Monday, July 12, 2010

Stock Market: What is ahead?

Stock Markets around the world have been buoyant in the past week because of positive economic outlook and reduction in negative news flow. We have experienced the slowdown in economic activity for about 30 months now and I think there are enough indications that this is going to end very soon. Indian markets have outperformed other markets because of strong domestic growth and positive IMF Projections. IMF has projected 9.4% growth for India which is really significant. Lower IIP numbers not withstanding, the markets are consolidating with positive bias.

What is Ahead?

Indian economy is going to do very well in the next 2 decades and we need to grab this opportunity by buying good stocks on every dip. Though markets are trading with positive bias, 5-10% corrections are not ruled out as the Western Countries have not come out of the woods yet. Any negative news like Greece debt will bring our markets down and that should be an ideal entry point for long term investors. SENSEX EPS for 2011 is projected at Rs.1050 and for 2012, it is projected to be at Rs.1250. If we calculate the SENSEX Target based on this EPS and Historic PE Levels, then by the end of 2012, SENSEX should reach at least 27500 (22*1250). Again this is a conservative estimate and corporate earnings can surprise us either way and markets can reach crazy levels if bull market sets in. Most of the indicators point a strong Indian economy both at micro and macro level which will take the markets to new highs ahead of world markets in the coming years.

Personally I have sold most of my stocks for profit last week as the markets were consolidating in sideways and I do not know if my move is right or wrong. But I am waiting for another correction to enter again and even otherwise I might buy some stocks which are available at reasonable valuations now. Before that I want to report some interesting stocks that have been going up irrespective of what happened in the general market and if we are fortunate to have invested in those kinds of stocks, then early retirement is on the cards.



Stocks that defied General Market Trend

Hawkins Cooker
TTK Prestige
Asian Paints
FDC Limited
Cadila Healthcare
IPCA Labs
Bayer Crop Sciences
Supreme Infrastructure
BGR Energy
Fulford India Limited
Rallis India
Unity Infraprojects
Bank of Baroda
Clariant Chemicals

All the above mentioned stocks have shown continuous uptrend with only minor fluctuations even during the 3 major corrections in the past one year. We need to find such stocks for long term investment to make good returns. But all these stocks are very expensive now and I want to point out some of the stocks that are available at moderate valuations.


Hindalco
Mcleod Russel
Tech Mahindra
Prakash Industries
Mindtree
Mphasis
Aditya Birla Nuvo

But to be a successful long term investor, we need to find out good stocks and continue to invest on every dip. We need to follow this financial discipline and accumulate the stocks by applying the principle of rupee cost averaging. So, readers don’t need to alter their portfolio just because I have mentioned some stocks here. Every one needs to follow their own strategy.

Forbes List

Forbes has recently listed the top 20 stocks that one can have in the portfolio (At this point of time - July 12, 2010) and if you have not read it, here is the link.

http://www.moneycontrol.com/news/features/20-stocks-you-must-own_468158-1.html

I agree with most of the stocks they have mentioned but if you ask me to select the best 10 stocks out of this 20, then here is my list.

Andhra Bank
Yes Bank
BGR Energy
IVRCL Infrastructure
Crompton Greaves
Unity Infraprojects
Mphasis
HDIL
Asian Paints
Rural Electrification Corporation

Happy Investing !

Kumaran Seenivasan

http://www.stockanalysisonline.com/

16 comments:

Shabu's July 13, 2010 at 9:42 AM  

Hi,

Nice post with the genuine Kumaran touch. Keep writing...

Shabu Thachat

Anonymous,  July 17, 2010 at 11:22 AM  

I am keep watching your post since March 2010 and you never be wrong. Last month, eagerly waiting for June Post at the time when market was jittery.
Kindly let your reader know in case if you have a plan to take a break from your monthly post. There are peoples in a planet who love to read your post.
Regards,
Vikash

Anonymous,  July 17, 2010 at 11:28 AM  

I have been keep watching this blog since April 2010 and found that your market analysis always right.
We missed your June Post.......
There are people in planet who love to read your post. In case if you have plan to take a break from your monthly post, let them know. .
Regards,
Vikash

Ram,  July 17, 2010 at 2:23 PM  

Have you come across stock named "Cals Refinery". They are setting up their business in bengal. Haven't delivered any project yet but speculation is that it might be good stock. It trading around 0.35 paise only. I know its risky but your expert advice will be good. If you get sometime then plz try to look into this scrip.

