A Question of Answers - Mail replies

I am holding SAIL at Rs. 230/- and Gujarat Ambuja Cement at Rs. 118/-. Do you see any recovery in short term?

With cooling commodity prices, I would stay away from metal stocks in the current market. Cement inspite of predicted decrease in Infrastructure growth looks positive.
Investors can take fresh long position in sugar stocks with surging sugar prices. Stocks like Sakthi Sugars and Triveni Engineering looks good.
With falling prices of zinc and lead one can look for fresh investments in battery manufactures like Eveready and Amara Raja.

Are you taking any fresh look into your earlier recommended stocks?

Yes. We are positive on Tamil Nadu Newsprint Limited (TNPL), JK Lakshmi Cement, Rallis India and Orchid Chemicals from our earlier recommendation.

With Neyveli Lignite almost available in half the price from it's peak is it advisable to take a fresh position into this stock?

New power additions are not progressing satisfactorily. Also the current quarter results are way below expectation. Will wait and watch for couple of more quarters.

I have brought Alembic at Rs. 42/-. Is it a worth hold for long term?

Seems to me yes. Pharma sector looks to be a good bet in the current market. Alembic looks good with strong presence in domestic market. We are also positive on Orchid Chemicals and Novartis India.

I have huge position in textile stocks like Arvind mills and Alok Industries? Can I book losses or hold it?

I am not sure about Arvind mills. Alok seems to me a good bet from a longer term. I think government control on curbing cotton exports is set to benefit domestic textile firms.

Can I buy Teledata Informatics, Phoenix Mills at current level?

Sorry I am not tracking both of these companies.

A portfolio for your retirement savings

"Bull markets are born on pessimism, grow on skepticism, mature on optimism and die on euphoria". Legendary investor John Templeton one of the contrarians believed that the best bargains are available when the investing public is fearful. Not to mention another contrarian investor Warren Buffet whose key to investment success is to be greedy when others are fearful and fearful when others are greedy.

The current financial year saw Indian markets bull run coming to a halt and the financial markets correcting almost 40% from it's peak. Lot of pessimism is surrounding the market regaining it's lost glory with crude oil trading way above the three digit mark and the inflation number touching 2 digit mark. People are surprised to see bank deposits giving two digit return after a gap of almost 7 years. High inflation weakens investor sentiments as it slow downs industrial growth and also brings down the mega expansion plan the Indian corporate world is undertaking.

Taking a optimistic view of tomorrow we have selected 10 stocks which is set to benefit from the India growth story. We have picked these companies with strong balance sheet, corporate governance, business model, Good dividend yield and it's market position. Investors with a horizon of 3 to 5 years can consider investment in to the below stocks.

1) Shipping Corporation of India (SCI) - CMP Rs. 230/-
2) Indian Oil Corporation (IOC) - CMP Rs. 400/-
3) Hindustan Construction Company (HCC) - CMP Rs. 87/-
4) Ashok Leyland - CMP Rs. 28/-
5) Bharti Airtel - CMP Rs. 799/-
6) Bharat Heavy Electrical Limited (BHEL) - CMP Rs. 1679/-
7) Tata Steel - CMP Rs. 630/-
8) Rural Electrification Corporation Ltd (RECL) - CMP Rs. 87/-
9) Oil and Natural Gas Corporation (ONGC) - CMP Rs. 996/-
10) LIC Housing Finance - CMP Rs. 321/-

Detailed recommendation to follow for the above stocks. Due to time constraint we were not able to post recommendations regularly. We have lot of unanswered e-mails from our subscribers which we are trying to attend at the earliest convenience. We will try to clear the e-mail backlog soon.

Wish you all a very happy and prosperous new year

Year 2007 has been yet another blockbuster year for the stock markets. The market saw a spectacular bull run for the fifth consecutive year.
The sensex this year was up by more than 45%. The broader indices (Midcap and Smallcap) this year posted exceptional returns outperforming the sensex returns.

Year 2008 can be challenging and as per analyst predictions can turn out to be a first bear market after 5 years of spectacular bull run. The questions remains whether the year forward can offset the global economy challenges and continue the bull market running streak.

The challenges that remain ahead in 2008 are

1) Impact due to US Credit Crisis.
2) Deteriorating Consumer Spending in developed economies.
3) Rising cost of commodities and crude oil.

Domestic challenges include

1) High crude oil prices which Indian markets has still not taken into consideration.
2) Continuing Rupee Appreciation.
3) High raw material prices.

Although major challenges are attributed towards developed economy like US, Europe and Japan, we cannot rule out the fact the correction in the developed economy is likely to have a repercussion on the rest of the world. Albeit the fact that the Indian economy has come to stand on stronger structural pillars, the growth trajectory is still highly dependent on the developed economy.

In the upcoming year inspite of the economical challenges we are positive on select pharma stocks, Infrastructure and Energy Sector, Select Automobile counter. We caution our subscriber and readers to take a conservative call on Textile and select metal stocks. We are expecting some revival in International Sugar prices and recommend a wait, watch and pick strategy on this counter. We see a consolidation phase in IT arena with more M&A, at the sametime expect this sector to underperform the broader indices.

Coming soon... Watch out our blog for top picks of the year 2008.

Our performance

As of today our blog completed four months, thanks to the continuing support of our subscribers and readers. Our subscriber feedback has been the main driver in Improving the content of our blog.

All of our recommended stocks have ended this year on a positive note. Neyveli Lignite (241%), Alok Textiles (64%), Chennai Petro (51%), Hotel Leela (46%), Dish TV (41%), Orchid Chemical (33%) and TNPL (27%) have been the star performers.

With this we wish you once again a very happy and prosperous new year and like to start the new year with the quote of Warren Buffet, the greatest investor of the era,
"Rule No.1: Never lose money. Rule No.2: Never forget rule No.1"

Warm Wishes,
Srivatsan Srinivasan