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Buying stocks now? Careful!

August 28, 2008 08:28 IST
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The Sensex opened the week with a significant positive gap of 242 points but profit-taking towards the close saw the Index pare gains.

And on Tuesday, it opened more than 100 points down, but ended with marginal gains.

The market opened higher on Wednesday, but soon sliiped into the negative region.

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

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

Riyas asked, 
Hi pranav, Are RIL, L&T, SBI, IDFC, RPL stocks worth to buy at CMP? Shall i wait for further correction in the market? Thanks.
PRANAV SANGHAVI answers,  at 2008-08-27 15:45:24I think the markets will come down a bit. It would be a good time to buy in parts at that time on every dip. But I repeat once again what I have been saying ovr the past few months, that one must invest with a long term over view.
sameer asked, Hi pranav, Please correct me if i my understanding is wrong. "bonus share" does not have any benefit to the shareholder, i meant the bonus share does not help the investors to increase his/her wealth. It is almost same as stock split option, and the only difference in stock split is that the face value of stock is divided by the ratio of the stock split, so the face value gets reduced value. Is my understanding is correct? Please advise. Many thanks to you.
PRANAV SANGHAVI answers, The one fundamental difference is that in a Bonus issue the capital of the company actually goes up where as in a stock spit the Face Vale of the stock goes down but the capital remains intact as the number of shares increases. Bonus shares on a longer term do add value as when the stock price moves up post bonus the aggregate valuation of original shares plus bonus shaes will be higher than the previos shares held. Also, the company is showing great confidence in it's ability to deliver higher profits so that it can service a highe equity.
SRM asked, Bajaj holidng and investment at 550? shall i hold or sell?. If I hold, shall i buy more to average it? Thanks
PRANAV SANGHAVI answers, You could hold on but with a 6 to 12 month outlook.
Hari asked, Hi, Aban offshore is traded at its 52 week low price. Will it yield good return if i buy now and hold it for 1 year period.?
PRANAV SANGHAVI answers, They are the largest player in the offshore drilling business and also have made some aquisitions recently which should bear fruit in the coming time. I would surely look at the stock with that time frame.
Gav asked, I am holding the following shares in my portfolio, punj lloyd, IDFC, Unitech, Suzlon, Pantaloon retail, GUJ NRE Coke, GMR Infra, Canara bank. Shall i hold it for 1 year period.
PRANAV SANGHAVI answers, Yes you could hold on to these with a 1 year outlook.
RR asked, Is Adani enterprise good company for invetment? I like to buy Adani shares. Please advise. Thanks
PRANAV SANGHAVI answers, I would look at other frontline stocks currently rather than Adani Ent.
Bala asked, I am just curious, As there is no value to the shareholder due to bonus share news, why people are rushing to buy those bonus share issued companies shares. Kindly help me to understand. Thanks a lot.
PRANAV SANGHAVI answers, I just explained a bit about Bonus shares earler please refer. On a longer term a company that issues bonus normally will be valued higher say 3 to 6 months down the line after the bonus issue provided it is a quality company.
Bala asked, One more questions, What is your take on Jindal Saw? I am holding 30 shares at 600 now?
PRANAV SANGHAVI answers, I think you could surely hold on to the stock with a 6 to 12 month outlook. Even though it is a steel commodity stock which are cyclicalin nature. If it comes down substantially in the short term you could average it further.
afrose asked, Hi, Please suggest your top 5 picks as of CMP? Thanks
PRANAV SANGHAVI answers, I would still go with stocks like RIL, SBI, L&T, NTPC etc. But I would buy on a stronger dip of say around 4 to 5% atleast.
chandan asked, what are 12 year prospects of SUZLON and SESAGOA?
PRANAV SANGHAVI answers, I think considering the businesses they are in Suzlon especially should be doing well. Sesa would depend on how mch of its resources have deplted over te years.
sultansurti asked, How's idfc at current price ?
PRANAV SANGHAVI answers, I like the stock and would look at it on ever dip.
san123 asked, hello Sir, I want to buy 100 shares of Reliance infra, shall I buy at current levels and what will be its prospects after 1 yr
PRANAV SANGHAVI answers, The company has just completed a buy back program from the open market and I don't think the stock will appreciate tremendously from here. I would wait for a correction to look at the stock.
marlia asked, What is your take on TNPL? Are you bulling on this stock for 1 to 2 years period.? Thanks
PRANAV SANGHAVI answers, You could look at the stock with a 1 to 2 yea outlook surely.
RanaD asked, I have bought 20 shares of SESA GOA @ 175. What are the prospects?
PRANAV SANGHAVI answers, I like the stock and I think over a period of 6 to 12 months I think the stock should give decent returns to investors.
