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The markets opened lower on Wednesday. Sensex was down 267 points from the previous close, and Nifty was down 72 points. There is limited upside in this market and in the best case scenario Nifty could go to 3300. There is lot of fear around with very little appetite for risk. In such jittery times, what strategy should you adopt? Which stocks to buy, sell and hold?
In an hour-long chat on rediff.com on Wednesday, market expert Pranav Sanghavi replied to many such queries. Here is the transcript:
riyas asked, Hi pranav, What is your advice to the investors. I am planning to buy some large caps shares. Shall i wait for any major correction? or shall i start buying at every small dips. Thanks
PRANAV SANGHAVI answers, at 2008-10-22 15:36:04Markets will remain choppy with a negative bias for some time. BUt if ou havea view of over 1 to 2 years then everytime the market tests new lows or is very close it would be a good time to ivest say 5% of what you actually intend investing. We already have wintessed a major correction of over 50% from the highs.
kalai asked, Shall i buy voltas at cmp?
PRANAV SANGHAVI answers, Like Voltas [Get Quote] a lot of companies are trading at extremely atrtractive levels or well below their intrinsic value. If you are a long erm investor it would be a good time to pick up small parts on every dip of what you intend investing. But be prepared for a sluggish market for the next 9 to 12 months atleast. If you are investing for quick returns then I would suggest you to stay out of the markets.
SRR asked, Is grasim share already bottomed.? Shall i buy it for long term.
PRANAV SANGHAVI answers, With the downward slide in the realty and infr sectors ancialliary stocks like the cement sectors are also correcting sharply. Grasim [Get Quote] looks to give negative growth in its results for the next cuple of quarters atleast. So one could wiat for it to correct a bit more and then look at it with a 1 to 2 year outlook. Fundamentally it is an extremely strong stock.
parvi asked, I would like to invest some gold ETF funds? can you suggest some good funds? Is this right time to invest in gold. I am holding ICICI [Get Quote] direct demat account, when i look at those gold ETF funds, it is not available in MF but it is available as shares. How safe is it to invest in ETF fund. I look foward to hearing from you soon. Thanks.
PRANAV SANGHAVI answers, Buying gold through ETF's is a much cleaner way of acquiring gold. You can hold the Gold in form of shares and you don't have to bother with wealth tax etc. If you actually wish to hold Gold in physical form then ETF is not for you. ETF's are pretty safe form of investing.
deen asked, Hi pranav, Please suggest some good bank shares other than the SBI [Get Quote] and ICICI. Thanks.
PRANAV SANGHAVI answers, I just studied briefly the results and balance sheets of BOI and HDFC Bank [Get Quote]. Both have given stellar quarterly performances. I think both these banks are under valued but given the current scenario surrounding the markets both the banks are trading at very attractive PE multiples. On every correction I would look to buy these two in small parts with a 1 to 2 year outlook.
maran asked, Shall i buy L&T at 800. Will there by more downside for L&T
PRANAV SANGHAVI answers, There could be a further downfall in L&T due to the percieved negative growth in the Infra sector indirectly affecting the Capital Goods sector. But I would look at buying in parts everytime the stock goes below the 800 levels. Some analysts have said that at around a 17 PE multiple L&T could be available at around Rs. 750 which would be a good entry point for a long term investment. But I would surely buy with a 1 to 2 year outlook.
SRB asked, What is your take on ABB and crompton creaves. Which one you prefer in your portfolio.?
PRANAV SANGHAVI answers, At this juncture I would go with ABB. It has the capability of servicing the Nuclear Power industry also which I think will be a greenfield industry for our nation over the next 5 to 10 years. There are few players like Areva in the sector and I think ABB will benefit from the same. India has a major power demand supply gap that needs to be filled in.
kiran asked, I am holding great eastern 30 shares at 340 but it is trading at 180 now. Shall i buy more now to average it.? what is the future of this company? Thanks
PRANAV SANGHAVI answers, If you are a long term investor yo could bu in small parts at every fall. GE is the leading player in the private shipping industry in our country.
kiran asked, What is your take on RIL [Get Quote]? shall i buy at cmp? wait for major correction?
PRANAV SANGHAVI answers, You could buy in parts when the markets test the previous lows. But look at the stock only with a long term outlook and not check it every day. As RIL has a strong weightage on the indices and moves in tandem with the markets. So if markets are to remain choppy with a negative bias for the short term so will RIL.
kumar asked, At what level the sensex would find its bottom.?
