How to cope with the current market mayhem

Hi friends,

I am inundated with your queries! But before I start answering them individually, I thought I would write a general note on what you people might be going through with the current sudden downward move of the overall market. First advice to you is : DO NOT PANIC!

The times we live in demand from us that we should be able to think on our feet and take quick decisions. But the decisions we take must be well considered and should not be impulsive. DO NOT ACT IN PANIC. There has been a great run in the small and midcap universe in the last one month or so without a break. So it is but natural that profit booking has to come in at some point. And in raging bull market like ours, corrections will always be swift and sudden.

Look at the bright side of these corrections. These corrections show you which are the stocks which are showing strength even when the market sentiment turns weak. They separate the wheat from the chaff. I would say that this is a good time for you to get out of weak stocks which were running purely on momentum and get into strong stocks which are backed by solid fundamentals. For example, if you were holding junk stocks with no EPS figures to talk about, then sell them and enter LOW PE stocks like Cybermate Infotek, Jayaswal Neco etc. in the small cap section, Aurobindo Pharma in the large caps, Unichem Labs in the midcaps. These are only a few examples of stocks you can buy in the current overall market weakness, there can be many more such stocks out there which will turn out to be big winners in the medium to long term.

I hope you get my drift.

Guest Tips Here

Hi friends,

As I've always believed in the power of team-work and collective wisdom, I'm introducing this thread which is open to all the visitors to this site. I have always tried to incorporate good suggestions into my site. So all of you are welcome to post your latest stock tips here and discuss them amongst you.

To just give a few pointers to those of you who are new in the stock markets, here are a few factors which make stocks go up. A stock may go up if one or more of the following factors hold true for it:

1) If it is fundamentally sound and posting good profits consistently and if it has a low PE as compared to its peers.

2) If it is technically on the verge of an upward breakout or is in a confirmed uptrend. Learn to read the technical charts to be able to predict price movements effectively.

3) If there is some Corporate Action coming up in a stock like a bonus or a stock split or a merger/demerger, for example.

4) If the stock is in news and if some big operators/fund houses/brokerages have taken position in it.

5) A combination of all the above factors will make a stock simply irresistible and then one should not hesitate to go ahead and buy.


Happy blogging and Cheers!

PS: A link for posting tips for guests was provided earlier also (see the link GUEST STOCK TIPS on the right side of the main page), but very few people are using it. Some of the tips posted there by guests have also risen very sharply over the last few months. Instead of scattering your tips all over this site, it is much better to centralize all guest stock tips at one place for more convenience.

Happy New Year

Wish all of you a very Happy & Prosperous New Year. While the star sector of 2007 was the Power & Energy sector. The sectors which I think will perform well in 2008 will be IT, Telecom, Pharma, Agri and select Metals & Mining along with select Energy stocks. The markets are likely to go higher before they go down. We might see a tearing bull rally in January. Corrections may come either around the end of January or around the end of April. But an end of the year target of 25000 on the Sensex is what I expect from this year. While the indices may give moderate returns, there will be plenty of action in the mid and small caps in the coming year.

Hope everyone prospers in this New Year.

Cheers!

HOT STOCK : AUROBINDO PHARMA

One of the largest API manufacturers in Asia, Aurobindo Pharma has commercialised over hundred APIs. Aurobindo's products are spread over six major areas encompassing Antibiotics, Anti-Retro Virals, CVS, CNS, Gastroenterologicals, and Anti-Allergics.

Aurobindo’s R & D strengths lie in developing intellectual property in non-infringing processes and resolving complex chemistry challenges. In the process, Aurobindo develops new drug delivery systems, dosage formulations and applies new technology for better processes.

This is an A group stock trading at a PE of only 10 at current market price. The price is near year's low and technically looks as bottoming out. The stock is also in FNO and can see some action in the near future. Being an A lister in the Pharma industry, this stock deserves a PE rating of 15-20 and thus, a price target of 780 to 1040 in the medium to long term.

Cheers!

HOT STOCK : UNICHEM LABS

Unichem brings to the customer a blend of modern-day research and nearly six decades of rich experience in the Indian pharmaceuticals industry. The Company was promoted by the late Mr. Amrut Mody, a pioneer in the Indian pharmaceuticals business.

Even though formulations account for a significant portion of Unichem's revenues, the Company also manufactures active pharmaceutical ingredients (API or bulk actives). The Company has prudently addressed relevant and growing therapeutic areas like gastro-intestinal, cardiovasculars, diabetes, psychaitry, neurology, anti-bacterials, anti-infectives and pain management, among others.

Unichem is headquartered in Mumbai with five manufacturing locations in Roha (Maharashtra), Goa, Ghaziabad (Uttar Pradesh), Pithampur (Madhya Pradesh) and Baddi (Himachal Pradesh). The Company's facilities enjoy credible certifications: for instance, the Goa plant has been approved by UK MHRA (earlier MCA), MCC (South Africa), WHO (Geneva) and TGA (Australia). The Baddi plant has been approved by UK MHRA and MCC (South Africa). The Company has received ISO 9001:2000 for all its plants and corporate office. Similarly the Company has received ISO 14001:2004 certificates for its formulation plants ( Goa, Ghaziabad and Baddi) and Corporate Office at Mumbai.

As a future-focused initiative. Unichem has expanded its Research and Development facility in Jogeshwari (Mumbai) to spearhead research in Novel Drug Delivery Systems (NDDS) and develop non-infringing routes for the manufacture of products directed at the regulated markets. The Company has also funded a collaborative research with the Indian Institute of Sciences, Bangalore. Unichem's growth strategy is fueled and backed by more than 2400 talented and motivated human resources.

Source : www.unichemindia.com

The financials of the company are robust. With the full year earnings expected to be in the 23-25 range, the stock is trading at a PE of only 7.7 at cmp of 190 which is quite low as compared to its peers. The stock deserves a PE rating of 12-15 and thus the fair value of this stock should be around 300 to 375 levels. Technically, the stock looks like it has bottomed out and will now go up.

SPICEJET

Prabhudas Liladhar has initiated ‘buy’ on the stock for target Rs 84. SpiceJet is the most efficient low cost player in the industry. With a fleet size of 11 in 2006-07 and passenger load factor of about 77 per cent, the company has a market share of about 8 per cent. SpiceJet's identical fleet configuration (all B737-800s) helps reduce its operational costs. Also, the absence of food on board helps it achieve a better turnaround. Irrational pricing prevalent in the industry a couple of years back has largely ceased. With improving yields and the lowest cost per ASKM in the industry, Spice is poised for a turnaround. The company has also started focusing on ancillary revenue to further boost sales. The share of ancillary revenue is expected to go up to 10 per cent (from 7-7.5 per cent earlier) in 18 months. Prabhudas expects the company to achieve profitability in 2008-09. SpiceJet is currently trading at 2.0 times 2008-09 estimate and 1.7 times 2009-10 estimated adjusted enterprise value per sales, which appears attractive for a growing company. Prabhudas expects topline to grow at 64 per cent CAGR over the next three years to Rs 2,823.9 crore by 2009-10 and achieve profit after tax of Rs 76.1 crore (from a loss of Rs 70.8 crore in 2006-07). source : Economic Times

HOT STOCK : GUFIC BIOSCIENCE

Gufic Bioscience, with one of the finest Tissue Culture labs in India, along with a sophisticated R&D Center and a robust infrastructure has a vision to grow into a global Bioscience major. Informed buying has been taking place for the last few days around 10 levels and the share price is tipped to double in the near future. The Promoters hold a very healthy 70% stake in the company.