What goes up must come down, warned the market experts when Sensex was reaching new heights a few weeks back. Yet when the market came crashing recently, traders were at their wit's end. They were panicky, baffled and groping for a solution. Many lost a huge amount of wealth because of the market upheaval.
How were you affected by the market mayhem? The question upmost in everybody's mind, what should the investment strategy be? Buy more and stay invested or sell and exit the market? To find out and to clear all doubts, rediff.com readers spoke to market expert Pranav Sanghavi, director, Jitendra Harjivandas Securities (P) Ltd, on Tuesday, June 6. Here is a transcript of the chat:
Pranav Sanghavi says, Hi, good afternoon everybody. Let's chat.
Jesam asked: Hi, I have invested 100,000 in mutual fund. I am in loss now. What should I do?
Pranav Sanghavi answers: It depends on what's your investment outlook. If you are a long term investor, stay invested.
Gaurang asked: Previously all channels, technical experts and chartists were saying of boom in global economy & India's growth story. Now what has changed suddenly? Market has crashed under heavy selling by FII's. This looks as if the FIIs are the only driving force in the market and the boom that was created was just to make them earn more. When people of India start investing, they start withdrawing. Why did not mutual funds and LIC who are sitting on huge cash, bring in another rally? If the fundamentals have not changed then what's the matter? The market has corrected a lot and now a rebound is needed. Why then these institutions are not taking care of it? Are they waiting for individual investors to sell and then start buying ?
Pranav Sanghavi answers: Various factors are affecting the current downturn in the market. One being there has been a continuos upswing since last Octover from 7,800 level to 12,000. A correction was long overdue.
Second, the US Federal rates have risen from little under 2% to the current 4.5%. Thereby a certain part of the FIIs have pulled their funds out of India to invest in the federal deposits. Any change in Indian currency affects the dollar investments in India. There are lot of other factors like global alignment with other markets etc which need to be discussed in detail.
Msm asked: I am in loss. What should I do... the market is still going down?
Pranav Sanghavi answers: If you are a short-term trader, book your losses and stay in cash. If you are a long-term investor with an outlook of anything above nine months, stay invested and go on a holiday.
GG asked: What stocks are hot for long term?
Pranav Sanghavi answers: There are lots as most of the frontline stocks have extremely attractive valuations. I would put my money on stocks like SBI, ITC, TCS, Infosys etc.
GG asked: Reliance Capita30 at 500?
Pranav Sanghavi answers: If you have a one year or higher outlook, you should eye a price of above Rs 700. The company has invested into various businesses which will bear fruit in the forthcoming years.
Vineet asked: Hi, I have invested Rs 250,000 in NFOs like Reliance Equity Fund, HSBC Advantage Fund, Birla Infrastructure Fund, SBI Mutual Fund and HDFC Long Term Equity Fund. Please advise ifIi should remain invested.
Pranav Sanghavi answers: Please remain invested. You already have made some excellent choices.
Gangadhar asked: Should I start investing now or when the market goes down further?
Pranav Sanghavi answers: If you have cash, you couldn't have asked for a better time. Remember to buy in pyramid fashion -- say your acquisition target is 1,000 shares in a particular stock, on every fall of 100-200 points, pick up 20 per cent or in lots of 100 to 200 shares. This way you will always ensure your average buying price to be lower than the market rates.
Yaman asked: Hi Pranav, could you please tell us, what is the prospect of ITC with one year horizon in mind? Would you advise to stay away from it for the time being, or invest right now?
Pranav Sanghavi answers: I would recommend to invest right now. With one year outlook, a 30% return should be easily achievable.
Sangeetamehta asked: I am totally unaware of the stock market but the recent ups and downs made me interested in the share market. How do I invest in the share market? I am a government servant. What kind of investment in share market will be right for me, kindly advise.
Pranav Sanghavi answers: My first advice to any investor caught up in a job or who does not have time to devote to the stock market would be to go to the professionals and invest via mutual fund route. For, stock investing requires certain skills and definitely a lot of time. Investing on hearsays will lead to burning fingers and cursing us, that is brokers.
