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Pre-budget stocks: What to do

February 28, 2008 08:33 IST
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Countdown having begun for the Union Budget, Sensex remained in the positive zone for the whole of Wednesday, raising hope in the investors' minds. But towards the end of the day, Sensex went into the negative.

Will the Sensex move up from this point? Or is the Sensex likely to sink further? What strategy should you follow?

Is this the right time to buy stocks? If so, which stocks and sectors should you concentrate on?

Market expert Pranav Sanghavi answered to many such readers' queries during an hour-long chat on Wednesday. Here is the transcript:

Good afternoon everyone and welcome to the chat. Let's begin.

LalooPrasadYadav asked, which stocks can be purchased tomorrow morning for 3 months ?
PRANAV SANGHAVI answers,  at 2008-02-27 16:03:05The same stocks I've been mentioning over my last few chats. I would look at frontline stocks like RIL, SBI, L&T etc. But one hsould wait before entering the markets. They still look a bit weak and any global negative news could bring our markets down marginally. Although our Budget could be a turning point where if there is a good budget the markets could move up after its consolidational phase.
rty asked, Hi, I bought TCS shares worth Rs 50,000. What to do
PRANAV SANGHAVI answers, What rate have you bought and when have you bought? TCS should continue to grow at over 20% per annum but in dollar terms. So the fate of the Dollar vs the Ruppee should dictate the price movement of TCS over the next few quarters.
shyam asked, Hi How is the market for a short term buys
PRANAV SANGHAVI answers, Markets in the very short term are extremely choppy and I would not buy for the short term perspective. Today being a good example for the same. The markets were up by over 300 points only to close completely flat.
joser asked, Hi Pranav, 100 Cairn @ 226, 100 NTPC @ 205, 100 Hotel Leela Venture @ 53. Hold or sell post-budget
PRANAV SANGHAVI answers, I like NTPC and Hotel Leela. Instead of Cairn I'd rather look at Power Grid which has now been included in the NIFTY in place of Bajaj Auto. Because of this a lot of FII buying should take place in the stock.
anshul asked, hi...i have 100 ntpc and 10 BOI... wat is the scope for BOI.. when will they delcare their dividend
PRANAV SANGHAVI answers, I think BOI is a strong stock which you can surely hold on to. They have been paying dividend on a regular basis so I see no reason why they should not this year too.
sat asked, What is ur opinion about BGR bought 60shares @808 and Kotak 20 @1190
PRANAV SANGHAVI answers, I like Kotak with a long term perspective. In the short term it may not do much but in the longer term you should see returns. BGR I don't follow sorry.
rocky asked, Will the Sensex touch the 21000 levels again soon?
PRANAV SANGHAVI answers, I am pretty sanguine that we will see those levels but in the long term. We have been in a bullish phase over the last 3 to 4 years. So even if we have a 3 to 4 month phase of cosolidation, it is not a bad thing but only healthy for the markets.
rksharma asked, what is pre and post budget outlook for state bank of india
PRANAV SANGHAVI answers, I like the stock. I have been recommending it strongly from Rs. 600 levels on this chat. I am still bullish on the stock. Even post the rights issue I think the stock will eventually go up.
karan asked, is it a right time to buy for super long term? by super long term i mean 10+ years.. what are your top picks... if no... then what levels should wait for?
PRANAV SANGHAVI answers, You could buy for the long term. I would look at stocks which would be in an industry which is not cyclical and in a long term based industry like infrastructure, heavy engineering, power, technology, banks etc.
dhruv asked, What is your outlook for the markets for the next month
PRANAV SANGHAVI answers, I think markets should remain range bound in the short term. Any negative news from the US could bring our markets down and positive news in the budget could bring them up.
gtx asked, is it right time to enter into GAIL , Petronet LNG , POwer Grid
PRANAV SANGHAVI answers, Yes. Buy on dips in parts. But if you have a long term perspective then it should not be a problem.
