Did I Not Tell You To Buy Stocks When The Going Was Bad? Prashant Jain HDFC MF

Today, when the Sensex touched an all-time record high of 21,919, there is great jubilation on Dalal Street. Everybody has forgotten, for the present, Shankar Sharma’s dire prophecy that “I Am 100% Sure The Stock Market Will Crash 20%”

This is an opportune time for Prashant Jain, equity evangelist with HDFC Mutual Fund, to rub in his timeless advice that investors ought to have bought truck loads of stocks when the going was bad and stocks were available at throwaway prices. At one stage, things were so bad that Prashant Jain had to quote from the Holy Scriptures to persuade investors to even look at stocks.

Anyway, it is never too late to listen and act on prudent advice because the fact is that even if the Indices have run up sharply, individual stocks are still available at low valuations. Lets look at some of them.

PSU Banks:

Investors will scorn at you if you recommend an investment in PSU Banks and rightly so because PSU Banks have been the biggest wealth destroyers in the recent past. However, if you are bit a contrarian, the time is ripe to tuck into PSU Bank stocks. A recent report in ET by Rajesh Mascarenhas reveals the astonishing fact that several PSU Banks are quoting at a fraction of their book value while offering high dividends. The reason for the dirt-cheap valuations is because of the surging NPAs. However, any hint of reforms for the banking sector or that the economy is reviving or softening interest rates can send these stocks spiraling up.

MRPL:

MRPL has a business model of refining crude oil and selling it to OMCs which ensures that it will make profits. The expansion of the refinery complexity means that there will be higher GRM’s. However, the gross delay in the expansion has meant huge losses for MRPL. However, now it is at the end of the tunnel. An announcement that the new refinery is on stream can send the stock price surging up.

JB Chemicals:

JB Chemicals is a good example of the myopic eyesight of the market. The Q3FY 2014 results are only optically bad owing to a one-time write-off of a disputed amount. However, the market refuses to acknowledge the strong operating performance and improvement in margins that the company has displayed and the stock has not participated in the rally that Pharma stocks have seen. If JB Chem reports similar strong operating performance in Q4 FY 2014, the stock will spurt.

So, taking a cue from Prashant Jain’s advice, one can say that these stocks which are in the throes of agony at the moment should be bought now.