Contrarian Picks - For Risk Takers

Contrarian investing can at times pay handsome dividends, provided it is weighed properly against various considered inputs. The general consensus of the market is not to be discounted but at times you stand to gain immensely by taking just the opposite stance to that of majority of market participants. When financial institutions were falling like nine pins and every shade of investor treated them like lepers, Warren Buffett took a contrarian view. He went ahead and bought $ 5 bn preferred stocks of Goldman Sachs. One year down the line he grew richer by $ 3 bn.

There have been many instances of taking calculated and considered risk by contrarian investors and succeeding with a bang. Laxmi Mittal of Arcelor Mittal fame bought distressed steel plants around the globe when steel as a commodity was in slump and prospects looked bleak. Result of that brave contrarian investment decision is for all to see.

Coming to Indian markets as of now, to my mind there are some distressed stocks one can consider for contrarian investment. It should be done with a view that one is ready to average the same scrips at lower levels and hold for long term if short term view does not work out. Under no circumstances should one discard the stocks at loss if the trade goes unfavourable. Lets see some of these scrip in succeeding paragraphs.

Unitech

Buy the scrip at current market price ( closing price on 06 Oct was 98.75) for initial target of 160 to 180. If trade goes awry then keep accumulating from 83 to level of 60 in small packets and hold till its long term target of 320/330.

Suzlon

Buy the scrip at current market price (closing price on 06 Oct was 87.15) for initial target of 140. In case trade goes in opposite direction then start accumulating from 77 to the level of 70 in small packets and then hold for for its long term target of 320.

Rcom

Buy the scrip at 250 ( closing price on 06 Oct was 268.3) for initial target of 350. In case trade goes in opposite direction then start accumulating from 220 to the level of 180 in small packets and then hold for its long term target of 600.

PORTFOLIO ANALYSIS - SAMPLE 7 (J P SHARMA)

Presently we are going to do an interesting portfolio analysis of Mr J P Sharma where the choice of companies is rather fascinating. There is immense scope in this portfolio for impressive gains over the next one year. Shall we begin then?

Unitech
Holding 500 shares at an average price of Rs 83. Closing price on 23 Sep 09 was 109
6 mnth tgt- 160, 1yr tgt- 200
Since you are sitting on profit and market correction is expected soon, you may like to sell 50% of your holding at about 120 and release your capital. After the correction you may like to pick up Unitech at 75/80 level. Then hold your position for one year's target of 200.

Suzlon
Holding 500 shares at an average price of Rs 96. Closing price on 23 Sep 09 was 94.6
6 mnth tgt- 180, 1yr tgt- 320
Suzlon should be bought at every dip. So be ready to add to your holding in small packets till level of 80. Such accumulation in the scrip will pay you handsome dividends in one year. Sell your complete position once the scrip reaches the price target of Rs 320.

DLF
Holding 90 shares at an average price of Rs 343. Closing price on 23 Sep 09 was 423.6
6 mnth tgt- 700, 1yr tgt- 900
DLF may correct till 300 and may on extreme conditions go down as much as 250. You can keep a stop loss of 385 and keep holding your position. You may then re-enter the scrip at 300 for the price target of 900 in one year or so.

Bhartiartl
Holding 50 shares at an average price of Rs 612. Closing price on 23 Sep 09 was 413.5
6 mnth tgt- 550, 1yr tgt- 750
Hold your position in this scrip and plan to add to your position during the correction. Fall below 390 can take the scrip to 340/350. Buy 50 additional shares at 350. Hold the scrip for one year's target of 750.

Mundra Port
Holding 50 shares at an average price of Rs 610. Closing price on 23 Sep 09 was 537.5
6 mnth tgt- 800, 1yr tgt- 1100
Mundra port can slide down to 400 if it closes below 520. Double your holding if the scrip touches 400. Hold your position for one year's target of 1100.

RNRL
Holding 200 shares at an average price of Rs 140. Closing price on 23 Sep 09 was 88.15
6 mnth tgt- 145, 1yr tgt- 190, 2 yr tgt- 250
RNRL can correct to 70 once it closes below 83. Keep accumulating the scrip from 70 downwards till 60. Hold your position till one year's target of 190.

Alok Industries
Holding 1000 shares at an average price of Rs 22.45. Closing price on 23 Sep 09 was 22.7
6 mnth tgt- 33, 1yr tgt- 42
Alok Industries can fall to 15 level but you should keep holding your position. You should start accumulating at dips right from 19 till 15. You can then sell your positions comfortably at one year's target of 42.

