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Rediff.com  » Business » Markets weak: Go for long-term investments

Markets weak: Go for long-term investments

December 04, 2008 09:09 IST
It was a volatile day for the market on Wednesday, oscillating from the positive terrain to the negative, but closed flattish.

Sensex ended the day at 8,747, up 8 points from the previous close.

Nifty shut shop at 2656, down just 1 point.uch 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 readers' queries. Here is the transcript:

PRANAV SANGHAVI says, 
Good afternoon everyone. The past week has been one of the most dramatic weeks in our lives and it had very little to do with the markets. I request each and everyone of you to show solidarity in our acions and make sure that we don't rest till there is a change this time and not let things getback to as theywere. With that, let's begin this chat.


riyas asked, Hi pranav, RPL is good buy at 70 rs for long term investment. Can we expect more downside in the market, i meant will the market retest its october low again? thanks.
PRANAV SANGHAVI answers,  at 2008-12-03 15:26:36You could see further downside as a lot of market professionals feel we could test the October lows. If the markets do drop to thos levels you will see lower levels on RPL too.
kalai asked, Hi, I have 30 Grasim at 2100. I bought when the share prices are less than its 52 weeks low in 4 months ago. What should i do now.? What is the prospect of this company? Thank you.
PRANAV SANGHAVI answers, Grasim is a fundamentally strong company. But due to the global meltdown and the crash witessed in our markets so has the stock corrected. Grasim being a Cement major is perceived to face with lower sales revenue in the times to come with the perceived slow down in the infrastructure spend and real estate development. So one could see Grasi correct in co-relation to the infra and realty sctors as well as the markets.
elam asked, 45 DLF at 510. Hold or book loss?.
PRANAV SANGHAVI answers, The realty sector will not see any major turnaround very soon. The property prices are falling and even with the lower prices the realty compnies are finding it more and more difficult to match the sles of the previous two years. Ove the next one year period when we could have lower see lower interest costs and US markets stabilizing, I dont think the realty sector in India will see any major upside. You have got in at reasonably high levels although not the loft 1100 levels that many have invested in DLF at. But you will have to pla the waiting game as it is ridiculous to sell at such low levels.
sam asked, Hi pranav, i have been reading your chatting replies for some time. By loot at the india's future and growth, what are the sectors will outperporm. what will underperform.?
PRANAV SANGHAVI answers, I think in a growing economy the infrastructre sector the baking sector, the power ector are the mmediate beneficiares. So in the longr term these sectors should do well provided they successfully tide through these difficult times. Look at Unitech a company which has fallen by 95% in these trying times, is facig a lot of financial problems. But if it does manage to tide through I think it could do well over a 3 year period. Unitech was just used as an example.
rai asked, These days the market movement does not seem to be more attractive. There is no vibrant/ brisk movement and no positive sentiment? How long the market will be like this?
PRANAV SANGHAVI answers, I think there is a lot of movement infact we see a lot of days with over 4 to 5% movements either upwards or downwards in a single day. This proves that the markets are extremely volatile but definatey not suitable for trading. I think the markets should remain volatile for atleast another quarter as we have the elections coming up within India and US economy still delivers negative impacts on the global markets on a regular basis.
jai asked, What is your take on TISCO and TELCO, i have 50 shares each at high cost. I am afraid that these company may go on bankruptcy due its company debts and recent acquisitions. Please advice.
PRANAV SANGHAVI answers, I think with the current situation that is with steel prices looking to head futher downwards, there is a god chance that TISCO may correct further. TELCO also should face the flak of the recessionary fears as auto sales accross the country has fallen sharply over the past few months overall. TELCO will be subjected to a simillar loss of sales in it's automobile segment. Plus, most importantly, both the stocks are burdened with large acquisitions overseas an are facing liquidity crunch. This will surely affect them in the short term and could ride their prices furhter down along.
krishnan asked, What is your take on Indian hotels.? the company says that it will cost 500 cr to rebuild the hotel. Is it advisable to make fresh buy? Thanks.
PRANAV SANGHAVI answers, I think at around Rs. 35 Indian hotel is an extremely lucrative buy. At that price the company would be trading at about a 30 to 35% discount to it's book value. And I am not even going by the replacement of current assets method were the stock will be grossly undervalued. If you are a long term investor you could surely look at investing with a 2 year outlook at around those levels. The exact cost of rebuild has not yet been announced and it will take some time. And also due to last weeks events there will be a slak period for the company but I am pretty sure that over a 2 to 3 year period they will bounce back.
