Your Stocks is a daily show where market experts answer your specific stock related queries.
In July 3 edition of Your Stocks, Rajat Bose of rajatkbose.com and Sharmila Joshi of sharmilajoshi.com, answer your queries on investments in the stock market.
Q: Manish Shah writes to us from Ahmedabad. He holds 200 shares of Reliance Industrial Infrastructure at Rs 571 since six months. He is a long term investor and wants to know whether to hold or sell?
Bose: Reliance Industrial Infrastructure stock is weak in the near term. In the sense, it went up to about Rs 680 and from there, it has come down so much, I mean Rs 418 as we talk. So, probably if it was to fall below Rs 397, then it could actually go down to Rs 334. I would suggest Rs 397 on closing price basis as a stop loss, because if it was to go below that, then there could be further downside and that could happen pretty fast. In such a case, it would be worth while to actually get out. Currently, he has already lost so much, another 20 points would not be a great deal. So, let us keep a stop loss there and watch out as to how things pan out.
Q: Ravider Singh writes to us from New Delhi. He holds 4,000 shares of Fineotex Chemical at Rs 68 since four months. He is a long term investor and wants to know whether to hold or sell?
Joshi: Very honestly, as you said, we have seen a huge correction about 4-5 months back in lot of these midcaps and chemicals as this sector was fancy. They had a twin benefit of certain China facilities closing and bans etc. Though, anything that had chemicals in its names sort of rallied up. But a lot of these companies weren’t really in that space. For instance, Fineotex Chemical is a textile speciality chemical company, so really no exciting news there in terms of ban. But, the business is chugging along nicely, so just from that perspective and the fact that valuation from this perspective now seem reasonable. It makes sense to hold on to this stock, because I do think that it can sort of rally from current levels, especially since he is a long term investor. There is no concern in terms of earnings or anything of the sort, but it may spend some time at this level before it moves higher. Long term target can definitely go to his buying price at least which is Rs 68.
Bose: My point is that technically this stock looks weak. But at the beginning of the year, if you remember this stock was very much in discussion. If I remember correctly, with passage of time, it’s fundamentals would improve even better. Sharmila Joshi just said that from a fundamental point of view, it would be worth to continue holding this stock. In that case, I would suggest hold it with a stop below Rs 40. But technically speaking, once it settles down below Rs 55, there is every possibility that he has to take a bit more pain and see it testing Rs 40 levels. But, if I was in his shoes and convinced that this is actually a good fundamental stock to clearly hold on to, I would definitely average it around Rs 40.
Q: Sanjay Pande writes to us from Pune. He holds 1,000 shares of Hindalco at Rs 88 since two and a half years. He is a long-term investor and wants to know whether to hold or sell?
Bose: I personally bought Hindalco around those levels. My buy price was just a rupee higher than what this investor did. But, I sold it at a higher level. I would suggest now is that, yes it’s time he took some money off the table. But suppose, if you were to continue hold it with a stop below Rs 215. If it was to go below closing price basis, then definitely exit or if you have to wait, then wait for a rally and see if it takes out Rs 250 decisively. If he does that, then Hindalco would see another great upswing. But if it fails to takeout Rs 250 on the upside in any counters, then definitely take profit and get out.
Joshi: Precisely, this question is difficult to answer, because he has invested at really good levels and now going ahead would be a little rocky for metals. Since the trade war issues have started, we are seeing one week goes well for metal story and then, next week again there is some bad data and news etc. By and large, it’s believed that Hindalco should not be affected. Firstly, they have Novelis exposure, which is in the US and secondly, I am expecting better numbers for aluminium as a metal in any case as compared to steel. I would be positive on Hindalco. So I think from that perspective, the stock is a hold. The only thing that I leave up to the investor is he is sitting on a good profit and perhaps, which is why he is worried because of this correction that we have seen. But I think keep the faith in metals and continue to stay invested. Target, you can expect about 20 percent from current levels.
