Tuesday, November 13, 2012
We wish all our readers and friends a very happy diwali and a prosperous new year.
As happens every time we are recommending following sectors to our investors for next 1-1.5 years.
1. Energy Sector:
We have been reading a lot about possible crash in crude prices but our view is exactly opposite - bullish on crude. We think over next 1-1.5 years world (incl. DMs) is going to experience Inflation spiral which EMs have been experiencing since last 2 years. In the world of QEs it is just not possible for us to imagine lower crude prices. Crude also goes up in case of geo-political tensions. We recommend Crude Equity stocks with 1-1.5 years view. Note that all Crude stocks in India made their new all time highs in Oct 2010 which to us suggests continuation of their uptrend after ongoing consolidation.
2. Agri Input/Tea:
Rising consumerism coupled with falling Agri productivity in EMs augurs well for Agri Input sector - Fertilisers, Pesticides, Seeds, Micro-Nutrients stocks one can buy. Note that this sector has been consolidating since last 2 years but we feel now it is ready to give great returns over next 1-1.5 years. We also like Tea stocks where prices have already started going up and may go up further in coming inflationary spiral.
3. Export oriented - pharma/engg/tyres/Midcap IT:
Rupee has been going down since India started reforms in 1991. Rupee was 18.10 against Dollar in Jan 1991 and over last 20 years India has developed tremendously but Rupee is 54.88 against Dollar in Nov 2012 this tells us Rupee may continue to go down for next few years and India may continue to develop. Look at Japan's Yen to see how strong currency impacts country.
Indian companies which exports Pharmaceuticals, Engineering products, Tyres, Midcap IT etc will do well over next 2-3 years so we recommend every investor to add stock from export sector.