Transcript of Chat with Mr. K Seshadri -Deputy Editor -Business India- Markets : What lies in store in FY03? - (1/04/2002)
[04:44:54 PM] => Myiris: Welcome to the live chat session.
[04:45:17 PM] => Myiris: Our guest today is Mr. K. Seshadri, Deputy Editor, Business India.
[04:45:29 PM] => Mr. K. Seshadri is the Deputy Editor, Business India. At the time of this conversation / chat, Mr. Seshadri may or may not have positions in the stocks mentioned below, although holdings may change at any time. The views expressed by Mr. Seshadri is based upon information that he considers reliable, but does not represent that it is accurate or complete, and it should not be relied upon as such. Mr. Seshadri, his company and its affiliates, officers, directors, partners, and employees may, from time to time, have long or short positions in, buy or sell and deal as principal in the securities, or derivatives thereof, of companies mentioned herein and may take positions inconsistent with the views expressed.
[04:45:46 PM] => None of the information contained herein constitutes, or is intended to constitute a recommendation of any particular security or trading strategy or a determination that any security or trading strategy is suitable for any specific person. To the extent any of the information contained herein may be deemed to be investment advice, such information is impersonal and not tailored to the investment needs of any specific person. You should consult with and rely upon your own advisors whether and how to use such information in making any investment decision.
[04:45:58 PM] => Lastly the views expressed by Mr. Seshadri have no bearing whatsoever with that of IRIS Ltd. IRIS does not guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information. IRIS especially states that it has no financial liability whatsoever to any user on account of the use of information provided on its website www.myiris.com.
[04:46:26 PM] => Myiris: Welcome to the chat session Mr. Seshadri.
[04:47:28 PM] => Neeraj : Sir, do you expect any impact of the Exim Policy on the market?
[04:48:15 PM] => KS : The policy will not have impact on average corporate performance. There would be a sentimental stimulus to the pharma and leather sector. In the long term the policy would help strengthen the export efforts. There are incentives for agri-exports but corporate efforts have to be brought into the sector for the pay off to materialise. The policy steps could help the market sentimentally, whose tenure will be short.
[04:48:48 PM] => Csavla : What's the outlook of market till June 2002?
[04:49:49 PM] => KS : Markets are waiting to see the March quarter results. Corporates have had the advantage of lower interest rates, but demand has been sluggish. In any case with continued trend towards lower interest rate the outlook for the rest of the year is good, as the demand growth emanating from farm income would kick in.
[04:50:07 PM] => Also the US markets have bottomed out and recovery in the economy has begun. Downside risks there are minimal and the risk for investors is not being in the market right now. Tech sector upturn could be delayed uptil end 2002/beginning of 2003. The Indian market could be range bound between Sensex 3300 and 4000. A flash dip to 3100 could provide buying opportunity.
[04:50:33 PM] => Right now the index faces a resistance technically at 3575. It fell through a long-term support line at 3537 on 21 March. This has weakened the index and its potential for an upward movement.
[04:51:17 PM] => Lalitdadhich : What's the future of Lupin?
[04:51:46 PM] => KS : Collect your profits at Rs.136. The fundamentals support the price to go to Rs.195, but even good volumes have failed to fire the stock with an impetus from the Rs.120 region where it has been hanging for over three months.
[04:52:02 PM] => Dina : Sir,What's your outlook on Pharma sector?
[04:53:08 PM] => KS : The long term outlook is certainly good, as the public health spend is constantly on the uptick.
[04:54:04 PM] => For firms with a strong export thrust it is the dynamic balance between costs, risks and opportunities. That said, one needs to weight them for the expertise they pick up on the way. Stocks markets treat them with one eye on caution, especially since they are fully priced for current performance. One must use a downturn in the stock price to buy in, after examining the fundamentals and prospects. Investment in the sector however is a must for one�s portfolio.
[04:54:48 PM] => SKG : What is your opinion about South East Marine?
[04:55:36 PM] => KS : There is a technical rally on South East (B526807) on small volume. If you have the stock ride the profit run with a stop loss every day to capture your gains. If you do not have, entering the rallly where volumes are so small is not advisible. I am not aware of any development, which is driving the scrip on fundamental grounds. So you need to check this out. Never the less the volumes are not good enough to be taking the risk.
[04:56:18 PM] => SKG : What is your opinion about Sierra Optima ?
[04:56:31 PM] => KS : Judging by the market interest, there is hardly any good volume in the counter. The scrip has been travelling horizontally around Rs.65 for almost three months.
[04:56:57 PM] => Mano : Which IT scrips look good short-term?