Q: Sudhin Vathija writes to us from Bengaluru. He holds 50 shares of HDFC at Rs 1,940 since a year. He is a long term investor and wants to know whether to hold or sell?
Bose: Predicting prices are far easier than predicting time as to when that thing will pan out. But still, I would say that around generally, you will find that from a cyclical perspective. October-November is the time when the bottom will be lower than the bottom you saw around Rs 9,000 or so in the Nifty than it’s still to be considered. But I would expect that something around that time, you will get a better entry price for HDFC. But I would suggest an alternative. I would say that why only HDFC, why not look at Dr Reddy’s Laboratories, Lupin or Sun Pharmaceutical from the pharma space, even Aurobindo Pharma for that matter. Because from a return perspective, they could actually give you much better appreciation.
Joshi: We are already seeing a correction in the housing finance space. If you see stocks outside, HDFC is perhaps the last to really correct within that lot. Because stocks like LIC Housing Finance etc. corrected more than I think 20-25 percent from the higher levels. It’s a pain that has been felt across the sector. I would say that the correction in the HDFC has been sort of last to join the correction that we are seeing. I wouldn’t really expect much lower levels on HDFC. If he had to average, I think the current price would be as good as any. I think, you can go with Rajat Bose’s advice on levels. As a stock, it’s a portfolio stock from my point of view. So, I wouldn’t really exit it for any reason. I would just continue to hold what I have at current levels and if you get a lower level, average at that price as well.
Q: K Nagarajan writes to us from Chennai. He holds five shares of Shree Cement at Rs 18,350 since six months. He is a long term investor and wants to know whether to hold or sell?
Joshi: Definitely hold, because cement is a sector which they generally perceived as being direct correlation with your GDP. So, if you are expecting GDP to improve over the next three years, there is no real reason to not hold cement. Secondly, other factor that goes in favour of cement stocks is that it has really been a sector that has never joined the rally. Even when markets were trending upwards, you didn’t really see any great rally in cement stocks because there is always that mismatch capacities increase. But demand hasn’t caught up and then offtake is slow and we are in the monsoon, so it’s a slower period etc. Since he has a three year horizon, he can continue to hold and in any case he doesn’t want to buy more.
Bose: Shree Cement is one of the best blue chips in cement space. If you have three year perspective, definitely there will be some upswing at some point in time. If you look at the last several quarters from a price appreciation point of view, this is basically distributing in the sense that lot of people are exiting this cement stock and maybe moving to some other cement stocks. But still I would say that Rs 15,000 is a very strong support area and if that gets broken, then Rs 13,000 could also come. Since he is a retried person and doesn’t trade on a regular basis in the market, I would suggest that it’s a great blue chip and continue to hold on over the long period. I think he will make some money.
Q: Aakash Shah writes to us from Pune. He holds 4,000 shares of HDIL at Rs 55 since one year. He is a long term investor and wants to know whether to hold or sell?
Joshi: I would say sell simply, because I think that real estate is not my favourite space. If I have to recommend something within that space, I go via the proxy play. We spoke of housing finance companies earlier, so stocks like that. For HDIL, I am not really sure about earnings visibility as well as the fact that whole SRA in metros which used to big story for HDIL. I think it’s still better to sell and buy something, where he can recover your money rather than staying invested in a stock which you don’t like.
Bose: I would second Sharmila’s opinion. The chart that you are showing on the screen shows clearly that it’s in a down trend and the down trend shows no signs of abating. Chances are that it will actually seek even lower levels, so it would be better to actually save some money. Maybe he has lost two-third of this money or more it would be better to actually exit at current levels and invest that money elsewhere or hold it for a lower level to invest somewhere else whatever, but do not stay in HDIL. I have mentioned this earlier also that if it’s not criminal to be wrong, but it’s a crime to remain invested, where you know that things are not working out for sure.
Disclaimer: The views and investment tips expressed by investment experts on CNBCTV18.com are their own and not that of the website or its management. CNBCTV18.com advises users to check with certified experts before taking any investment decisions.
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