Gurus (again) save novices from ruin
It is unbelievable that just a few days ago, novices at Dalal Street were aimlessly roaming around with despair and desperation writ large on their faces.
Today, they are back to strutting around like Millionaires, their pockets bulging with hefty gains.
All fears of the dreaded LTCG tax are a distant memory now.
For this, we have to compliment the Gurus who offered valuable advice that the market correction would be short-lived and provide a golden opportunity to buy stocks at bargain basement prices.
What is commendable is that the Gurus united despite their ideological and political differences and spoke in one voice so to inspire novices (see I Love Stock Market Crashes Says Shankar Sharma While Porinju Veliyath & Vijay Kedia Soothe Nerves Of Hysterical Investors).
Ridham Desai of Morgan Stanley also rendered yeoman service by producing reliable data which proved that the crash in the markets had nothing to do with the imposition of the LTCG tax but was due to Global factors.
Even Billionaire Anand Mahindra did his bit by advising us that it is a “great time to go bargain hunting”.
A free-fall in the market triggered by a global sell-off is in my opinion, a great time to go bargain hunting; especially when India’s economy is headed northward..Will just have to move swiftly before the market begins to recover..!
— anand mahindra (@anandmahindra) February 6, 2018
At the same time, we have to pull up RaGa for making buffoonery statements and trying to cause panic amongst novices.
RaGa claimed that the crash was a “no-confidence” motion by the markets against NAMO for having imposed the LTCG tax in the Budget.
In Parliamentary language, the Sensex just placed a solid 800 point No Confidence Motion against Modi's budget. #BasEkAurSaal
— Office of RG (@OfficeOfRG) February 2, 2018
One can imagine the level of buffoonery in RaGa’s statement from the fact that even Shankar Sharma, who is known to be a die-hard fan of RaGa, mocked the statement, albeit in a subtle manner.
It's now clear that our imposition of Long term capital gains tax has caused the global market crash ?. India is finally a mover & shaker on the global stage now
— Shankar Sharma (@1shankarsharma) February 6, 2018
Later, Shankar dispelled all doubts that there is no co-relation between the LTCG tax and the correction in the markets.
He described it as a “normal correction in a vastly overbought global market”.
I am absolutely clear: this isn't a 2008 repeat. This is nothing but a normal correction of a vastly overbought equity market globally. And this also marks the start of a massive relative bull market in Emerging Markets vs Global Equities. Yaad rakhna…
— Shankar Sharma (@1shankarsharma) February 6, 2018
It is worth noting that Shankar has claimed that this “marks the start of a massive relative bull market in Emerging Markets vs Global Equities”, which means that we have to buy stocks aggressively and on a no-holds-barred basis.
Coast is clear. Resume buying stocks: Porinju Veliyath
Porinju has also issued the all-clear signal and advised that we can safely return to Dalal Street and resume our quest for multibaggers.
“Markets, in general, look fine and healthy; Focus on improving Corporate Governance in mid & small-caps, to create wealth in 2018,” Porinju said with a sparkle in his eyes.
Markets, in general, look fine and healthy; Focus on improving Corporate Governance in mid & small-caps, to create wealth in 2018. #BePriceSensitive
— Porinju Veliyath (@porinju) February 12, 2018
He also made public a top-secret letter that he had addressed to the elite members of his PMS on the strategies that investors should adopt to reap full advantage of the opportunities.
SGX Nifty 10,330 – more panic after US sell-off!
Just sent this message to our PMS investors: pic.twitter.com/nZJbVg7gU7
— Porinju Veliyath (@porinju) February 6, 2018
Top 10 mid-cap stocks to buy now
Motilal Oswal, under the able leadership of Raamdeo Agrawal, has developed a stellar reputation for recommending stocks which meet the stringent QGLP standards
It is well known that “QGLP” is an acronym for “Quality, Growth, Longevity and favorable Price”.
Stocks which tick all the boxes in the QGLP formula are destined to shower hefty gains upon investors.
In the latest report, Motilal Oswal has stated that the sharp correction in mid-caps had made stock-picking less challenging because the valuation premiums have moderated from the recent highs.
It is also stated that the correction offers a good opportunity to accumulate quality stocks.
Motilal Oswal has favored stocks which are the ideal mix of growth and value plays.
The three key themes are:
(a) Consumption Recovery – both urban and rural,
(b) Financialization of Savings, and
(iii) structural trends like Formalization of Economy post GST implementation.
On the value side, Motilal Oswal has recommended stocks which are relatively unpopular but where underlying dynamics are turning favorable, and also those where valuations are at a significant discount to sector.
10 stocks have been recommended where:
(a) growth visibility is healthy and outlook is strong,
(b) there has been at least 15% correction from 52-week highs, and
(c) the target upside offers a healthy return potential.
The 10 mid-cap stocks are the following:
|CMP||TP||Upside 52 wk||EPS CAGR (%)||ROE (%)|
|Repco Home Fin||592||800||35||923||19.7||18.1|
|Team Lease Serv.||2212||2700||22||2537||31.4||17.7|
It is notable that as many as six stocks have an upside in excess of 30%.
One stock, MCX, has a fabulous upside potential of 49%.
The lowest potential of 22% is offered by Team Lease. However, this is also an attractive return.
8 Blue-chip large-cap stocks
For investors who are inclined to dabble in large-cap blue-chip stocks, Motilal Oswal has cherry-picked 8 stocks.
These stocks are the following:
|CMP||TP||Upside||52 wk||ROE (%)|
|Larsen & Toubro||1347||1650||22||1470||13.0|
|Mahindra & Mahindra||754||881||17||803||14.1|
It is notable that NMDC offers an eye-popping upside potential of 61%.
HPCL, which was recommended by Porinju Veliyath a few days ago, has an upside potential of 44%.
Titan Co, which is the crown jewel of Rakesh Jhunjhunwala’s portfolio, has the potential to give gain of 24%.
There is no doubt that Motilal Oswal’s selection of stocks is stellar and fail-safe. We can confidently buy these stocks and wait for the gains to gush in!