Stock Market Outlook & Investment Idea - 2011

It's been really long time since I've given recommendation to the investors and readers of this blog.

There have been tones of ups and downs in the markets during last one year, but finally Nifty and Sensex are managing to hold and give good returns to the investors.

I have got many queries asking for the stock recommendation which could prove to be good investment idea at this point of time.

Indian stock market Outlook - 2011

First of all let me reiterate the fact that there’s immense potential in the Indian stock market to do well over the next 3-5 years. I believe Indian economy would be triple in the size over the course of next 10 years. You can imagine the amount of wealth could be created if you invest in right company, right business at right time.

In particular outlook for 2011 looks good to me from the Indian stock market point of view. I expect earnings to grow around 15-18% next year, which would provide further upside to the stock market and justify valuation for the market. I believe sectors which are underperforming over the last 1 year or so would start catching up with rest of the market. It could be infrastructure, metals and oil & gas. I’m not so bullish on Real Estate even after recent crash in many of the stocks. I believe IT stocks should also do well and grow earnings by 18-20%. It’s worth to put money in some of the beaten down midcaps which has high growth potential. Let me recommend some of this which could make money for readers of this blog.

-       UCO BANK – CMP RS. 115: UCO BANK is one of my favorite stocks. I recommended this stock at Rs. 59 in January’2010 - http://indianstockmarketexpert.blogspot.com/2010/01/investment-idea-uco-bank-by-stock.html . It has proven to be good investment for the readers as it has touched high of Rs. 150. It was one of the best performing stock over the last one year. Now stock has retraced a bit due to recent scam news in PSU BANK.  It’s been consolidating for a while and formed a base around current levels. I believe it has potential upside of RS. 140 over next few months. I recommend buy for the stock with target price of RS. 162 and RS. 180 for the medium and long term view respectively.

-        IDBI BANK – CMP RS. 165: This is also one of the very good stock to remain invested for longer period. I recommended this stock at RS. 129 on 29^th Dec – 2009 http://indianstockmarketexpert.blogspot.com/2009/12/stock-recommendation.html. It has touched high of RS. 200 and now again available at reasonable valuation to get into the stock again. I believe this bank has got huge potential to become one of the larger PSU BANKS in India. It has got huge customer base, strong financial performance and investment in lot of companies in the stock market. There’s potential chance of listing of subsidiaries in the company which would again unlock value of this stock. I recommend buy on this stock with potential target of RS. 216 and RS. 234 over the medium and long term view.

Happy Investing!!

Investment Idea : UCO BANK by stock market expert

I'm glad to share one more excellent investment stock idea: UCO BANK with you people.
It's PSU bank which has excellent track record. It has announced it's 3rd quarter results for FY10. Profit went up 42.74%, net interest income increased almost 40%, Deposits grew almost 20% in this quarter.

UCO BANK is one for the best performing PSU BANK and also its candidate for acquisition by bigger PSU banks. For now there's no such announcement from government but this is well known rumors in the market about small PSU banks.

After its excellent performance in this quarter stock has touched it's 52 week high for Rs. 66. Currently stock is trading around 59 Rs. I strongly believe that in the next upmove it will by pass it's 52 week high.

Other Factors:

- UCO BANK has planned for FPO to raise around 400-500 crore from the market by March END.

- If we calculate no. equity shares UCO Bank is likely to divest and the amount it's going to raise PRICE for IPO Comes between Rs 66- Rs 82.

- Technically stock is showing really good support around 56-58 Rs.

I recommend to buy UCO BANK with short term target of 66 Rs. which is more that 10% gain from current levels and long term target of Rs. 76-80. You'll see stock at higher levels by April-May'10.

Happy Investing!!

Disclaimer: I have investment in UCO BANK. Please take your own call before investing in the stock.

Stock Market Review and Outlook Next week

It was turbulence on the DALAL STREET last week. NIFTY and SENSEX lost around 4.1 % and 4% respectively.

People were talking about correction which was pending for last few weeks, finally came with Bang. For last couple of weeks markets were bit confuse about decisive directional move. Finally it got bunch of bad news which gave direction to the market.

Reasons:
- It was disappointing set of earning numbers from Major player like L&T.
- Monetary tightening concerns in China after posting excellent Q4 GDP.
- Obama new proposal to put strict restriction on the big banks and new firms on WALL STREET.
- Commodity related stocks fell due to concerns about overheating in China.
- Realty stocks got hit as investors are bit skeptical before RBI policy meet next week.

Now what's next?

Positive Factors:
- Nifty managed to close above 5000 levels which is showing some strength and will recover if there's support from global markets.
- Most of the RBI actions have been priced-in, so market will avoid any out come from RBI policy meet if there s no major Negative surprise.
- There was some buying interest from Domestic Insurance Players on Friday which gave some strength to market.