Sudheer asked: I have invested verious mutual funds so far. I would like to start investing in shares. Do you think this is the right time to invest in shares?
Pranav Sanghavi answers: As I have mentioned earlier, it's a great time to invest. The story of India has not taken a U turn overnight. The top 150 corporates are still giving a year on year return of over 18% for the last three years and I feel they should be able to manage the same growth rates if not better over the next four to five years.
Karthi asked: I would like to invest 100,000 in mutual funds and shares. I planned to buy Wipro, Infosys, Satyam, Infotech, Dr Reddy's and Biocon shares and also to invest in GAIL, ONGC and MRPL. May be this will comprise 50 to 60,000. The rest I plan to put in mutual funds like Sundaram Midcap, Relaince or HSBC funds which give good returns. Please suggest.
Pranav Sanghavi answers: Barring a couple of stocks like Biocon, you have made great choices. Go ahead.
Soni asked: How does Financial Technology looks like?
Pranav Sanghavi answers: It's an excellent buy at current levels. FT is the owner of the MCX commodity exchange which is coming out with an IPO over the next three months which will substantially enhance the value of FT.
Shekar asked: Is it the right time to invest as a starter? My budget is Rs 15,000.
Pranav Sanghavi answers: Go with mutual funds.
Ganesh asked: I have invested in PNB, Dena Bank and Reliance Petro through IPOs. What are their prospects in the next three to four years? I am a long-term investor.
Pranav Sanghavi answers: PNB is a good buy. Hold on. Dena Bank had certain hidden non-performing assets issues which should clear by March 2007 balance sheet. Beyond that, it looks good. Reliance Petro's commodity production is slated to start in 2010. So don't expect profits until 2011.
Arun_chandak1 asked: I bought 200 Maruti at 790. Should I hold or book loss today?
Pranav Sanghavi answers: Maruti is in the news again for a foreign joint venture and the company still remains a leading car manufacturer and seller having robust growth rates. Hold on to it.
Varinder asked: What about Ashok Leyland? I have purchased 39?
Pranav Sanghavi answers: No problem, hold on.
Naveen asked: Hello, sir, I hold ITC, Gujarat Ambuja,VSNL, Nelco, RNRL. Please tell me these companies' prospects and how long should I need to wait for good profit? I am in loss now.
Pranav Sanghavi answers: Anything between nine and 12 months should yield you a 30 to 40% returns on your investment from current levels.
POLLY asked: Where do you anticipate the Sensex bottom?
Pranav Sanghavi answers: If Sensex breaks 9,700, it could go as low as to 9,200 which is a bit scary but we have seen a tremendous support at 9,900 levels.
Ravinder asked: What are the levels in Sensex you are looking further?
Pranav Sanghavi answers: Beyond March 2007 results, the index should have crossed 12,000.
Kart asked: Hi, I Invested in a few good stocks like Infy, IFlex etc at the 12000 levels. Should I remain invested or should I sell it? Please note that I am prepared to wait a few years if required.
Pranav Sanghavi answers: Excellent! If you wait for a few years, you will see the Infosys rate to be the same as today but it will be inclusive of bonus. So hold on. Do not panic.
Rajendra asked: The market will cross 15000 mark may be after Diwali. What is your opinion?
Pranav Sanghavi answers: Probably not this year. Unfortunately, our market is mainly driven by the FIIs' money and only unless they turn net buyers continuously for three to three months, that won't be possible.
Aftab asked: I want to invest around 100,000. Would it be wise to enter the market at the present level? Moreover, where will the market go from here as the market does not show any northward trend?
Pranav Sanghavi answers: As mentioned earlier, go for mutual funds if you don't have time to devote to the market. The market should move northward over a longer term.
Mukesh asked: Hi Pranav, What is the prospect of Essar Oil and the cement sector?
Pranav Sanghavi answers: Barring the stigma of having a promoter background, Essar Oil is a good stock to invest in. I feel the cement sector will outperform as its demand is going to rise. Remember: extensive investments are being made in infrastructure not only by the government but also by the private companies.
