'Go for a mix of balanced funds'

After crossing the magical 12,500 points the Sensex has plunged below 9,5000. As a matter of fact on Tuesday, it even dropped below the 9,000 mark to 8994!. The market mayhem of the past few weeks has left investors, traders and analysts at their wit's end. In the bargain, many investors lost a fortune, while others made huge losses through panic selling.

To sooth the nerves of all those affected by the market mayhem, Pranav Sanghavi, director, Jitendra Harjivandas Securities (P) Ltd, chatted with rediff.com readers sharing valuable investment tips. Here is the transcript: _____________________________________________________________________________________

Ankur asked: What would be fate of Mawana sugar? I bought 73 shares at Rs 96. What level will it reach and in how much time?

Pranav Sanghavi answers: Sugar stocks have performed well over the last one and a half years but I would stick with frontline stocks like Bajaj Hindusthan.

Bhaskar asked: Is it worth holding Aptech, Mcdowell, Amararaja Battery?

Pranav Sanghavi answers, Aptech and Mcdowell are excellent long term investment. Amamraja I don't follow so won't be able to help you on that.

Kkumar asked: Infosys, TCS and Satyam have announced 1:1 bonus. Assuming that a retail investor wants to invest in these issues, based on past experiences, what is the best way to invest: buy before bonus or buy after bonus?

Pranav Sanghavi answers: All these stocks have been hammered in the current bloodbath that the market is witnessing and I would recommend buying all of them at current status of come bonus.

Payal asked: Hello sir...I am a long term investor. In the current markets, I have invested in ITC at 160. For a 1 to 3 year horizon, what are the prospects for this script?

Pranav Sanghavi answers: In a year's time, I see a price north of 200. The current price does not justify the ITC's balance sheet.

Payal_sarin asked: Dear Sir, I picked up Cipla at 269, Centurion Bank at 27 and ITC at 179, please tell me should I hold them at this level or sell?

Pranav Sanghavi answers: I need to know the time frame for your investment. If you can hold for a year, hold on. I would recommend switching Centurion Bank to another bank like SBI, ICICI Bank or HDFC Bank.

Arun asked: Well, everyone knows it is falling, but at the same time everyone knows it will recover. Question is when does it recover? What are the technical signals?

Pranav Sanghavi answers: As I mentioned during my chat last week, between 9,000 and 9,200 are strong support levels. If 9,000 is breached, we could see levels of 8,500 also. Today, for example, each and every market, be it US or other emerging markets like Argentina and Brazil are down and the latter were down by over 4% just yesterday.

Gaurav asked: What is your view of Shaw Wallace? Should I buy at the current level?

Pranav Sanghavi answers: Having come under the UB umbrella, I see a good future for this stock.

Aneesh asked: What are the share that look good to u at current levels in the following sectors: cement, auto, tech, telecom, metal, infrastructure, real estate?

Pranav Sanghavi answers: You can choose from Gujarat Ambuja, Ultratech, Bajaj Auto, Bharti, IDFC and Bombay Dyeing. These will be good choices at this point.

Sahil Anand asked: I bought Reliance for 1,100. Now it is 860. Do you think it will come back to 1,100. If yes, when?

Pranav Sanghavi answers: Nobody can predict the market with such accuracy or we all would be Bill Gates. But Reliance as a stock should surely break the 1,100 levels in future.

Alok asked: How are the hotel stocks looking? Is Royal Orchid a good bet?

Pranav Sanghavi answers: I prefer sticking to quality frontline stocks like Indian Hotels, who have strong findamentals and are well known promoters.

Bappaditya asked: Is it a good bet to buy shares of Satyam Computers now or shall I wait a bit so that the share price goes down a little more? Presently it is trading at Rs 577.

Pranav Sanghavi answers: I would recommend buying come bonus and at every fall, 15 to 20% of what you intend to buy.

Sahil Anand asked: Hello sir. Where do you see the market in coming two to three months?

Pranav Sanghavi answers: Market should recover beyond July-August once the quarter results are in, the rains are halfway and global markets are stable.

Ashwin asked: Sir, I am holding 100 Canara Bank shares. Do I hold or sell it at current level? What are its prospects?

