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Thursday, October 23, 2008

News, Views and Results Analysis - Hero Honda - Opto Circuits - Geodesic - Tata Sponge Iron - JP Associates

Safe investment duration:

This is not a market for new investors with short term horizon but accumulators can continue to buy in SIP manner for the next 3-4 months. September quarter is already giving clear signals about bad and good companies.

1. Good large caps= 8-14 months.

2. Best mid caps= 12-24 months.

3. Wonderful small caps= 15-30 months.

Significant statements:

1. Only 2% Indians invest in stocks- Finance Minister of State.

2. Industrial trends survey: U.K business situation index fell to -60 from -40 in July - the lowest reading since July 1980.

3. Growth in Europe will be grinded to halt in 2009 but countries will recover in later half due to cut in interest rates and other bailout measures- IMF.

Rumours: Hindalco will offload its stake in group companies.

Positive news:

1. BHEL-GE joint venture bagged big Railway diesel locomotives tender.

2. RPL refinery is in advanced stage of completion.

3. Norway will invest $2 billion in Indian Stock market. We will need more such investments.

4. Merck India is aiming high and target is among "Top 5".

Negative news:

1. Steel sector will face margin pressures in the next quarter- SAIL. Companies without backward integration like Essar steel etc will suffer heavily.

2. Nano will not be launched in this quarter.

3. Satyam Computers will face more pricing pressure in the coming days. Stay away from this sector.

4. Ashapura Minichem is facing 3 legal suits in United States.

Company results analysis:
1. Navin Flourine International: Bumper results. Company reported 73% increase in sales while net profit increased to Rs 17 crore from Rs 1 crore in Q2FY08.

CMP: 143; P/E: 4.5; Book value: 190.

2. Hero Honda:

Good results. Company reported 36% increase in sales while net profit rose by 49%. Hero Honda is like Coca-Cola of Dow Jones. Safe stock and solid fundamentals. Company should concentrate more on electric vehicles business. Safe stock. Accumulate this stock.

3. Opto Circuits India: Good results. Company reported 28% increase in sales and profits rose by 35%. Will this battered stock recover?

CMP: 148.4

4. Geodesic Limited:
Bumper results. Company reported 130% increase in sales while net profit rose by 124%.

CMP: 124.

5. Tata Sponge Iron:

Bumper results. Company reported 145% increase in sales while net profit rose by 308%.

CMP: 152.

6. JP Associates: Positive surprise. This blue chip announced 37% increase in sales while net profit rose by 96%. Will this battered stock recover due to these positive results? But it will definitely participate in every bull market rally.

7. Punjab tractors: Bumper results. Company announced 178% increase in net profit while sales rose by 48%. Keep it up.

CMP: 127.

8. Swaraj Engines: Bumper results. 100% rise in sales while net profit increased by 61%. Wonderful performance. Accumulate this stock.

CMP (BSE): 150.

Decent results:

Cosmo Films, NIIT, SAIL, RNRL, LIC Housing Finance, United Spirits, Marico, PFC and Bayer CropScience.

Poor results:

Wire and Wireless, Motherson Sumi Systems, Hindustan Zinc, Noida Toll Bridge, Facor Alloys, Zee Entertainment, Tech Mahindra, Blue Dart, Bongaigaon Refinery, Finolex Industries, Hindustan Motors and Elder Pharma.

Worst results:

Bihar Caustic, Wockhardt and Mukand.

Recession news: To get a ring side view of what is happening all over the world.

1. More banks in Europe will fail- IMF.

2. Pakistan needs $10-15 billion to avert economic crisis- PM Economic advisor.

3. China will be suffered due to manufacturing slowdown while India will be suffered due to services slowdown. Contrary to expectations, job losses will come from all sectors. Chinese investment bank suffered 2 billion dollars in the trading in Hong Kong stock exchange.

4. England: Manufacturing confidence fell to 2-year low. Housing sales plunged by 53% in September.

5. South Korea's $130 billion rescue plan failed to reassure investors.

6. French Government injected $14 billion into top 6 banks.

7. Southern California home prices continued to slide.

8. Australia: Study reveals pensioners are skipping buying essential medicine due to rising costs.

Source: Stock Market Guide

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