Bears are here to Stay; but Speculators have enough oppurtunities

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The Markets closed on a high yesterday, but experts in the financial world are suggesting Bears are here to stay. JP Morgan raised its bid for Bear Stearn which pushed DOW Jones average to higher levels at closing on Monday. A few other Asian markets were also trading higher on Monday. But experts suggest that their is lack of sufficient enough good news in the market to bring back the bulls at full pace. The big Financial institutional investors are still struggling with the credit crisis and show no signs entering BSE or NSE any time soon. So here are few recommendations for various investors.

1. Speculators: There is just enough good news in the market to book some profits, but keep an eye on stop loss. Here are few recommendations for today:
Texmaco : 1360, 1365, 1370 Stop loss 1350
Exide Industries: 67, 69 stop loss 60

2. For long terms investors it time to re-align your portfolio with long term outlook. There are strong oversold stocks rite now, a few recommendations for long term buyers:

Reliance Industries
Reco price: Rs 2,346 long term Target price: Rs 3,198

IndiaInfoline values the exploration and production (E&P) business of RIL at $35.2 billion (approximately Rs 1,40,800 crore).

Globally, gross refining margins (GRMs) have been on a sustained uptrend in the last three years with intermittent blips. RIL, with its complex refinery, has gained significantly by registering GRMs $5-7/bbl above benchmark Singapore GRMs.

The brokerage believes that the uptrend in GRMs would continue over the next couple of years as demand supply scenario remains tight. Based on the optimism, IndiaInfoline has valued RIL’s refinery business at $22.8 billion (Rs 91,200 crore) and its 70 per cent stake in RPL at $17.1 billion (Rs 68,400 crore).

Reliance Capital
Reco price: Rs 1,441.60
Current market price: Rs 1,327.10
Target price: Rs 1,962
Upside: 48%
Brokerage: Indiabulls


Reliance Capital has been consistent in recording impressive growth numbers for all its business domains. It has been able to maintain a balance between the various businesses. Reliance Capital has recorded a 231 per cent y-o-y increase in the new business premium to Rs 1,390 crore. Reliance General Insurance too continued to grow fast with a 151 per cent y-o-y increase in the gross written premium to Rs 1,530 crore.

While the asset management company is consistently increasing assets under management (AUM), the life insurance company alone added around 400 branches in the third quarter. Further, Reliance Money, in less than a year since inception, has established around 4,400 outlets.

Indiabulls has used a target price-to-book multiple of 2.5 times for the consumer finance business, thus valuing the division at Rs 177. The Broking business has been valued at Rs 125 on the basis of a target price-earnings multiple of 25 times.

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