Market Looks Attractive, Start Accumulating in small quantities

I think this is the right time to start accumulating select largecap stocks in the market (Mid-caps can be picked up, if they are appearing at a deep discount to their asset valuations).


My view on the Indian market is that the markets might(Might) fall to 3400 - 3450, but not expecting them to fall below that, too much of value in the market at that point to ignore.

Expecting global syndicated action by Central Banks if markets have a big fall. Interest rate cuts round the globe, this will have 2 effects:
a) Interest rate sensitive sectors should gain
b) Commodity prices world over should rise, however the demand destruction already caused due to uncertainties and volatility in the market coupled with the fear of increaesed government regulation should restrict any excess bubble in commodities for now. So, avoid the commodities sector atleast for now, watch out how the prices pan out.


My sectors in this market: Large cap capital goods (L&T, BHEL), Large cap Banks(ICICI Bank, SBI), Largecap IT companies(TCS).

Avoid Metals, Cement, Real Estate.
Unlike many people I am bullish on Power Sector (esp. Power Finance) and Construction companies (which do not own real estate but are builders/contractors)

Some Qtns to be answered?
1. Why is Infosys not in the largecap IT companies list?
A. I have employment relationship with Infosys, so to avoid the mess of insider regulations etc, Infy will be absent from my future analysis unless it is a comparative of the Largecap IT companies. Infosys will be absent in company specific BUY/SELL recommendations.

2. HDFC is absent in large cap : Too much exposure to RE sector, am not comfortable with that.

3. Why +ve on Cap. Goods: Financial muscle is strong, so can tide over. Not over-leveraged, hit by high interest rates, which might have peaked. Most of their contracts have escalation clauses now for future projects, so relatively insulated to commodity bubles.
[Can be hit by short term forex,commodity hedging prices though]


My ideal calculation is: if you have 100 Rs. in cash now. Invest 25% in Yes Bank FD (10.75% for 1 year), 10% in gold (for safety against inflation), 10% in equities (keep 10% cash to take care of future opportunities) and remaining in cash.
And as usual, postpone all non-discretionary expenses :)