manju asked, How is idea cellular, Indian Hotels, Hotel Leela & IDFC. Pls suggest me whether to hold or exit. I have purchased recently...
PRANAV SANGHAVI answers, I would surel hold on to the stocks you have mentioned. Indian Hotels especially looks underalued.
ashok asked, what about gujarat nre coke ltd
PRANAV SANGHAVI answers, It is a hold. The demand for coal is not going to die down soon and Guj NRE will only benefit from it.
CMukherjee asked, Hi,what is your prediction for RNRL and RPL stocks?
PRANAV SANGHAVI answers, As I have been saying earlier, RNRL stock price will depend on the outcome of it's legal battle with RIL. RPL should move once the commercial production draws closer an there after its quarterly results.
venu asked, My portfolio is IDFC,IFCI,DENA,SBI,india cements, DLF, ADlabs,Welspun Gujrajat,RELCOM,RIL, Facor alloys, BSEL infra & Teledata. I want to modify the portfolio. Please suggest me which one to sell & which one to buy further. Thanks Venugopal D R
PRANAV SANGHAVI answers, I think you have a decent mix of stocks in your portfolio. You could switch Welspun, BSEL and Teledata to frontline quality stocks like NTPC, L&T etc.
jyoti asked, what should I do with reliance petroleum
PRANAV SANGHAVI answers, Hold with a 1 to 2 year outlook.
venusmail asked, Hi Pranav, Is it right time to enter in Voltas, Sesa goa, KS Oils and Karuturi Global? and please name 2 public sector banking stocks which are below 100 rupees
PRANAV SANGHAVI answers, I don't follow the other two but yes Voltas ans Sesa can surely be looked at on every dip.
arindam asked, Sir, Could you tell me the name of one Mutual fund scheme so that I can invest Rs. 1000 per month for next 10-15 years in view of my son's education.
PRANAV SANGHAVI answers, I won't receommend a single name but look for large cap diversified Mutual funds offered by SBI, DPML, HDFC, Templeton etc.
RAMUJIRAO asked, Dear Sir, RCOM 500 SHARES @ 550. Holding for more than a yr, pls give your feedback on the same
PRANAV SANGHAVI answers, With the new rules set out by TRAI for the telecom sector, RCOM will take some time to recover fully. I think that beyond 6 months the stock should do well.
G SURESH asked, Hi.......I hold 200 bombay dying at 600 & 2000 ispat at 29 I am nor sure whether to hold it for long term or selloff.......Kindly guide me
PRANAV SANGHAVI answers, Bombay Dyeing could be held on to. Ispat could be switched for a better qulity stock even if it ins in the steel sector.
Lipika asked, What would u suggest about Ranbaxy? I have 50 shares @505. kindly advice..
PRANAV SANGHAVI answers, With the recent development
it becomes a play with a long term perspective. In the short term it will move in tandem with the news related to the buy back and stke sale by the promoters.
venu asked, Hi, Please suggest 3 stocks from Power sector & 3 good MIDcap stocks. Thanks Venugopal
PRANAV SANGHAVI answers, I like NTPC, Power grid and Tata Power. I like Indian Hotels, Voltas and Financial Technologies albiet with a long term perspective.
jamal asked, i m having 5000 share of tata teleservices, what is future prospects
PRANAV SANGHAVI answers, I think they disappointed with their results and I don't think the stocks will go any where north soon. if there is any news of a merger amongst its group companies then there could be movement in the stock.
Brijesh asked, What is the future of Reliance Power Ltd. Is it prudent to buy some more share of the same.
PRANAV SANGHAVI answers, It's first plant will come into commission some time in 2010-2011. Unless it makes an acquisition earlier, the stock will not move much. I would not buy at the current levels but look for further lows to get in to the stock that too with a 3 to 4 year outlook.
sundaram asked, Sir , I am having PunjLLoyd , Relaince petroleum, NMDC, HDIL , Nagarjuna Construction , Yes bank , BGR energy , Sesa GOA shares . What are the future prospects and fundamental of these shares ?Whether I will hold these shares for 3- 5 years period? Or any thing I will change ?Please give your suggestion
PRANAV SANGHAVI answers, Barring a couple of stocks like Nagarjuna Const and HDIL and BGR energy, you could hold on to most of the other stocks. I would switch a Yes bank to a Bank of India, PNB or even SBI.
Mayank asked, i hve Ntpc at 190 since long time. being a very gd script why is so much moving in it
PRANAV SANGHAVI answers, The market conditions won't let the stock move upwards. You will have to hold on for a while and you will surley see returns.
VCLINGAM asked, Hi, can I buy SBI, L&T, BHEL AND RELIANCE at current level?
PRANAV SANGHAVI answers, I would wait for furhter dips before jumping in to buy. But all the stocks you mention are excellent choices.
SSS asked, SIR, I AM HOLDING IDFC. WHATSHOULD I DO NOW. WHETHER TO EXIT.
PRANAV SANGHAVI answers, Hold.
rajyashraja asked, Dear Sir, Plz advice me, i m new to this but i want to invest somebody told me that this is the right time to invest, so can u plz guide me in which stockj i should invest and what should be the numbers of shares foa a beginner
PRANAV SANGHAVI answers, If you are looking at the markets with a 3 to 5 year outlook you could buy on every dip from these levels as a fall should come. Also buy only quality frontline stocks.