deb asked, HI Pranav, How good is Power Grid Corporation at this moment?
PRANAV SANGHAVI answers, Yes it has just been inducted into the nifty index stocks and we should see some fund buying in the stock.
red asked, what to do i am holding 50 harrisons malayalam at 70 rupees
PRANAV SANGHAVI answers, Hold on to the stock. You should see decent returns in the 6 to 12 month period.
dhruv asked, Are the markets oversold at these levels
PRANAV SANGHAVI answers, If you take the SENSEX EPS then the markets are trading somewhere in the region of 16 to 17 PE which is not a very low multiple or a very high one either. it's somewhere in between. We have seen PE multiple of 21 too on the index EPS.
dhruv asked, Do you think that the market players are expecting too much from the budget
PRANAV SANGHAVI answers, Not really. I think they don't expect any major benefits or negative policy for the corporate sector. I think like the Railways Budget a populist budget could be expected.
rocky asked, Will this bodget have any impact on brokerage or STT
PRANAV SANGHAVI answers, I don't think the STT would be changed. It is definately a cleaner way of collection of taxes from the investing community but if he plans to raise the STT he will have to reduce either the Short term capital gains which is 10% or the tax on trading income which is currently 33.36%.
sonia asked, Hi Pranav, what you think for Fertilizer stocks after budget?
PRANAV SANGHAVI answers, I am pretty sure that there will be some sops for the fertilizer sector as I do expect a populist budget which should be good for the farming community.
PRANAV SANGHAVI answers, I like all the four stocks and surely would hold on to them with a long term perspective.
nikki asked, Good Afternoon Pranav ji I have around Rs. 6000/- surplus savings to be invested in stocks. Please let me know which stock i shall buy and when. kindly give atmost two to three stocks, one being the ideal. my outlook is 1 year
PRANAV SANGHAVI answers, I have mentioned a few stocks in my earlier replies. I would add stocks like NTPC, IDFC, DLF, Dena Bank, CentBOP, Vijaya Bank Praj, Rel Comm, etc from the midcap stocks.
vamsi asked, What to do iam holding 250 GMR Shares @ 168,
PRANAV SANGHAVI answers, You will have to hold on to the stock with a long term perspective.
dhruv asked, Why do people pay too much attention to the short term movements in the markets?
PRANAV SANGHAVI answers, A lo tof people have got used to making huge returns in the short term due to the bullish trend in our markets from the past few years. It is infact the longer term investor who really makes the cream of earnings.
vamsi asked, What to do iam holding 550 Ashok leyland shares @ 35
PRANAV SANGHAVI answers, You can hold on to the stock. The interest rates have begun to come down. If the RBI reduces them during the course of the year Ashok Leyland should benefit from the same.
KartikNibjiyaPune asked, HI pranav... i am holding 1000 nagarjuna @ 53.8 and 1000 chambal @ 62.4... For How Long should i hold ??
PRANAV SANGHAVI answers, I guess you could see some positive news for the fertilizer sector in the budget. If the stocks do move up you could use the rally to book some profits in the stock.
dhruv asked, what parameters should i look for in investing in equities? Are mutual funds better than buying individual shares of blue chip companies like Reliance Inds, HDFC and ICICI etc
PRANAV SANGHAVI answers, Yes Mutual Funds are always better for individuals who do not have thorough knowledge of the markets. One ahs to look at a lot of aspects when investing into stocks. If you are buying with a long term perspective then you can surely buy the blue chips stocks and hold on to them.
Srinivas asked, How will be budject impact on the energy stocks like Suzlon?
PRANAV SANGHAVI answers, I think there will be further sops to clean energy companies like Suzlon especially since India is a power defecient country.
KartikNibjiyaPune asked, Hi, Please Post Your Views On Gujarat NRE Coke ??
PRANAV SANGHAVI answers, I like the stock. They are also entering power and have their own production of high quality coal through their mines which required for power generation. Also the demand for coal will only increase due to expansion in steel and power plants.
