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'Markets: Another correction likely'

December 11, 2008 08:43 IST
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The Sensex on Wednesday opened with a positive gap of 153 points at 9,316, and thereafter exhibited range-bound movement in the morning session.

Fresh buying in the afternoon deals saw the index move to higher levels. The index firmed up and extended gains as the day progressed on the back of sharp gains in realty and metal stocks.

The Sensex rallied to a high of 9,679, and finally settled with a gain of 492 points at 9,655.

In such jittery times, what strategy should you adopt? Which stocks to buy, sell and hold?

In an hour-long chat on on Wednesday,  market expert Pranav Sanghavi replied to many such readers' queries. Here is the transcript:

Good afternoon and welcome to the chat. Regret the 5 minute delay as I had some internet problems. Let's begin.

Harshad asked, Hi, I am planning to enter into stock market. what type of stocks should i buy with the short term of horizon of 6 months?
PRANAV SANGHAVI answers,  at 2008-12-10 15:30:47If you do buy you should stick with the profit making frontline index stocks. Also, try and get in when the markets are a bit lower than current levels. Currently, I think we are in a bear market rally and should treat it as just that.
PRANAV SANGHAVI answers, I think Aban is a fundamentally strong stock and over a longer term will yeild decent results. Punj Lloyd also could be looked at with a longer term outlook of 1 to 2 years. In the short term the infrastructure related stocks may not perform as well till there is clear signs of infra spend by the government.
mani asked, i have icici @10 @480 HDIL@6@280 indiabulls@23@300 rcom@8@450 shold i average or should i hold please suggest
PRANAV SANGHAVI answers, You could average ICICI and Indiabulls but at lower levels.
sunj asked, hi, gvkpower, idea cellular & unitech at presnt prices
PRANAV SANGHAVI answers, Unitech ws a good buy last week when the stock was closer to Rs. 22. Today at Rs.35 I wouldn't invest. I would wait for the lower levels. Idea also could be looked at lower levels. Currently, th bear market rally seems to be in place and one should not get carried away and buy stocks left, right and center.
PRANAV SANGHAVI says, NIIT could see some correction when the markets correct. Till then it may ride up marginally aong with the markets.

