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The Indian stock markets are soaring like there is no tomorrow. Starting at 13,000 in the beginning of this year, the Sensex crossed 20,000 by October.
Will the Sensex sustain the gains or will it go down again?
Where is the stock market going? Will it rise further? Or will they crash again? What should a small investor do in such a scenario? Should he hold on to his stocks or sell them? Should he buy stocks now or stay away from the market?
Market expert Pranav Sanghavi answered many such readers' queries in an hour-long chat on Wednesday. Here is the transcript:
PRANAV SANGHAVI says, Good afternoon everyone and welcome to the chat. Let's begin.
karan asked, Hi Pranav, Good afternoon.... you are doing a great job by providing small investors insights which otherwise is difficult to get these days when every other guy claims to be an expert.... i have been following your chats for the last one year or so..... and what i found is that your suggestions are really worth mentioning.... hats off to you.... let me come to my first question for the day: do you feel that something could be bought even now??? or one should wait for a correction... actually i have some spare money and i would like to invest.... a part for 6-12 months and the rest for 3-5 years...
PRANAV SANGHAVI answers, at 2007-12-12 12:04:32Thank you Karan for your kind comments. Well markets are trading at all time highs but as I have mentioned before our economy growth looks intact and is less US dependant than say China, so with a long term outlook for investing you could invest even now. But in the past month or so the markets have been consolidating and some days even down a couple of percentage points. So I would recommend to buy on those days rather than when the index is touching new highs. It is difficult to time the markets but you can always buy on days the markets are down.
karan asked, is SBI [Get Quote] worth buying at current levels for 3-5 year outlook?
PRANAV SANGHAVI answers, Yes definately. They are about to come out with a rights issue which should favor the investors. And with a 3 year outlook definately a buy. It is after all the largest bank of India and with a growing working and earning population banks will be one of th ebiggest beneficiaries in the long run.
ash asked, hi what is the target of himachal (hfcl) and till when??
PRANAV SANGHAVI answers, I would rather not trade in HFCL and look at a quality growth stock.
ash asked, also what bout ril, ifci and jaiprakash associates??
PRANAV SANGHAVI answers, RIL [Get Quote] is an index heavyweight. It will almost always move in tandem with the index movements. But as in case of the index so will RIL move upowrds in the long term.
ash asked, also what bout ril, ifci and jaiprakash associates??
PRANAV SANGHAVI answers, IFCI's outcome will depend on the bids on December 15. And also beyond that what the winning bidder has in plan for the company's future growth. JP also is a decent player in the infrastructure sector and could be looked at. But I'd rathe rgo witha Unitech and DLF.
uma asked, Hello Pranav - how are ICRA and GVK Power for the long term ??
PRANAV SANGHAVI answers, I think both have performed well post their issues over the last few quarters and both look to continue their growht. GVK Power also has announced decent expansion plans and India being a grossly under powered country, GVK owuld benefit from the same.
Anuj asked, What are the prospects of IT shares in 3 years time frame? FMCG shares like HUL , ITC are still less priced , will it be good to enter them with ahorizon of 2-3 years?
PRANAV SANGHAVI answers, TIll the dollar continues to weaken the IT pack may not outperform the markets. They already have recovered about 15 odd % from their lows. But any appreciation in the ruppee may again send the stocks tumbling. Yes ITC I believe is still under priced even though it has surged about 30% over the past few months.
bmbnb asked, what abt RPL and RNL as both are among the flagship companies of Reliance
PRANAV SANGHAVI answers, RPL has a large refinery coming up. Once the production starts off the stock shall start its upward rise. It will be one of the largest refineries in the country. RNRL still has a vague business model and its future depends on the outcome of the court case ruling over the gas fileds.
rajat asked, what do you say regarding BIRLA CAPITAL & FINANCIAL SERVICES LTD. is it worth entering it?