Saket asked: Hi, I have only one question: I have JBF Ind at Rs. 90. What do you think the future of this company will be?
Pranav Sanghavi answers: If you are investing for long term, there will be no problem.
Nalini asked: Hi, Pranav, I have started investing from last month in mutual funds. I am going to stay invested for one more year in funds like SBI Magnum Contra, Reliance Equity, HDFC Tax Saver, Magnum Tax Gain. I am still interested to invest in a few more funds. How can I utilise this bear period, what formula should I follow in selection of funds at this time? Thanks in advance.
Pranav Sanghavi answers: If you invest into a combination of growth and diversified funds, you should be able to beat the volatility of the market.
Harrybhaweja asked: What will be your tips for long term outlook on Biocon?
Pranav Sanghavi answers: If Biocon manages to come through with the outsourcing business of developing viruses/vaccinations on behalf of foreign MNCs as promised by the company, they should deliver good results in 2008. However, their results in the past have disappointed market expectations.
Vijay asked: Dear sir, Is this right time to enter into Reliance Energy?
Pranav Sanghavi answers: Yeah. India is grossly short on power production. Take the city of Mumbai itself. It requires 10,000 MW by 2010 and currently it is slated to have 4,500 MW. With the treatment to projects like Dabhol, all power companies should do exceedingly well as the demand will far outstrip supply.
Vijender5 asked: What is the future of Infosys in next six to eight months?
Pranav Sanghavi answers: Infosys has a history of under projecting and overperforming and I see no reason for them to beat their guidance for March 2007, which is a growth rate of over 35%.
Ritesh asked: Is systematic investment plan really secure?
Pranav Sanghavi answers: SIP invetment is a must for all investors. It not only helps you plan your future but also helps you put in a habit of saving a small amount every month. This small amount will balloon into a huge retirment kitty 30 years down the line.
Shyam asked: I am new in the share market. I invested 300,000 and bought shares of Infy, Wipro and RPl when the Sensex was around 11,000. Now I am confused seeing Sensex going down and down everyday. Should this be a reason for pressing panic button?
Pranav Sanghavi answers: Most of the short term investors have already panicked and suffered huge losses. My advice to you would be: stick to your quality investments in frontline stocks for a longer term.
Ashok asked: Hi Pranav, I invested 150,000 in four mutual funds -- HSBC Mid Cap, Reliance Equity, Fidelity India Special Situation, Templetion India Income Euity Fund. Should I remain invested?
Pranav Sanghavi answers: Yes. All these have performed exceedingly well over the past few years and they should continue doing so over the next two to three years.
Vinod asked: I have invested in Gujrat NRE Coke at 110. I want to know if this scrip is good for over two years and what returns are expected?
Pranav Sanghavi answers: Mettalurgical coke's demand shall not die down as I see the cement and the steel sectors creating fresh demand for the next four to five years.
Anand asked: Can I Sell TCS shares (34) now at this rate or wait?
Pranav Sanghavi answers: You should not sell as the current price is inclusive of bonus. Please be patient. The price should be between Rs 2,100 and Rs 2,300.
Kunwar asked: Will Reliance Petroleum would remain below 80 level till 2009?
Pranav Sanghavi answers: RPL's commercial production starts in 2010 and its net profit which will translate into earning per share will drive the share price. Therefore, I don't foresee a huge jump in the stock price before 2011, all information remaining the same.
Ghosh asked: Hi Pranav! What is the future of Mahindra & Mahindra and Satyam Computers?
Pranav Sanghavi answers: Mahindra & Mahindra has ambitious plans and their Scorpio is doing extremely well not only in India but also in the overseas markets. So in long term persepective, M&M is a good investment at current levels. Satyam again has come bonus. So please hold on.
Ritesh asked: I have about Rs 50,000 to invest. Do I need to put it in debt, equity or mid-cap?
Pranav Sanghavi answers: It depends on what is your other investment plus whether this money is risk capital. For a safe return, debt fund will be the best.
Tamu20 asked: How does Gitanjali Gems look for medium to long-term investment?