PRANAV SANGHAVI answers, No one can predict a bottom. In Warren buffets recent newsletter, even he says he doesn't know where the market will bottom out. Nor does he know where the markets will be in the next week or month. But in the long term they should move upwards.
cmdesai asked, Which is a better magazine about markets?Dalal Street [Get Quote], Capital Market or Outlook Profit or any other than please name it.
PRANAV SANGHAVI answers, I think one should not limit oneself to local magazines but also read magazines like Bloomberg Markets, Business Week, Forbes and Fortune to get an overall global markets scenario. One or two magazines can never be enough to study the markets. One should read as much as possile to get better insight into the markets as the markets are so dynamic and diverse and most importantly global.
naidu asked, I would like to buy titan industires. Shall i buyt at current price?
PRANAV SANGHAVI answers, As I metioned earlier, a lot of stocks look extremely attractive so I would buy in small parts on every major correction of over 500 to 700 points in the market especially when the market are testing new lows. Titan is a fundamentally strong stock but there is a perceived slowdown in the economy and the retail sector which could be counter balanced by a perceived demand in investments in Gold which Titan offers indirectly through its jewellery division.
MEETA asked, I HAVE SESA GOA [Get Quote] AT PRICE OF 119 WHAT I DO AT THIS STAGE
PRANAV SANGHAVI answers, I would surely average out as the stock corrects further. There has been a global meltdown n the metal commodities world over and it should have affect Sesa negatively. But in the long term (1 to 2 year) Sesa should give a decent performane.
asha asked, I have Tata Steel [Get Quote] @ 370/-. What are long term prospects of Tata Steel?
PRANAV SANGHAVI answers, The global seel stocks had corrected well before our stocks started correcting as there was a downward move in steel prices the world over. Our steel stocks are just playing catch up. I think there is a possibility of fallin further and one should wait for furhter before investing.
Rajesh asked, Hi, At this stage is it better to invest in large caps or midium caps ?
PRANAV SANGHAVI answers, Defiately liquid large cap stocks are better but only in small parts on majkor corrections and most importantly for the long term as in the short term the markets could fall further.
neetu asked, with the global realty market's doom, Pranav do u see any changes in the property market in India, do u see any correction, decrease in rate happening much to the commom man's delight?
PRANAV SANGHAVI answers, Property makets will definately see a further correction. See property markes are pretty illiquid as compared to say Gold or equities. Any bearish phase in equities will result in a bearish phase for the property markets too only it would take a couple of quarters to reflect the downturn due to the illiquid nature of the property marekt.
sarv asked, dear sir your view rec and orbit corporation
PRANAV SANGHAVI answers, Orbit is a iche player in the sense that it has develops cheaply acqired properties and sells at very high end, posh areas like South Mumbai which has the highest returns. But with the slow down in the real estate secor even Orbit will face some heat of the slow down despite them being in the most high end market in the property spectrum.
nath asked, Why can F&O segment not be setteled by deliveries only instead of difference in price? It will force short seller to cover in delivery market forcing prices to move up.
PRANAV SANGHAVI answers, A large part of the turnover in the Derivative segment is derived from the NIFTY Futures which is essentially the combination as per the weightage of the NIFTY index stocks. So for say 1 lot of NIFTY it would be very diffiult to deliver in stocks as there would be fractional shares in certain stocks. This is one of the main problems amongst other hurdles.
RITUHARSH asked, IDEA CELLULAR [Get Quote] - HOLDING 2000 @ 55 - What are your views
PRANAV SANGHAVI answers, IDEA has disappointed the markets with its quarterly results. So the stock may correc further. But over the longer term the stock will see better prices as they comple heir consolidation and their RPU's go up.
kabir asked, Hi Pranav, can you guess the worst limit of sensex like 9000 or 8600 ?
PRANAV SANGHAVI answers, It would only be a guess so it won't help anyone.
arunm asked, is it buying time rel petro/idfc/tata steel
PRANAV SANGHAVI answers, I would surely look at IDFC [Get Quote] on every major decline.
aanantt@rediffmail.com asked, hi pranav can i buy sbi , idea cell and idfc now
PRANAV SANGHAVI answers, For SBI wait for a downturn int he markets and look at it in parts when it's nearer to it's lows. IDFC also culd be looked at on every major dip albiet both have to be with a long term outlook.
Vijay_Pandey asked, I have HDIL 100@197 and SesaGoa 100@101. How do you see future of these companies
PRANAV SANGHAVI answers, HDIL will remain an underperformer like most of the real estate and infra sector companies. Sesa would be good look at below it's current levels on every major dips with a 1 to 2 year outlook as it has a very strong balance sheet.
