses on Friday with sentiment rub off pulling down the market.
Its no brainer these days to figure out that the recent gains in the market have been FII driven. To that extent it is difficult to say what FIIs will do next. However few aspects of market technicals may be worthwhile to recognise.
1. Nifty is close to its 200 DMA (200 day moving average) which is at 5742. This level will be required to be crossed for the Nifty to continue its upmove. In other words the 200 DMA is a resistance for the nifty on its way up. It may stop there or it may overcome it. That will have to be seen.
2. The level of 5200 is important on the downside. It is here around this level that the Nifty took support number of times. Hence 5200 can be considered to be a very strong support. Again market may take support there or it may not. That we will have to see. For a shorter term perspective 5350-5400 is an important area.
Disclosure: I am continuing to hold my shares
Happy investing
Basudev
Its no brainer these days to figure out that the recent gains in the market have been FII driven. To that extent it is difficult to say what FIIs will do next. However few aspects of market technicals may be worthwhile to recognise.
1. Nifty is close to its 200 DMA (200 day moving average) which is at 5742. This level will be required to be crossed for the Nifty to continue its upmove. In other words the 200 DMA is a resistance for the nifty on its way up. It may stop there or it may overcome it. That will have to be seen.
2. The level of 5200 is important on the downside. It is here around this level that the Nifty took support number of times. Hence 5200 can be considered to be a very strong support. Again market may take support there or it may not. That we will have to see. For a shorter term perspective 5350-5400 is an important area.
Disclosure: I am continuing to hold my shares
Happy investing
Basudev
Thursday, June 23, 2011
tale of pledged shares
Looks like the tale of pledged shares has played out in the Indian markets for now. Till the next time its told i.e. Markets saw a decent pullback after 2 days of nerve wrecking price erosion.
Most promoters of companies pledge their shares to financiers for meeting a variety of their needs. Nothing terrifying about it. Problem occurs when promoters are required to shell out a top up when the market value of the pledged shares falls. And if they can't, all hell breaks loose. A proper scrutiny of a company's financial health before investing helps tide over such crisis in the markets. And for people with deep pockets, these are windfall generating situations.
Stock Idea:
Mundra Port: Another stock,which has been able to maintain it price in the region of 140-150 for the past 6 months instead of going down. It is now India's 7th largest port and has handled 50m MT cargo in 2010-11. Co's target is to increase it to 80m MT in 2011-12 and 100m MT by 2012-13. This will make it the largest port in terms of cargo handling.
It has recently added another feather to its cap. It has acquired a coal terminal in Australia through an all cash deal amounting to Aus$1.829 bn.
Looks like a good growth compounder.
Disclosure : I hold the stock in my portfolio.
Happy investing
Basudev
Most promoters of companies pledge their shares to financiers for meeting a variety of their needs. Nothing terrifying about it. Problem occurs when promoters are required to shell out a top up when the market value of the pledged shares falls. And if they can't, all hell breaks loose. A proper scrutiny of a company's financial health before investing helps tide over such crisis in the markets. And for people with deep pockets, these are windfall generating situations.
Stock Idea:
Mundra Port: Another stock,which has been able to maintain it price in the region of 140-150 for the past 6 months instead of going down. It is now India's 7th largest port and has handled 50m MT cargo in 2010-11. Co's target is to increase it to 80m MT in 2011-12 and 100m MT by 2012-13. This will make it the largest port in terms of cargo handling.
It has recently added another feather to its cap. It has acquired a coal terminal in Australia through an all cash deal amounting to Aus$1.829 bn.
Looks like a good growth compounder.
Disclosure : I hold the stock in my portfolio.
Happy investing
Basudev
Tuesday, June 21, 2011
To tax or not to tax
Markets took another punch on the chin Monday. In a knee jerk reaction to Govt's efforts to resume talks on DTAT(Double taxation avoidance treaty)with Mauritius markets took a body blow. Though Govt assured that nothing new is in the offing, selective panic continued Tuesday also. It is unlikely that a decades old treaty with Mauritius will be overhauled in a jiffy. Mauritius surely by this time has enough reasons to recognise India,s need to prevent money laundering. At any rate it is not going to have any material impact on Indian stock markets over the long term.
