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Reg : RIL AND GOLD, YOUR RECOMMENDATION
Dear Anil Ji,
I have 24 RIL @ 775 , CMP 1000 and Gold ETFs worth Rs 47000 which are presently giving 15 % profit (purchased onr yr back). As a long term invester what are my options
1. To buy more of RIL and Gold on falls?
2. Sell now or at little higher price and re enter later?
3. Sell Gold and buy some stocks recommended by you?
4. Do Nothing.
Regards,
Vijay, Jammu, India
Author, Anil Selarka, Replies on Tuesday, January 18, 2011
It seems that the RIL’s gas output is not as rosy as it was before, almost 40% down. It is not expensive nor very cheap either. Its most assets have been disposed off in the form of subsidiaries, so not much juice remains in the company. I take the view that the company has become mature with limited growth opportunities which is forcing Mukesh Ambani to venture into Broad band (when WiFi is the new strong market – I use only WiFI for my phone connections which is free whereas it costs lot of money for dedicated internet services from telco companies). Cement is another venture he is looking into. In short, he is more drawn towards sexy but barren utilities, and infra related commodity like Cements. It is still acceptable stock, no doubt but with the market having caused severe damage to other good stocks, it is better to look elsewhere for people with limited budget.
Do the following:
SELL the RIL in rally and stay liquid or when you feel like buying gold or silver, then sell the RIL. Enter the gold at $1335 level or Silver at $27.85 level. Work out Rupee prices accordingly.
for the time being, you can afford to sell gold and retain cash until it corrects sharply again.