India’s GDP for Q2 FY12 grew at 6.9% (Bloomberg estimate: 6.8%). Core sector growth for the month of October dropped to a six year low of 0.1%. The core sector has expanded 7.2% last year (October 2010).
India’s food inflation for the week ended November 19 declined to 8%on a week-on-week basis from 9.01% for the week ended November 12 while fuel price index increased to 15.53% (15.49% last week).
Indian Prime Minister Manmohan Singh failed to break an impasse with opposition parties and his own allies demanding a rollback on FDI hike in retail sector. And as of today, this new policy has been put on hold to get agreement from opposing political parties. Continue reading Indian Economy and Capital Markets Review- 04Dec2011→
For the last two days (Dec 6 and Dec 7), something uncommon is happening in the Indian Stock Market: Both FIIs and DIIs are selling! (Dec 6: 500 crore net sell; Dec 7: 1000 crore net sell). This is uncommon because one of the two parties usually acts as net buyer when the other party is net seller.
In an entire year, we may not see more than 10-15 such days. It means all large players are seeing a need to cut their equity positions for whatever reasons. Till the FIIs start buying, we urge our readers to be cautious and not buy any new stocks or buy any new stocks at higher end of valuation like 52 week high, because profits are being taken out across the board. The best confirmation to start buying is when the FIIs start buying since they contribute to about 67% of the Indian stock market volume.
Reliance Communications (RCom) is in a problem with its alleged involvement in the 2G spectrum scam. RCom is already undervalued but this latest problem can put pressure on the stock. This past week saw 10% drop in RCom’s stock, and based on new facts that came to light in last 2-3 days, we have reduced our holding in RCom. Its possible that RCom can fall another 10% from current levels to around Rs 130-135.
Thankfully, many other good stocks have also fallen 10% in the week, giving us an ideal shifting opportunity. Our top picks to make the shift are: BHEL and Tata Motors at current prices. Both these stocks are likely to continue delivering good profits and have no regulatory overhangs like in RCom. Once the air around RCom clears, then we will reconsider entering this stock.