Sensex & Nifty made high of 21108 & 6338 respectively on November 5, 2010 (Same is 52 Week High). This week i.e. on 14th January, 2011 sensex closed at 18860 and Nifty closed at 5654 i.e. correction of 10.5% from recent high.
I have always maintained and will always maintain that correction is the time to enter the market. Just find the right stock. There is not any specified range for correction. It may be 10% or may be 50%. Only criteria which I see to decide whether this is correction or not is that our economy is growing despite all odds i.e. gift of scam from government, global crisis, manmade calamities and natural calamities.
Mr. Rakesh Jhunjunwala said that good stocks will always have expensive valuation. Correction is the only time when these good stocks will be available at cheap or reasonable valuation. Just you need to find out good stocks.
Recently there were lots of controversies regarding scams from Telecom Ministry (2G), Agriculture Ministry (Food price rise) and Sports Ministry (CWG & IPL). Just being POSITIVE, I wanted to take an advantage of correction in PSU Stocks. Because I believe, fundamentally, these stocks would have been downgraded by investors considerably considering uncertainty on promoters credibility i.e. Government of India.
I do not know definition of defensive stocks but for me following are defensive stocks.
Top 5 picks from PSU pack for very good capital appreciation in medium to long run.
Sr | Stock | Sector | CMP 13/1/11 | 52 Week High | Correction (%) | Performance |
1 | NHPC | Power Generation | 27 | 36 | 25.00 | Under perform |
2 | SCI | Shipping | 121 | 202 | 40.10 | *Under perform |
3 | Power Grid | Power Transmission | 97 | 121 | 19.83 | * Follows Index |
4 | Coal India | Coal | 310 | 356 | 12.92 | Follows Index |
5 | IOC | Refinery | 360 | 556 | 35.25 | Under perform |
* Performance remarks considers dilution in equity while 52 Week high price has not been adjusted.
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