KYI: Market tips to play the Nifty safely

ALSO READ See what other experts are saying about markets See what FIIs are saying about the markets See what Udayan Mukherjee is saying about the markets

Forget a Santa Claus rally, the street would now be content if the market would just stem the fall and settle. Over the past 10 days, the Nifty has lost nearly 7.5% to close at 4651 on Friday. Investor confidence is at its least and while large caps are just about managing to keep their balance, mid- and small-cap stocks have taken quite some beating. In such a situation, where should you park your capital? Should you be shuffling your portfolio or how best can you play the downturn in the Nifty? 

Moneycontrol.com initiative Know Your Investment roped in Ambareesh Baliga, COO of Way2Wealth, to answer the queries you sent us on our facebook page. Check out his comments!

Manish Bedi: What is your call on Nifty now?

A: As Nifty has convincingly broken below the important trading band of 4700- 5200, the next important level in sight seems to be 4200. The bias is mostly negative as of now and any bounce back would be utilized by the traders to book out.

Denish Farsanwala: I would like to buy L&T. What is the perfect price to buy it at?

A: Capital Good stocks have witnessed a severe beating after the dismal IIP data. L&T has been the top loser and has corrected 43% so far this year. The current level seems to be attractive, but a further fall of 15-20% cannot be ruled out looking at the state of the market. My advice would be to allocate nearly 40% at current levels and balance on further declines as you should remember that it's next to impossible to catch the bottom.

Pushkar Maniyar: Which share is a must-buy below Rs 100 with a timeframe of six months?

A: I like Dish TV as the media distribution space seems to be a convincing story for India. Also, any progress toward FDI in this space will be an added advantage. CEAT is also a good bet at current levels, considering the cooling off in rubber prices and expected replacement demand.

Arjun Aggarwal: I have 700 shares of SpiceJet at Rs 34.70 and 900 shares of TVS Motors at Rs 57.40. What is your call on both these stocks?

A: With Kingfisher in trouble and Air India tottering, the other better placed airlines like Jet , SpiceJet and Indigo will be able to take advantage of the situation. Whenever a particular sector is in trouble, buy the leader in the space if you believe that the sector would rebound. Airline space always goes through this cycle though it's never an investment. Since you have bought at higher levels, I suggest you to average at around Rs 16-17 so that you can book out on the up-cycle.

TVS Motor- you could hold as it's doing a catch up with the leaders.

Athul Jayaram: Which is a good safe stock to be invested in?

A: In the current scenario, only defensive like FMCG and Pharma could provide some cushion. But in uncertain markets, cash is king.

Maninder Singh Chadha: Will the downward trend continue to reach 2008 levels?

A: I don't think so. RBI's statement that monetary policy is likely to reverse cycle; we could see softening of interest rate in the second half of 2012.  At the broad index level, I don't see 2008 levels, but at stock specific level, we are already at those levels or lower for about 35% of the regularly traded stocks.

Aswin Muthiah: IT sector companies haven't taken a big hit in the recent fall. How does the IT sector look? Is this a positive sign in the sector?

A: No, IT sector movement currently is based on two variables - currency and the business environment. Currency depreciation is already priced in at about Rs 54, hence we have seen the IT sector outperform in the last few months. The business environment is getting tough with euro zone uncertainty. This will hit performance and along with that, if the rupee starts appreciating (which it should in the next four-six months), you could see the IT space underperforming.

Sasidharreddy Chinnapareddy: I am holding 3000 shares of Suzlon at Rs 21. Should I exit it or hold it for another 3 months?

A: Suzlon may not move in the next three months. The company is highly leveraged and unless that is set right to a certain extent, don't expect a positive bias for the stock. The promoters too recently sold (or were forced to sell) part of their holdings at Rs 25, and this has been weighing to the sentiment. Though the company has got a steady flow of orders in the last few months, the performance for the next three-four quarters may bolster sentiment. Hence, you will need to wait al least nine months to 12 months for any worthwhile upside.

Abhaya Suman: I have 1000 shares of Dish TV at Rs 58; 1000 shares of Kingfisher Airlines at Rs 23.10; 500 shares of IDFC at Rs 104.15; 250 shares of Jubilant FoodWorks at Rs 757. My holding period is for six months to a year. Should I hold these shares or accumulate profit/loss? Also, can you suggest some stocks in IT and pharma sectors with a holding period of six months to a year?

A: You can continue to hold Dish TV. Jubilant FoodWorks has been showing resilience, but I am not too confident that they will continue growing at the same pace. Book out at least partially. In pharma space, I would recommend Biocon , Cipla or Dr Reddy's . Utilise any airline FDI news flow to exit Kingfisher - don't see a move beyond Rs 28-30 levels there. Continue holding IDFC. I wouldn't recommend IT sector at this point as the business environment seems difficult. Infosys management too has indicated that, but the currency move is supporting the space right now.

Chaitanya Deshmukh: Is it the right time to invest in infra companies, mainly JP Associates and HDIL ?

A: Infra companies have seen a significant fall but it's difficult to say if bottom has been reached. Here again, I would advice investing a portion now and accumulate some more of further dip. The trigger for this space would be the interest rate cycle moving down and end of Government policy slumber.

Naveen Agarwal: What is the future of the 'ADAG' group of stocks?

A: This group has been flooded with adverse news flow since the last two years. The recent one that the group had been using a foreign vehicle to invest in stock market seems to be the final nail. One should prefer to stay away unless you believe in High Risk/High Return.

Gaurav Baranwal: I have 500 shares of DB Realty at Rs 73. What should I do with this stock?

A: They have lost credibility and this is the most important aspect for any realty company. With uncertainty surrounding their projects, I doubt whether they would be able to show any performance in the foreseeable future, especially when the sector itself is expected to go through a bad phase. Book your losses.

Chintan Mehta: I bought 200 shares of Shree Renuka Sugars at Rs 33.50. The stock has touched Rs 25.90 today. Should I continue holding the stock or sell it?

A: Sugar is a cyclical sector and is currently going through a downtrend. Renuka, which was among the promising stars till recently, shocked all analysts with the abysmal numbers last quarter. One wonders whether they have were building up a bubble. Since you have bought recently, you could take the risk of the next two-three quarters and watch closely their international business performance.  If there are no signs of improvement, book a loss.

Mahima Gargi: I bought ACC at Rs 11173 and HUL at Rs 393. Should I sell or hold them? My timeframe is six months.

A: ACC you should book out as the cement outlook still looks bleak. But HUL you could continue holding as it is expected to outperform as long as the markets are weak.