PRANAV SANGHAVI answers, All the financial services companies are doing exceptionally well considering the high activity in the areas such as Capital Market, Insurance, M&A etc. I would hold on to the stock. Their Mutual Funds also have performed exceptionally well over the past few years.
Gopal asked, Hi, Q.1. Do you think there will be any correction in short term & how much will be the impact. Q.2. Do you have any idea on Silverline Tech. after recent Amalgamation & proposed listing of Animation Division.
PRANAV SANGHAVI answers, Our markets are just coming out of a correctional cum consolidational phase. I think once the December quarter results are out, our markets should rally. Even the FII's who have not been as active in our markets due to their annual holiday and festive season will be back in early Jan and we should witness a rally.
Gopal asked, Hi, Q.1. Do you think there will be any correction in short term & how much will be the impact. Q.2. Do you have any idea on Silverline Tech. after recent Amalgamation & proposed listing of Animation Division.
PRANAV SANGHAVI answers, I would stay away from Silverline completely.
Pramendra asked, Hello Pranav! what are the prospects for Praj Industries [Get Quote] with 1/1.5 yrs time horizon ? dou you feel that valuations are still on the higher side?
PRANAV SANGHAVI answers, Hi Parmendra. Praj was one of my recommendations last year and it has reaped great returns. I am still bullish on the bio-friendly fuel sector. Praj is one of the largest suppliers of bio-fuel plants in the country. They have a huge 7-8 year order backlog. I still like the stock.
bmbnb asked, Also one more scip is Oriental Bank of commerce [Get Quote] what would u suggest for that
PRANAV SANGHAVI answers, All the mid cap PSU banks shall fare well over the next few quarters. OBC being no exception.
Atul asked, What is you take on banking stocks SBI, Punjab National Bank [Get Quote], Axis Bank, HDFC [Get Quote] , ICICI. As per you which are the good one to invest in with atime frame of 3 years? At what level one can invest in them looking at 3 years prospects.
PRANAV SANGHAVI answers, I think the banking sector should continue their growth path with talks of the interest rates coming down in the 2nd or 3rd quarter next year. SBI, ICICI & HDFC being my picks.
sunil asked, wahat about hotel leela in next 12 month
PRANAV SANGHAVI answers, After I had mentioned it, it has risen over the last few months. I would still continue to hold on to the stock.
Josh asked, Hi mate! Which are the MNC could give us better returns?
PRANAV SANGHAVI answers, I'm not too bullish on HUL but you could look at ITC, Nestle [Get Quote].
Rajdeep asked, How do i identify the profitable share? I'm new & trying to invest in share.
PRANAV SANGHAVI answers, You need to learn how to study stocks. Both the training institutes of BSE and NSE offer such courses.
amar8 asked, What are your views over Finolex Cable, RPL & Infosys [Get Quote] ?
PRANAV SANGHAVI answers, With a long term outlook all should do well. Dollar/Ruppee rates will dictate much of Infy's movement next year atleast. RPL should outperform the markets the year its commercial production begins.
Divya asked, Hi Pravan,Pls give me some good mid cap n large cap and their roughly returns in 5yrs period.
PRANAV SANGHAVI answers, Hi Divya, You could look at stocks like NTPC, IDFC [Get Quote], IDEA, SBI, RIL, L&T, BHEL etc.
amar8 asked, Will it be wise to invest in Petronet, Dish TV, Ispat and IFCI ?
PRANAV SANGHAVI answers, I would be wary of Ispat but you could look at the others. IFCI ofcourse you must wait for the December 15 outcome of the bidding process.
Atul asked, Presently pharma shares are out of flavour and their pricing is lucrative compared to other shares. Can one invest in them with a 3-5 years outlook? If yes, which shares one can invest in and at what level?
