STOCKS TO WATCH

TATA MOTORS-Just like the BSE, this stock is extremely Over-Valued at current Values (close to 52 week Highs); and Trading at a Trailing PE Ratio of 49 today. The Dividend Yield is 1.5%.The Market is expecting a Good growth Supportive Budget, which will ensure that their Main Business (Trucks) will do well.Also, nothing negative on their Cars production, plus Very-very good results from Jaguar-Land Rover.However, there is a strong possibility that Diesel Cars will have to bear an additional Tax burden in this Budget, we are also likely to see a small increase in Diesel Prices (about Rs 2/Liter) before March is over. The News from JLR's Two Biggest Markets (Europe and China) is very negative for Autos in General. China has already started cutting Auto production (which clearly shows the Glut of all kinds of Cars there) and Europe is under immense Pressure to reduce Auto Production. With their Two key markets not exactly doing Great; most of the Good News has already been priced into JLR and by relation Tata Motors. Plus, if we do get a cautious RBI(which decides to wait for a month more before cutting Rates-My Preferred Scenario);then Tata Motors could very well get hammered over the next week or so. Oh and Did I mention that Insiders are Selling??? STRONG SELL

Mahindra&Mahindra-M&M is also plagued with many of the same Issues that Tata Motors faces-High Interest Rates, Taxes on Diesel Cars, Increase in Diesel Prices and Insider Selling. The Difference being that it has already corrected (Trading at a PE ratio of 15 and Dividend Yield of 1.70%).It is also flat for 2012 so far. From here, Downside even if things don't go according to plan on the Global Macro front (incl.Indian Budget) is limited. If the Stock does dip below 650 levels; it becomes a Strong Buy in my Opinion. HOLD Indian Overseas Bank-On the 21st of this Month, IOB is coming out with an EGM to discuss raising The Government's Shareholding in the Bank (from 66% to 71%) and the LICs holding is also going to go up (from 11% to 12%) on the infusion of about Rs 2000 crores Cash[At a price of Rs 97/share] from these two entities into this Bank as a way to increase Capital Reserves. At a time when you hear so much clamor about Disinvestment and reducing Govt shareholding in companies;IOB is going for the reverse route-Shows they must be doing something right and there is something about the company which the Govt clearly likes.IOB has been a Perennial favorite of mine(as anyone who has been reading my newsletters for a longtime knows);its up 32% this year and still pays a Dividend Yield of close to 5% today(I expect the Dividend to be maintained at same Levels in 2012) & Trades at a PE Ratio of 6.If it dips below Rs 90,it becomes a Strong Buy in My Opinion. HOLD

Muthoot Finance-The Company has come out with Bonds (NCDs) with Interest Rates of 13.25% per annum [About 12% per Annum after Taxes].They have been forced by Recent RBI regulations to hold more Capital Reserves.Also,Gold[In Indian Rupees] is basically flat for the year. If they can't leverage their Gold Deposits effectively they are not going to be able to do much. I wouldnt touch the Stock [No Dividend];but the Bond offering 12% per annum is an intriguing proposition. I wondered why exactly where they offering such Rates on Bonds; so I contacted my sources in a couple of Govt Banks. They said that Banks are charging close to 20% per annum to lend cash to them. So this way, they save about 6-7% in Interest Costs. The Company is quite big and is a very well-known in what they do. So should one buy the Bond? A Qualified Yes, But do not risk more than 10% of your Investing Capital in this Bond Issue.

Numeric Power Systems-The Company recently sold a significant chunk of its UPS business to the French MNC Legrand for Rs 830 crores. Consequently they are holding a EGM on the 21st March to decide what to do with the Cash raised. I fully anticipate they will issue an Extra-ordinary Dividend of close to Rs 20/share here. An awesome opportunity to grab a Dividend Yield of close to 8%.Buy if it dips Below 225.

DISCLAIMER:

I do not work for any of the following organizations A Mutual Fund, Investment Bank, Bank, Analyst Firm, Brokerage House, Any Government or any other related firm with links to the Financial Services Industry. I am a retail investor and I write because I Love writing about Finance and Economics. Please do your own due-diligence before investing anywhere