Anand asked, hi, is there any fear that lot more bank across the globe would face turmoil still?
PRANAV SANGHAVI answers, Yes every few days we do hear of a new bank facing some problems or the other related to the US Mortgage markets or other problems.
Ket asked, Hi..With the way Fii's are pulling out...do you think the sensex will reach 7500 ?
PRANAV SANGHAVI answers, It could nothing can be ruled out in the current circumstances.
mgs asked, Indian comp's are doing fairly well,but index is going down.Do u suggest to buy good scripts in small quantity. If so which script u suggest ?
PRANAV SANGHAVI answers, I would look at stocks like L&T, SBI, HDFC Bank, IDFC, Indian Hotels, Sesa, Voltas, and so many more which look very attractive at current levels. But please do not buy with an outlook of making money in 2 to 3 months on investments.
deb asked, Hi Pranav, Good afternoon, A quick Question, where do you see the sensex this DIWALI...9000-10000 level or 12000-13000 level
PRANAV SANGHAVI answers, I would love to see it over 12,000 but unless a major global turnaround especially led by the US markets takes place that scenario looks highly unlikely. So I would go with 8,500 to 10,500 levels.
banti asked, I have invested LICs ULIP MONEY PLUS after 2 years its NAV IS Rs.8 what is the future ?
PRANAV SANGHAVI answers, ULIP's should be looked at as very long term investments of over 10 years. Over that time frame I am pretty sure you should see decent returns on your investment.
rvcat asked, hello pranav-two questons-have we bottomed out?second is SiP the correct way ahead/Regards s
PRANAV SANGHAVI answers, I don't think the markets have bottomed out and over the next three months we could see new lows. But I would look at them only as opportunities to invest for the long term. Yes SIP's are better methods of investing especially in current market scenario which is highly volatile. SIP help you average out the downturn in the markets over a longer term.
scool asked, L&T or Bhel which one do u suggest for Long term ?
PRANAV SANGHAVI answers, Of the two I would look at L&T as it is a pofessionally managed company and not a publi sector outfit.
jvs asked, is cairn india`s production started? do u see any down in price in the stock?
PRANAV SANGHAVI answers, Cairn India [Get Quote] is essentially an Oil sector stock and its fortunes mostly depend on the movement of the Crude Oil prices which have fallen from a high of mid US$ 140's per barrel to the current lows or around US$ 70 per barrel. If Crude prices fall further Cairn also could witness further downside.
jvs asked, from where one can know the % of holding Fii has in any stock. ?
PRANAV SANGHAVI answers, All the companies file their shareholding with the exchanges and it is publicly available on the exchange websites. for BSE listed stocks on www.bseindia.com and for NSE liste stocks www.nseinia.com.
kish asked, Hi Sir, I have 200 Essar Oil [Get Quote]@100, 10 HDFC Bank(1000), 10 JSW steel [Get Quote](500), 400 IKF Technologies [Get Quote]@18, 75 Jaiprakash associates [Get Quote]@430 and 70 UCO bank [Get Quote]@54 and 40 Dena bank [Get Quote]@45...What to do now..Hold or SEll and book loss?
PRANAV SANGHAVI answers, I think all the stocks that you have mentioned can be held on to barring maybe IKF and Jairprakash Associates.
GIRI KUMAR asked, where this sensex bloodbath will end????
PRANAV SANGHAVI answers, We have seen a massive bull run for over 4 years so even if the bearish phase lasts for a year it is fine. We have already witnessed over 6 months of bearishness.
Deepak asked, Hello Sir, How are you? I am planning to buy shares of Sterlite Industries for short term period. Do I need to wait till it reaches near 230-240 Rs /share? Or Should I go ahead with the currect price range 265-275 Rs/Share? What is your take on Sterlite Industries (for the short term period only)?
PRANAV SANGHAVI answers, Metal commodity stocks the world over are facing a correction witha perceived decline in demand due to a gobal economic slowdown. So I would not be in a hurry to get in to Sterlite stock.
chuha asked, Hello Sir, I have 50 DLF @ 575, 100 SAIL [Get Quote] @ 170, 100 RPL @ 163. Kindly suggest what time it would take to atleast regain the money back.
PRANAV SANGHAVI answers, You owuld probably have to hold atleast for a year to see your capital back and maybe some profit.
Kamini asked, I have GMR at 120 should i average?
PRANAV SANGHAVI answers, GMR is still trading at a high PE Multiple. In the current scenario you could wait for a further correction before looking at the stock.
PRANAV SANGHAVI says, Well it's time for me to leave. Bye for now.
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