Pranav Sanghavi answers: Canara Bank has a good prospect. And the bank is continuously addressing the non-performing assets issue.

Ramdongre asked: I have 200 shares of Ashok Leyland. Should I hold them ?

Pranav Sanghavi answers: Please hold.

Ladesh asked: I invested 40,000 in HDFC core mutual fund and the price of the fund is 25% down. What is your advice? How are mutual funds so affected though they are monitored by experts?

Pranav Sanghavi answers: Equity-based mutual funds basically invest in stocks. Thereby their NAV would reflect the fluctuations in the market. But if you study historical figures of 5, 10, 30 year terms, you will notice that these funds perform better than the Index.

Jaga asked: I would like to enter the share market. Could you advise please?

Pranav Sanghavi answers: This is probably a great time to enter the market but do buy in parts. Don't invest everything in one shot.

Sunil asked: What future do you see for GE Shipping, Mecledo Russel?

Pranav Sanghavi answers: Shipping industry is a cyclical sector but GE Shipping and SCI have performed well in the past though in the last couple of quarters, their performances have not been upto the mark. The global shipping industry has not witnessed any showdown in the moment of cargo and I see the same for the Indian market.
As for the other stock, I would rather invest in Tata Tea.

Psrini asked: I have invested in the MF (HSBC Adv, SBI Bluechip etc) and all of them is below par and I am losing confidence funds will recover. Will it be good to exit the funds position and re-enter later?

Pranav Sanghavi answers: I would not recommend to book losses if you are a long term investor. Sell only if you have an alternate investement opportunity on hand. The NAVs will come back over time.

Manas asked: Hello sir, at what levels can I enter Wipro? I can keep it for a year.

Pranav Sanghavi answers: Do buy from current levels. Wipro has an extremely strong balance sheet, robust growth rates and very little float of shares in the market.

Vidya asked: What will be the future of software stocks like Infosys, Wipro, TCS?

Pranav Sanghavi answers: Please refer to my previous reply on the same stocks.

Thillai asked: What is the prospect of GNFC? I have bought it at Rs 126. Now it is Rs 82? Please advise.

Pranav Sanghavi answers: Lot of Indian institutions are holding large quantities of GNFC. Plus their results over the last quarters have been satisfactory. So I would say: hold on.

Ashish asked: In what time do you see market returning to 12k-13k levels?

Pranav Sanghavi answers: I mentioned last week that beyond March 2006 results, an Index of 12,000 cannot be ruled out but as you know, markets are like a one-day cricket match, absolutely unpredictable. We could see 12,000 in three months.

Sh021 asked: What is your expectation regarding Century Textiles at these levels?

Pranav Sanghavi answers: It can be looked at for long term.

Mahi asked: What is stock market? Can you explain briefly?

Pranav Sanghavi answers: I would need a special one hour session to answer this one.

Lakdawalarakesh asked: I have FT Prima Plus and Blue Chip since three years. I also have HDFC Prudence Fund since two years -- returns are average 25%. Should I hold on -- I have 5-year planning. I am in no need of money.

Pranav Sanghavi answers: You have already made a wise timing to your investement. You should hold on.

Cheshta asked: Why Bajaj Auto is falling?

Pranav Sanghavi answers: It's not that a single stock that is falling, all the index stocks are falling.

Oldkid asked: How would Andhra Bank fare in future? It has gone down to 59 from the issue price of 90.

Pranav Sanghavi answers: You should be able to see levels of Rs 100 in Andhra Bank in future. Midcap banks like Allahabad Bank look good.

IJJATLOOTLIYA asked: Varun Shipping and Tinplate have P/E of 5 and EPS of 15 and 11 respectively. Shall I buy now?

Pranav Sanghavi answers: Varun Shipping has given good results and have acquired a couple of vessels in the last two quarters. It should be able to maintain profitability. Tinplate's stock price will be ruled by the outcome of the metal index overseas as all metal stock prices are being hammered.

Suniel asked: With talks of the bears taking over, should I hold for six months -- ICICI Bank (50 shares at Rs 510), L&T (10 shares at 2200), Colgate (50 shares at Rs 350), GujNRe (100 shares at Rs 85), ITC (100 shares at Rs 172) or sell and buy at lower prices later?

