I have got good and very encouraging response to start the series on " Best Stocks to buy in 2010". I would like to share the first response I received here. It is from Mr. Sreenivas Erukulla. He has shared his ideas on couple of bad and good sectors where we can buy stocks for our 2010 investments. Let's checkout opinion from Mr. Sreenivas.
E-mail from Sreenivas:
In my view its better to avoid the telecom sector because the entire sector is in doldrums because of stiff competition among the telecom players and in the coming quarters due to price reductions the companies may post even less profits. At least we may need to wait for 2 more quarters so that the dust settle downs and a clear picture is visible by then.
My opinion on public sector companies for the next year is bullish with the recent news from Chidambaram regarding disinvestment in Profit earning public sector companies. If one observe the stock market on last Friday one could observe many public sector companies saw a robust 10-20% rise on single day. In the coming months one can see these stocks can rise multiple times since the disinvestment may take more time than expected since its a Government stuff unlike private players.
One more sector which could see a revival is Real Estate sector in the coming year since the Recession started slowly fading away. It can bounce back from the middle of second quarter. I am always bullish on Infrastructure since there is lot more left in this sector. India needs a very good infrastructure which lacks when compared with other developed economies. Players like Lanco infra, HDIL is always a good bet in this sector.
My opinion:
I completely agree with Sreenivas on telecom sector. It is best to avoid Telecom sector for time being unless the visibility gets clearer once the pay per second billing and effect of new entrants on existing players gives the direction on earnings. Checkout an article published few days back here:Telecom Stocks Crash - To Buy Stocks Or Not?
I also agree on public sector stocks divestment and it's positive effects on PSUs would prove to be good investments in these companies.
Real estate sector seems on track for revival mode but it is not going to happen so soon. People have seen difficulties in terms of what problem a home loan can create in times of recession. It is not too long back that young generation who had bought apartments with big home loans on the back of appraisals they use to get every year have faced recession and were stretched to their extremes of limits. Looking at their experiences, many of their peers would act very very cautiously. Recession is yet far from over and this fact will not allow real estate sector stocks to fire their engines so soon.
This article is part of the series "Stocks To Buy For 2010 - Let's Share Ideas". You can find updated list of other articles in this series, as and when published, here.
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