Stock Doctor

Stock Doctor : Dr. GS Sood

gs-soodTo invest in order to derive handsome returns over a reasonable period, one must track international relations, economic and political developments, industry, and company-related events et al.

In the US, almost 50 per cent of the population has an exposure to the stock market directly or indirectly. In India, according to Reserve Bank of India, less than 2 per cent household assets are currently invested in the capital markets and the population percentage is even lower. A much larger percentage needs to invest in equity-either directly or through mutual funds.

Equities always yield amazing returns-be it gold, company deposits, bank deposits, debentures or bonds. The magic of multi-baggers experienced by those lucky enough to buy Infosys, Wipro or even Reliance, and more recently the likes of Unitech early in their life cycles, is only possible by buying equity.

The Indian scenario has a lot of positives: favourable demography, and strong GDP growth (with services accounting for 66 per cent), robust growth in domestic consumption, strong corporate growth with low debt and high levels of cash, strong liquidity. There is some concern over already stretched valuations, increasing inflation, rising crude prices, political developments and so on. Here are some stocks worth looking at.

stock-doctor-dr-gs-soodeast india hotel (eih)-cmp rs 94
A member of the Oberoi group, operating a number of subsidiaries in the hotel industry and related activities, EIH is on an expansion spree within the country and abroad. With robust December quarter results and the fact that the stock is available at its four-month low, it offers significant scope for appreciation. Moreover, with tremendous growth in the Indian tourism industry, the stock is a good long-term buy.

apollo tyres-cmp rs 270
The tyre industry is likely to witness a demand-supply squeeze and the possibility of any new capacity coming up in the near future (at least two years) looks remote. With the prices of natural rubber and crude holding at reasonable levels, tyre companies may witness a quantum jump in their earnings in the next few quarters. Apollo Tyres is likely to be the biggest beneficiary, with recent acquisitions in South Africa. The stock can comfortably give 50 per cent returns in a year’s time.

apollo tyres-cmp rs 270
The tyre industry is likely to witness a demand-supply squeeze and the possibility of any new capacity coming up in the near future (at least two years) looks remote. With the prices of natural rubber and crude holding at reasonable levels, tyre companies may witness a quantum jump in their earnings in the next few quarters. Apollo Tyres is likely to be the biggest beneficiary, with recent acquisitions in South Africa. The stock can comfortably give 50 per cent returns in a year’s time.

Vol 1,Issue 1 | April 2007

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