PRANAV SANGHAVI answers, Thats a good question. The pharma sector has surprisingly remained an underperformer. This I believe is for various factors. The companies that are dependent on exports have suffered due to the dollar depreciation. And the local market players are still under a pricing policy of the government. But inthe long term you could look at some of the pharma players like Dr. Reddy, Dabur [Get Quote] etc.
munna asked, Hi Pranav, Is it a good idea to invest in very high P/E ratio companies like Praj, DLF though their order is quite strong?
PRANAV SANGHAVI answers, Some businesses command a high PE. Like the IT sector in its heydays traded at 30 plus PE ratios and no one batted an eyelid. DLF is one of the largest palyers in the Real estate arena and it has delivered fantastic results in all quarters post its listing. They have high capability plus htier margin ratio is very healthy. THey also have some huge projects on hand like the recently announced one with the Karnataka Government. So I would surely go with a DLF even though its PE is high. I had receommended the stock in August I think and its nearly given a 80% return since.
Kamalnath asked, I was allotted Gujarat Borosil [Get Quote] when public issue was issued @ Rs.10. I am holding 100 shares. Due to change in address, i don't receive any communication after that. When i present the same for demat, Bank told me to send it to the company and get it labelled for Rs. 5 share? where should i send - to the company or share broker? any address?
PRANAV SANGHAVI answers, You can contact your broker and get the company's address.
ravii asked, Hi sir how r u its being long time Do u thing tht there will be 10/12% correction in the market at any time...?
PRANAV SANGHAVI answers, Corrections are a part an parcel of the game. But I don't see any reason why our markets should correct that much in the near future. Maybe beyond mid January after a rally we may see some correction. But from our previous hugh we had corrected 10% to see 18800 levels.
Atul asked, What is your take on metal especially Hindalco [Get Quote] and Telecom especially Rel Comm, Bharti, Idea, Tata Tele shares? In which shares of these sectors one can invest with a 3-5 year outlook?
PRANAV SANGHAVI answers, Hindalco is a long term play and one can look at it with a 2-3 year outlook. By then it will have digested its large overseas acquisition also. I am still bullish on the telecom sector depsite the govenrmental interferences in the policies. I still like Bharti, RCom and Idea.
ravii asked, Hi Sir is it good to purchase essar oil, ispat at this level..?
PRANAV SANGHAVI answers, They are momentum stocks and I would tread carefully with both.
ravii asked, What is Spot & Forword?
PRANAV SANGHAVI answers, Spot is the price of the stock in the equity market and Forward is the price of the Future of that stock in the derivative market.
Don asked, Hello Sir, How r u? Where were u for so many days? Ok question: What do you think about entering Cairn India [Get Quote]?
PRANAV SANGHAVI answers, I would rather look at a REL or NTPC.
Um asked, I taken lot of L&T at price 4500.After roll back its price now goes to 4650.Accorting to you how many days i wait or can i sell it in loss.
PRANAV SANGHAVI answers, You can surely wiat to see a profit by mid Jan. I would hold on surely.
KAN asked, What bout market/ sensex in short term will it fall or raise ?
PRANAV SANGHAVI answers, I think we should see a rally in early Jan.
Don asked, Which stocks in MidCap do u think will do well in coming days?
PRANAV SANGHAVI answers, I think Dena Bank [Get Quote] has some good upside going by its fundamentals. You could also look at Idea, IDBI, IDFC etc.
KAVITA asked, I have Kotak Midcap Dividend (1000 units) and Franklin India Flexi Cap Fund 1500 units. Now both of these NAV doubled to around Rs. 21/-. Want your suggestion whether i can sell both these MFs and invest in good shares. In that case can you suggest which script should i invest?
PRANAV SANGHAVI answers, I would need to see the portfolio holdngs of these funds for me to advise you.
shahji asked, Pranayji Namaste, With so much competition coming in TELECOM Sector do you think investing in companies lime RCOM,BHARTI,IDEA will be good for long term - say 5 yrs. Please advice
PRANAV SANGHAVI answers, We are the fastest growing telecom market in the world. Especially the wireless market. Our wireless telephony numbers has shot past the land line numbers which has been around for over 50 years. But there is still a large scope for growth.
jk asked, Is greaves cotton a good inv from long term ?
