Nifty at 10,000 was sustaining like it would breach more levels in upward trend but due to some Geopolitical conditions, nifty has now fell almost 4 percent from its highs. While mid-cap and small-cap are also facing tension due to steps taken by Sebi against some companies and taken few of them in its shell company list. This both activities (giopolitical tension and shell companies) have changed the whole market trend for sometime. However, i don’t think that tensions between USA and Korea have any solid future. But a investor at this time should be cautious about their investments.
After the trump won the elections, it was expected that it would affect the overall exposure of Domestic companies to USA, which is now can be seen in changing market of Pharmaceuticals in USA. One of the common reasons for domestic pharma companies facing issues is of Pricing pressure in USA. Issues oberserved by USFDA in many pharma companies is also the reason for depreciation in margin and profitability of companies. Another domestic reason for same is of GST which had effected the storage of stocks of many companies.
Although, we can say that pharma companies are facing issues same as telecom companies where pricing pressure, quality level have effected the whole business modals of telecom companies. But comparatively, pharma companies are in good state because most of them are earning profit from their operations. However, i feel pharma companies still have little expensive valuations than telecom companies. And this is mainly because of pharma stocks have already performed well between 2010 to 2015. Although, at present valuations i would advice to avoid this sector for short-term.
Real estate sector
JP Group has again highlighted his name after NCLT announced Jaypee Infratech as Bankruptcy and ordered major steps against company. Earlier, RBI had published a list of NPA Accounts comprised 12 companies among which jaypee infra was one of the name. After that, stock faced serious selling pressure. But after few days of this news, it get recovered and made a new 52 week high. Now after this NCLT order, stock is again facing serious selling pressure.
However not only Jaypee infra, many other real estate companies are facing problems in their earnings. Recently, HDIL faced same issue of NPA account against its subsidiary. And that’s why, you will find only few companies in real estate sector having good growth and better margins.
Even now, Jaypee infra can not be recognized as fully diluted or bankruptcy because a 270 days revival plan or advance payment of IDBI bank’s debt can be the solutions. From investor point of view, the basic thing that shareholder can do from my advice is to continue its holding and try to assume their investment as dead investment in Jaypee infra. Maybe, there could be chances that your money would get recovered in long-term or your investment turns into positive. However, who are thinking about taking risk by investing in Jaypee Infra can take risk but do this when levels would be suitable. A high risk taking investor can try to enter in this stock around Rs.10. But remember, avoid any bulk buying.
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