ram babu asked, namaste pranav ji, which stocks do you think are the most undervalued at this moment?
PRANAV SANGHAVI answers, I think there are a lot of stocks which are undervalued. Stocks like L&T, Sesa Goa, RIL, DLF, and so many more are still undervalued despite their gains from the recent lows.
chaitanya asked, is there any policy that can affect Reliance energy and reliance communication during the budget.....what is the likely impact on these stocks
PRANAV SANGHAVI answers, I doubt any negative policy changes would be made for the power sector or the telecom sector which could affect the stocks you mention negatively.
KartikNibjiyaPune asked, Is It True That There Is A Guy Call S Bora From Gujarat...He Is The Major Operator In India And Many Big Politicians like desmuk from maharashtra Give Him The Amount TO Operate ..
PRANAV SANGHAVI answers, I have not heard of any such rumours.
Sush asked, Can we see some tax rebate for sugar/fertilizer sector? will it be advisable to hold some of these stocks?
PRANAV SANGHAVI answers, Yes you could see some policy benfits to teh fertilizer sector.
PRANAV SANGHAVI answers, You could see a 50 to 60% return on the scrip with a 2 year perspective.
nitin asked, Hello Sir ,i bought POWER TRADING CORP india at@117 , how you see this stock moving in next 6 months ?
PRANAV SANGHAVI answers, Power trading is essentially a trader of power and how it performs depends a lot on how much margin they are able to keep between their buying prices and sale prices of power.
skp asked, HI Pranav, Which stock i could pick for pre and post budget day trade. Also, give your short term (2-3 months) out look on GMR,DLF,Suzlon, Praj Indust., IndiaBulls and L&T
PRANAV SANGHAVI answers, Hi, I won't be able to tell you stocks for daily trading. From the stocks you mention I like all of them especially, L&T, DLF and Praj.
PRANAV SANGHAVI answers, I am not a technical analyst so will not be able to give you a price target but you could easily see a 20% return over 6 to 9 months on the stock.
Srinivas asked, HI, Could you please tell me your views on Essor Oil and RPL??
PRANAV SANGHAVI answers, Both are setting up world class refineries with commercial production starting in the coming years. So you would have to buy them with a 1 to 3 year perspective to see decent returns on the stock. asked, Dear Sir Please tell me is better to invest in mutual fund and which mutual gives better return and which is best Thanks
PRANAV SANGHAVI answers, I will not be able to give you specific MF names but you could study and pick from DSP ML, SBI Caps, Templeton, HDFC and others. Some of the funds from these MF providers have given decent returns in the past.
terry asked, hi pranav good afternoon
PRANAV SANGHAVI answers, Hello Terry good afternoon and what is your query?
jose asked, What is the future of Power and petroluem stocks post budget. can we see some sops coming ?
PRANAV SANGHAVI answers, We could see sops for cleaner and green energy producers. But I dont think petroleum companies may get any sops.
vamsi asked, Hi Pranav, NIFTY will touch the 5700 levels again
PRANAV SANGHAVI answers, Yes I think it has the potential to do so. But I don't think it would in the short term.
Raj K asked, Is this is the ideal time to invest in shares?
PRANAV SANGHAVI answers, I would buy quality stocks on days where the markets are correcting over 1 to 3%.
guna asked, Your views on glaxo pharma
PRANAV SANGHAVI answers, I think the pharma industry has not participated in the bull run we saw over the last few quarters. I think Glaxo is a fundamentally strong scrip and has potential to give decent returns over a longer term. Look at it with a 1 to 2 year perspective.
ravi agrawal asked, hello sir good afternoon this is ravi agrawal
PRANAV SANGHAVI answers, Hi Ravi and what is your query.
devinder asked, Hi, Pranav, Have purchased NTPC,Sail,Punjlyod,Dish TV,Wipro and Tata Steel at 273,278,450,93,480 and 830 resp. with long term prespective min.2 years. please suggest
PRANAV SANGHAVI answers, I like NTPC, SAIL, Punj Loyd and Tata Steel form the lot you have mentioned. asked, Dear Sir My name is Nitin i am a salary employee and i want to invest some money so please tell me is mutual fund is a better option and which mutual fund is better and give gud return
