Have the markets lost its mojo or come to terms with the political reality during the last few weeks? It definitely looks like so, because sentiments is ruling the moment rather than the fundamentals. With every rise in the Indian benchmark indices, the stock market forecasters indicate the return of the NDA government and continuation of its economic policies. Overseas, the global $10 trillion rally could not sustain itself, pointing to a weakening appetite for risk. In western markets, riskier stocks are being sold into with investors pulling money out from equities and pouring them into bonds. This has created an inverted yield curve, meaning, long term debt instruments carry lower interest rate or yields than short term debt instruments. Historically, this indicates a pending economic recession or where the long term outlook is poor and therefore long term fixed income securities could fall. Therefore, an economic slowdown in China and the US plus the tamasha of Brexit has many investors worried (even Warren Buffett). Hence, Indian investors should not be very enthusiastic as these adverse global concerns could puncture the current rally as we near the elections. This could happen with foreign portfolio investors or FPIs turning bearish and booking profits on their immediate short term gains. Our suggestion to investors would be to book part profits after the RBI policy meet due on 4 April 2019.

We have identified Nelco Ltd (a Tata Group company) as an excellent stock pick for long term investment. The company offers solutions in the area of VSAT connectivity, satellite communication services, integrated security and surveillance solutions, etc. There are many instances where companies are often held back from realising their true potential. Lack of proper communication infrastructure connecting remote business sites, fear of sabotage, lack of information, etc., can prevent enterprises from fully maximising their potential. Nelco provides these companies with reliable and cost effective data connectivity solutions across remote part of the country for the B2B sector using the VSAT service. It is focusing and leveraging among important industry segments like the banking and financial services, oil and gas exploration, renewable energy, etc. The aero and maritime communication services is one of the fastest growing sectors globally, but due to regulatory restrictions, it is not being offered in India. Early this month, the company secured an in-flight and maritime connectivity licence from DoT for providing broadband internet and voice call services to people flying in Indian airspace and sailing in Indian waters. Analysts expect the VSAT industry to more than double in a two-year timeframe and hence looking at this macro change, the Nelco stock is a multi bagger in the making. Portfolio investors can accumulate the stock, currently quoting at Rs 270 from a medium to long term perspective. It has the potential to deliver solid returns in the next two years.

Rajiv Kapoor is a share broker, certified mutual fund expert and MDRT insurance agent.

 

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