Dear friends,
I would like to share a view of investment in the down trend of the market. I think, mkt will keep sliding inthe march and up to the relly of comodity mkt continue. If bull run in the comodity mkt breaks, then only global stock mkt starts moveing upward.
The sectors and the scrips to keep in the mind for the investment of three year or five year span are as under.
1). Oil & Gas: I do not think, much is to be added to justify this choice. Actually, in last bull run, mostly oil majors have not participated. Crude at the price of +100 USD makes this sector more attrective. The picks are HPCL, BPCL & IOC.
2) Banking Sector: This sector has long way to go. In our restricted economy, RBI has stringent control on Banks. And come june 2009, due to Bessel agreement, PSU & private banks level playing will be same. In Union Budget 08, PC has cleared the balance sheets of each PSU banks by senctioning RS 60K crores to adjust bad agri. credits. Here IDBI, CBI are good picks.
3) Tea companies: Agriculture is going to be great opportunity in time to come. But most agril related companies (like ITC or Sugar Companies) do not owe land & estates. Most tea companies posses hundreds & thousand hactors of the cultivated plantation. If we take mkt capitalisation into the consideration, the stock price are so chip that, land is available at around 15 - 20 Rs per meter. Even in Asam or Kerala, the price of land is not available at tis price. So mostly tea companies are considered as land bank story also. Moreover, India is producing highest Tea in the world. This year crop of Kenya is failed due to bad weather. This can trigger price hike in time to come. India is a biggest mkt of the tea also, which protects from the Global slow down. In all other agro comodities, company are doing value addition only. Here, companies are produing the comodity and add value into it. Picks are Marico, Mcleod & Rushel, and other less known te companies.
4) Fertiliser: For last six to seven years there is no addition of single ton of Ureae in the country. If agriculture is to become the future, how come fertiliser stay behind. There is agreat deficit of fertilisers, which is being met through imports. The comodity is subsided by goverment but the agro produce prices are shooing up sharply, which tends to increase the consumption of the fertilisers for better yeild. Since new capacities are not coming up globally, prices of fertilisers are bound to go up sooner or later. Here picks are Nagarju fertiliser (Based in KG Basin, which will immidately benifited by RNRL gas line), GNFC, GSFC
Shipping companies: Due to longer waiting period for new fleets (Four to six years) and improvement in international freights, the top line &botom lines of the all shipping companies are doing good. If, agriculture, oil and fertiliser sectors are going to witness bull run globally, the shipping also bound to getits pie. good Picks are SCI(PSU company having key location andhuge land at all major ports available at very chip price) Varun shipping.
Holding Compies: Indian government has given a great advantage to the holding companies by removing double dividend Tax in Union Budget 2008. All leading family run Business houses are resructuring their holding since few years. Few companies have witnesses a sharp jump due to this like Nalva Sons (Holding companies of Jindal from 300 to 2200), Dic Industries, Satluj Industries and many more. Still lot of things are to come in this segment. Keep watching.
Few other sectors looks promising are IT & Pharma which will be benifited in time to come.
This study is on the assumption that by year 2010, mkt will be more than 35K. All picks are for the long term investments (Three to five years span)
Awaiting your feedback on the subject
Dinesh
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