Negative Factors:
- Markets were down with enormous volume. I look for this factor for directional move and picture doesn't seem to be good.
- FII's were net seller last couple of weeks and now DII's joined them as well.
- U.S. Markets got hit badly on Friday which may get reflected on Monday.
- If nifty breaches 5000 on closing basis then we may see levels of 4914 - 4860.

Advice to Investors:
- Get ready with money to invest in the market. If you get fall in the market next week invest partial money around levels of 4860-4900.
- For trading purpose pick up some of the High Beta counters like HDIL, Sesa Goa. You'll get quick returns in these stocks. It's high risk strategy.
- Look for PSU stocks which were tumbled last week and enter at 30-30% discounted price. I believe it's the best place to be invested.

I'll come up with investment idea for different stocks when market comes to suggested levels.

Happy Investing!!

JUBILANT FOODWORKS IPO ANALYSIS : DOMINO'S PIZZA

JUBILANT FOODWORKS has come up with an Initial Public offer (IPO). It's planning to raise around Rs 328 crore. They have kept price band of Rs 135-145 per share. IPO closes on 20th January.


Should you subscribe?

- For pizza lovers it's good to invest in the company where they ideally pay money to their own company by visiting Domino's Pizza. Apart from that I don't see any benefit out of the company.

- I would advise retail investors not to carry away with the current IPO trend where Investors have made quick money on the listing day. There's no point of investing in all the IPO's.


Reason:
- Most of the raised money is going to be paid to Promoters. There's not major expansion plan for the company using our money.

- Domino's Pizza is having 286 stores around different cities. By giving current valuation and money they are raising, value for per outlet comes around 3 crore rupees. It seems to be really expensive when you get it for Rs 50 Lacs.

- There's lot of competition in the market from US Pizza and other local players. I personally prefer US Pizza over Domino's due to service and variety.

- At current IPO price company is trading at around P/E multiple of 35, which looks really expensive for me.

Positive:

- Jubilant Foodworks IPO is first of its kind in Indian stock markets. We don't have any previous data about peers to compare. It may deserve some premium.

Take your own call after reading this article.

Happy Investing !!

Risk VS Stock Market

People use to come and ask me "Is it safe to invest in Stock Market??". They don't want to take risk for the money which they earned by truly working hard for it.

This article is dedicated to all such investor who could earn more by parking their money in right investment instruments.

Please take a look at the below year on year comparison for the Sensex only. You'll see average return of 22 %. Even if you don't know anything about stock market this is just simple calculation and you would have earned lot of money by investing in Equity and Equity related instruments over the period.

Sensex Valuation
Year	First Trading Day of Jan	Last Trading Day of Dec	% Change
1991	999.26	1908.85	91.03
1992	1957.33	2615.37	33.62
1993	2539.62	346.06	1.75
1994	3465.86	3926.90	13.30
1995	3932.09	3110.49	-20.89
1996	3127.94	3080.20	-1.37
1997	3260.56	3658.98	12.22
1998	3694.62	3055.41	-17.30
1999	3060.34	5005.82	63.57
2000	5375.11	3972.12	-26.10
2001	3955.08	3262.33	-17.52
2002	3246.15	3377.28	4.04
2003	3390.12	5838.36	72.23
2004	5915.47	6602.69	11.62
2005	6679.2	9397.93	40.70
2006	9390.14	13708.34	45.99
2007	13942.24	20286.99	45.51
2008	20300.71	9647.31	-52.48
2009	9958.22	17464.81	75.38

Above comparison shows that investing in the stock market for longer period always rewards you with handsome return. Make investment as your habit and do it for long term.

For new investor or people who don't have time to check market pulse daily, I would recommend to investment in Mutual Funds. You'll be amazed by some of the Mutual Fund Performance.

Below table gives you idea about the enormous wealth a MF could create for you over the period of time.

Value of Rs 1 Lac - Invested in NFO
Company Name	Launch Year	Initial NAV	Present NAV	Today's Valuation
Birla Sun Life Mid Cap Fund	Oct'02	10	104.84	10,48,400
Sundaram BNP Paribas Select Midcap Fund	July'02	10	134.99	13,49,900
Reliance Growth Fund	Oct' 95	10	427.35	42,73,500

I would advice all the small investor to start SIP - Systematic Investment Plan to invest into MF schemes. This is the best method to start investing in Equity. This is same thing like recurring deposit you are aware of. Only difference is the return you get here. In recurring deposit you'll hardly get return of 6 % which has no comparison with MF returns where you'll get much more return for your valuable money. I'll come up with new article about MF schemes which has great track record for creating wealth for investors.

In country like India we have higher inflation. Most important if you'll check Food Inflation which is necessary for common man it's around 18 %. Do you think parking your money into Bank FD's would help you to sustain in the environment?

I won't answer this question. Take your own call and now rethink if investing in stock market or equity related investment instruments is risky or You are at much higher long term risk by not to investing in the stock market.

I'll come up with some more articles which will really change the way you think investing in the stock market.

Happy Investing !!

DB Corp IPO Minting Money as Suggested

Congratulations to all daily readers!!