In a separate development Global rating agency Fitch retained India's sovereign rating at investment grade and sees India having robust growth prospects. Rating given is BBB with stable outlook, denoting a moderate default risk relative to other nations. It projects a GDP growth of 7.7 % for 11-12 as compared to around 8.2% for the previous fiscal. Not bad under the circumstances.
Stock Idea:
Welspun Corp - The steel pipe maker of global repute has shown good relative strength against recent market odds. There is not much down side from the current levels of Rs 155-60. Under favourable market conditions it is expected to reward the investor handsomely.
Glenmark Pharma - The dependable and growth compounder from the pharma sector. FDA approvals and molecule development news keep steadily rejuvenating the stock and consequently its price. Should be an excellent buy at around Rs 300 or so.
Disclosure : I hold both the stocks in my portfolio.
Happy investing
In a separate development Global rating agency Fitch retained India's sovereign rating at investment grade and sees India having robust growth prospects. Rating given is BBB with stable outlook, denoting a moderate default risk relative to other nations. It projects a GDP growth of 7.7 % for 11-12 as compared to around 8.2% for the previous fiscal. Not bad under the circumstances.
Stock Idea:
Welspun Corp - The steel pipe maker of global repute has shown good relative strength against recent market odds. There is not much down side from the current levels of Rs 155-60. Under favourable market conditions it is expected to reward the investor handsomely.
Glenmark Pharma - The dependable and growth compounder from the pharma sector. FDA approvals and molecule development news keep steadily rejuvenating the stock and consequently its price. Should be an excellent buy at around Rs 300 or so.
Disclosure : I hold both the stocks in my portfolio.
Happy investing
Friday, June 17, 2011
Hope emerges
Another day of fall for the markets. There seems to be some hope that the fall might get arrested at least for now.Globally, indications are that both France and Germany are serious about resolving the Greek crisis quickly. There has been some reshuffle in the Greek cabinet ostensibly to infuse rejuvenated crisis handling.
Much of the fear in the market is due to equating the Greek crisis with the American sub prime crisis. This may not be the case. It should be possible to ensure stability of the euro and prevent the contagion. After all other European nations have not been as profligate.
Stock Idea: Alstom Projects.
The stock had come in the news recently after it was reported in a TV channel that it was getting delisted. Reason - Alstom would be creating a 50:50 joint venture with Shanghai Electric for making boilers for coal fired power plants. The company promptly denied the delisting part. The stock therefore see sawed for a while. Delisting news sends the price through the roof as promoters usually do it at a premiun.
Delisting or not this stock is expected to go places. Company sources say the proposed JV will be world leader in it's field. Even though the boiler unit might be wound out of India, the inevitable restructuring would benefit the Indian arm. Besides the company has posted decent Q1 results. At around Rs 550 the stock is attractive.
Disclosure : I hold the stock in my portfolio.
Much of the fear in the market is due to equating the Greek crisis with the American sub prime crisis. This may not be the case. It should be possible to ensure stability of the euro and prevent the contagion. After all other European nations have not been as profligate.
Stock Idea: Alstom Projects.
The stock had come in the news recently after it was reported in a TV channel that it was getting delisted. Reason - Alstom would be creating a 50:50 joint venture with Shanghai Electric for making boilers for coal fired power plants. The company promptly denied the delisting part. The stock therefore see sawed for a while. Delisting news sends the price through the roof as promoters usually do it at a premiun.
Delisting or not this stock is expected to go places. Company sources say the proposed JV will be world leader in it's field. Even though the boiler unit might be wound out of India, the inevitable restructuring would benefit the Indian arm. Besides the company has posted decent Q1 results. At around Rs 550 the stock is attractive.
Disclosure : I hold the stock in my portfolio.
Thursday, June 16, 2011
No let up
As expected RBI went ahead with it rate hike. 25 bps this time. It appears industry is concerned about continued rising input costs. Analysts are equally apprehensive that interest rate hikes may continue for some more time and this is not the last that we have seen.
