“GOLD”, when this word is heard anywhere around india, the speaker gets attention of all the ears around him. Gold is consider to be one of the preferred investment of savings in India. Gold Jewellery is highest consumed in India. Whenever i ask my elders what to of the savings, they would reply “Buy Gold”. I am sure many of my friends and colleagues would be facing that. Arent we creating some bubble in gold?? On the charts i was bearish and i am bearish on Gold since it hit 34000+ in last January and i did even post it on this blog. Second thing to gold is “Real Estate”. Last ten years inflation in India was majorily due to real estate prices. People became rich unexpectedly faster due to doubling and tripling of Land price in even less than a year of buying the property. A survey by a renowned agency said that saving in financial market droped from 8% from 2008 to just 2% in 2013 of total saving i.e., rest of saving is in either gold and Real estate. Buhh!!! arent we smelling a bubble in real estate??? It my view that when more than 80% of public is bullish in any asset of investment than we can expect a big move in prices on either side. Since we have seen a continuous upside in real estate segment, we can be bias on downside of the prices. On other side Gold is treated as a just a mere investment option in US. I just came across of the article of Ex. member of FED Mr. Randall S Kroszner who stated to our indian Journalist that they wont give more weightage to Gold at this level as their economy is recovering but yet not inflating. Gold is just the hedge against inflation for them. So we can make out that Gold demand in global market will decline so is the case India. On other side Equity has very less portion of ones saving in India, which gives huge opportunities on upside in the Equity. Technically, Gold has strong resistance at 28000/30350 where current rally could hault. Therefore, looking at inter asset analysis, Equity is the underperformer and we are bullish on it for LONG TERM
The Indian Power sector includes – coal, lignite, natural gas, oil, hydro and nuclear power to other viable non-conventional sources such as wind, solar, agriculture and domestic waste.
Currently, if we have a look at the Indian Power sector, the country is facing a deficit of 8.7% in 2012-13 and the peak power deficit was 9% indicating a huge gap between demand and supply of electricity due to the shortage of coal, problems regarding power plants and inefficient use of resources.
We believe that Indian power sector can be improvised if the government allows privatization in the coal mining, production processes and the coal plants are facing shortage of coal so if the government take measures to make the supply flow smooth then there will be increase in the production of electricity. Hence if the new government works on these issues and allows more share of private then there will be fast developments seen and the power sector will boom in the coming years by FY 2020. So we believe that it is the right time to invest in this sector.
As the markets are at all-time high, the valuation of nifty and sector has been stretched. So in the current situation which is the sector to invest were we still able to see upside is the question in everyone’s mind. To answer that question we have done simple analysis on the basis of PE. We have compared the Nifty PE with other sector’s PE. PE is valuation ratio of a company’s current share price compared to it’s per share earnings in other words it let us know whether it is currently overvalued or undervalued.
Nifty is currently trading at PE of 20.52 as compared to it CNX Pharma is trading at multiple of 40.45, CNX Media at 34.94, CNX FMCG at 34.22, CNX Auto 31.56, CNX infra 21.83, CNX IT at 20.97, CNX PSU Banks at 12.49, OIL and GAS at 12.65, CNX Energy at 14.01 and CNX Metal at 16.51. If we compared the Sector PE with Nifty PE, CNX IT, media, infra, pharma, auto and FMCG has been fairly value. We believe that Investors should look invest in CNX PSU Banks, Oil and Gas Sector, Energy Sector and Metal Sector were still upside is left.