DB Corp - one of the leading Daily share price got listed at Rs 250. It has touched an intraday high of Rs 274.60 and low of Rs 235.50.

Finally it closed at Rs 265.90 which is almost 25% gain on the day 1. It's truly star listing.

I'm really happy for the followers of this blog who subscribed for the IPO after my detailed analysis about the DB Corp IPO.

You can find the previous post on DB Corp IPO here which tells you about future prospects for the company as well.

 As I mentioned in that post DB Corp had left some money for the investor. It was cheap compared to it's peers, reasonably well growth story and due to that it attracted lot of appetite in the market on day 1.

I recommended subscribe with price target with 15% upside on the listing day. DB Corp has already achieved it and in fact followers of this blog are sitting on almost 25% profit on day1.

Happy Investing!!

Godrej Properties Listed at Rs 510 as suggested

Godrej Properties got listed at Rs 510 per share as suggested in my blog post on this Sunday.

Click here to read the details.

Godrej Properties has touched intraday Rs 586.70. I already indicated this fact in my previous article under Company fundamental section "Qualified Institutional Investors looks quite bullish on the stock, which can add some premium to the counter on the listing day. If this continues you'll see appetite for the stock from Mutual Funds, HNI and Retail Investors"

As I anticipated Godrej Properties has given good return to the investors on the listing.

Now what’s next?

- Lets wait for stock to form base for now. It's likely to settled down around 535-550 Levels.

- Nifty is moving upwards which is good indication.

- Global markets are supportive as yesterday US markets were up and today Asian markets were buzzing.

- Today we had extremely strong breath. We can sense it from Advance Decline ration.

- People who already have position in the stock should continue holding it but keep a stop loss of Rs 495. New position could be taken if stock moves above Rs 575 levels.

Happy Investing!!

Godrej Properties IPO listing

Godrej Properties equity shares will list on 5th Jan to the stock exchanges.

Earlier company has come up with IPO of 9429750 equity shares of Rs 10. Issue was open for subscription from Dec 9 to Dec 11. Company has got good response from qualified institutional investors where it got subscribed 7.45 times. Retail investors and Non institutional investor quota were not fully subscribed.

Company has fixed share issue price at Rs 490 per share, which is lower end of price band Rs 490-530. It has collected more than Rs 460 cr. from this IPO.

Reason for IPO:

- 30% of IPO money would be used for debt repayment.

- Company will acquire land development rights for upcoming projects, investment in new projects.

Company Fundamentals:

Positive:

- Company carries brand name of Godrej. Godrej Industries holds 80.26% in the company.

- Operates in the real estate sector where demand is likely to pick up in upcoming years after current slowdown.

- Qualified Institutional Investors looks quite bullish on the stock, which can add some premium to the counter on the listing day. If this continues you'll see appetite for the stock from Mutual Funds, HNI and Retail Investors

Negative:

- Many brokering houses have downgraded real estate as sector.

- People look more skeptical regarding turn around in the sector.

- Larger players are available in the market as cheap valuation.

Listing Price:

I see Godrej Properties to list around Rs 500-510.

Long term investors should wait for initial market reaction to get into the stock. One can buy this stock during market correction.

Happy Investing!!

JSW Energy Listing Price

JSW Energy will list on coming Monday - Jan 4, 2010. JSW Energy shares will list on both NSE and BSE via public issue.

As many of us know that it's JSW Group Company and frankly speaking they have track record of making money for the investors. Most of their company stocks have outperformed stock market in 2009. Like, Jindal Steel and Power.

In fact they have given discount of Rs 5 for the stock to retail investors where issue price was fixed at Rs 95 per share.

IPO of JSW Energy was subscribed 1.68 times - taken from NSE Website. There was no hunger in the market for the issue as investors have not made money in other recent power IPO's like Adani Power and NHPC.

Qualified Institutional Investors portion was subscribed 2.88 times but retain and non-institutional investors were not much exited about the issue and their quota was not fully subscribed.

Company is planning to utilize raised amount to various power projects and reduce the debt. Thing which I'm glad about is that company will use some portion in Mining acquisition, which will result in giving competitive advantage to the company in the sector. This model will add up into bottom-line of company. As of now company is having 860 MW power generation capacities. With this IPO money they are planning to raise it 2790 MW.

Listing Price for JSW Steel :

Listing Price depends on various conditions like,
- Market opening on Monday. As we all know from Monday Market will open at 9:00 in the morning. So get ready to wake up early
. It's entirely new experience for all of us as our markets are now inline with global markets opening.
- Dow Jones and NASDAQ closed in red on Thursday. So we need to see if global markets are reacting on that.
- I don't see people buying this stock aggressively due to lackluster IPO response, peers are available at bit cheap valuation for now.
- I see listing around Rs 90 - 94 for JSW Energy.

Long term investor should wait for the market correction to get into the stock. One can buy around Rs 85 and hold it for at least 1-2 years.

Happy Investing !!