Mirroring the weak trend in global markets, the Sensex opened with a huge negative gap of 171 points at 20,080 on Wednesday. Unabated selling saw the index drift deeper into red as the day progressed.
The index tumbled to a low of 19,513 - down 738 points from the previous close - in late noon deals. The NSE Nifty ended at 5,950, down 124 points.
Where is the stock market heading? Will it rise? Or will it crash? What should a small investor do in such a scenario? Should he hold on to his stocks or sell them? Should he buy stocks now or stay away from the markets?
Market expert
Pranav Sanghavi answered to many such readers' queries during an hour-long chat on Wednesday. Here is the transcript:
PRANAV SANGHAVI says, Good afternoon everyone and welcome to the chat. I know there's not much to be smiling about with the markets correcting ov er the past two days. Let's begin.
pop asked, Dear Pranav, is this just a correction or is there something more sinister to it?
PRANAV SANGHAVI answers, at 2008-01-16 16:04:53Dear Pop, there are a lot of factors affecting the markets. The bad news from US, the Yen hitting new highs against the Dollar and lack of FII participation. We have bounced back from major support levels, if we don't break them over the next few days then we should be fine. Our corporate results should be good. At the month end there is also the USFED Rate meeting where in they should reduce the rate by 50 basis points which could turn the markets.
Manda asked, What is your take on the Reliance Power IPO, Pranav?
PRANAV SANGHAVI answers, As I had mentioned last week it has been crazily oversubscribed on the first day itself. So it would be a lottery if you do get allotment as they are expecting it to list at around Rs 800 to 900 levels. But if this correction continues then one can't say about the listing price. Although the company by itself is a decent bet but for the long term as their capacities will take 2-3 years for commencing.
bullsbears asked, till which date these mid cap and small cap will fall ??
PRANAV SANGHAVI answers, Till realistic prices are reached.
srb asked, Pranav, what do u think of Hercules Hoists Reliance Infra and Jai Corp
PRANAV SANGHAVI answers, I loike Rel Infra. In Jai Corp there is news that a 100% subsidiary of the company has launched an SEZ. Thats why the stock has run up.
sajid asked, Hi, Pranav, What is the future of united & alok industries.
PRANAV SANGHAVI answers, I would rather look at other quality stocks.
Rishi asked, In view of the upcoming budget and LS elections, do we see a lot of SOPs for some of the sectors coming up? If yes, which of the sectors do you think would find the best favor from Mr. Chidambaram?
PRANAV SANGHAVI answers, I am sure he should give sops to the fertilizer and farming sectors. As still 50% of our country is still involved in farming.
Parag asked, HI... i wanted to know if the Future Capital IPO is worht invseting in for a small investor...
PRANAV SANGHAVI answers, It has a strong management team and they ahve proven their ability to succeed in their other ventures so I don't see why they will not do well with this company too. It could be rated as a bit overpriced but most financial services companies are going at high PE's already.
MAverick asked, Reliance Power IPO got superscribed in 1 st day only. do you think this as possible reason for yesterday & today's fall in market???
PRANAV SANGHAVI answers, A part of the reason could be that but there are other global factors also bearing heavy on our markets.
akky asked, hi pranav i invested all my money and now the market is falling will it recover sometimne soon?
PRANAV SANGHAVI answers, I am sure it will recover. If you are holding on to quality stocks you should not be worried. I cannot say the same for penny and B2 stocks.
Rajesh asked, why market is go down
PRANAV SANGHAVI answers, I have mentioned in my previous replies as to the US and Japan factors are the major reasons.
Vikas asked, HI Pranav, Since the market is already at all time high, is it time to stop investing in the stock market or still there are prospects good prospects of making money in the long term?
PRANAV SANGHAVI answers, No, in fact I would use these corrections to go long on quality frontline stocks who are delivering fantasitic results.
Ashwani asked, What is the future of Noida toll?
PRANAV SANGHAVI answers, They have just announced the plans to develop some large parts of land around the expressway on the Delhi Gurgaon area. This could yeild good returns over the next few years. There is a steady rise in their toll collections also.
srb asked, which Bio-fuel companies are promising to invest
PRANAV SANGHAVI answers, I like IKF, Praj which is not actually a bio-fuel company but it makes the plants. I also like some of the sugar companies who have started making bio-fuels from the sugar canes for better yeilds.
Ram Nikumb asked, Goo Evening Sir,which stocks do you think attractive at this moment to invest
PRANAV SANGHAVI answers, I like the frontline stocks which are giving results of over 20% growth in profits. Also stocks which have got coorected sharply. I like stocks like RIL, SBI, DLF, IDFC, Uco Bank, ICICI Bank etc.
dinkumgup asked, sir , is it right time to enter in to state bank of india scrip
PRANAV SANGHAVI answers, With this correction you could look at the stock. There was not much benefit left on the table for the investors with the pricing but as stock it can surely be bought not necessarily with the Rights Issue angle.
rahuls asked, Hi Pranav, Thanks for spending sometime for us. Why is markets going downward,is it bcos of global indices?
PRANAV SANGHAVI answers, As I mentioned earlier in the chat, its various factors like the US economy's health. Citibank reported multiple billions loss for this quarter which shows that their credit markets are still open for further losses. The Yen also hit new highs against the dollar due to which all the yen carry trades will start unwinding which was seen especially today in the South East Asian Markets. Plus we had a huge IPO and very little FII participation.
ashokbh asked, I am holding some shares of Axis /bank, Unitech, Ifosys & TCS and I am a small investor. What is my right step now?
PRANAV SANGHAVI answers, You could surely hold on. If you are a long term investor you shall surely make decent profits. The IT stocks may not see new highs for a while so you could switch them to banking stocks.
KD asked, What is the story behind SBI?
PRANAV SANGHAVI answers, SBI is the largest bank in the country. It has a rights issue in the offing, it has consistently paid higher advance tax every quarter this year. They paid Rs. 600 crs in the 1st quarter, Rs. 800 crores in the 2nd quarter and for the December quarter they have paid a whopping Rs. 1000 crores.
srb asked, i hold some quantity in Parekh Platinum,
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