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Tuesday, November 19, 2013

Season of Laggards...

The Nifty has made a new near high.The Sensex already did that.So how many of those who invested came away winners?
 
Very Few.Most stocks are still languishing at 2011 levels and that is especially true of mid caps.Those who invested in 2009-10 and did not average are stuck with stocks which are as yet 15-40% below their buy level.
 
Retail participation is at all time lows in Indian equities and few have the taste for fresh investments.Fewer yet have the courage!
 
Analysts have been talking on how important infrastructure is if India as a Nation has to develop economically and challenge the USAs,Chinas etc.In a decade the vaulations have tumbled for stocks and even mighty companies a la Larsen&Toubro,Bhel and a few others have had prices come down from stratospheric heights.

This Five Year chart of L&T is a good example:


The present managers of India have been caught in too many stings,corruption scandals and sheer weariness to do much.If the BJP comes to power then infrastructure looks set for a fillip as their economic policy is very traditional,their support base being mainly from Infra,textile and the general merchant class.
 
Additionally what this correction has done is to very brutally factor in the over leveraged Balance Sheets,longer duration of realization,increased project cost -  till most of the firms prices fell to 30-50% below Book Value(BV)
 
For the long term investor it still isn't the best  price to buy and forget.Offcourse these days its difficult to reccomend such buy-and-forget ideas as the Global and internal situation is so fluid and just a surfeit of news and occurrences.I mean,President Obama might 'find' WMDs in Iran to take focus of his internal issues with the Congress,Prime Minister Nawaz Sharrif might send in Peshmergas into Kashmir to prove to the Pak Army-ISI combine on how tough he is.India's food inflation with daily rumours of some shortage or the other.
 
Tough call.But buy the following stocks  as they look set for 10-20% rally in a market where the large cap leaders have already moved up leaving few gaps for a profitable trade:-
 
JPinfrasture   cmp 19
HCC              cmp 14
JPAssociate   cmp 49
IFCI               cmp 25
 
Other stocks that one can look at NBCC, JSW En,NCC.Afterall its a trader's market!