Pranav Sanghavi answers: We need to see the company's performance over at least four quarters. As the company came out with its public issue recently, this data is not available with me and so I cannot comment.
Ramesh asked: Please give your view on Morgan Stanley growth fund portfolio.
Pranav Sanghavi answers: If you have invested at its IPO price, you are already sitting on hefty returns. If you have invested recently, you have to wait for at least a year to see a decent return from current level.
Kamal asked: Hi Pranav! I have SKF Bearing, IPCL, RPL, NELCO in my portfolio. I am losing about 250,000 on this shares. Please advise what shall I do? Shall I hold or book my loss. Thanks.
Pranav Sanghavi answers: If you are a long term investor, hold on to your investements. SKF and IPCL look promising to me.
Ash asked: Is this the right time to invest in MF?
Pranav Sanghavi answers: Yes.
Mahipal asked: Hi, where and what is the best way to invest for one to two years?
Pranav Sanghavi answers: If you don't have time, please go with market professionals like mutual funds or portfolio managers with good performance records.
Arora_manish asked: I invested in RIL and RPL and Siemens when they were at the peak. I have a time horizon of about one year. Shall i stay invested?
Pranav Sanghavi answers: If you have a little more cash, you could average them and hold for one year to get a decent return.
Sanju asked: Sir, I have invested in Tata AIG Investassure (an ULIP) about 15 days back. Should I remain invested?
Pranav Sanghavi answers: Yes. All ULIPs over a longer term of 10 to 30 years will yield excellent returns.
Arnab asked: I want to invest in construction stock. Could you please suggest some?
Pranav Sanghavi answers: DLF issue is about to hit the market. You could look at that.
Shailesh asked: What opinion do you have about Patel Engineering, Andhra Bank and Nevi Lignite?
Pranav Sanghavi answers: Nevi Lignite looks good.
Ramakrishnaudupa asked: Sir, I bought Infosys at 3030,3254, ITC at 175, Nagarjuna Construction at 303,370,380. Please advise. Can I wait till July?
Pranav Sanghavi answers: Hold on. You should see these prices in the next three months.
Shailendra asked: Hi Pranav, could you please tell us, what's the prospect of NTPC with one year in mind?
Pranav Sanghavi answers: We had strongly recommended NTPC to our clients at levels of 72 and 75. Our advice was: buy and forget as these price levels would never be seen again. NTPC has an extremely strong balance sheet and looks to continue its performance over the next decade.
Shashi asked: Sir, I am interested to buy Karnataka Bank's 1,000 shares at the current market price. Please give information.
Pranav Sanghavi answers: Acquisition below 80 should yield good results after six months.
Kunal Patel asked: What's your take on Liberty shoes, BSES?
Pranav Sanghavi answers: The retail sector of India is growing at a handsome pace and research shows that the earning population of India shall grow from 80 to100 million people currently to the entire population of USA about 260 million by 2011. This will spurt expendable income of the earning population and thereby the retail sector will benefit.
Manoj Sharma asked: What about the IDBI shares?
Pranav Sanghavi answers: Banking stocks will do well provided their non-performing assets are kept in check. On longer term, IDBI should do well.
Arun69 asked: Which SIP should I opt for? I want to invest Rs 2,000 in SIP's. Please advise.
Pranav Sanghavi answers: SIP is a continuous investment process and not a one-time thing. You would need to invest in certain amount either monthly or annually over five, seven, 10 or 15 years as per the scheme chosen by you. DSP Merrill Lynch and SBI Mutual have good SIP schemes on offer.
Nkshah asked: Hello, sir. What is your view on Indian market for short to medium term? We want to invest some amount for that period.
Pranav Sanghavi answers: Market, according to me, should remain choppy in the short term and every dip should be an opportunity for a long term investor to buy quality frontline stocks with a one to two year investment horizon.
Pranav Sanghavi says: Thanks everybody! I would have loved to answer all your queries. But there is no time today, I am afraid. I may have a chance to speak to you later. Have a great time. Don't panic and stay invested.
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