Mirroring the weak trend in global markets, the Sensex opened with a huge negative gap of 171 points at 20,080 on Wednesday. Unabated selling saw the index drift deeper into red as the day progressed.
The index tumbled to a low of 19,513 - down 738 points from the previous close - in late noon deals. The NSE Nifty ended at 5,950, down 124 points.
Where is the stock market heading? Will it rise? Or will it crash? What should a small investor do in such a scenario? Should he hold on to his stocks or sell them? Should he buy stocks now or stay away from the markets?
Market expert Pranav Sanghavi answered to many such readers' queries during an hour-long chat on Wednesday. Here is the transcript:
PRANAV SANGHAVI says,
Good afternoon everyone and welcome to the chat. I know there's not much to be smiling about with the markets correcting ov er the past two days. Let's begin.
Dear Pranav, is this just a correction or is there something more sinister to it?PRANAV SANGHAVI answers, at 2008-01-16 16:04:53
Dear Pop, there are a lot of factors affecting the markets. The bad news from US, the Yen hitting new highs against the Dollar and lack of FII participation. We have bounced back from major support levels, if we don't break them over the next few days then we should be fine. Our corporate results should be good. At the month end there is also the USFED Rate meeting where in they should reduce the rate by 50 basis points which could turn the markets.
What is your take on the Reliance Power IPO, Pranav? PRANAV SANGHAVI answers,
As I had mentioned last week it has been crazily oversubscribed on the first day itself. So it would be a lottery if you do get allotment as they are expecting it to list at around Rs 800 to 900 levels. But if this correction continues then one can't say about the listing price. Although the company by itself is a decent bet but for the long term as their capacities will take 2-3 years for commencing.
till which date these mid cap and small cap will fall ??PRANAV SANGHAVI answers,
Till realistic prices are reached.
Pranav, what do u think of Hercules Hoists Reliance Infra and Jai CorpPRANAV SANGHAVI answers,
I loike Rel Infra. In Jai Corp there is news that a 100% subsidiary of the company has launched an SEZ. Thats why the stock has run up.
Hi, Pranav, What is the future of united & alok industries. PRANAV SANGHAVI answers,
I would rather look at other quality stocks.
In view of the upcoming budget and LS elections, do we see a lot of SOPs for some of the sectors coming up? If yes, which of the sectors do you think would find the best favor from Mr. Chidambaram?PRANAV SANGHAVI answers,
I am sure he should give sops to the fertilizer and farming sectors. As still 50% of our country is still involved in farming.
HI... i wanted to know if the Future Capital IPO is worht invseting in for a small investor... PRANAV SANGHAVI answers,
It has a strong management team and they ahve proven their ability to succeed in their other ventures so I don't see why they will not do well with this company too. It could be rated as a bit overpriced but most financial services companies are going at high PE's already.
Reliance Power IPO got superscribed in 1 st day only. do you think this as possible reason for yesterday & today's fall in market???PRANAV SANGHAVI answers,
A part of the reason could be that but there are other global factors also bearing heavy on our markets.
hi pranav i invested all my money and now the market is falling will it recover sometimne soon?PRANAV SANGHAVI answers,
I am sure it will recover. If you are holding on to quality stocks you should not be worried. I cannot say the same for penny and B2 stocks.
why market is go down PRANAV SANGHAVI answers,
I have mentioned in my previous replies as to the US and Japan factors are the major reasons.
HI Pranav, Since the market is already at all time high, is it time to stop investing in the stock market or still there are prospects good prospects of making money in the long term?PRANAV SANGHAVI answers,
No, in fact I would use these corrections to go long on quality frontline stocks who are delivering fantasitic results.
What is the future of Noida toll?PRANAV SANGHAVI answers,
They have just announced the plans to develop some large parts of land around the expressway on the Delhi Gurgaon area. This could yeild good returns over the next few years. There is a steady rise in their toll collections also.
which Bio-fuel companies are promising to investPRANAV SANGHAVI answers,
I like IKF, Praj which is not actually a bio-fuel company but it makes the plants. I also like some of the sugar companies who have started making bio-fuels from the sugar canes for better yeilds.
