Reliance industries: Buy at current price Rs.1023 Target Rs.1050
There is likelihood of gas price increase sooner.This is one of the stock now available cheap as compared to other stocks. Gas, oil and metal sectors now gain as compared to software, banking sectors which are overheated.
Reliance Industries (RIL) plans to raise at least $1 billion through bonds denominated in US dollars, bankers said today. The proceeds will be used to refinance $765 million of loans the company has taken for its acquisition of shale gas ventures in the US.
Tech Mahindra: Buy (Rs.765)
BP who is the holder of 30% of Tech mahindra will soon like to get out of Tech Mahindra. It is in need of funds and is looking for a buyer. First offer will be to tech mahindra. But Tech mahindra will not be much interested . This sell out may take place before Mahindra Satyam merger and hence there is chance of open offer and the likely bulk sale price may be around Rs.900/-.Global PE firms are interested for the stake buy.
IFCI: Hold . No fresh buy.
Govt has appointed advisor for IFCI who will submit report before dec2010. Banking licence will take some time and it will not be issued in the current year as lot of comments and counter comments and then firm guidelines are expected which will take not less than 6 months from now. Licenses will be issued probably in the FY 2011-12.
Mahindra satyam:Sell till Rs.80/-
At Rs 90.10, Mahindra Satyam’s stock is trading at 13 times its 2011-12 estimated earnings, which is not cheap.
Avoid this share till clear picture emanates. We got good shares like patni computers etc which are good now.
Unitech: sell(Rs.94/-)
Overheated and risky. Profitability of the stock is still a question and it is a gamble . So exercise caution investors.Present PE(TTM) 33 against sector PE of 22.This is as per reuters rating. PE around 10 to 15 appears to be reasonable. Unitech is not in Nifty also now. So avoid gambling in this stock.
Sell software stocks:Since market is going up, it is better to sell software shares and wait for good time. The dollar earnings are reduced due to strength of rupee. When markets goes down and $ strengthens against rupee, then we can go for software stocks. Till such time, either hold or sell.
Sterlite industries: Sell
Supreme court has allowed time upto 18th Oct 2010 from the stay. But it appears that it has to close down the unit due to environmental problems.Supreme court may vet the decision of High court.
So be cautious.
Bank, reality stocks- My opinion is to sell. Bank stocks are overvalued. If anyone wants to buy, go for specific shares having PE multiples of 18 or less and also growth oriented. Recent wage hike will push up expenses of banks. It will fall like arranged cards. Rupee appreciation, expected reduction in growth targets will pull down software stock price. So better to exit now and re-enter at lower levels. Nifty may hover between 6300 to 6400 due to global stock market positive trend and faith in India's growth by FII .But domestic institutions and retail investors should step in and replace FII soon.Otherwise , a crash like situation may emerge at any time as FII move fast where they get good returns. Bringing back ELSS to all people in savings plan giving income tax benefit will help market to enthusiaze public to finance share market and replace FII thus removing the fear of RBI for exit of FIIs. Finance ministry may look into it.
Banks now have NPAs in dangerous levels in education loans, agri loans and to some extent in housing loans. Also there will be less housing loan business expected for reality and banking sector after revised Direct tax code comes in as no income tax benefit is given for repayment of principal of housing loans. Financial consultants,banks, reality companies and experts should recommend to Govt about bringing back the benefit under Sec.80C. Banks will feel the heat once many more private players enter into the areana of banking field like reliance capital, L&T and IFCI etc.
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