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`I don't think there is a substantial downslide'

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Mr Vijay Kedia , MD, Kedia Securities
Mr Vijay Kedia , MD, Kedia Securities

Our Bureau

Mumbai, June 21

Mr Vijay Kedia, Managing Director of Kedia Securities, has seen it all - the worst of the bear phases, the frenzied bull rallies, stock scams even dating back to early 1960s and the wildest of wild swings in the market.

In an interview, Mr Kedia explains his investment philosophy. He says that the current market crash is very different from previous crashes in that this time round it was not due to any scam in the market.

Mid- and small-cap stocks such as Cera Sanitaryware Ltd, Atul Auto, JK Lakshmi Cement, Mangalam Cement, Standards & Lloyds and TRF are his favourites.

Excerpts :

What went wrong in the market?

The correction was expected. But the speed with which it happened surprised many. But, if you look at the previous crashes, the recent crash is very similar. The stocks have fallen in the same momentum with which they went up.

Various experts have been cautioning investors on entering the market, especially in the last phase (from 10,500 to over 12,000 levels). People who entered the market in the final phase of the bull-run were actually new investors - those who had no previous experience in the stock market.

This time round, money came into the market from industries such as textile, chemical and even diamond sector. These investors get trapped when the market crashes.

Do you think the correction is over? Have we seen the bottom of the downslide?

I don't think there is a substantial downslide. May be another 3-4 per cent. I feel 8,500-levels will be rock bottom. At present there are several companies that look very attractive.

What is your investment strategy?

My motive is to multiply my money several times over. I am in stock market not to make 10 per cent returns. I have to go for 30-50 per cent year on year growth. Mid cap sector will give you that kind of returns. There will be one or two setbacks, but that is part of the game.

What is your advise to investors? What is your opinion about real estate as a sector in the stock market?

Frankly, I don't understand this sector. But, when real estate stocks went up to dizzying levels, it resembled like the tech bubble of late 1990s. In fact, I was on record saying that engineering and real estate sector will lead the stock debacle. Valuation was going haywire. Stocks were trading at a price to earnings multiple of 30-50 times. The prices had to crash.

How about banking stocks?

Banking stocks are good defensive buys. Investors should put a portion of their investments in banking stocks mainly for dividend yields. In this market, investors could easily get 5-6 per cent yield in this market. These are tax-free returns.

(This article was published in the Business Line print edition dated June 22, 2006)
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