Ram Nikumb asked,
Goo Evening Sir,which stocks do you think attractive at this moment to investPRANAV SANGHAVI answers,
I like the frontline stocks which are giving results of over 20% growth in profits. Also stocks which have got coorected sharply. I like stocks like RIL, SBI, DLF, IDFC, Uco Bank, ICICI Bank etc.
sir , is it right time to enter in to state bank of india scripPRANAV SANGHAVI answers,
With this correction you could look at the stock. There was not much benefit left on the table for the investors with the pricing but as stock it can surely be bought not necessarily with the Rights Issue angle.
Hi Pranav, Thanks for spending sometime for us. Why is markets going downward,is it bcos of global indices?PRANAV SANGHAVI answers,
As I mentioned earlier in the chat, its various factors like the US economy's health. Citibank reported multiple billions loss for this quarter which shows that their credit markets are still open for further losses. The Yen also hit new highs against the dollar due to which all the yen carry trades will start unwinding which was seen especially today in the South East Asian Markets. Plus we had a huge IPO and very little FII participation.
I am holding some shares of Axis /bank, Unitech, Ifosys & TCS and I am a small investor. What is my right step now?PRANAV SANGHAVI answers,
You could surely hold on. If you are a long term investor you shall surely make decent profits. The IT stocks may not see new highs for a while so you could switch them to banking stocks.
What is the story behind SBI?PRANAV SANGHAVI answers,
SBI is the largest bank in the country. It has a rights issue in the offing, it has consistently paid higher advance tax every quarter this year. They paid Rs. 600 crs in the 1st quarter, Rs. 800 crores in the 2nd quarter and for the December quarter they have paid a whopping Rs. 1000 crores.
i hold some quantity in Parekh Platinum, Kohinoor Broadband and Lloyd steel.Do
you think i should continue to hold themPRANAV SANGHAVI answers,
would exit and invest in quality stocks.
Hi Pranav, I mostly invest in MF's. I plan to start investing in the share market. If the market is down is it the right time to buy shares. When will it be up again so that I can profit out of itPRANAV SANGHAVI answers,
Yes it is a good time to enter the markets when they are correcting. Our country's economy looks to be intact. I don't think the US economy will have a very drastic impact on our markets. Timely corrections are part and parcel of the game.
Hi Pranav, Is the reliance IPO a good bet for an investment for 5 years? Also is it better to go for IPO or buy from secondary mark?PRANAV SANGHAVI answers,
In the IPO you may or may not get allotment. With the kind of oversubscription it has seen it would be sheer luck. For a 5 year outlook the stock is surely a good buy as India is a country with huge power shortage. If you do not get allotment you have only the option to buy from the secondary market.
WHAT DO YOU THINK ON THE RELIANCE IPO ALLOTMENTS ? I HAVE APPLIRED 3 LOTS OF 225 SHARES IN DIFFERNT NAME OF MY FAMILY,HOW MUCH SHARE WE WOULD BE ALLOTED AND WHAT ACCORDING TO YOU WOULD THE PRICE OF SHARE WHEN LISTED ON THE STOCK EXCHANGE.AWAIT YOUR PROMPT REPLYPRANAV SANGHAVI answers,
Please refer my previous reply, thank you.
Am holding jindal steel. what is its futurePRANAV SANGHAVI answers,
You could usrely continue to hold on. Even though steel is a cyclical commodity, the demand for steel over the next few years will remain high due to the massive real estate and infrastructure developments.
i am holding 100 shares of power grid should i hold or exitPRANAV SANGHAVI answers,
Is 2008 a year of recession?PRANAV SANGHAVI answers,
It could prove to be for US although I doubt a serious recession would take place but I definately don't think India would face a recession.
i am new in market, I want to purchase some share. Please gude me PRANAV SANGHAVI answers,
I would suggest you study the markets thoroughly and also discuss your investment goals with your broker before starting.
pranav why does reliance power does not buys the stocks right noe...they have pubilc money of 1 lakh chroresPRANAV SANGHAVI answers,
Because of SEBI guidelines they are not allowed to use the public money for investing in the secondary markets.
