Friday, 7 November 2008

Sell Tata Steel, says Sharma

VK Sharma of Anagram Stock Broking is of the view that one can sell Tata Steel.

Sharma told CNBC-TV18, "Whatever the economy indeed is going to slow down and even the die hard Indian fans are also seeing a slowdown in terms of the lowering of the GDP growth rate in all sectors, even IMF pulled it down to 6.3% and the assumption that China will make up for their lost growth of Europe and US is absolutely wrong because the Chinese local consumption is hardly 39% of their GDP and if you had to work out their per-capita consumption, they will have to consume more than 35 times of what an average US investor does. So Tata Steel is still a sell and if you also look at what Arcelor Mittal had to say is four times the size of what Tata Steel is and my own sense is that they have pruned their profits by half and they are going to cut volumes by 20%, so there is a fair indication that the worst is yet to come and you don’t buy commodity stocks when the PE is cheap but you go on to buy when the PE is still high that tells you that the analyst estimates of Tata Steel are going on the wrong side."

Disclosure: It is safe to assume that analyst and his clients may have an investment interest in the above stock/sector.

Source: Moneycontrol

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DISCLAIMER: The author is not a registered stockbroker nor a registered advisor and does not give investment advice. His comments are an expression of opinion only and should not be construed in any manner whatsoever as recommendations to buy or sell a stock, option, future, bond, commodity, index or any other financial instrument at any time. While he believes his statements to be true, they always depend on the reliability of his own credible sources. The author recommends that you consult with a qualified investment advisor, one licensed by appropriate regulatory agencies in your legal jurisdiction, before making any investment decisions, and that you confirm the facts on your own before making important investment commitments.