Your Stocks is a daily show where market experts answer your specific stock related queries.
In June 28 edition of Your Stocks, Vijay Chopra of enochventures.com and Rajat Bose of rajatkbose.com answer personalyour queries on investments in the stock market.
Q: Rajesh P writes to us from Mumbai. He holds 500 shares of Kwality at Rs 65 since three months. He is a medium-term investor and wants to know whether to hold or sell.
Bose: It's in a strong downtrend and holding it means that you are willing to see even more bloodletting. I would say that this is not actually a good strategy. If you look at the dairy sector, I would say that from a fundamental point of view, I have read some reports, which say that it's fundamentals are not as good as say Parag Milk, let alone Heritage Food or something. So, this is not a very strong play fundamentally.
Technically, it's in a strong downtrend. So, if he was to take my advice, I would advice that he should exit and save this money to invest somewhere else because Kwality has no redeeming feature. Kwality has lost its quality; the “K” for Kwality here has lost “Q” for quality in the word. So I would say, exit.
Chopra: Rajat has absolutely pinned it and I think that there is nothing more to say. It was a complete exit, once we saw a 20 percent decline in the stock. So, since then, we have been constantly recommending exit on Kwality. So I do not see either the balance sheet coming back or the company coming back very soon or the stock prices as well. So, I would say that it's better whatever money is left, you can conserve that, you can probably invest in some pharmaceutical stocks and expect that to go up and gradually you can make up the lost money. However, as of now, I would say that as soon as possible you should get out of the stock.
Q: Ravinder Singh writes to us from New Delhi. He holds 900 shares of Equitas Holdings at Rs 148 since five months. He is a long-term investor and wants to know whether to hold or sell.
Chopra: All the small finance banks hold a lot of promise for the future, but as of now, there is a pressure in the market and especially financial stocks. So, I would say that if he is a long term investor, he should not worry that much, probably the stock can even correct maybe Rs 15-20 from here. However, he has to hold on with a long term perspective and Equitas looking at the entire balance sheet as of now, I think it has the potential of coming back very strongly. So, he should average at lower levels, if he is a long term investor. So no problem with the company as such, but if he is a short term investor, he cannot handle the nerves of the market. I think, he should exit on rallies, but I see Equitas as a long term portfolio bet and one should hold on to the stock and at lower levels, it's good to average.
Q: Rupen Lahoti writes to us from Mumbai. He holds 2,000 shares of Bhushan Steel at Rs 50 since eight months. He is a long-term investor and wants to know whether to hold or sell?
Chopra: If he has a very risk huge appetite, definitely hold on to Bhushan Steel as anything can happen on the good side or the bad side. Today that deal, which was supposed to happen, there is some glitch there. I would say that if you want to be invested in such markets, be in the largecap, be invested in the leaders. That would always be a safer bet, a better bet, rather than being in any sketchy counter. I would say if at all you want to make money, it's better to be in the likes of may be Jindal Steel rather than Bhushan Steel.
I would say, he should exit on rallies or if he has that kind of risk appetite, then he should hold on to the stock and wait for it to come back to its buying price. But, still I would say that, there are better options available like Jindal Steel, Tata Steel, Hindalco and Vedanta. They give you better opportunities in the market if he wants to be in the metal space.
Q: Naveen Kumar writes to us from Ludhiana. He wants to buy 100 shares of Can Fin Homes and wants to know when is the right time to enter the market?
Chopra: As I said earlier, all the finance related companies, banks, non-banking financial companies (NBFC), although they were good bets some time ago. But as of now, the way the market is cracking and not showing confidence, I think if some fresh entry has to be made, it has to be made in the defensives. The defensives are pharmaceutical and information technology. I would prefer pharmaceutical over information technology, because we have seen some kind of a run up already in information technology but pharmaceutical is still to catch up.
So, there are good stocks like Lupin, Dr Reddy's Laboratories, like Aurobindo Pharma and Sun Pharmaceutical. These are frontline stocks and pharmaceutical has not performed in the last there years. I think, even if the market fall, there is not going to be a major fall in the pharmaceutical space and there are going to be a lot of opportunities, money to be made in pharmaceutical. I would say that better to be in pharmaceutical stories, rather than being in financial stories or NBFCs stories as there can be corrections especially in the housing finance space because we have seen all these companies running up considerably in the last two years.
Q: Shashi B writes to us from New Delhi. He holds 220 shares of Sun Pharma at Rs 709 since five years. He is a long-term investor and wants to know whether to hold or sell?
Chopra: I have been mentioning that the pharma is the saving grace for such market. I think, if he can average out even around these levels, Rs 650-670 is quite possible on Sun Pharmaceutical. I would recommend averaging out the stock at these levels and there is a good possibility that they can make his money back, whatever has been lost. Again with another two to three years perspective, I think pharmaceutical should do well, because they haven't done anything in the last three years. You have recently seen in the last one month or two, I have been iterating on your channels several times that pharmaceutical was in the process of bottoming out and I think that slowly and steadily, they are coming out of the blues and there is a good possibility that pharmaceutical might bounce back very strongly.
Bose: Personally, I would say that definitely pharmaceutical is the only sector where you can actually get some good investment opportunity. Of course even in cement, I suppose something is happening. But then, cement is a bit too early. However, pharmaceutical, the case in point is Sun Pharmaceutical, you look at it this way that from 2009 bottom to about early 2015 top, roughly about 7 long years of upswing and that has been corrected over the last three years or so. Now, Sun Pharmaceutical has made bottom around Rs 450 tested those levels twice over the last few months and now moving up. There is a possibility that Sun Pharmaceutical can actually move up and give good gains to the investor. I would suggest him to average on any dip. The disclosure has it that I personally hold the same stock, some shares of the same company in my investment portfolio and plan to do the same and to that extent my views could be predilected but anybody looking at the chart or studying the fundamentals would concur with the view I am offering here. So this is one good area and one good stock that you can definitely invest. My choice would be Sun Pharmaceutical, Lupin, and Dr Reddy's.