Pranav Sanghavi answers: If you are an active trader in the market, you could sell at higher levels and cover at lower prices. Though 9,000 looks to be a strong support level for the Index, if it breaches the 9,000 level strongly, you should try the second strategy.

Rishab asked: Sir, Can I buy ITC at this level? Please advise.

Pranav Sanghavi answers: Yes you can.

Sheetal asked: What is your take on Larsen & Toubro at 2,000?

Pranav Sanghavi answers: A strong buy. As on March, L&T's equity was 26 crores (Rs 260 million)as against a reserve of over Rs 3,000 crores (Rs 30 billion) and net profits of over Rs 900 crores (Rs 9 billion). Plus the company has announced a 1:1 bonus.

GauravGarg asked: Hi Pranav, I bought 500 Reliance Petroleum Shares at Rs 84 and got another 75 in IPO. Please suggest how I should play with it.

Pranav Sanghavi answers: You could sell now and invest into a growth stock like TCS, ITC, SBI and after having made up your loss, you could switch back three months down the line.

Santosh123 asked: Dear Sir, Please reply me. Can I buy ITC on this level. I can hold for 1 to 2 years.

Pranav Sanghavi answers: Of course, you can.

Adhardikar asked, is FM aware of the market crash?

Pranav Sanghavi answers: Only if he doesn't own a television or doesn't subscribe to a newspaper!!

Vinita asked: Sir, at what levels can we enter RCovl and RNRL?

Pranav Sanghavi answers: RCoVL shareholders will get an equal amount of shares in Reliance Infocomm which is now an ADAE group company. Previously, when Reliance Infocomm had planned its IPO, it had got a valuation of over $10.5 billion, which was at that time higher than TCS' IPO valuation. Reliance Infocomm is also planning to come out with an IPO shortly. I would, therefore, recommend to hold till then.

Karthik_2896 asked: Hi Pranav, I have about 10 shares of Infy, which I plan to hold and another 300-odd shares of Karnataka Bank. What should I do?

Pranav Sanghavi answers: Please hold. Karnataka Bank should bounce back over 100 in the next three to six months and Infy is come bonus.

Lovie asked: Sir, should I sell my Reliance Industries shares or keep it for long term?

Pranav Sanghavi answers: Please keep it for long term.

Chandu asked: Hi! I brought DIVIS for Rs 1,290 (25 shares) and 1,180 (25 shares), IVRCL for RS 210(50 shares) and Rs 185 (25 shares) and Sterlite for 366. Should I hold them or sell them? Thanks.

Pranav Sanghavi answers: It is difficult to call theses individual stocks which I don't follow actively but DIVIS has far outperformed most of the pharma stocks. IVRCL is an infrastructure company and it has good prospect. Sterlite's fate would depend on the prices of the commodities like copper, zinc, aluminium etc.

Priyesh asked: Hello! How are you doing? I wanted to ask you about arbitrage funds. Are they safe investments? Is it true more the volatility, more return.

Pranav Sanghavi answers: Arbitrage between equity and the F&O segments were yielding a return of anything between 12 to 14% pretax last year. This year, because of volatility, it could yield higher. Arbitrage investements are completely safe as they are fully hedged.

Sakthi asked: Last three weeks, there was a lot of volatility. To be specific, lost seven days. Retail invester like me worried a lot over whether to stay or withdraw?

Pranav Sanghavi answers, Volatility is just not specific to the last seven days. It was there for the last three months ever since the Index touched 12,000. In the short term, I expect the volatility to continue.

Satya asked: Is it better to invest in lumpsum or go through SIP as they are taking more returns (2.25%)?

Pranav Sanghavi answers: Always SIP. For, funds there are being invested in parts over longer term, rather than in one go at a specific price or level. It's like putting a single cube of ice in a soft drink as compared to breaking it into 10 smaller pieces. The smaller pieces will cool way faster than the single cube. SIPs are like the smaller pieces.

Manas asked: Sir because of the falling market, I incurred some losses. At current levels I want to invest more. Do you suggest to invest more in the portfolio that I have already or add new stocks to my folio?

Pranav Sanghavi answers: I would need to know what you have invested in to be able to answer this.