Stock Idea :
IDFC collapsed in the past few days falling from Rs 142 to 120. While overall market had it toll on the share, it appears some news on Govt's thinking to regulate NBFCs contributed to the collapse. NBFCs are non Banking finance companies and there are a number of types each with its own lending/borrowing priorities/rates/target groups etc. There may be merit in Govt's thinking for regulating their margins etc.
Now, IDFC, is not likely to be affected ( impact on margins i.e.). It is involved in infrastructure financing and operating in a competitive environment. Besides due to infrastructure being given special treatment, its able to benefit from high growth.
Mr Vikram Limaye Executive Director IDFC, appearing on CNBC has expressed expectations of a loan growth of 20/25% this financial year and a doubling of loan portfolio in 3 years. Enviable.
At present level the stock is at an attractive valuation and can be expected to rebound once situation gets clearer on the NBFC regulation front.
Disclosure : I have IDFC in my portfolio and intend to add more at curent levels.
Happy investing
Basudev
Stock Idea :
IDFC collapsed in the past few days falling from Rs 142 to 120. While overall market had it toll on the share, it appears some news on Govt's thinking to regulate NBFCs contributed to the collapse. NBFCs are non Banking finance companies and there are a number of types each with its own lending/borrowing priorities/rates/target groups etc. There may be merit in Govt's thinking for regulating their margins etc.
Now, IDFC, is not likely to be affected ( impact on margins i.e.). It is involved in infrastructure financing and operating in a competitive environment. Besides due to infrastructure being given special treatment, its able to benefit from high growth.
Mr Vikram Limaye Executive Director IDFC, appearing on CNBC has expressed expectations of a loan growth of 20/25% this financial year and a doubling of loan portfolio in 3 years. Enviable.
At present level the stock is at an attractive valuation and can be expected to rebound once situation gets clearer on the NBFC regulation front.
Disclosure : I have IDFC in my portfolio and intend to add more at curent levels.
Happy investing
Basudev
Monday, June 13, 2011
Pain continues
Indian markets continues to be in the rut it’s been in for sometime.
The pain is expected to continue for some more time. Crude prices and
inflation may continue to be the dominating factor. Govt is expected to
continue with it’s policy to tighten monetary situation for controlling
inflation and may raise interest rates one more time. This inevitably will
continue to exert it’s attendant effect in growth numbers which we are
likely to see moderating to some extent.
In the global perspective effects of the stimulus package in the US, launched
in the wake of he recession, seems to be wearing off. Another package is hard
to come by. Situation in Europe is not giving any encouragement either.
But for the medium to long term this could be the opportunity to start
accumulating stocks of companies with sound buisinesses and growth
prospects. For, and equally, Indian economy may continue to
demonstrate its resilience.
Happy investing
Basudev
The pain is expected to continue for some more time. Crude prices and
inflation may continue to be the dominating factor. Govt is expected to
continue with it’s policy to tighten monetary situation for controlling
inflation and may raise interest rates one more time. This inevitably will
continue to exert it’s attendant effect in growth numbers which we are
likely to see moderating to some extent.
In the global perspective effects of the stimulus package in the US, launched
in the wake of he recession, seems to be wearing off. Another package is hard
to come by. Situation in Europe is not giving any encouragement either.
But for the medium to long term this could be the opportunity to start
accumulating stocks of companies with sound buisinesses and growth
prospects. For, and equally, Indian economy may continue to
demonstrate its resilience.
Happy investing
Basudev
Sunday, June 12, 2011
About this blog
I have been blogging for a while writing about ways to recognise opportunities in the stock markets which are more likely to be profitable. The approach has been to dwell on fundamental aspects of stock market investing rather than on stock specific ideas. This was done with the idea of making the literature universally appealing. Over time I have received great encouragement from visitor statistics of my posts and also encouragement from friends, colleagues and others . The latter have expressed I should give stock ideas also.
Giving stock ideas is something that I would prefer to give a very very wide berth. However I see no harm if I share my own buy/sell decisions with the usual caution for the reader to seek professional advice.
Happy investing
Basudev
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