KYI: What stocks must you buy or sell to get max returns?

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The market, experts say, are heavily overbought, meaning stocks have shot up to such levels that the fundamentals have been left far behind. This generally indicates a correction, but interestingly, the Nifty is showing no signs of a downtrend just yet.

Over the fortnight, the benchmark index has nestled comfortably above the 5500 mark, with returns of 3.4% on a weekly basis and returning 12% over the month! On a three-year basis, the returns from Nifty is above 100%! So what is the way ahead? Where should you park your capital?

Siddharth Sedani, AVP (Portfolio Management Service) at Microsec Capital answered investor queries sent to us on our Facebook Page . Check out his answers.

Below are the chosen questions and the answers from the expert.

Ashish Gupta: Is it prudent to purchase Kingfisher shares with a 3-4 month perspective?

A: KFA has high debts in its books and trying to take out a mid-way to restructure loans with the banks. Fund infusion by the promoter remains a crucial issue for effective running of the business. In addition, interest cost continued to remain higher on account of rise in debt burden. Although, the sector got few of positives like ATF imports and 49% FDI which improves long term growth. Hence, for medium-term, KFA should be avoided. 

Nikhil Bansal: I am a long-term investor. I have Reliance averaged at Rs 900 in five-years time. Where do you see the stock in next 12-months?

A: Reliance sold 30% stake in 21 fields to BP for USD 7.2 billion last year and has sought Government's permission to develop new discoveries and lift the production of existing KG-D6, which is a big positive for long term. Reliance being almost debt-free and having huge cash in the books enables the company to grow inorganically, going forward. Investors can expect 20-22% return from the stock due to improvement in GRM and boost in production of hydrocarbons.

Akshay Arora: I am a short-term investor. I have bought IOC shares for Rs 275. Where do you see the stock in next 12-months?

A: OMCs are victims of subsidy sharing mechanism. The kind of geopolitical issues that have cropped up between Iran and developed western nations indicate high volatility in crude oil prices going forward. IOC and other OMCs are going to feel the brunt of it. Domestically speaking, oil marketing companies don't have the privilege of selling diesel and LPG at market-regulated price which remains a big spoil-sport. Hence, better to switch over the investment in some other sector.

Vincent Pm: I am a short-term investor. I have bought Reliance Communication shares for Rs 95. Is it time to sell or I can see even more?

A: The company has been unable to post growth in bottomline over last several quarters. There may be some spikes in the stock's price, citing alliance with RIL and/or tower unit sale; these spikes should be used as exit opportunities.

Naval Kanojiya: I am short-term investor. I've purchased JP Associates at Rs 76. When should I sell it?

A: Since the investor being short term in nature, it is advisable to book partial profits in every rise. Quarterly results were largely in line due to positive surprise in construction division on account of dividend received from Jaypee Infratech and healthy volume growth in cement division. 

Mukesh Karanwal: I am a mid to long-term investor. I've bought NHPC during its IPO. When can I expect decent returns on my investment?

A: NHPC is a hydro-power producer and its capacity index was well above the benchmark, unlike the thermal power producers, leading to no loss of incentives. However, further capacity addition and commercialization of new projects remain big concerns to the company going forward. Hence, I would suggest that the investor switch over to Tata Power or some other sector to reap better returns.

Apurva Vadera: I've bought Aurobindo Pharma at Rs 130 about four months ago. It made a low of Rs 82 in December and currently is at about Rs 122. Should I hold or sell my investment?

A: Corporate governance issue persists which may remains an overhang. In the current quarter company reported improved quarterly performance but in the hindsight high debt of nearly Rs 3400 crore, lower visibility of earning and high forex exposure remains key concern to the valuation. Hence, sell on rally would be the strategy.

Surinder Sharma: What is your call on Suzlon Energy at current levels?

A: One should not buy Suzlon into investment portfolio as price movements are not based on fundamental parameters. 

Ravi Kunte: Can I make some descent short term profit on Prajay Engg at current levels?

A: It seems to be a micro-cap stock and financials suggest that the company has been posting losses since last three years, has negative cash flow and negative return ratio.  Better to avoid these kind of stocks.

Abhishek Gupta: I want to invest Rs one lakh (in equities) with time of one-year. Where should I look to deploy my cash?

A: Investor can deploy cash in equal contribution in stocks like Coal India , L&T , LIC Housing , Bharti Airtel , HUL , Bata India , RIL etc to reap handsome returns in next one year.

Joel Peter Lobo: What is your call on L&T and SBI ? At which level should one enter/exit those counters?

A: One should start accumulating L&T at Rs 1300 odd levels and SBI at Rs 2100 levels in a staggered manner. L&T is the largest infra (EPC) company and would be a big beneficiary of reversal of interest rates and increased infrastructure spending (capex) by the government. These stocks can earn 15-17% returns in a year. 

Narender Tiwari: I am a short-term investor. I have bought GVKPIL for Rs 20.15. Where do you see the stock in next few weeks?

A: The power generation company signed the FSA with Coal India for coal linkage for estimated 50000 MW power generation, which gave a strong boost to the stock price. It is difficult to comment on news-driven rally for short-term.

Viraat Mankad: What should I do with Coal India & Tata Steel at this level?

A: Both the stocks have strong fundamentals. So keep holding in the portfolio. Recent FSA agreement with power generation companies remain mildly negative for Coal India, but seems like a short-lived impact on the stock. The company has plans for commissioning of washeries till FY17 in a phased manner and even plans to aggressively invest in FY13 to boost output.

Tata Steel has good expansion plans of 2.9 million tonne going forward. Management expects that the steady performance that the Indian operation delivered in the current quarter to continue.

Ankit Agrawal: Should I subscriber to MCX IPO?

A: One should subscribe in the IPO. The Exchange strives to be at the forefront of developments in the commodities futures industry.