Multibagger Stock Picks for Long Term

The Indian markets have gone up almost 100% from the lows it made in March 2009. There is suddenly more optimist about the global economic recovery. There are also hopes of major economic reforms in India and talks of disinvestment and oil price deregulation are already on. With all these factors, the optimist in the markets is much more then it was in the past 1 year and more.

So is this the time to buy equities?

I would say that at 8000 levels the risk return balance was more in favor of high returns. Big companies were trading at amazingly low valuations. However, currently if one makes an investment the risk factor is high. The reason being that there are several stocks that have gone up more then 2-3 times from its March lows. In my opinion these stocks can easily correct 30-40% from their current levels.

Correction or Crash Coming?

Its always difficult to take a call on the markets. However, in my opinion I dont see a major crash in the markets in the near term. The reason is not that the fundamentals of the economy are improving very fast. The reason is that, even in a bad economic scenario, there is plenty of liquidity in the hands of market participants. So markets can remain relatively stable even on bad economic news.

So after a near 100% rise on the Sensex and Nifty, we should see some correction. In my opinion it would not be surprising to see the markets go back to 12k type of levels in the near term. This will happen mainly because of the realization that the global economy will not recover so fast as it is now being expected.

Multibagger Stocks for Long Term Investors

If the markets correct 30-40%, then it would be a good time for long term investors to buy some equity. I am not sure if the markets will go back to 8000 levels. But what I am sure about is that if one slowly accumulates equities on corrections, then he/she will make big money in the next 5-10 years.

Accordingly I have listed down some sectors and stocks I personally feel will outperform in the long term.

Sector - Agriculture

Stocks

1. Karuturi Global Ltd.
2. Jain Irrigation Ltd.

Sector - Industrial Commodities

Stocks

1. Sterlite Industries Ltd.
2. Maithan Alloys Ltd.
3. JSW Steel Ltd.
4. Hindustan Copper Ltd.

Sector - Education

Stocks

1. Everonn Systems India Ltd.
2. NIIT Ltd.

Sector - Oil and Gas Exploration

Stocks

1. Oil & Natural Gas Corporation Ltd.
2. Reliance Industries Ltd.
3. Reliance Natural Resources Ltd.

Sector - Logistics

Stocks

1. Container Corporation of India Ltd.
2. Gateway Distriparks Ltd.

Sector - Infrasturcture

Stocks

1. Hindustan Construction Company Ltd.
2. Subhash Projects & Marketing Ltd.

Sector - Security Systems

Stocks

1. Honeywell Automation India Ltd.

Sector - Banks

Stocks

1. ICICI Bank Ltd.
2. YES Bank Ltd.

I my later posts I will try and take up all these stocks individually and give a detailed analysis on why I feel these stocks would outperform in the long term.

Once again I would like to point out the fact that you can never be sure about the markets. It might go up to 21,000 also or fall again to 8,000. But in my opinion if one is looking to invest with a time horizon of 5-10 years then getting into great stocks at any levels between 8,000 and 12,000 would be the best option.

Comments are invited on more sector and stock picks. Investors should note that in my opinion these are good stocks and should do well. Thus, everyone should do their own research before arriving at an investment decision.