As I said in my earlier post, that it is unlikely that I'd have the time to blog regularly or answer individual queries. The stock markets have been trending down since the start of this year and have been pretty depressing on the whole. As some of you know I have other interests like Astrology, Films etc. and have been pursuing those interests. Was in Bangkok couple of weeks ago to attend the IIFA Awards. Watch out for Akshay Kumar's dare-devil act in the show, in the television telecast on Star Plus on the 29th of June.
Coming back to the markets, u may recall that I had named the IT and Pharma sectors as the Outperformers of the market this year, at the start of the year itself. That call has come true. You may also recall my call given on Kohinoor Foods last year when it was trading below Rs. 50 levels. At that time, that stock was available at low single digit PEs. Even during the market crash, Kohinoor Foods was trading at Rs. 120 levels in March, 2008. Today there is news in the papers that Kohinoor Foods has become a hostile take-over target. A Bombay based company Temptation Foods along with Consortium consisting of names such as Morgan Stanley, DSP Merril Lynch among others have acquired nearly 30% of the shares of the company during the last six-seven months. Even after the total market collapse, Kohinoor is trading around Rs. 100 today......a good 100% gain over the price when I gave my buy call on it, in less than a year.
A similar fate may await JK LAKSHMI CEMENT LTD. I feel at PE levels of a mere 2.3 at current price of 89 odd, JK LAKSHMI CEMENT LTD. may become an attractive take-over target for bigger players in the cement sector. The Promoters themselves have increased their stake from 41.52% last year to 45.60% on 31st March, 2008 taking advantage of the weakness in the stock price. I suspect the Promoter share may have gone further up since then. If there is one sector in this beaten down market which deserves a buy currently, then to my mind, it is the Cement sector. My Best picks in this sector are ACC, Ambuja and ofcourse, JK Lakshmi Cement.
About my current market outlook, I feel that the price of Crude Oil is the most important factor in deciding where the markets are headed from here. Then ofcourse, there is the ensuing general elections in the country. I think the price of Crude may go as high as $171 per barrel in the next couple of months before settling down to $115-$120 levels in the medium term.
You may also recall that I had given an explicit Sell call on over-hyped and over-heated stocks like JP Associates, GMR Infra , Punj Lloyd etc. much before the others. Look at how much they've fallen in the last six months. Even the Real Estate stocks have fallen nearly 50% from their highs, and to my mind, they are likely to fall further. While there has been a downward correction to the tune of 50% in the price of Real Estate stocks, Real estate prices on the ground themselves are yet to fall by that percentage. People thinking of buying a residential/commercial property should wait for the next six months to get them at much cheaper prices.
Investors like me would accumulate JK Lakshmi Cement in the current market weakness.
Cheers!
