Worst is over & time is ripe to buy stocks :
Most of the negatives seem to be priced in the market and any positive trigger like passing of goods and services tax (GST) for example or the land acquisition bill could act as a positive trigger. There are lots of opportunities in the market when your rupee depreciates. IT and pharma stocks were the leaders in terms of when the markets started to rally may be around 8,000 – 9,000. They also felt as severer jolt as when the markets started falling.
I expect that the market has started its bull run again though it may not go in a hurry towards its all time high but probably the worst part of the correction seems to be over and I think there is a good valuation support around 8300-8400 from where the market would bounce back. So, given the pull of the sectors that I said probably this is a better place to play the rally rather than not just coming into the market. So, probably you should nibble into the stocks and among these sectors also we would like to have 30-40 percent exposure in the so called midcap space.
Keep a balanced portfolio with 50% to Pharma, IT & FMCG & balance to Banks/ FMCG, Capital goods & autos:
Keep a balanced portfolio with, say 50-60 percent would be allocated towards the so-called defensives like IT, pharma and FMCG which in fact are not defensives and have taken the lead in this sort of a rally. Earnings growth would not be a big problem in these sectors; 40-50 percent of your portfolio has to be in banks, NBFCs, capital goods and even may be autos. So, if you construct this sort of a portfolio then there all chances that probably you outperform even the benchmark indices.
TVS Motors – story over; Tata Motors – A screaming buy:
We have seen the better part of the run of TVS Motor, the last one, one and a half years was a dream run for the stock. It is seeing healthy round of profit booking from a lot of investors. Currently if there is something to buy in the auto space then it is something like Tata Motors which in fact is playing out very well and the valuation at which it is available comparing it with peers.
Tata Motors looks to be a screaming buy rather than TVS Motors.
Ahluwalia Contracts – A favourite stock:
Ahluwalia Contracts has been one of our favourite stocks and this stock has had a dream run up in the past few months. From here also we feel that the order book is continuously on the rise. Also the contracts which the company is executing are again in an excellent terrain. So, we feel given the valuation also Ahluwalia Contracts is one decent play.
NIIT Technologies – good expansion, reasonable valuations
NIIT Technologies is one of the better stocks to own in the IT universe. It is trading at around 13-14 times. At all the verticals, the company is seeing good bit of expansion.
Snowman Logistics – 30 to 40% upside possible:
Snowman Logistics after listing had corrected big time. We feel that the logistics sector is going to do very well if the economy is going to move forward.
Private & PSU Banks should be bought aggressively on further correction:
We like private banks. Bank of Baroda (BOB) and Punjab National Bank (PNB) probably some where down by another 3-4 percent correction from here on would be very attractive buys for 1-1.5 years horizon. In private banking space the numbers which have already come out the likes of YES Bank and IndusInd Bank have also seen decent amount of correction and to a certain extent even something like HDFC Bank gives you a rock solid stability to investors’ portfolio.
These are good opportunities because banks have started falling; even private banks which have come up with good set of numbers have also started to fall. If this correction lasts for another 100-200 points more we would be buying private banks very aggressively.
NBFC stocks can give high returns:
Your money would give you better returns in sectors like non-banking financial companies (NBFC) which a lot of people are still ignoring. We saw a couple of good results from L&T Finance , M&M Financial and I see no reason why REC and PFC would also thrive in this scenario.
NBFC is one sector which is still a dark horse and which can do very well going forward. Can Fin Homes has seen a sharp correction from around Rs 900 to Rs 650-700 odd. So, I feel these are the stocks which one can own in their portfolio at this point. So, these are the stories which one can own. Even cement is going to do very well as far as the construction activity is going to boom. So we feel cement as well as some sectors like NBFCs as well as housing finance companies are sectors to own in this current fall.
Buy stocks that profit from the fall in price of crude:
Wherever crude is an input or crude derivatives are inputs, we have seen good set of numbers coming. A lot of companies have reported great numbers because last quarter there was a inventory which Asian Paints carried, but this quarter the numbers would be good.
We expect Asian Paints to deliver a decent set of numbers and there is a substantial upside from here for such stocks like Asian Paints or Pidilite Industries which derives a lot of its raw material from crude.
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