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Doubts may be raised on mid-cap firms too

January 08, 2009 12:13 IST

Just as the market was recovering somewhat, Satyam's explosive revelations send the Sensex on a southward spiral.

The investors are indeed having a tough time at Dalal Street [Get Quote].

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 offered some valuable tips to our readers.

Here is the transcript:

PRANAV SANGHAVI says, Good afternoon everyone. Again today has proven to be a historic day in our fnancial markets. Let's begin.

SunilMishra asked, Dear Pranav, I am an LIC [Get Quote] agent for the past more than 6 years and i myself have invested about 20000 p.a. in future plus and market plus. Should I continue with LIc or switch to some other company. Please also suggest me which is the best mediclaim company as I also want to take mediclaim agency.
PRANAV SANGHAVI answers,  at 2009-01-07 15:21:01LIC by far is one of the largest Institutions of India. Over the years they have given decet returns and in all probability they should continue to do so. Over a 10 to 30 year period the stock markets should give you decent returns. I think you could continue with your investments.
riyas asked, Hi Pranav, what is the destiny of the Satyam [Get Quote] computer. I have 40 shares at 145 and today i bought 30 more shares at 60. Is this buying oppertunity for the investers. Please advice.
PRANAV SANGHAVI answers, It has been shocking to read the letter written by Ramalinga Raju and the confessions he has made in the letter. All valuations of the stock don't make sense at all as he himself agrees all the numbers are rigged. One I would not look at the stock as investmnt at all. Two, if you wish to buy in the hope that some other peer will come and buy out Satyam's business and the price could rise a bit, then I would suggest looking at the stock when it is Rs. 10 or Rs. 15 rather than its' current price. Finally there is always a probability that the company may file for bankruptcy as a lot of clients may lose faith and cancel their contracts.
kamil asked, Hi Pranav, Will the sensex retest its october month low again?. Shall i invest in today's low. Thanks.
PRANAV SANGHAVI answers, I do expect the markets to retest the lows some time during this quarter but least expected it to fall due to such shocking news. A retest of the lows would be a good time to invest for the long term.
ram asked, Hi, i am just trying to understand the flow of the market. Today there was a bad news from satyam, not sure why the whole market went down including Non IT companies like RIL [Get Quote], Suzlon [Get Quote], Aban offshore [Get Quote]. Let me know the reason? Thanks.
PRANAV SANGHAVI answers, Satyam is an index stock and it was down over 75% today itself wso that took the index down a bit. Following Satyam a lot of the index majors also fell taking the index down sharply.
mala asked, Hi, By look at the news today, it is very scared to invest in the share market as one of 4th largest software companies is collapsed. Is there anyway a investor can sense these kind of bad news before investment. Is this list continue for other companies also.? thanks
PRANAV SANGHAVI answers, Unfortunately, there is no way a lay investor could figure out such a devious scam perpetrated by the companies promoters. When such a big company has come out into the open there will be a lot of doubts raised on various midcap companies too. When a top five accounting firm audits the company and does not fully disclose its findings, how can a lay person figure out. It is truly sad that a lot of the small investors will suffer.
Nk asked, What are the actual cash surplus of Satyam as on date Are these rates justified
PRANAV SANGHAVI answers, Mr. Raju said in his letter that of the total cash on the balanace sheet Rs. 5000 odd crores is non-existent cash.
lex asked, I have boughtsatyam shares at 39.50? will the rise in the shortterm?
PRANAV SANGHAVI answers, Only if there is some news of the stake holders next action plan for the company or if there are talks of taking over the company's business by some of it's peers.
v@rediff.com asked, is unitech is nex t followed by satyam
PRANAV SANGHAVI answers, There are doubts on various large, midcap and smaller companies about their honesty and integrity. Unitech could now be scrutinized minutely.
Manas asked, Will the market bounce back in the nest two days after Satyam fiasco?
PRANAV SANGHAVI answers, If the global rally currently being witnessed continues, then in all likelyhood our market will also turn around. I don't think our markets will keep falling when world markets are rising. But if they trn negative then our markets will slump furhter.
Diwaalia asked, Whats the future of investors who have put significant amount of money in Satyam? Will the stock see 150- 200 levels ...if yes, whats the time frame? Please suggest ...I have lost a lot of money and need to commit to the lenders :-(
PRANAV SANGHAVI answers, It looks very very difficult to see those rates in the short term.
sandy asked, who are possible runners for taking over Satyam?
PRANAV SANGHAVI answers, Mahindra Tech has categorically declined. We will know the response from other peers over the next few days.
shashi asked, i hav already got AXIS, BHEL, NMDC, SESA GOA [Get Quote], RIL, L&T, VIJAYA BANK [Get Quote], INFOSYS [Get Quote], ICICIC and am sitting with a loss of 40%. Kindly advise me whether to avg or add any more equities with good fundamentals
PRANAV SANGHAVI answers, You will have to hold on to your stocks as they will give you a return but it will take time. The markets look to reound and remain rangebound and weak for the next few months. You ocud add banks like SBI [Get Quote] and HDFC [Get Quote] instead of a Vijaya & Axis Bank. Barring that most of the stocks you hold are quality stocks.
Neo asked, Is there any possibility to de-list Satyam by SEBI? If yes, how the existing stock holder will be impacted?
PRANAV SANGHAVI answers, There could be a ban but not without providing an exit for the small and large invetors.
aSHU asked, OVER LAST 15 DAYS EVERTHNG WAS GOING OKAY, WHY THESE CHAP (SATYAM'S) CREAT PANIC, DONT WE HAVE ANY MONITOR WHO MAY TRACK ALL THESE HAPPING. WE REACT AFTER THINGS OCCURED, WHY CAN WE NET ABLE TO STOP ALL THESE NON SENCE
