Cement Stocks may loose and Bhel will shine bright !

BHEL has announced amazing results this evening and following that the stock is an out performer in the stock. BHEL is planning to spend 3200 Crore to increase its capacity, Plans on to enter Nuclear power plant set up in association with Allstom. Plans to generate 15000 MW power in the current fiscal. It is on tie up with Reliance on rigging operations. BHEL has an excess outstanding order to the value of Rs.55,000 Cr. and this fiscal it announced a 48% increase in its net profits. This is a stock to watch for now and a recommended buy as the stock shows a good one to hold on a medium to long term basis. The BHEL stock gained Rs. 100 today as the market reacted to the news

Cement Stocks are taking a great thrashing and the latest on this sector happens to be that the CVD has been removed from import of cement thus making the imported cement much cheaper and attractive than the local cement producers like ACC, Ultratech, Grasim, Ambuja, Dalmia so on . Analyst say that the cement that can thus be imported with these rates will be Rs. 30 cheaper than local cement. This move by the government follows as a result of steps to curb inflation rates in the economy. This is one of the list of steps taken by the government to keep check on the inflation as along steps like these….

• Increase in CRR making the liquidity more dearer now.
• Removal of quota on sugar exports thus boosting agriculture  
• Taking a tough stance on realty IPO’s and stocks to keep check on land prices

In the news from the auto stocks, Carlos Ghosn, CEO, Renault and Anand Mahindra, CEO, M&M unveiled the Logan at Rs. 4.8 lacs for the petrol version and the diesel version at Rs. 5.45lacs. Only time will tell if Logan is going to replicate the success that it has in the European markets again in India. M&M is currently quoting at the levels of Rs. 743 and the next few days can see if we are in for some good news in this stock. Initial bookings on the Logan to start in 2 weeks at 10 cities across India.

Hershey’s come visiting to India to take a 49% stake in Godrej foods and this will be a great step in the F&B segment. I will be writing more about this as the deal unfolds. As to my favorite sector IT tread with care as all these companies are due to announce their results in the course of this fortnight and there are so many factors that are of great concern. There has been a slowdown in the IT scenario in US market, companies in a bid to keep up the figures are making foray in newer markets like Europe, Scotland and south America. Secondly Rupee is very strong against the dollar so this might reflect unfavorably in the earnings. Two nights back in Bangalore I was exchanging notes with Raj Datta, GM of Knowledge initiatives of Mindtree quoting that Africa is one of the untapped markets where there is sizable potential for all these IT growth.

Investors beware the market has not bottomed out yet . What appears as a small comeback of 160 pts today is a small bounce back , but appearances can be so deceptive as I feel the bear hug is still gripping the market.

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Stock market - Beware small time investors!

Following the move of RBI that hiked the Cash Reserve Ratio by 50 bps to 6.50% (back in 2006 may RBI did a similar exercise and the market took a month to get back to those rates again)  and also the Repo Rate has been hiked from 7.50% to 7.75% . The response to this has been a sever bloodbath in the market witnessing a 600 point fall in the sensex and a 187 points fall in the nifty . Absolute bearish hug is ruling the market currently and it will take some time for the market forces to get out of this bearish grip. In terms of the magnitude of this down move of the markets this is the second biggest fall in absolute terms closing near the day’s low Realty stocks, auto stocks, and banking stocks have taken the major blow in this downfall. It is not a good sign for small time investors to hold the stocks rather can exit their positions now to take position much later at much lesser rates once the bottom out is over. Next 2 days is going to see a major loss in the small cap as well. To think that this is how we start a financial year gives a very negative breadth to the Indian economy. All this is leading to FII’s looking at Indian market as something that needs to be avoided for the moment so this might result in most of the FII’s deciding to pull out from the market resulting in a bearish hug getting a bigger grip on the market thus resulting in lower prices for a longer period. India Inc is already reeling under scarcity of money in the market due to following factors

• Increase in CRR resulting in Higher PLR
• Less money sources in market
• Greater Taxes like MAT
• Advance tax payments

 Now these are market forces that are hear to stay and India Inc needs to figure out strategies to meet these challenges and workaround them. So for a few weeks stay away from the market guys and if you are fold wait for a few consecutive upwards moves before taking any position in the market.

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