PRANAV SANGHAVI answers, Yes going by its fundamentals.
jk asked, iS tata steel good to enter at htese levels ? Shoudl I look at other stell stock s?
PRANAV SANGHAVI answers, Tata steel [Get Quote] is a good stock with a 2 year outlook too. It depends on which stock you plan to sell. Once the debt of Tata Steel is reduced and the Corus numbers get merged you will have an extremely strong set of numbers. Even though steel is a cyclical commodity but I dont see the demand in India dying down too soon.
rajesh asked, I am into systematic investment , do i sell when rates go high and buy again when it is low or just keep the mutual funds going for as long as i can.
PRANAV SANGHAVI answers, Just keep the mutual funds going as SIP's always average out the market volatility due to its periodic investment nature.
HEMENDRA asked, I PURCHASE 500 SHARE OF BPCL [Get Quote] AT RS 415 IF MARKET IS DOWN IT COMES TO RS 350 BUT WHAT IS UPPER SIDE OF BPCL FOR LONG TERM
PRANAV SANGHAVI answers, You could see a 10 to 15% jump in the stock if the margins can see some improvement due to hike in local prices or drop in crude prices.
sathish asked, Hello sir, If I sell any stock after one year is I need show while tax filing
PRANAV SANGHAVI answers, Yes you do. Not all stocks are expempt from long term capital gains tax. Only a certified list falls under the Long Term Capital Gains tax exemption.
Sudha asked, Infosys is good to hold or you suggest exit? Can i purchase these shares whenever it reaches 1650/- and sell it around 1725/- and repeat this to earn money?
PRANAV SANGHAVI answers, Yes at 1650 levels you could look at accumalate the stock.
Don asked, How about entering power grid now?
PRANAV SANGHAVI answers, Yes you could still look at the stock with a longer term outlook of 6 to 12 months.
nimisha asked, hello pranav i have around 100 shares of sterlite industries ltd brought at abt 1100 n it is quoting around 1105 as of now? wht are the immediate n short term outlook of this scrip? plz advise thnk U!
PRANAV SANGHAVI answers, Hello Nimisha, you could continue holding on to Sterlite. It want to emerge as the largest non steel metal player in India. I would hold on. You oculd look at MALCO which has a substantial stake in Sterlite and is available to a discount to Sterlite price.
BALAJI asked, I have Southen Ispat shares..200 numbers purchased at Rs. 17/- on tips. Kindly suggest upto what rate i should hold?
PRANAV SANGHAVI answers, If you are in profit book it and look at Tata Steel or Sail [Get Quote].
sanjay asked, hello sir, i had purchased GMDC 10 @ 590 on Muharat Trading what should i do with it now as it has come down to 490 today
PRANAV SANGHAVI answers, I would hold on. In the longer term you should see your price.
giriraj asked, sir i hold 125 shares of reliance capital@ of 625 .I can wait up to one year .Should i hold it or sell it .Also Can i take entry in RPL at current levels
PRANAV SANGHAVI answers, I would hold on to R Cap. I has said last year that it has made a lot of investments and should reap benefits in the coming years. This year has proved just that. Also it should derive further benefit in the coming years.
sreeja asked, i hold Aegis Logistics [Get Quote], India Cements [Get Quote] and ICICI bank [Get Quote]. I am a long term investor. Which of these shold i hold and which to sell. any other long terms changes in this portfolio ?
PRANAV SANGHAVI answers, You could hold on to all three. Aegis has emerged out of nowhere with a strong business plan and the stock has moved from single digits in 2004 or so to the current tripple digits.
PRANAV SANGHAVI says, Well its time for me to leave. Hope to see you'll next week and Happy Investing. Bye for now.
Chat with Pranav every week!
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