shrikant asked, Hanil Era Textiles - do you think the share will ever get listed at all ? Holding on to this for 10 years now !!!
PRANAV SANGHAVI answers, I doubt it would get listed. Write to the exchange to find out an update on the company and the write to the company seeking clarification.
rajeshgambhir asked, Hi Pranav, I have been holding BHEL(20) and L&T(10). Should I hold and upto what time.
PRANAV SANGHAVI answers, Yes you can surely hold on as both look to contine their good performance in the following few quarters.
Manjeshkar asked, Hi Pranav. I've been reading your replies every week without fail. I want to start investing in stocks both for Long & short terms. So pls advice me some good stocks to invest in accordingly. ThnkU...
PRANAV SANGHAVI answers, For both long and short term I would only recommend frontline index stocks for any one who wants to enter the markets. Get in post a correction.
Manoj asked, Hi, I had brought reliance petro,RNRL, Jaiprakash Hydro and JSW steel when market was between 20k - 21k. Should I Kept all those share, If yes then for how long period.
PRANAV SANGHAVI answers, You have unfortunately got into the stocks at the highest levels. It will take an extremely long time for you to see the prices.
ARUN asked, I have purchased VINYL CHEMICAL LTD shares before Nov-08 on Rs.27 with face value 10 now it is demerged in PIDILITY and now having face value 1 . So what is the futur of it
PRANAV SANGHAVI answers, I think Pidiliteis a strong player and the company will only benefit from this merger.
AJAY asked, Can I buy India Cement at this stage ?
PRANAV SANGHAVI answers, I would look at Guj Amb and Ultratech.
xxx asked, Sesa goa @ 172 Can i hold for long term?
PRANAV SANGHAVI answers, Yes surely. You could accumalate further at lower levels and hold on for 6 to 12 months for decent returns.
jayant asked, Hi Pranav, I bought 200 shares of Renuka Sugar @111.00. Now it is at 120.55. Pls tell me what is its future & how long to hold??
PRANAV SANGHAVI answers, I would book partial profits.
rini asked, Hi Pranav what do you say Jaicorp. will it touch its privious high in near future
PRANAV SANGHAVI answers, I doubt the stock would see it's earlier highs any time soon.
vip asked, what about L&T should i buy which one is good among ambuja cement, india cement, acc i bought aban @ 2350 now its less than 2150 what do you say. which one is good among gail or igl or both are good i'm trying to build a diversified portfolio plz suggest some stocks which i can keep buying with 1-2 or more years prespective, thanks
PRANAV SANGHAVI answers, You could surely look at all the stocks you havementioned baring may be IGL. With that time frame you should see decent profits.
RAJEEV asked, Sir, Ur views on NTPC, FORTIS, DLF and Transformers and Rectifiers (TRIL).
PRANAV SANGHAVI answers, DLF and most other reality stocks look a bit weak in the near term. DLF announced a fund raising program which is sending negative signals for it's stock. NTPC could surely be looked at.
malini asked, Hi Pranav, do you track UTV? Why isn't it showing any movement despite being included in F&O?
PRANAV SANGHAVI answers, I am sorry, I don't track UTV.
nitinptrp asked, hi. i have 700 shares of hindustan motors bought at higher level. shall i hold or book loss? any chances of going beyond Rs.40 level? thank you.
PRANAV SANGHAVI answers, In the short term I don't think the stock will move up sharply. You will have to hold on for a long time.
Manoj1 asked, Can I go for ICICI at 670? it will be a good deal or not?
PRANAV SANGHAVI answers, The banks have rallied a bit over the past few sessions. When they do fall a bit I would surley look at ICICI and other banks like HDFC, SBI etc. but as I keep repeating witha 6 to 12 month outlook.
we asked, dear sir your openion on moserbear and kpitcumins.
PRANAV SANGHAVI answers, From the tech related companies I dont think MoserBaer will be affected that badly by the US recession. I think you could hold on.
dddddddddd asked, What is the future of UCO Bank & Banking in general
PRANAV SANGHAVI answers, In the short term with the high interest rates and CRR Ratio the banks may not outperform the markets. Over a longer term I would surley look at the front quality PSU banks.
Vikram asked, Hi PranavI have been posting for a long time.But have not received a reply.Anyways.I have invested in GMR INFRA for long term.What will be the next support levele for it.What about NMDC for 5 years.What about Suzlon at the current levels?Please reply.
PRANAV SANGHAVI answers, GMR has compelted some great proects like the Hyderabd Airport and has many more in the pipeline. I would surely look at the stock but with a long term outlook. NMDC also could be looked at with that time frame. Suzlon too would have to be a long term bet as in the short term it may not shoot up.
ayush asked, voltas to hold or sell ? what is the max price you think it can go in 3 -6 month time ?
PRANAV SANGHAVI answers, I would surely hold on.
PRANAV SANGHAVI says, Well it has bee geat chatting with you all. Hope to catch you'll next week. Bye for now.
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