[04:57:40 PM] => KS : The IT companies in US are yet to see the end of the slowing down of orders. Under the circumstances, it would be too risky to play short term just now on Indian stocks. Best is to let the IT stocks find their bottom and then review vis-a-vis the US situation.
[04:58:05 PM] => Rai : Will the FM make good on his Budget promises? He's started rolling back again!!
[04:59:23 PM] => KS : Roll back or otherwise the budget has failed to provide any growth impetus or strategy. Over the years he has been busy setting the macro economic scenario, without realising that his measures have failed to provide the drive momentum. In fact there has been a negative pull back. This is because every step or policy he takes is at loggerheads with another.
[04:59:37 PM] => There is therefore no synergistic effect over the years. It is time he developed a new model based on the micro economic model quantifying and forecasting impact of each of his action and then attempt scaling up for extracting the marginal utility. The current model is too gross and each of the steps pull in opposite direction. Net result the GDP is not growing but going down.
[05:00:04 PM] => Sanjeev : Now that US is slowly coming out of economic slump, will things look up for us? What's your opinion on the markets in FY-03?
[05:00:58 PM] => KS : The outlook for FY-03 will definitely be good, for quite a few reasons. Corporate profits in the US markets can be expected to post a gain of around 40 per cent and this will affect the Indian sentiment positively. However, the 100 per cent growth rate for Indian infotech companies will be history.
[05:01:22 PM] => Growth could be restrained to between 30-50 per cent and the P/E ratios will get re-rated to reflect this reality. Also the outlook for infotech sector through technology spend will start brightening only in the last quarter of the current calendar year or early 2003. But the buying for this upturn will take place during the current year. Ideal is to watch the tech stocks bottoming in the next six months, so that you can buy them at prices, which can bring in reasonable reward.
[05:02:13 PM] => Venugopal : Sir, what's your analysis of mid-rung tech companies? Will they deliver?
[05:02:40 PM] => KS : This is not the right time to buy tech stocks.
[05:03:07 PM] => Venugopal : Any expectation on guidance from big IT companies?
[05:03:44 PM] => KS : The outsourcing model is likely to catch on quite well as global companies shift to offshore model to cut down costs. The margin on offshore work is sizeably less than the on shore model.
[05:04:07 PM] => So companies would have to work harder to earn the same revenue. They would of course counter this challenge by resorting to variable compensation for their staff from the fixed model. But more than this the growth rate will be affected and that is the thing to take note of. Growth rates for big companies could be from 30-50 per cent. Profit margins could move down. The market is already counting in these factors.
[05:04:26 PM] => Karan : Hello Sir, how long do you expect the PSU rally to last?
[05:05:01 PM] => KS : I expect profit taking to restrain the upside of the rally. But action here is scripwise and that is the way to handle it.
[05:06:47 PM] => Suman : What do you think of the interest rate situation?
[05:07:13 PM] => KS : Interest rates have moved down in a historical context. But the real problem for corporates is not the interest rate or liquidity. It is the lack of demand. Again there is surplus capacity in the industry and therefore new investments are not interesting. The interest rate is however attractive for capital investment for marginal expansion of capacity. For fixed income instruments, rates will remain at the current level or another 50 bps down. Rates can start looking up from mid-2003.
[05:08:25 PM] => Ragh_56 : Please give your outlook on auto, FMCG and pharma?
[05:08:57 PM] => KS : Pharma outlook I have already talked about. The outlook for the commercial vehicle sector is good, as it is likely to get into a synergic growth along with the pick up in the economy. Ashok Leyland is the best example of how one can combine the sector outlook, individual company strategy and company stock price.
[05:09:15 PM] => For M&M the tractor industry may be slow growth area this year, but it is trying to figure out compensation revenue flow and margins in other areas like utility vehicles. But the market player should exercise discretion in each case as stock prices in some cases have already run ahead of these developments. The two wheeler industry is full of potential and research into second line two wheeler stocks could provide handsome return. The FMCG sector has limited and steady growth potential but you need to research the company into its product profile. The sector does not qualify for blind investment as a group.
[05:12:13 PM] => chitah12345 : Sir do you see business prospects of Siemens and Escorts Ltd. improving in the current financial year starting today then previous year?
[05:13:34 PM] => KS : The demand for tractors is subdued. Otherwise Escorts holds good on its own turf. Siemen's power business suffers for want of new projects. In other products they are doing well.
[05:13:49 PM] => ayanad1 : Mr. Sheshadri, What is your feeling about frontline tech stocks about their valuations at present prices. You sound cautious about it considering it higher or you think they have seen the worst and prises should gradually move up?
[05:14:01 PM] => KS : Answered elsewhere
[05:14:37 PM] => Sanjayn: Please give me one good pick each from Pharma and FMCG?
