Indian markets have witnessed one of the sharpest declines in the past week due to vicious cycle of unwinding of leveraged positions, coupled with liquidity crisis, resulting from $30 billion being locked in IPOs (initial public offerings). We firmly believe that the sharp declines in stock prices are not a reflection of any significant adverse impact on fundamentals and provide a very attractive opportunity to buy. The pain resulting from unwinding of leveraged positions seems to be completely behind us.
Real estate, metals, power and oil and gas are the key sectors that have witnessed one of the sharpest declines in the past week. We believe that the stocks from these sectors that have been significantly battered down should be bought into as they are likely to offer one of the highest gains on rebound. We reiterate our Sensex target of 25,500 by December 2008.
Housing Development and Infrastructure Ltd, Sobha Developers Ltd, Lanco Infratech Ltd, Ashok Leyland Ltd, Tata Tea Ltd, Tata Steel Ltd, Mahanagar Telephone Nigam Ltd, Reliance Communications Ltd and Sesa Goa Ltd are some of the key stocks in our universe that have been fallen by over 20% in the last week, offering an upside of over 50% based on their fair value.
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