Long Term Investment in a Pharma Stock

Well, in this volatile markets, a lot of Investment managers, fund managers would recommend you to invest in defensive sectors like Pharma & I am none different opinion. In the current high interest rate scenario, one should look to invest in defensive sectors which have no or small amount of debt in their books of accounts as high interest rates are eating up majority of the profits of high debt companies like Unitech, HCC, DLF, GMR Infra.

I would advise my readers to invest in defensive sectors & one such good stock is Divis Lab. A good fundamental stock with technicals working in its favour. 

Market Cap- 10405 Crores
EPS- 32.85
Dividend %- 300%
PE Ratio- 22 (low for any debt free pharma stock) 

(Source:www.nooreshtech.co.in)




If you like reading this article, you may look up to read these articles

1. Dont Trade, But Invest
2. Portfolio Advisory
3. SIP in Mutual Funds is the best
4. What should be the entry point for Nifty

Is Recent Fall a Market Crash?

Dear Readers,


There is no reason to panic in such markets, where the markets are not doing much but just moving sideways. If I generally look at the Sensex or Nifty levels since the start of this year, no one can term it as a crash.


Why???


Sensex on 1st Jan, 2011- 20500
Sensex on 31 May, 2011- 18503


It is hardly a 10% fall. If you cant sustain a 10% fall, then equities may not be the right investment product for you. Go and invest in debt funds.


Some other people have their own apprehensions. They feel that I have invested in a large cap like State Bank of India. It is down to 2250 odd levels after making highs of 3200 on 31 Dec 2010. What should I do?
I have an answer for them also. I always recommend my readers to have a portfolio of stocks that may be 12 to 15 in number fro atleast 6-8 sectors to diversify their investments rather than buying a single stock on news and hoping it to do miracles for you. Yes, Miracles do happen, but no always in realistic world. I hope you have understood me, dont over try to become rich overnight & get yourself in a trouble. I have given enough multibagger ideas in my previous posts & I hope it will help my readers to gain out of it. Have a long term investment horizon and hope the equities to outshine in 2-3 years. 


If you want some more multibagger stock ideas , do comment in the section given below and lets discuss within the members of this blog.


If you like reading this article, you might also love reading,

1. Dont Trade, But Invest
2. What should be the entry point for Nifty
3. How to Invest
4. SIP in Mutual Funds is the best

Regards

Mayank Gupta

mayankportfoliomanager@yahoo.com

Thoughts about Petronet LNG

Petronet LNG- a stock in the Oil & Gas sector backed by strong management. It was initiated by Govt of India in 1998 and is into LNG procurement. For investors of Petronet LNG, one must know that the four promoters ONGC, GAIL, BPCL, OICL each holds 12.5% stake in the company. Looking at the history, Petronet LNG doesnt have any history of bonus in the past but the company has declared dividends on various occasions.

• 2007- 13%
• 2008- 15%
• 2009- 18% 
• 2010- 18%
• 2011- 20%

The company's Net profit was standing at 313 Crores in 2007 vis-a-vis a net profit of Rs 619 Crores in FY11 showing a 100% return growth in profits in nearly 4 years. Lookig at the fundamentals, I am neutral on the stock as the valuations are looking quite streched. If one is holding this stock in his portfolio, he may continue to hold.

Looking at the technicals,the stock is nearing its all time high of 144 and has a huge support at 105 odd levels.  I dont expect the stock to break its strong support levels of 105.

Regards
Mayank Gupta
mayankportfoliomanager@yahoo.com




If you want to discuss something on the stock, you may post a comment & if you like this article, kindly read

1. SIP in Mutual Funds is the best
2. Portfolio Advisory
3. Dont Trade But Invest
4. What should be the entry point for Nifty 

What should be the entry point for Nifty

After a healthy correction in Nifty since Diwali on 5 november, 2010. Everyone is looking for a good entry point in stock markets. Everyone want to know what is the best time to enter into stocks. Is 5500 a bottom or 5300 a bottom for the markets or market will break 5177 levels which Nifty made a low some 2 months back.


If you ask me, Nifty is trading at e PE Multiple of 15 FY12 estimated earnings of 1205 & in the past Nifty average PE Multiple is 15 to 18. Analyzing PE Ratio & technical Analysis, 5177 seems to be bottom for the market & I would request my clients to start accumulate multibagger stocks (60% quantity at 5400 levels & remaining 40% at 5150 levels if comes)


Banking stocks or Bank Nifty has been a clear underperformer & a big support level of 10000. So one needs to accumulate banking stocks at those levels.


Nifty seems to be forming a head & shoulders pattern which is the most reliable pattern in Technical analysis







Now after explaining you what is a head & shoulder pattern, lets see how this head & shoulder pattern looks on Nifty chart. The chart given below is a 1.5 year old chart of Nifty. Nifty is forming a head 7 shoulder pattern as per indicated in the chart given below



(Source:www.nooreshtech.co.in)


If you want to get some multibagger ideas, you can ask me by putting comments below the article or mailing me at mayankportfoliomanager@yahoo.com. I would be more than happy to discuss multibagger ideas with you.


Regards
Mayank Gupta
mayankportfoliomanager@yahoo.com

Answer to "How to Invest"

Dear Readers,
A lot of investors in India are looking for value picks which they want to add up in their Portfolio & earn multibagger returns over the next 2 to 3 years.
The biggest mistake which the Indian investors make is making their complex calculations or their own analysis without getting deep into the waters of Investments. But if you just think back & just study the stock markets in a simple way & not try to become rich overnight, I am sure, you can earn 10 bagger returns in 10 years or 10 times returns in 10 years. This is based on the simple funda of stock allocation to different sectors rather than deploying your entire capital to one stock.





Diversify your Investments
The better way to deal is to make your investments in diversified sectors & adding atleast 15-20% of your Portfolio size to defensive sectors like Pharma & FMCG stocks. One of my all time favourite FMCG stock is ITC Limited, though I wont advise you to buy at current levels of Rs 190. I would wait for a correction & may be then look to accumulate the stock.


There is nothing called "Good Stock"
Think beyond this term "Good Stock". Always look to buy a company rather than a stock.When somebody tells you about a good stock to buy, think beyond a stock or a stock chart. Look at the business of the company, what they do. If you not able to do that, leave this job to your Investment planner or financial planner


Buy in Parts
Just like SIP in Mutual Funds, also try to do SIP in stocks. This would help you to get rid of market volatility. You should have sufficient cash at all levels that you should be a buyer at each level of market & thus average out your buying price in investments. These are some rules of Investment Mangement & Portfolio Mangement or Portfolio handling.


Understand the Importance of every Profession
Understand the fact that just like doctors give you advise & treat your body parts or take care of your health, likewise, a fund manager would be responsible for keeping a check on your finances (health in case of doctor, lawyer in case of court cases). I hope this will make you undersyand in a much better way.


If you want some more advice regarding a particular stock, you are most welcome to leave a comment & ask...

If you like reading this article, kindly read

1. Best Mutual Funds in India
2. Rupee Cost Averaging takes you to become a Crorepati
3. Systematic Withdrawl Plan in Mutual Funds
4. Why do you need a financial Plan
5. Looking for Portfolio Advisory

Regards
Mayank Gupta
Portfolio Manger
mayankportfoliomanager@yahoo.com