[05:14:49 PM] => KS : Dr.Reddy and Colgate. Colgate is speculative but has profit potential.
[05:15:04 PM] => Naresh : Should I buy Digital Globalsoft now?
[05:15:38 PM] => Naresh : Should I buy Digital Globalsoft now?
[05:15:53 PM] => KS : No.
[05:16:06 PM] => Koppikar : Please advice me on cement scrips (ACC, Gujarat Ambuja).
[05:16:47 PM] => KS : Buy Gujarat Ambuja for long term. In the immediate short term the coming quarterly results have to be watched. So provide for stop loss. Long term both ACC and Gujarat are good, looking ahead into the next four years.
[05:17:09 PM] => Balakrishna : Your outlook on Cipla?
[05:17:21 PM] => KS : I would wait to see the match between present downtrend in the stock and the next quarterly result.
[05:17:51 PM] => Manish KR : Which industry can outperform the market expectations in next two quarters?
[05:18:04 PM] => KS : IT
[05:18:15 PM] => Guest 64 : What's the next resistance for Sensex?
[05:18:28 PM] => KS : 3575
[05:18:40 PM] => Madhavan : Sir, What'll be the effect of APM dismantling on Reliance Petro?
[05:19:05 PM] => KS : Until Reliance Petro builds its own petrol stations, it would not be able to tap the marketing margin. Also for sale of its product it is dependent on others now. Net effect currently negative.
[05:19:25 PM] => Narayana Swamy : Dear Mr. Seshadri, any multi-baggers in your list?
[05:20:05 PM] => KS : The days of momentum trading are over. Multi baggers are there in growth scrips. It was there in Ashok Leyland, M&M, Bajaj Auto and Archies. Look for growth companies and catch them cheap. Right now I have none to recommend as most of them have already run their profit run.
[05:20:32 PM] => Manohar : How do you foresee the FMCG sector growth this year?
[05:20:44 PM] => KS : Answered elsewhere.
[05:21:10 PM] => Burua : Please suggest some short-term buys.
[05:21:29 PM] => KS : Zee Telefilms, Hindustan Inks.
[05:27:50 PM] => T D Joshi : Should I enter BPCL & HPCL at current levels? Or I should wait for correction? Do you anticipate any correction in immediate future? What upside level do you foresee for BPCL & HPCL and after how many months?
[05:29:03 PM] => KS : Upside levels are difficult to predict due to PSU sell out conditions. There has to be a correction in the immediate future. Never the less technically, the scrips are entering new virgin territories. Id you do not want to miss out you should enter. But keep stop loss. If profit booking starts you run considerable risk for your stop loss may not get executed effectively.
[05:35:06 PM] => Joshi : What is your opinion for investing in HZL & EIL what high levels can these stocks touch and in how much time?
[05:35:18 PM] => KS : Get in to EIL with stop loss at Rs 240. There is quite some up side potential may be Rs 300 to 350.
[05:35:28 PM] => HZL will have to be examined in detail before an answer can be given.
[05:38:02 PM] => Ramesh : What are your best picks for 6-9 months range?
[05:38:17 PM] => KS : Zee Tele and Infosys when it finds the bottom.
[05:41:46 PM] => Rajeev : Possible potential in NALCO?
[05:42:00 PM] => KS : If you are considering very long-term, modest potential. A forecasting exercise is required. So no better answer than that!!
[05:45:47 PM] => Srinivas : MRO-TEK - Should I hold this scrip currently?
[05:46:04 PM] => KS : I do not see much market power in the stock.
[05:49:42 PM] => Rajeev : Your views on Unichem?
[05:49:54 PM] => KS : On technical grounds you may as well sell out, if possible, close to Rs 210.
[05:52:31 PM] => Ramesh : How would we know when the scrips have reached the bottom?
[05:52:50 PM] => KS : The best bet is to follow technical analysis columns. A commoner cannot make it out.
[05:58:16 PM] => Joy : Sir I bought compudyne winfosystems at 61 and sail at 5.30.Please comment.
[05:58:30 PM] => KS: Compudyne will see resistance at Rs.83. Hold with stop loss. At Sail average at Rs.4.40. It is a long term investment. Book profit at Rs.5.80 unless you want to hold for very long.
[06:02:43 PM] => Myiris : Thats the end of the chat session.
[06:02:52 PM] => Myiris : We thank you all for your participation.
[06:03:05 PM] => Myiris : Our thanks to Mr. K. Seshadri for sparing time to answer all the queries and also for his valuable inputs.
[06:03:16 PM] => Myiris : Hope to see you all again soon.
[06:03:24 PM] => Myiris : Till then its bye from us.