shesha asked, Hi pranav sanaghavi I have bought SBI reliance capital Micelecronics reliance Ind and L&T at Higher price should I hold
PRANAV SANGHAVI answers, All the stocks you mention barring MIC Electronics could surely be held with a long term outlook. If the markets cross 8,000 levels you could even average further. MIC Elec I don't follow so will not be able to advise you.
anirudha asked, i want to buy suzlon 1000 at 40/-. What do u think about this ?
PRANAV SANGHAVI answers, Suzlon is into the alternative evergy business which has great long term otental. It was a highly leveraged company and like many of the higly leveraged companies which faced a massive correction when the markets plummetted so did Suzlon. But i the long term I think Suzlon should do well. I would surely hold on.
aru asked, What is the future of Reliance capital?
PRANAV SANGHAVI answers, I think due to the ownward trend in the financial services sector Rel Cap will face certain downside in the next few quarters, but beyond that they should bounce back when the market's negative scenario reverses.
vadivelu asked, can you please tell the prospects of the following - xl tele, moser baer, facor steel and artson engg?
PRANAV SANGHAVI answers, XL Tele is a leading manufacturer of Solar Panels in India and also is planning a massive expansion in solar power energy production in the European Union. I would hold on to the stock with a long term outlook. Moser Baer also could be held on to.
mohit asked, should i hold l&t 50 nos. brought at 1400
PRANAV SANGHAVI answers, Yes you could. You can also average further if the stock goes below Rs. 650 - 700 levels.
rals asked, can I add Larsen at 780???
PRANAV SANGHAVI answers, As I said earlier I would wait for lower levels that we saw a couple of weeks back.
poo asked, Do you foresee a deep correction from here on? If yes, what is the sensex level you are looking at (as a bottom)? And what stocks should i accumulate for the long term?
PRANAV SANGHAVI answers, We have had a massive correction already. So it looks difficultto have another 50% plus correction from hereon. But we could surely test the previous lows set out in the month of October over the next 2 quarters.
ss asked, Hi, I am planning to enter into stock market. Should i buy SBI bluchip fund (GROWTH) units now
PRANAV SANGHAVI answers, I think it is a wise idea to enter the markes through Mutual Funds and especially at such times when their NAV's will be comparatively very low. If you do invest with a longer term plan you should benefit hugely.
naval asked,  i want to buy suzlon,sterlite industries and Unitec. What do u think about this ?
PRANAV SANGHAVI answers, Last week when all were testing their lows was a good time to get in. Unitech has seen a 50% jump since last week. I would not get in now. I would wait for a fall in the prices before jumping in.
Subhankar asked, People are talking about a nifty band between 2850 and 2600 levels. Do you think we have moved out of the band today and see consistent upmove for the mext few days. Or we will be slaves of US markets ? Please comment.
PRANAV SANGHAVI answers, We have closed above 2900 today and strongly at that. So it looks like this bear market rally may continue fr a bit longer than expected. But I would not get too bouyant and think that the bear market phase is over. To your second query, we cannot discount urselves from the US Economy and markets as they are a massive force as witnessed over the last few months. If the US market do fall sharply in the near future then in all probablity so will our markets.
mh asked, I have L&T 75 @ 1350, Glenmark 50 @336, Sesagoa 50 @ 124, Biocon 100 @ 201, can hold it, whats ur opinion? For long term of 2 to 3 yrs, which stocks are preferable?
PRANAV SANGHAVI answers, All the stocks you hold are quality companies which have been profit making and growing steadily barring maybe Biocon which had a few weak quarters. L&T andSesa I would surely average at lower levels with an idea to hold them for 2 years. Glenmark also could be looked at lower levels with a 1 to 2 year outlook.
Biocon may take longer to bounce back all corporate news remainig constant.
Murali asked, Hi.. Can i invest in RNRL now..?
PRANAV SANGHAVI answers, I would not till the clear outcome of it's legal battle with RIL.
Girish asked, can i invest in auto sector share?
PRANAV SANGHAVI answers, In the recent news of government reducing excise duty on auto's and also with the interest rates looking to drop over the next few quarters you could see a marginal upmove in the auto stocks.
gaurav asked, hello what is the future of icici
PRANAV SANGHAVI answers, I don't think that ICICI as a institution will fall. I think it is adequately capitalised. Yes it has been very aggressive in it's greed for growth but tey would be able to overcome their NPA's issues if any arising out of the aggressive growth model.
vrao asked, Hi Pranav, I bought 5000 shares IFCI @ 20, my target is only 25 rupees, how long can i hold this?pls reply
PRANAV SANGHAVI answers, I don't think the stock has anything positive going for it in the short term. Their results have disappointed and there is no talk of a foreign player buying a stake in the company. If you do hold on for say 6 to 12 months you could see your price target a IFCI is a trader frendly high F&O volume stock.
senthil asked, hai mr pranav, how about rnrl,sbi,rpow and tata steel
PRANAV SANGHAVI answers, I think SBI and Tata Steel could be looked at from the stocks that you mention. Tata Steel I would wait for further dips before buying in to the steel sector.
Monish asked, Hello Pranav, I want to buy stock and trade with him in short term ie 1 month. I will be trading with 10000 rs . Which stock do you suggest me for short term prospestics. Thanks for answering
PRANAV SANGHAVI answers, In this volatile and choppy scenario I would strongly recommend that you do not enter into short term trading positions. The bear market rally oculd end any time and reverse. You could be caught on the wrong side. So unless you have full time to devote to trading activity I would abstain from the same.
jinu asked, Hi, I have 800 unitech @26.50.and sesagoa 250@76.00 .Hold or sell
PRANAV SANGHAVI answers, You could hold till this rally lasts that is if you have bought with an intention fo short term trading.
subur asked, what is your view on SBI. I am having this shares at right issue price of 1590/- What do you recommend?
PRANAV SANGHAVI answers, SBI is the largest bank in our country. It has a strong balance sheet andI don't think their performance will get majorly dented this year. I am pretty confident they will have strong results to announce for the yer ended March 2009. And if the interest rates are further lowred thy could benefit from a higher credit offtake.
subir asked, I have 1000 gvkpower@20.60.What to do sell it or hold?
PRANAV SANGHAVI answers, If you have bought the stock with a long term outlook you can surely hold on.
PRANAV SANGHAVI answers, I think the stocks have come off substantially from their lows so I would wait for a while before I enter the stocks again. There cold be a downturn over the nex few weeks which I would use as an oppotunity to get in.
PRANAV SANGHAVI answers, We could test the October lows again over the next few months. There are a lot of local adlobal event in the pipeline which could trigger a down trend. This to me looks more like a bear market rally than a market reversal into a bull market.
basant asked, i have ashok alco-chem 50@6.44. Can i hold it now?
PRANAV SANGHAVI answers, I am sorry I don't follow that stock so will not be able to help you.
pk asked, what about nifty @ 3200 ?
PRANAV SANGHAVI answers, I think there is stiff resistance at 3100 levels.
Baluph asked, Where do you see the market going from here? Do you think the economy stimulus package is sufficient to kick start the economy ?
PRANAV SANGHAVI answers, I don't think the economic stimulus package is large enough to effect a reversl of the downtrend looking to set in. I think they will need to give further impetus to the economy with larger spending in the infra sector amongs other areas.
Ulhas asked, Hi pranav..I have 100 shares of sterling biotech..what to do ..sell or keep
PRANAV SANGHAVI answers, I would switch to a quality stock.
sz asked, hi i have RIL @ rs.1500?Plz suggest what to do?
PRANAV SANGHAVI answers, It has already crossed the Rs 1200 mark today. If the bear arket rally continues you could see your price. If it reverses then it could test it's previous months lows.
Girish asked, can you please tell the prospects of the following SHARE for short term DLF, ICICI, M & M, RELIANCE,HUL, RNRL
PRANAV SANGHAVI answers, All are quality stocks and can surely be held with a long term outlook. DLF being in the realty space amy take a bit more time to recover from it's lows. HUL on the other hand I think has been an outperformer in the market and if and when the market trend reverses and move upwards, I think HUL would tend to be an underperformer. RNRL as have said in the past, one should wait for the legal battle between RIL and RNRL to culminate in a ruling before making a decision.
farida asked, I hold a few stoocks of RCOMM, & Powergrid. My question is should I hold on to both? I have purchased them at Rs.540 per share & Rs.100 per share respectively? Appreciate your valuable response
PRANAV SANGHAVI answers, I think you can surely hold on to RCOmm. I think depsite the growing competition and proposed changes of number sharing within networks by the government I think RComm will be able to hold on to it's market share. Powergrid also is in the power generation business and if you can hold with a long term view, you could hold on to the stock as in the near future it may not touch it's previous highs.
harnek asked, I wants to invest very small amount Rs. 35000/- in which company we have to invest for 2-3 years. Awaiting yoiur reply.
PRANAV SANGHAVI answers, I would look at frontline stocks like L&T, RIL SBI etc. If you do hold on for 2 to 3 years you should see decent returns. Although you shold get in at lower levels.
PRANAV SANGHAVI says, Well it's time for me to leave. Bye for now.
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