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Monthly equity investment tip - July 2010

If you want to be a smart investor then surely avoid investing in PSU stocks.

Now you will ask: Why?

A very good reason is, PSU stocks most of the times perform because of a regulatory change. If the change is in their favor, they jump rapidly. Contrary to this, if the change is negative, they fall rapidly.

Now you will ask one more question: Why shouldn't I invest in a PSU stock which is in uptrend after a positive regulatory change?

Remember PSU stocks are very slow movers, so if you get trapped at a higher price then you will need to wait for a long time to recover your investment.

Now you will ask for an example of a slow mover PSU stock: A very good example is NTPC. In August 2009, NTPC was available around Rs. 220, the same stock is now available around Rs. 204.
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