Now it apparent that market is sliding down, and the bull run has ended on account of various factors. It will take some years to recover and go up. I have read somewhere that stock market has 8 years cycle..i.e. 1992,2000 and now 2008, (if someone can confirm it, may be with varying years say 4 or 14 years).
Therefore, one can cherry-pick stocks on valuation basis. I intend to accumulate following Large Cap (Index Constitutes) scrips :
Reliance Industry : Being the market leader, It will be difficult not to pick RIL at lower price.Reliance Industry still offers much potential to grow from here. Reliance Refresh appears to have started working smoothly. The oil flow in KG-basin will make significant earning possibilities. Reliance Petro (RPL) will also provide good portion of earning (if RPL pays dividend). Reliance Industry may well go below 1500 in months to come.
Tata Steel : No doubt on account of acquisition of Corus and thereafter slowing down demand of steel has made TISCO to touch year’s low around 435. However , in long term , 3-5 years Corus debt will be wiped out and steel will be booming as per the steel demand cycle, TISCO will be paying handsome returns in 3-5 years time frame. Also dividend yield is reasonable , considering dividend payout was Rs. 16-00 for 2006-2007. TISCO still can go near 350 where it will give good opportunity for buying.
State Bank of India : After falling of private banks in US and Europe recently, suddenly PSU banks seem more safe. SBI , being banker for the Central Government, has dominating presence in the financial sector of India. At CMP around 1400, SBI is having PE of 9 which is reasonable to give good returns in future.
Larsen & Toubro : L&T is perhaps the most expensive of blue chips. At CMP of 2500 it is trading PE of 31-32, and still has much left for discount. But nevertheless, it has good growth potential.
I am not able to put any particular price target for these scrips, but 20-30% return is expected from here.
There is still many good mid-cap and small cap companies, but I will write it down about it later.