Rating rationale from CARE ratings on Deepak:
http://www.careratings.com/upload/CompanyFiles/PR/DEEPAK%20FERTILISERS%20&%20PETROCHEMICALS%20CORPORATION%20LIMITED-10-20-2015.pdf

Reasons for downgrade being:
1. Higher reliance on trading activity leading to a deterioration in the financial profile marked by decline in profitability margins
2. Increased debt levels (being debt focused, the agency has also taken into account debt funded capex pertaining to capacity augmentation of Bentonite Sulphur (BENSULF) and NPK fertilizers
3. Continued reliance on natural gas at market rate vis-à-vis administered price mechanism (APM) rates
4. Likely recovery of differential pricing on account of domestic natural gas at APM vis-à-vis natural gas at spot prices further to the circulars issued by the government

Sudhaditya,

You can make entry at current level...then add on dips...
I do not think it will give correction at CMP..unless broader index goes in deep correction..

Mukesh,

Cupid has south african order of 100 cr for next 3 years starting from Jun of this year.

and zimbabwe also showing interest..so soon it should get order from Zimbabwe..

There r two things that I am waiting for to re-enter:

1) A bit time correction as earnings catching up
2) Management to be more aggressive and dynamic to market situation.

Apart from the sectors mentioned by Hitesh, I think the following ones might do well too:

1. Commercial vehicles - the government has disallowed vehicles more than 15 years of age to ply on the roads, and capex from transport companies has been long overdue. A lower interest rate regime should also help.

2. Chemicals - same reason as that of OMCs. Cheaper crude will result in lower RM costs. However, most chemical companies have low pricing power, so margin expansion will be muted. What might help is an uptick in mining activity, textile sector and other end users.

3. Tea companies - have not researched this in detail, but El Nino in Ethiopia should lead to higher prices. India might be affected though too

Interesting topic. If one gets the sectoral themes right there's lot of money to be made.

Question is how to find out the sector that will outperform.

One group of sectors I can think of is those that can benefit out of low crude and gas prices or those benefitting out of govt initiative of making gas easily available.

The sectors that fit the bill are OMCs (which have run up much earlier), certain companies in power segments (the name that comes to mind are torrent power etc who were earlier stuck due to non availability of gas to run their power plants), fertiliser sector again due to availability of gas and some easing of subsidy payments etc.

But even if one can find good companies in these sectors these will at best be opportunistic bets and one will have to be careful to get out of them once there are early signs of the music becoming too loud or stopping altogether.

If GST is passed then high quality consumer companies would have a good time but looking at valuations of most of them it seems overall returns may remain muted. There will off course be some winners there also.