Buy Power Grid

Power Grid Corporation of India 100.40 0.45 (0.45%)

PSU's historically have never been aggressive in the past and hence, the valuation they command compared to their private peers have always been on the lower side. Powergrid at current valuations is reasonable to accumulate. With a PE of 17.4 and dividend yield of 1.5%, its certainly a stock to accumulate in your portfolio.

Hold for long term with an expectation of 20-30% YOY growth.

Sell Orchid Chemicals

Orchid Chemicals 302.800.45 (0.15%)

Pharma stocks have given decent return in this run up. However, most of them look expensive at this point. Technically, stocks like Orchid chemicals, Wockhardt and Biocon look strong on the chart. However, it is prudent to exercise caution and sell part of your holdings in these stocks. Long term investors can however continue to hold their positions in Biocon.

Buy Repro India

Repro India 128.70 -0.65(-0.50%) NSE

Repro India is clearly showing bullish signs on charts and is a great buy at this point. Buy and hold for 3 months.

Fundamentally, it makes sense to accumulate stocks with good dividend yield and high book value. Repro with a P/B of 1.09 and dividend yield of 2.34% is a great pick at this point.

However, stay invested for a capped upside of 5-10% more on Sensex post which we should see another leg of fall.

Next crash in waiting!

Sensex 20445.04 +375.92

Nifty 6143.4 +113.45

Looking at historical PE charts, one can safely conclude that Nifty or Sensex is nearing its peak. It may take another year before a crash, but its bound to happen.

Current PE of Nifty is around 25.48 and the highest PE Nifty has ever commanded from 1999 is 28.47. It is to be noted that Nifty touched a PE of 27.3 on Jan 15, 2008 around the same time when I first predicted a crash. Current levels are more or less near to the peak. Will we see a downside anytime soon? Well, my sense is that Investors will continue to buy for some time before selling actually begins. However, current levels are certainly not conduisive for long term investment.

Invest for short term(3-6 months) and watch for critical levels explained.

Sensex Overvalued

Sensex 17472.56 +11.98

This is probably not the best of the times! With Sensex ruling at over 21 PE, this is certainly not the best time to invest. While one cannot rule out a 10-15% rise based on historical PE highs, BSE 100 stocks would certainly be under pressure.

Having said this, this is possibly one of the longest recessions. I've said earlier in my posts before that Sensex still has another leg of fall before the bull run begins. So, we should see the start of the last leg anytime soon.

Invest selectively in stocks at this point.