Scl6 asked, Long Term means how many months?

Pranav Sanghavi answers: As I mentioned last week, anything from 6 to 24 months.

rr asked: At this stage what do you recommend -- buy, sell or hold?

Pranav Sanghavi answers: In respect to what?

Sekar asked: Dear sir, I am planning to invest in DLF & GMR IPOs. Is it a wise move?

Pranav Sanghavi answers: Both are infrastructure development companies. As India is witnessing a growth phase, huge investment will be required in infrastructure. Retail segments (malls), roads and highways (quadrilateral national highway project), airports etc require companies like these. Therefore, these companies will do well.

Stocky asked: Hello sir. I have 500 shares of Hero Honda. At what high price should I sell? Is it better to exit from Hero Honda and enter Bajaj Auto as it may give better returns?

Pranav Sanghavi answers: Both are the leading companies in the two wheeler segment. In fact, if I am not mistaken, Hero Honda had higher number of vehicles sold than Bajaj Auto in the last quarter.

Satya asked: I am loooking for some more mutual funds with more returns in less time. Which one should I opt for?

Pranav Sanghavi answers: I would recommend go for a mix of balanced funds, diversified funds, growth funds and bond funds.

Prasenup asked: Hello: What is your pick on Bharat Forge in a three-year horizon?

Pranav Sanghavi answers: It's a good investment as demand for steel will not subside for the next four to five years I think.

Subhashish asked: Hi Pravan What is your outlook for the market in the next three years?

Pranav Sanghavi answers, It is bullish market. Over three years, it will definitely cross 15,000 at some stage as India's story is still intact.

Sush asked: Sir, Please reply to my question. I have Rana Sugar at 51.40 and also Engineers Limited at 920. What should I do ?

Pranav Sanghavi answers: Rana Sugar has given good performance and has cleaned up its balance sheet. It could perform well but I would still go with the frontline sugar stocks.

Ajay asked: Visit www.stockbaazigar.com

Pranav Sanghavi answers: I will.

Debarshi asked: Sir, I have Tata Tele bought at 25. It is 17. What is its prospect?

Pranav Sanghavi answers: For longer term, telecom sector should perform well. There was a rumour of merger of Tata Tele with other telecom cos within the Tata group. But nothing has been finalised.

Riskappetite asked: Does Vigneshwara Exports Ltd have good prospect?

Pranav Sanghavi answers: I would rather wait for at least three to four quarter results post IPO to consider investing.

Market Expert asked: Do you think the Sensex will stabilise at 8,500 to 9,000 level?

Pranav Sanghavi answers: Yes. As mentioned earlier, between these levels, there will be tremendous support. In fact, at 9,000 odd levels, over the last few days, FIIs have been buying.

Zujer Saifee asked: Good afternoon, sir! I am an investor from Kuwait. I have 1,500 shares of Orissa Sponge at Rs 55 and 500 Shares from Shrachi Securities at Rs 55. What should I do?

Pranav Sanghavi answers: I don't follow either of these stocks. But for Orissa Sponge, you need to actively follow the sponge, iron prices and the metal sector as a whole.

Jannu asked: Hello sir, I am a student. I would like to know where can I get basic information related to stock markets. I would like to learn about the basics before investing. For example: what is bulls, bears, how are the points calculated. Waiting for your reply.

Pranav Sanghavi answers: It is always wise to learn about the market you are to enter. Both the leading exchanges BSE and NSE, especially the former, conducts extensive basic and advanced courses for investors. You could go to www.bseindia.com, www.nseindia.com for futher information.

Gaj asked: What is the best way to invest now? Buying mutual funds or frontline stocks?

Pranav Sanghavi answers: If you can follow the market, buy frontline stocks. If not, invest in any Index-based mutual fund from a reputed issuer.

Chetan asked: Where are we heading towards now? Is it a bear market?

Pranav Sanghavi answers: In the short term, market looks to be highly volatile and definitely in the bear phase. In the longer term, post a consolidation phase, we should see higher levels of the Index.

Pranav Sanghavi says: It was very nice talking to you all. Meet you again next week, same time. Thank you. Stay invested.

Do you want to discuss stock tips? Do you know a hot one? Join the Stock Market Investments Discussion Group