murli asked, RIL, Tata Chemicals, Tisco, IDFC, Hindalco and Powergrid. Can we hold these stocks? Facing 5 to 25% value erosion presently. Should I average?
PRANAV SANGHAVI answers, Yes you cna surely hold these stocks and many people are facing far higher erosions of nearly 50% and above as the markets have corrected from 20,800 levels to thecurrent 8,700 levels. I would wiat for a correction further to average.
roshan asked, What about Mercator lines?
PRANAV SANGHAVI answers, The sippingindustry is a cyclical indusry and I think there could be a slight slow down in trade volumes due to global recessionary fears. Mercator will also suffer marginally if the shipping sector slows down.
kris asked, Hi I am new in stock market.I had just purchased Reliance industries,reliance Communication,suzlon,unitech,gammon india,L and T .total around 60000rs.now i am in loss of 13000 rs.but i am looking for 3-4 years span.i still want to invest 2 lakhs in stocks,so please suggest me the good scripts which will give handsome returns. i also want to start SIP of 15000 pm.so which funds should i go ahead? and is it right time to start SIP. please guide
PRANAV SANGHAVI answers, I think you have picked reasnably good stocks. Just have the patience and hold on. Look at large cap diversified funds which offer SIP options.
ravi asked, how is sbi
PRANAV SANGHAVI answers, SBI is the argest bank in the country. And despite the troubled ties over the past three quarters, SBI has gien good results over the same time frame. But SBI is an index heavy wieght and if the markets tumble so will SBI. At lower levels you could look at the stock with a 2 year outlook.
GUDDI asked, SUGGEST GOOD STOCKS TO BUY,WITH A HORIZON OF 2-3 YEARS
PRANAV SANGHAVI answers, I wuld look at L&T.
ashish01 asked, which stocks should i buy keeping in view of span of 1 to 2 year what about NTPC, Suzlon, Rpower, GMR Infra, LITL ?, whether Tata Steel, Sesa Goa, Sterlite can be bought at current level ?
PRANAV SANGHAVI answers, I think you could look at all the stocks you mention barrng maybe LITL but when the markets are close to their October lows.
ashish01 asked, what about SBI, HDFC, Axis Bank, Kotak Bank, IDFC, REl. Capital? which stocks to buy for an investment of Rs. 50,000/-
PRANAV SANGHAVI answers, I would look at SBI, HDFC Bank, IDFC from the stocks you mention and add probably, L&T, SBI, NTPC etc to the same.
ashish01 asked, can we buy Rcom, Idea, at current level
PRANAV SANGHAVI answers, I think with the issuance of new 3G licences, new foreign players entry lik Vodafone and DoCoMo
and also the number sharing facility about to get approved, I think the existing celular players are in for tough times in the near future. I would not get in at these levels.
ab asked, is UNITECH good one to invest for 1-2 yrs
PRANAV SANGHAVI answers, I would like to think so but they have to survive the tough times that the company is facing. The promoters themselves came on a nes channel and said that they were highly leveraged and selling assets to create liquidity and reduce debt of the company. If they are successful in doing so then one could look at the stocks with a 2-3 year time frame.
ads asked, whats your take on rnrl?
PRANAV SANGHAVI answers, As I have said in the past, nothing material will come of the stock till the legal battle with RIL has come to an end.
maheshkapadi asked, pranav which stock can u suggest for trading purpose or can give profit in short period?
PRANAV SANGHAVI answers, Right now the markets are extremely volatile and trading should be avoided. There is a good chance one will be caught on the wrong side.
Gill asked, Where do you see the Infrastructure sector in the next 6 months? 1 Year? Do you see it outperforming the benchmark?
PRANAV SANGHAVI answers, I think the government needs to take positive action and release fresh funds for the infra projects of the government which have slowed down. Also, in the retail segment I think it will take a long time for the retail real-estate sales to go up again. In the next 6 months I don't see that sctor to outperform.
rakhadu asked,  Hi Pranav, with recent news about japanese company stake holding in TTSL, will that make huge difference to TTML?
PRANAV SANGHAVI answers, If they do make furher infusion of capital inthe company and develop wireless and cellular and other ancilliar services then we could see that reflect in it's stock price. If not then there will be no material movement in the current scenario.
egyanil asked, in present scenario one shud stay invested in MFs or book looses??
PRANAV SANGHAVI answers, Historically, Mutual Funds have delivered good performance over a longer term. As the markets are cyclical there will be extremely good years and bad years. A longer term investment averages that factor and deliver decent prformance.
arindam asked, I have 100 shares of L&T @800/- what should i do now
PRANAV SANGHAVI answers, I would surely hold on. If the stock falls to Rs. 600 levels then you could look to start averaging further in parts. But over a 2 year period you should see decent returns on your investment. Do not sell in panic.