I have 9 shares of Infosys @ 2005.5 for last 400 days plus 7 shares of TCS @ 1186.7 for last 370 days.. Should I hold or get out of these?PRANAV SANGHAVI answers,
You could sell on a rally and buy back later.
how is punjab alkalies??? PRANAV SANGHAVI answers,
It is a good steady performer. You could look at it with a 6 to 12 month outlook.
what are your thoughts on l&t shares?PRANAV SANGHAVI answers,
I am extremely bullish on the L&T stock even at current levels. The stock has tremendous inherent value and once they do decide to unlock it, it will be a multi bagger for the investors.
What is your call on ISPAT Industrices, praj industries and india bulls financial!!! PRANAV SANGHAVI answers,
I am bullish on Praj and India bulls. Both are good bets for the long term and can be bought or held on. Ispat I would book profit and exit.
Hello Pranav, can you recommend good Mutual fund in Equity - diversified, thanksPRANAV SANGHAVI answers,
There are lots of them who are performing well. Like DSP Tiger, HDFC Growth, Templeton etc.
what is your take on Reliance Petroleum ? Shall i buy this? Do you see a rise in this stock in near future? and if yes, then how many months?PRANAV SANGHAVI answers,
You should look at the stock from a 1 to 2 year perspective. You shall surely see handsome returns with that time frame.
Last year, I had invested rs.350000.00 in lic's Jeevan Plus ,is it good investment or not? Investing rs.12,500.00 p.m. in sip(rs.2500/=uti mastershare plus,sbi global magnum & dsp ml technology.com
growth,rs.5000/=in each)is these good investments,continue or discontinue? And lastly,will i have to pay any tax on gains of these investments?how much?PRANAV SANGHAVI answers,
I think you have made good choices. ULIP's and SIP's over a longer term will give great returns. Infact, last year the insurance sector pumped in more money in to the markets as compared to the mutual funds. This year they are supposed to outpace the FII's investments in the markets.
your comments on ICICI bank sharesPRANAV SANGHAVI answers,
They have been talking of unlocking value through listing or demerging their profit making susbsidiaries. I would surely hold on bearing in mind their past performance and returns to investors.
what do u say abt Manjushree Extrusions Ltd. IPOPRANAV SANGHAVI answers,
I don't follow that stock sorry, so will not be able to help you.
I have filled an form for 225 Relience IPO should I can get back?PRANAV SANGHAVI answers,
You can go to the merchant banker or the banker to chekc if your form has been processed. If it has then you can try to make a stop payment on the cheque if it has not been debited in your account already.
Pranav isnt investing in ipo's a better option than putting ur bets on the shares?PRANAV SANGHAVI answers,
Not all those who apply are allotted. Also, with the IPO company you do not have any recorded history of performacnce to go by. It is only based on their prospectus. So a listed company wins according to me.
I have 40 shares of GMR @240. Can i buy more at current levels? or I should not buy. My interst is longterm (more than a year)PRANAV SANGHAVI answers,
You can surely hold on even buy more. It is a quality infrastructure play.
whats the ideal time from now to buy invest capital in share market as there are rumours that the market will collapsePRANAV SANGHAVI answers,
The markets have already been falling over the last two days. One can never time a market so you could start buying in parts.
Hi pranav, What about the future of these stocks ONGC, tata chemicals, Nestle, DLF and Infosys. Can i hold it for 3 to 6 months. May i know the reason for the ONGC stock price is falling very rapidly. Thanks a lotPRANAV SANGHAVI answers,
All are A grade quality stocks. You have picked up great stocks and surely can hold on. You will see good returns on your investments if held for 6 to 12 months especially.
PRANAV SANGHAVI says,
Well it was great chatting with you guys, hope to catch you'll next week. Bye for now.Chat with Pranav every week!