PRANAV SANGHAVI answers, If you are a slaried person with some investable amount every month I would recommend you invest through SIP schemes which ideally negate the volatility of the markets and should yeild you good returns in the long term.
ravi agrawal asked, i would like to know that selling of shares should be post budget,pre budget or on budget day
PRANAV SANGHAVI answers, It all depends on what the budget holds in store. So one should wait for the Budget and its poilcies before taking a call on the markets.
Sanghavi asked, i have reliance energy 30, hmt 185, birla power 350, irb 30, relcom 10, satyam com 50, suzlon 140 which one to hold and which to exit
PRANAV SANGHAVI answers, You can surely hold on to REL, Birpla Power, RComm, Suzlon from the lot you have mentioned.
abay asked, Hi Pranav Is REL a good stock to buy now?
PRANAV SANGHAVI answers, The management is showing faith in the company buy announcing a buy back in the stock. So you could look at it.
Neel asked, What will be the status of Sensex on Budget day and 2-3 weeks post budget, looking at the recent 4-5 year trend?
PRANAV SANGHAVI answers, The post budget trend always depends on the budget itself. So one cannot have a common trend to follow. Last year we had a severe crash in March end depsite a decent budget.
Chidambaram asked, Hello Pranav, its a good job that you are doing. What are the stocks you will pick , for Post Budget Gains ?
PRANAV SANGHAVI answers, I would look at Banks, Fertilizer, infrastructure, engineering, food processing, dredging stocks for the post budget.
Raj K asked, In share markets Does Long term investors or short term investors are benifited?
PRANAV SANGHAVI answers, I have been in the markets since 1990 and in my experience only the long term investors have made quality money. Short term traders have never fared as well as the long term investors.
jnhj asked, Can I hold Power grid, Fortis healthcare, gujarat nre coke and Torrent power for long term (more than 2 years) for handsome return. please advice
PRANAV SANGHAVI answers, Yes you could.
PRANAV SANGHAVI answers, Arvind Mill may not see too much movement as the textile industry has underperformed the markets but Rel Cap could see some activity.
LG asked, How will be banking sector?
PRANAV SANGHAVI answers, In the long term I am pretty bullish on the banking sector.
Papoo asked, I have 100 shares of ONGC purchased in 2004.What should I do now, to hold or sell?
PRANAV SANGHAVI answers, ONGC is fundamentally a strong company and I would surely hold on.
rahul asked, How do you see IT sector after the proposed tax breaks are we are hearing about...Do you see any particular sector that will be benefiting substantially after budget.....Which are the stocks that you see are going to gain post budget?
PRANAV SANGHAVI answers, I don't think the IT sector may see any gainfull tax breaks. They have been making phenominal profits in the past and the government did not tax them. I think the farming sector should see some benefits and fertilizer, food processors etc thereby will benefit.
guide asked, HI, I have bought berger paints 800 @ 55Rs what is your call on it? its trading in 40Rs now, please guide
PRANAV SANGHAVI answers, I would hold on to the stock surely. You will see prioftis in the next few quarters.
ril asked, whats the future of HDIL,SRF,Havells,Unitech,DLF,Centurion Bk of Punjab stocks
PRANAV SANGHAVI answers, I like all the stocks you have mentioned especially DLF, Cent BOP which will be merged with HDFC Bank, Unitech and Havells. All could be held with a 6 to 12 month perspective.
prince asked, Do you think the markets are overbrought or over sold at these levels
PRANAV SANGHAVI answers, I don't think the markets are over bought. But at higher levels we are seeing some profit booking from traders who have lost money in the recent correction. But in the longer term we could see newer highs on our markets during the course of the year. Provided there is no second wave of negative news from the US/global markets.
PRANAV SANGHAVI says, Well it has been great chatting with you guys and shall see you'll on friday for the post Budget Chat.

Budget 2008: Complete Coverage

Chat with Pranav every Wednesday, 4 pm

(Due to circumstances beyond our control, date and time of chat may change)
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