In a scenario where the Indian stock Market has lost its value by more than 50% in terms of sensex and the individual stocks losing as much as 70% on an average, it has always been a dilemma for the investors as to whether they should invest at all in Stock Market and if so as to the nature of stocks in which they can invest. While there is no clear cut answer to both the questions posed above as the economic trends may take at least six more months to give an emerging picture, it can safely be said that still we do have some stocks which are value picks and even if they do not register a marked upward trend, they may not also lose their values further as most of them have already touched their lows. More than this, the most important factor to be noted is that their day-to-day functioning is not determined by the day-to-day quotes in Stock Market. We have listed some of such stocks below.
Hero Honda: In spite of the fact that its peers have been affected by the slowing down due to the recessionary trends, this Company has stood steady throughout the last year. With an increase in the sales volume by about 13%, the company is well positioned to face 2009 when compared with say, TVS OR Bajaj Auto. Invested at current levels, it is expected to return about 20% during the next year, besides a decent dividend.
Reliance Industries would emerge as a winner in 2009 even if economic conditions do not improve the way one expects. It is because that it has its hands on almost every economic activity the country can think of. It has interests in Oil and Gas, Exploration and Production besides Petrochemicals. The stock is expected to appreciate by 20% if not more.
State Bank of India: When it comes to the Banking Industry, none can compete with State bank of India, in terms of its largest reach and diversified portfolio. Even assuming a continued slowing down of industrial economy, this can be offset through concentrating more on the rural belt which can to some extent offset the decline in earnings. The stock is expected to deliver a return of about 25% in 2009.
Tata Power: Though 2008 witnessed the biggest drop in the Reliance Power IPO, when it comes to the question of the Power Sector as whole, it has a prominent role and there are good stocks available, as Rural Electrification Corporation, Power Grid etc; but the best one is Tata Power. This stock score both from the angles of growth and value. Excluding the value of its investments in coal mines which accounts for about 50% if its currently quoted value of about Rs.750, the stock is attractive because of its visibility in the power sector. The stock can touch the Rs.1000 during the current year if not more.
In our next installment, we would cover some other stocks.
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