SBI
Holding 60 shares at an average price of Rs 343. Closing price on 23 Sep 09 was 2142
6 mnth tgt- 2300, 1yr tgt- 3200
You have SBI at IPO price so just keep holding it till its one year target of 3200.

GMR Infra
Holding 100 shares at an average price of Rs 143. Closing price on 23 Sep 09 was 140.7
6 mnth tgt- 200, 1yr tgt- 260
GMR Infra may correct to 110. You may start building up your position from 110 downwards. Hold the scrip for one year's target of 260.

RPL
Holding 160 shares at an average price of Rs 146. Closing price on 23 Sep 09 was 130.4
6 mnth tgt- 200, 1yr tgt- 235, 2 yr tgt 290
RPL can move down to 110 during the coming market correction. But you should only think of adding to your present position. Sell only when the scrip touches 290.

NTPC
Holding 260 shares at an average price of Rs 198. Closing price on 23 Sep 09 was 208.8
1yr tgt- 300
NTPC looks quite dicey below 200. You have a choice to move out of this scrip at current market price and re-enter at 170. It may go down to even 150 level, but over one year it will surely touch 300.

PORTFOLIO ANALYSIS - SAMPLE 6 (KOTHIWALA)

Continuing with our series of portfolio analysis , now we have portfolio of Mr Kothiwala. He has converted most of his portfolio into cash and wisely so. We have to learn to take profit home, otherwise there is no point in investing our time and money in the stock market. But my only piece of advice to Mr Kothiwala would be to start assessing the different sectors and good companies therein, so that he can re-enter the market after the expected correction. Be that as it may, let us now begin to analyse the portfolio or what remains of it!

GVK Power
Holding 2700 shares at an average price of Rs 46. Closing price on 22 Sep 09 was 46.6
6 mnth tgt- 65, 1 yr tgt- 100
You may consider exiting from 50 % of total holding of the scrip at current market price. This will be on a no-profit-no-loss basis, and will give you the capital to re-enter at lower level. This is because GVK power may test 27/30 level in the coming correction. Buy back your shares at 30 and hold for one year's target of 100. Exit complete position once target is achieved.

JP Associate
Holding 500 shares at an average price of Rs 220. Closing price on 22 Sep 09 was 249.8
6 mnth tgt- 390, 1 yr tgt- 500
JP Associate can correct to 170 level. If that happens then pick up 500 additional shares at around 170 and hold your total position of 1000 shares. Sell your complete position at the target price of 500.

Suzlon
Holding 200 shares at an average price of Rs 90. Closing price on 22 Sep 09 was 100.8
6 mnth tgt- 180, 1 yr tgt- 320
Suzlon is a bright candidate to be in any portfolio for the next one year. Hold the scrip and keep adding to your position in small tranches at every dip till 80. Accumulate at least 1000 shares in your portfolio for next one year. Exit your complete position at target price of 320.

PORTFOLIO ANALYSIS - SAMPLE 5 (DILRAJ SINGH)

Today we will analyse portfolio of one Mr Dilraj Singh who is new to the stock market. It will be my endeavour to suggest the best possible way to maximise profit for Mr Dilraj. Hopefully in a year's time Mr Dilraj would have become a strong investor in the stock market. Here we go!

IFCI
Holding 220 shares at an average price of Rs 53. Closing price on 22 Sep 09 was Rs 57.65
1 mnth tgt- 65, 6 mnth tgt- 85, 1 yr tgt 115
You should book your profit once at 65 if IFCI runs up in next few trading sessions. If not, then try and buy 220 more shares at 45 level. Exit your complete position at the target of 115.

Suzlon
Holding 120 shares at an average price of Rs 100. Closing price on 22 Sep 09 was Rs 100.8
6 mnth tgt- 180, 1 yr tgt- 320
Suzlon is a very good buy to keep in your portfolio for long term. Keep adding to your position at every dip till 80. After that hold for one year to reap extraordinary profit.

PTC
Holding 50 shares at an average price of Rs 83. Closing price on 22 Sep 09 was 88.35
6 mnth tgt - 160, 1 yr tgt - 200
PTC may fall down to 70/75 during the coming correction phase of market. That shouldn't worry you because then you will have an opportunity to pick up more shares of PTC. Sell your position only at the target of 200.

Power Grid
Holding 50 shares at an average price of Rs 117. Closing price on 22 Sep 09 was 108.
6 mnth tgt- 160, 1 yr tgt 215, 2 yr tgt - 260
Power Grid can correct right down to 80 level. Keep adding to your position from 90 onwards till 80. Sell your complete position at 215.

