The Reserve Bank of India cuts key rates

The RBI (Reserve Bank of India) has cut the repo rate by 50 bps to 5% and the reverse repo rate by 50 bps to 3.5% with immediate effect. The RBI is trying to help the economy grow, specially the housing and the construction sectors, by cutting key rates. This would force the banks to reduce interest rates. You should expect some small upward movement in stocks of realty and construction companies tomorrow. You should also expect the Indian markets to stabilize tomorrow. There could be a minor upward movement too.

Tata Steel

I would still like to stick to my recommendation of Tata Steel. Tata Steel announced its recent quarter results recently and it surprised the markets with a rise in net profits. There were apprehensions and market speculations that Tata Steel could have gone into the red because of losses at Corus UK. However, Tata Steel has managed to buck the trend. This is inspite of the meltdown and the falling prices of steel the world over. Demand from China has slown considerably. Tata Steel is presently available at Rs. 155 ($3) per share and it is available at a very attractive price. I am still bullish on the stock.

Reliance Communications: Buy

Reliance Communications is available at Rs. 155. The year high/low is 610/147 and the stock had crossed Rs. 750 in the last 18 months. This is India's fastest growing mobile company and it is growing in both CDMA and GSM segments.

From a 2-3 year perspective, I expect the stock to deliver more than 100% returns. In the short run, in another six months, I expect the stock to deliver 30% returns.

A sure pick.

Buying DLF

I would suggest buying shares of DLF Limited at Rs. 157 for a short term target of Rs. 220. It looks good for the long term too.

Investing in Recession: Kraft Foods

I don't know how many of you are really tracking the stock markets these days. However, I do know that the stock prices today are quite unrealistic and are a goldmine for the astute, long term investor. You would be surprised to know that the stock price of Kraft Foods, which is listed on the New York Stock Exchange [NYSE] has traded lower this year than the price that the legendary investor, Warren Buffett paid for it last year.

If you look at what Kraft makes, then it beats your common sense how this company could suffer so much in a recession. So, one lesson to remember, while investing in recession, is to keep in mind that stock prices are sometimes beaten down much more than their intrinsic worth.

News Flash: Satyam Computer Services

I read this on www.sharekhan.com but they have got the news feed from Reuters. The flash is that Satyam Computer Services or Sify Technologies on the NYSE has been banned from business with the World Bank.

http://sharekhan.com/News/DetailedStory.aspx?NewsID=2789330c-3e08-4b9e-8846-d6cbba4e9b41

The piece states that this had nothing to do with the current fiasco at Satyam but it only goes on to show what a problematic company it could be. I have seen people asking at various mailing lists on stocks whether it would be a good time to buy Satyam as all the negatives have been built into the current price. I would not advice anyone to buy Satyam.

What is the Opportune Time To Buy Stocks?

Every time, there is an economic depression, specifically something like the present global slump, which is the second biggest in the century, people are going to lose all sense of reality and confidence and claim that depressed markets are not the right time to enter them. I would beg to differ. I understand that recessionary markets require a lot of guts and very deep pockets but at the same time, I would also like to state that when stocks are at multi-year lows, it is the time to enter right away. I know there is risk but with intelligent planning, the risks are reduced and the rewards really multiply.