1. IT Sector: Due to strong rupee, earnings growth of IT companies has slowed down and hence, leading IT scripts have been underperforming. Since, rupee is unlikely to weaken in near future, IT companies will not report outstanding growth
2. Automobile sector: This sector is already witnessing slowdown in growth. Further, rising metal prices will not allow big profit growth and hence, valuations of this sector are not compelling anymore. Further, no sharp growth is expected in this sector for next 1-2 years at least
3. Textile Industry: This sector is passing through one of the worst times. Even if Govt doles out any benefits, it won’t lead to significant improvement in its dire position. In fact, textile industry may post dismal results for next 2-3 quarters
4. Fertilizer sector: Share price of many fertilizer stocks had been ramped up brazenly although this sector has always underperformed. Even Govt is coming with some new policy for this industry; fertilizer industry should not expect any path-breaking changes and fortunes/profits of fertilizer companies may change only in a minor way.
5. Power sector: This sector has witnessed never-before (and i pray never-again) hype which led to mindless valuations
6. Telecom sector: Yes this sector continues to exhibit big growth. But companies at PE Ratio of 40-60 are not screaming buy
7. Power equipment industry: Valuations of this sector still appear to be attractive (comparatively)
8. Metals: Prices of various metals have already risen steeply and further rise may be very slow and in fact, there can be even reaction in metal prices. Hind zinc has already reported huge decline in its profits.
Monday, March 31, 2008
Analysis of some important sectors in short
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