Important Update & Next Picks - 22 Jan 2008

Friends,

So we have just seen a Mega drop in the markets. I believe this is nothing to worry about. All the stocks that we picked on this blog are still in profits.

Additionally this is a right time to BUY as the growth story has not gone away.

As expected the markets went through a good level of correction, possibly leaving some of your investments in the RED.

I believe that the markets should now bounce back from this level. I do not see a lot of downside left (at the most there might be another slow correction) in the market. The fact that the US might have a Fed rate cut to boost their economy will only bear good impact on our markets plus the strength of our economy is contact.

I am inclined to enter the market at the current levels and suggest to increase your portfolio size by at least 20% at this stage (if your portofilo size today is 1 lac then buy into the market with another 20K).

Next Pick
1. ICICI Bank - At current levels of INR 1173.
This is a long term story. Just buy it and forget it for more than a year. The reasons that justify this are that it's ICICI Direct business is looking at value unlocking by offering 15% of the companies stocks as an IPO later this year (ICICI Bank will continue to hold the remaining 85% of ICICI Direct post IPO). They might then look private equity placements which will only increase the value for ICICI Bank. It must not be forgotten that their Insurance business (Prudential ICICI) is still unlisted where they hold a 74% stake and the ICICI Financial Services business.

2. Reliance Petroleum - At current levels of INR 171.
This a good opportunity for you to increase your stake in the company, if you have held some since lower levels. For new investors this can serve as an entry level as well, the stock must see good levels later this year.

3. In fact I do not mind adding some more of ISPAT at this level (INR 43.80), as my entry price is low and the story in ISPAT is still intact.

Important Note
I will now change the frequency of postings from frequent to in-frequent to ensure that this remains a pure long term picks only blog.

There will be no more short term pick calls on this blog but as and when there is a good long term story that I find it will be notified on this blog. The only thing I can say is that investing larger sums for longer terms has proved to be more beneficial than small amounts for shorter terms, especially for people like us who have a full time job to do.

Final word
I would repeat that 'do not let **ALL** your money rot in the bank. Risk it to give it a chance to grow' and 'do not sit on profits endlessly expecting to see them going in only in UPWARD direction', book profits whenever you have made a 20% profit to some percentage of the holding.

Cheers
Tarun

P.S
I hope once we tide over the current fall, you will ensure that the 5% of profits you made from this blog is put to a good cause before the end of this financial year.