neeshk asked, Hi pranav could i pick up Abhan, L&T, RIL, HDFC Bank, Rcom, RPL at current levels
PRANAV SANGHAVI answers, If you are investing with a long term in mind you could start nibbling at these stocks and invest 5% on every major fall.
anwita asked, Sir, keeping 2-3 years perspective, will it be advisable to invest in Suzlon, Unitech and JP Associates. I intend to average out the cost as I had bought these stocks at a higher costs earlier.
PRANAV SANGHAVI answers, Suzlon and Unitech have got completely battered in this current meltdown. They lost over 90% of their stock prices. JP is an infra stock which is very active in the F&O segment. I would wait for further falls to invest into Suzlon an Unitech.
shama asked, is this the right time to invest or should i wait
PRANAV SANGHAVI answers, I would wait.
vikrant asked, Hi Pranav What is prospect of SBI. I have it at 1220 pls let me know should i avg or sell
PRANAV SANGHAVI answers, SBI is the largest bank of India. They have a very strong balance sheet and have given good results all through this year. We have to see what it delivers in the balance two quarters. I think you could start aveaging if it falls below 1000 levels and that too in small parts of 5% on every fall there after and not jump in to buy.
suresh asked, Hi Pranav. what is the future of indiabulls real estate, indiabulls finance and DCB?
PRANAV SANGHAVI answers, I think the Iniabull companies are decently capitalizd and should not face any major liquidity crunch. But for the stock to do well there has to be a turnaround int eh economy's performance and current market sentiment. I would not look at DCB and rather go with a frontline bank like SBI and HDFC BAnk.
gopal asked, Hi Pranav, keeping 2 years perspective, will it be advisable to average in HCC, RPL, IDFC, Praj Ind., Rural Electric, Hindalco, RCOM, Mercator Line. I intend to average out the cost as I had bought these stocks at a higher costs earlier.
PRANAV SANGHAVI answers, You could hold on to most of the stocks that you mention with that time frame. You could look at averaging when the markets are closer to the October lows.
siva asked, i have 40 shares of RIL. brought the shares @1247. what should be my startegy as it is presently trading at 1060?
PRANAV SANGHAVI answers, You will have to hold on. You could buy further at lower levels to averag but with a view to hold for 2 years. Bear in mind that RIl is an index heavy stock and will mover pretty much in tandem with the index which could be volatile in the short term.
Ankur asked, What is the future of UNITECH? i have 200 shares of unitech at 29
PRANAV SANGHAVI answers, I have explained in a detailed reply earlier please refer thank you.
mahantesh asked, Hi boss i wanted to buy wipro.kindly suggest me
PRANAV SANGHAVI answers, I don't think this would be a good time to get in. Wipro is dependent on the US for a majority part of it's sales. Although the dollar has corrected by over 20% in the past few months the software sector is anticipating falling sales volumes from US and other western eonomies. I would wiat for the October levels to get in.
arun asked, hai mr pranav there are talks that january would be a worse month compared to october also. what is your view pls tell me
PRANAV SANGHAVI answers, I have heard that opinion too from a few chartered accountant friends of mine. They are of the opinion that the advance tax payments by Corporates which will be known by December 15th should be far lower for this quarter as compared to th pevious quarter thereby starting a downward rally as the profitability of the companies would be lower.
arun asked, hai mr pranav there are talks that january would be a worse month compared to october also. what is your view pls tell me
PRANAV SANGHAVI answers, Plus we will be at a stones throw from our elections which will cause further uncertainty in the markets.
Ramkumar asked, Hi Pranav...i am holding 500 shares of Suven life sciences @ 26..what will be the future prospect of Suven?
PRANAV SANGHAVI answers, I am sorry I do not follow that stock so will not be able to help you.
RALS123 asked, hI pRANAV...wHAT IS YOUR TAKE ON lARSEN, GMR INFRA AND FINANCIAL TECH...SHOULD I ADD OR WAIT AT THESE RATES???
PRANAV SANGHAVI answers, I like Larsen and Financial Techno from the stocks you mention. GMR still has a very high PE multiple and I would wait for the stock to correct furhter befoe looking at it. Although it does have a large number of project due to be completed over the years to come. but a governmental slowdown in spending could reflect in GMR's prices too. Financial Techno would pick up especially after the commodity turnover of it's MCX exchange goes up along wiht the sentiments of the market. So I would surely look at these stocks when the markets come down furhter.
abba asked, i hv 100K to invest is this the right time to get started in buying
PRANAV SANGHAVI answers, I would look at the October level lows as a good stating point to invest in parts.
PRANAV SANGHAVI says, Well it has been great chatting with you guys. It is time for me to leave. May I also request each and eveyone of you for whom it is possible to come to te Gateway of India today at 6 pm to show your support and solidarity in our want for change. Bye for now.