PRANAV SANGHAVI answers, A good point. But when top five accounting firms audit such companies and sign their balance sheets, how can someone predict such a massive fraud.
dejavu asked, It was being predicted that NIFTY will touch 3250 level in few trading sessions. Keeping in mind the Satyam Event and Global Markets do you still feel that Nifty can reach those levels?
PRANAV SANGHAVI answers, As I mentioned in my previous replies, if the global rally continues then in all probability the Indian markets will also trend upwards after a couple of days of slackness. I think the major reaction has already hit us today.
cheated asked, what sanctity does a corporate balance sheet have?the company board, CEO, auditors all hand in glove? not to mention politcos? how many more Satyams to come? and NASSCOM says its a one off case?nonsense.is this corporate governance in india?
PRANAV SANGHAVI answers, Very valid point and there have been a lot of people extremely angry and upset at the level of corporate governance in top firms. If Satyam such a large company could hide it for so long there could be a whole bunch of players who have simillar skeletons in their closets.
vip asked, what about punj llyod, abb ambuja cement videocon, rcom, r capital, adlabs,zee entertainment, parsavnath
PRANAV SANGHAVI answers, I like Punj Lloyd [Get Quote], Ambuja Cement [Get Quote], Rcom from the stocks that you mention. I would hold on to them witha long term perspective.
srs asked, can i buy chemplast sanmar now? what is your take on this stock
PRANAV SANGHAVI answers, With the economy expected to grow at a slower pace over the next couple of years, I would wait fr further corrections to get in to the stock.
asatyamcomp asked, Now that Satyam shares are all time low, is it advisable to purchase the shares of this company??
PRANAV SANGHAVI answers, I would not.
Selwyn asked, Hi,is satyam a good buy considering it has touched 40rs. & very soon it will be merged with a good company like tech mahindra or L&T infotech
PRANAV SANGHAVI answers, Tech Mah has categorically denied any interest in meger with Satyam. So I would not invest purely on rumours.
mahee asked, Hi Pranav, Will Satyam Case hit the IT sector stocks as a whole? is it advisible to buy IT stocks now?
PRANAV SANGHAVI answers, It could but TCS [Get Quote], Infosys and Wipro [Get Quote] are surely in a different league and I personally doubt they would ever inccate such fraudulent practices into their operations.
ak asked,  hi your views about TTML, Cairns India
PRANAV SANGHAVI answers, TTML has seen renewed interest due to the stake bought in the company by NTT Docomo Japans largest Telecom player. Cairns India would only benefit in the short term if the crude oil prices see some sustained higher prices.
mandy asked, will this give a wrong signal to FII? will they stop looking at india due to poor corporate governance? will india get branded as country with poor corporate governance? If the Maytas deal wud hv got thru' this crime wud not hv surfaced b'coz raju says buying maytas was attempt to get out of self created problems.
PRANAV SANGHAVI answers, Again a good point is raised. A lot of the foreign investors will get scared due to the total lack of corporate govrnance in such a major software player like Satyam. Our corporates could get lowered by a couple of notches by the FII's.
jiten asked, Did it will also impact on Mutual Funds????
PRANAV SANGHAVI answers, Those who have large holdings in the company will surely get affected. Some of the larger investors are LIC, Reliance Mutual Funds and Aberdeen.
laxmikant asked, I have purchase Unitech at 42.what will be the status in the present scenario
PRANAV SANGHAVI answers, Unitech going the Satyam way was the rumour floating around the markets and the stock tanked heavily today.
amar asked, good afternoon. do you feel IT stocks will be more vulnerable in the days to come due to satyam fiasco. If it is so, in which sector should we invest?
PRANAV SANGHAVI answers, The small and midcap software companies will surely bear the brunt of the Satyam fiasco.
mandy asked, what can b done against PWC which is audit firm for satyam ( astyam)
PRANAV SANGHAVI answers, I think they will first suspend the partner or associate who has sined the balance sheet on PWC's behalf. I don't think we have a strong legal framework to sue the auditors as in the western countries.
hemant asked, hi have got shares of satyam at the price of 120. Is there any future.
PRANAV SANGHAVI answers, I doubt you will see those levels on Satyam. Unless there is some news of some major player who would take over Satyam's business.
amar asked, do you think that there is still a possibility of acquisition of satyam by large players like reliance, mahindra, larsen? i feel the company's business fundamentals are solid despite fraud
PRANAV SANGHAVI answers, One can't really say how solid it's business fundamentals are after they have cofessed tosuch a large fraud. So one has to wait and watch.
Amol asked, Hey Pranav - Do you think Satyam looks good at current levels?
PRANAV SANGHAVI answers, No I would wait for it to tank futher if I am going to take a trading punt on the stock.
babu asked, Hi i ve suzlon, Unitech and Rs 100 and above per share what should i do
PRANAV SANGHAVI answers, They have taken a beating as there are rumors they will also go the Satyam way. If there is no such fraud in these companies one should not be worried. If you hold with a long term view.
babu asked, Ive bhel and L&T, how is the future of these stocks and how much return i can for another 3 - 6 months
PRANAV SANGHAVI answers, I like both those stocks. I would surely hold on to them or if there is a correction in our markets even buy into the stocks witha 6 to 12 month outlook.
RamlingaRaju asked, Should I buy shares of Satyam. @ current prices it seems to a very attractive. Will the stock rise to 200 in next one month. I am planning to but 10000 share
PRANAV SANGHAVI answers, I seriously doubt that. I would surely not get in at this stage with an investment angle.
PRANAV SANGHAVI says, It's time for me to leave. This day will go down in history as the day the largest and worst fraud in Indian Corporate History. Bye for now.

 





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