The stock markets are going through a rough patch and the investor confidence is really low. Most small investors have bought stocks when the stock market was peaking in end 2007 and are sitting on huge loss on their investments.
This is what typically happens in every stock market cycle. Now when the share market is close to bottoming out those same investors are scared to invest in shares. No one really knows when the global economy will stabilize and factors like inflation and high crude prices will retreat to normal levels but one thing is for sure, sooner or later stock markets and global economy will recover. Stock markets usually recover ahead of the economy as the indications of recovery are seen much earlier in individual companies than on macro level.
I am absolutely sure (and that is a big thing to say about the stock market) that people who invest in good stocks now will make money. Now we come the problem of stock picking in a bear market. What are the best bets in today’s economic scenario?
Amount of research needed to come up with winners for an individual is virtually impossible. The next best thing to do is follow the people who have teams of people doing research for investing. What are they betting on? Which stocks do the mutual funds and brokerage houses betting on? This can give us quite a clear picture of the stocks which will do well in the coming months.
Stock Picks:
The analysis of last months data of purchases by the mutual funds have revealed that they are picking stocks from infrastructure, IT, telecom and healthcare, and selling shares from oil and gas and banking sectors.
The favorite pick of the fund managers in last month have been Reliance Petroleum, Bharti Airtel and Reliance Communications. They have also added some new stocks like Spice Communications and Unitech in their portfolios.
Domestic mutual funds are making the most of the buying opportunity given by the bear hug in the stock market and made net purchases worth Rs 3,179 crore in equities in June.
According to brokerage firm Sharekhan, Bharti Airtel, Reliance Petroleum, Suzlon Energy and Tata Power figure among the favorite purchases by the equity funds in the month of June.
Mutual funds picked up stocks from diversified field. Many of these stocks are trading at very low PE values and make a great value buy. Dr Reddy’s, IDFC , Piramal Helathcare, Bajaj Electricals , Punj Lloyd , Reliance Communications, Balrampur Chinni Mills, Hindustan Unilever, Shree Renuka Sugars and Britannia Industries are the stocks which have a great future and all of these shares were added by fund managers to their portfolio.
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The top new stocks added to the fund managers portfolios in June, include HDFC Bank , Unitech, Hexaware Technologies, Exxon Mobil Corporation, Piramal Healthcare and Rolta India.
In terms of market value, Bharti Airtel, Reliance Petroleum, Suzlon Energy, Tata Power and Punj Lloyd are among the top picks by domestic fund houses in June.
Nagarjuna Fertilizers, Orbit Chemicals, Everest Kanto and Arvind Mills have also caught mutual funds’ fancy during the month.
Mutual fund managers were not just buying shares but also selling some shares in their portfolio. Whirlpool of India , Centurion Bank of Punjab, Seshasayee Paper and Boards, KLG Systel , XL Telecom and Hindustan Oil Exploration are among the stocks, where some of the funds have made a complete exit.
This will give you some indication on which stocks you can invest in right now and if you already hold some of the above mentioned shares you should hold on to them for a longer period. Keep investing in small amounts and do not lose faith. No other asset class gives same kind of returns as the stock market in the long run.
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