Kumaran July 18, 2010 at 11:25 AM  

Vikas,

I understand that there are many readers eagerly waiting to read my posts and I try my best to present my opinions every month. But sometimes it becomes difficult due to my job to post every month and it also becomes difficult to inform beforehand. So, please forgive on that count if I am not able to post every month.

-Kumaran.

Kumaran July 18, 2010 at 11:26 AM  

Ram,

Cals Ref is in the planning stage of everything and I do not know what to analyze for except the industry....So, I will wait for some more time....

-Kumaran.

kakarla sai July 20, 2010 at 12:28 AM  

Nice article kumaran sir. Could you tell me about "Punj llyod". It touches almost it low and again it is in bullish stage. I want to invest on this stock. What is your advice sir?

zarir wadia July 21, 2010 at 9:25 AM  

Dear Ram,
You may want to read this.
Cals Refineries, a penny stock (Rs 0.33), is a ferociously-traded company about which very little is known. However, the very fact that more than 40 million shares are traded in this stock daily (2-week average) even when its market cap is little more than Rs2.6 billion warrants a closer look at what’s going on here. The plot is quite thick — with rumours (and no evidence) that the promoters of Cals (Spice Energy) are the same as Spice Jet(not true) and the fact that it is building a 5mtpa refinery at Haldia (nowhere near completion from its own updates).

it’s quite a shock to see the company’s dismal filing of quarterly and annual numbers. It has not filed quarterly numbers since June 2008 (sales Rs0.27 million and loss at Rs0.22 million, the same numbers for FY09, no disclosures since then). After the dismally dated financial filings, the relatively updated shareholding pattern (March 2010) reveals that the promoter group holds less than a percent.
After all the cyber-snooping, I think it is safe to assume that there is something truly fishy about this company called Cals Refineries and all the trading that seems to be happening around its stock. I have not found a single piece of evidence suggesting that the fortunes of this company are going to turn around or found any evidence that it is anywhere near completing this refinery project. Investors, if you are smart, stay away.
Zarir

Indu,  July 23, 2010 at 2:45 AM  

Hi Kumaran,

Greetings.

I'm a new entrant into the share market and have been watching share markets over the last month or so and have been watching various channels and various sites to gain information on the trading patterns and companies of value. I have been impressed with your site and the analysis provided here. I'm an investor who would like to invest around 2.5 lakhs worth of investment and has a time horizon of 6 months - 1 year for my returns. I would like to have a return value of around 60,000(6 months) to 1,30,000 (12 months) during this time.

If possible, could you please help me build a portfolio, wherein I can invest the above said amount.

Awaiting your reply.

Sincerely Yours,

Indu.

Kumaran July 23, 2010 at 4:42 PM  

Indu,

Please read all my posts and try to learn how to pick stocks. Stock market is a place where nobody can be right all the time. So you need to learn, buy and take risk on your own. I have provided more than enough information in the blog to achieve your goal. Without knowing your financial background, risk taking ability etc...I do not want to comment anything here. You are expecting a return of about 50%in one year which can be achieved with fewer companies. Do not buy more than 5 companies for this amount.

-Kumaran.

SheeL July 29, 2010 at 2:26 PM  

Hi Kumaran,

Of-late I was going through few agriculture sector stocks.

I found few good companies which have the potential to give good steady returns in future.

1.Kaveri Seeds
2.Dhanuka Agrotech
3.Insectiside India

I went through their last 5 years performance.

I found these companies are good in all aspects, may it be ROE, Steady increase in Sales & Profits, Promoter Holding, etc.,

I think they are value buys compared to other stocks and are less risky.

They seem give 25% to 70% returns CAGR in future.

Please share your views.

kakarla sai August 2, 2010 at 9:50 PM  

Nice article kumaran sir. Could you tell me about "Punj llyod". It touches almost it low and again it is in bullish stage. What is your comment on this stock sir?

Swati August 6, 2010 at 2:32 PM  

It was a very nice idea! Just wanna say thank you for the information you have shared. Just continue writing this kind of post. I will be your loyal reader. Thanks again. and welcome to my Blog:


http://freecashmarkettips.blogspot.com/

Penny Stocks September 1, 2010 at 6:08 AM  

What a helpful post really will be coming back to this time and time again. Thanks

Penny Stocks January 18, 2011 at 7:14 AM  

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Thanks

Stock Market August 16, 2011 at 12:29 AM  

It was a awe-inspiring post and it has a significant meaning and thanks for sharing the information.Would love to read your next post too......

Thanks

Regards:
Share Market

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