RNRL
Holding 30 shares at an average price of Rs 76. Closing price on 22 Sep 09 was 90.65
6 mnth tgt- 145, 1 yr tgt- 190, 2 yr tgt 250
RNRL may correct to 70/75. You should keep an eye on it so that you may pick up more of this scrip at 75. Sell the scrip at its 1 year target of Rs 190.

GVK Power
Holding 50 shares at an average price of Rs 49. Closing price on 22 Sep 09 was 46.6
6 mnth tgt- 65, 1 yr tgt- 100
GVK Power is very weak if it trades below 44, since the chances are that the scrip may fall down to 27/30 level. Keep a strict mental stop loss of 44 and exit your position, thereby taking a loss of Rs 5 per share. Then pick up the scrip at 30 and hold for 1 year's target of 100.

PORTFOLIO ANALYSIS - SAMPLE 1(ABHINAV)

The reason why I have undertaken this particular exercise of Portfolio Analysis is simple. Here is the time to take hard look at your portfolio, if you have one. I am going to give answers to some investors who have been enquiring as to what to do with the present holdings in their portfolio. To start with this exercise let me take up the portfolio of one Mr Abhinav, who wants one year's view of his portfolio. His portfolio holding reads like this:-
3iinfotech
Holding 500 shares at average price of 75. Closing price on 26 Aug 09 was 88.6.
Resistance - 94.
1 mnth tgt - 114
6 mnth tgt - 135
1 yr tgt - 172
3iinfotech is in 2nd phase of Bull run and the correction for 1st phase of Bull run has already happened upto 50%. Hence it is an eligible candidate for hold. It needs to be accumulated at every serious dip till it reaches its 1 yr target.
Arvind
Holding 500 shares at an average price of 22.5. Closing price on 26 Aug 09 was 31.9.
Resistance - 35
1 mnth tgt - 41
6 mnth tgt - 52
1 yr tgt - 62
Arvind Mills has completed its 50% correction of 1st phase of Bull run and presently in 2nd phase of Bull run. It can be accumulated at every dip for its 1yr target of 62. Presently a strong contender for hold.
Dish TV
Holding 250 shares at average price of 38. Closing price on 26 Aug 09 was 48.65.
Resistance - 57.
1 mnth tgt - 65
6 mnth tgt - 75
1yr tgt - 103
Dish TV looks pretty to be held through its journey in 2nd phase of Bull run since the scrip has completed 50% retracement of its 1st leg of Bull run. Hold and accumulate in major dips till its 1 yr target of 103.
Mirc Electr
Holding 2000 shares at average price of 16. Closing price on 26 Aug 09 was 19.45.
1 mnth tgt - 23.5
6 mnth tgt - 26
1 yr tgt - 28
Mirc Electronics has completed 50% correction of its 1st phase of Bull run and is sailing in 2nd phase of Bull run. Hold this scrip till it achieves its 1 mnth's target of 23.5. After that wait for major correction and again pick it up at around 18 for its 1 yr target of 28
Suzlon
Holding 350 shares at average price of 110. Closing price on 26 Aug 09 was 93.6.
1 mnth tgt - 139
6 mnth tgt - 180
1 yr tgt - 255
Suzlon has also completed 50% retracement of 1st leg of Bull run and is well poised for substantive jump in its 2nd leg of Bull run. Hold for impressive returns. One can accumulate more at current level also for 1 yr target of 255.
Satyam
Holding 800 shares at average price of 136. Closing price on 26 Aug 09 was 110.2.
1 mnth tgt - 145
6 mnth tgt - 185
1 yr tgt - 320
Satyam needs to be held till 145 at least, but this has to be again picked up at regular corrections till it achieves its 1 yr target of 320.
GMR Infra
Holding 100 shares at average price of 136. Closing price on 26 Aug 09 was 142.9.
1 mnth tgt - 170
6 mnth tgt - 200
1 yr tgt - 260
GMR Infra can be liquidated initially at 170 and again bought at 150 for its 1 yr target of 260.
Ind Hotel
Holding 150 shares at average price of 60. Closing price on 26 Aug 09 was 65.75.
Resistance - 80
1 mnth tgt - 90
6 mnth tgt - 120
1 yr tgt - 132
Hold Ind Hotel for its 6 month's target of 120.
Zee News
Holding 400 shares at average price of 43. Closing price on 26 Aug 09 was 44.35.
Resistance - 50
1 mnth tgt - 62
6mnth tgt - 75
1 yr tgt - 95
Hold Zee News for its 1 month's target of 62. Keep accumulating at major dips for its 1 yr target of 95.