Play This Market Selectively

There is an old adage that says that “the difference between stumbling blocks and stepping stones is how you use them.” This is broadly the theme of our cover story. As a tumultuous 2012 drew to an end, there were great hopes of a good 2013 ahead. It has surely turned out to be that way so far, and the markets have been behaving like there’s no looking back. This has been true not just on the domestic front, but also globally.

On the domestic front, the return of Chidambaram to the Finance Ministry paved the way for the rolling out of reforms. The government unleashed a spate of reforms and the markets took note of them, pushing their way up. Expectations started building up, and with good reason. There were hopes of a good corporate performance, an interest rate cut, a pickup in economic growth and moderation on the inflationary front.

Globally, from worries of the US tipping over the ‘fiscal cliff’ to the seemingly unending problems in the Euro zone, every negative element has seemingly been either brushed aside or has disappeared into oblivion.

But looking at the recent developments, everything seems to have been like a mirage; the rate cuts have been inconsequential, inflation is seeing no moderation, corporate performance hasn’t been very great of late, and adding to all this is the political uncertainty. Economic data points, particularly the burgeoning Current Account Deficit (CAD), has come to haunt us like never before. The global scene isn’t very different either. European worries rear their heads every now and then, while in the US, ups and downs have fallen into a pattern in the economic lifecycle.

But having said that, one also needs to look at the way the markets have been behaving. The US markets are on a tear, with the benchmark indices scaling lifetime highs. On the European front too, the markets have been consistently rising over the past four months. Liquidity seems to be in plenty, and that is probably keeping the markets on the higher side in these regions.

On the domestic front, the situation seems to be getting worrisome. Investors have been wary of the markets for various reasons as enumerated above. But is it really a time to step aside and wait for the situation to improve? Well, we have always believed in providing our readers with the best of the opportunities to cash on. While many are sounding a note of caution, we are looking at it as an opportunity to ‘cherry pick’ some winning stocks. Our cover story for this issue presents a detailed analysis of the various factors that are currently hampering investor confidence. While the consensus is on how bad the situation looks, we present our view, which could help you believe in what we think is a situation that brings to you the opportunity to pick some reasonably good stocks at decent valuations.

Our editorial has also put together the reasons why gold still looks to be shining bright and how it is poised to do well going forward too. As we step into a new financial year, we present to you two report cards on the year that was. One gives you a broad perspective of how the equity markets have fared over FY13, while the other tells you about the performance of mutual funds during the last financial year.

As always, we bring you three stocks which are fundamentally strong and present a good opportunity for returns going forward, which have been covered under our Choice Scrip (Dr Reddy’s Laboratories), Low Priced Scrip (Vimal Oil & Foods) and Analysis sections (Geometric Ltd). For those who have been following our last two sections (Hot Chips and Gossip), there is a lot new to look at. But remember, these are purely speculative, short-term calls.

Evaluating public sector enterprise for their merit has been a tradition that DSIJ has been following over a long time. Since the past five years, we have been honouring the constituents of this very strong pillar of the economy (the PSUs). This has been our small way of doffing a hat to the doyens of the Indian public sector, and we at DSIJ, take immense pride of having been able to do it consistently. The 4th DSIJ PSU Awards were held on March 23, 2013 in Delhi. The Hon. Union Civil Aviation Minister, Chaudhary Ajit Singh’s presence as the chief guest this year added a shine to our efforts in according recognition to the most powerful engine of growth of the Indian economy. I would take this opportunity to thank each of the chiefs of all the leading public sector enterprises who graced the occasion with their presence. I would also like to congratulate the winners for having topped the charts in their respective categories.

Let me round up by asking you for your valuable feedback on the issue once you have gone through it. Please write back to us on comment@dsij.in. Here’s wishing you a Happy New Financial Year!