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S. Vaidya Nathan

SAIL (Rs 40): A few months ago, SAIL would have been viewed as the most unlikely candidate to propel the market. The rally in steel prices had, no doubt, improved its fortunes.

The stock had also recovered from its sub-Rs 10 levels. But over the past one-and-a-half months, it cantered past the Rs 50 mark and subsequently dipped on selling pressure. The earnings numbers may be good for at least the next two quarters.

With its inclusion in the Nifty, trading interest has perked up. The stock also appears to be caught in an operator-driven orbit, evident from highly volatile price trends.

Investment action: Sell, especially on strength.

Maruti (Rs 229) : The star listing of 2003 has had a dream run, its price zooming 83 per cent from the IPO price of Rs 125. Its scale of operations has received a significant boost, with July sales growing at 70 per cent, year-on-year.

This followed a strong first quarter, when volume growth was about 43 per cent. Expect bumper earnings for the July-September quarter.

Investment action: Hold. Any further run-up in the homestretch to the earnings announcement in October can be used to book profits partially.

MICO (Rs 6,929): Perhaps the strongest story in the auto ancillary sector, the company is still ramping up its scale of operations. Its rich cash flows should help tide over any difficult period (it is now on a roll) smoothly, as has been the case so far .

Investment action: Book profits partially to capitalise on the sharp run-up in prices. Remaining holdings can be evaluated a quarter or two down the line.

Indian Oil (Rs 363): Oil sector stocks have added the most by way of market capitalisation. Indian Oil Corporation, along with ONGC and Hindustan Petroleum, has been at the forefront. A deregulated market environment, good trends in demand and higher refinery margins have pepped up its profitability and earnings growth. The outlook is encouraging.

Investment action: Hold.

Bharti Tele-Ventures (Rs 64): Despite mounting competition, it is well set to emerge as a major telecom player from a long-term perspective. Customer additions look impressive, with its mobile subscriber base approaching the 4-million mark.

Well endowed with equity resources, a further push for revenue growth should not be a problem. It will stay a revenue story for a few more years. But the cash profits in the last two quarters, amidst intensifying competition and pricing pressures, are encouraging pointers.

Now, the stock enjoys a position similar to that of Zee in the 1995-2000 period. It is the prominent avenue to invest in in the telecom sector, in much the same way as Zee was then the only window to the entertainment/broadcasting sector.

Investment action: Hold.

Punjab National Bank (Rs 165): A much sought-after play in the banking sector, Punjab National Bank scores high on key operational parameters, such as low NPAs, interest spreads, capital adequacy, cost of deposits and deposit/liability growth.

In this backdrop, it is not surprising that it has emerged as a prime finance-sector opportunity along with SBI, HDFC and HDFC Bank.

Investment action: Hold.

Grasim (Rs 620): The stock has almost doubled over the past four months — a significant jump for a company of its scale. It is set to emerge as the top cement play in terms of volumes (Gujarat Ambuja will stay the best efficiency play for a long time to come).

With the cushion of its cash-rich viscose staple fibre — a monopoly business — Grasim is well placed to pursue organic and inorganic growth in cement. It is also a restructuring story, along with Indian Rayon (yet another prominent stock in the recent bull run) and L&T Cement Company (once the open offer is through).

Investment action: Hold.

Tata Motors (Rs 262): The stock enjoys a level of fancy that appeared unlikely for much of the past five years.

The recovery in the commercial vehicles sector has, no doubt, helped. But stringent cost control and, more important, a fairly strong base in the passenger cars market, after a poor start, has lifted Tata Motors' profitability.

This is one story that promises to get better. The stock could have more upside potential despite the sharp run-up over the past few months.

Investment action: Buy.

Lupin (Rs 456) : The bullish phase has bypassed the pharmaceutical sector, especially the frontline Indian and MNC pharma stocks. But a clutch of mid-cap pharmaceutical stocks — especially ones with a presence in bulk drugs and with the potential to scale-up on exports — Aurobindo, Shasun Chemicals, IPCA Labs and Divi's Labs — have been on a relentless uptrend. Lupin has been star performer.

Equity placements with strategic investors have helped.

Investment action: Hold

Elgi Equipment (Rs 45): Engineering industry stocks — ranging from bigwigs such as ABB, Siemens and BHEL, down to small players such as Veejay Lakshmi Engineering — are having a field day. Elgi Equipment, a small-cap stock, has, however, been the star performer.

Once highly fancied, it appeared to have dropped off the investors' radar until six months ago.

Driven by improved levels of industrial growth, demand for its products has looked up. So have export prospects. The stock has risen three-fold in 2003.

Investment action: Buy (high-risk); early investors who entered the stock at sub-Rs 20 levels can contemplate at least partial profit-taking.

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