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Stockselect Performance Review - Views on News from Equitymaster
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Stockselect Performance Review
Jan 1, 2011

In 2010, the BSE Sensex managed to crawl back to the levels seen in early 2008. But it was definitely not a smooth sail for the benchmark index. And there may be more negative surprises in store in 2011. In the past few months, scams shook the nation. So much so, that 2010 has been called as the ‘Year of Scams’. The 2G scam at Rs 1.8 trillion was probably the biggest case of political hoodwinking that this country has ever seen.

In the last quarter of 2010 (October to December 2010), QE-2 accelerated the inflow of cheap money from global markets. With a record level of FII inflows this year, the Indian indices hit their previous peaks once again. At the same time, stock valuations were sent rocketing skywards.

Insufficient liquidity levels prompted the RBI to temporarily halt its rate increases. However, with inflation showing no signs of easing off, further rate hikes are on the cards in early 2011. Rising inputs prices have now become a major tipping point. Companies which can pass on these increased costs to their customers may lose out on some volumes. The others who cannot will see margin pressures. All in all, things do not look too rosy based on the current inflationary environment.

In 2010, we saw some of our buy recommendations hitting their targets well before the time frame of 2 to 3 years. Select stocks in the banking, auto, and pharma space were amongst the top gainers. On the other side, over a third of our recommendations this year were ‘Sells’. We did see an up move in some stocks post our ‘Sell’ recommendation. But, the main reason why we asked you to avoid adding or holding them in your portfolio was because most of these stocks were trading at unsustainable valuations. We thus advised booking profits at those high levels. Rest assured that we will continue to track of their movements and advise you when the valuations once again offer reasonable upsides and margin of safety.

While stepping into 2011 we hope that the regulators and companies have learned from their mistakes in the past year. We also hope that the vices of greed and envy are shed and companies take into account the long term interests of their stakeholders. We advise investors to buy into only those companies which have strong and stable managements and ability to tide over margin pressures, at reasonable valuations.

With the completion of 52 StockSelect recommendations for 2010, we present you a review their performances and our outlook for their future. Nearly 91% of the large-cap stocks recommended Buy/Hold in 2009 and 40% of the stocks recommended so far in 2010 have already met their respective target prices. Here is a review of our StockSelect recommendations over the past twelve months.

Stock Select recommendation review (January 2010 - December 2010)
Company Reco. Date View Price on Reco.
Date (Rs)
Target Price Current price
(Rs)# 
% Gain/Loss Current View
BHEL 2-Jan-10 Sell 2,406  NA  2,325 -3% Hold
Corporation Bank 9-Jan-10 Buy     441 700    635 44% Buy
Ultratech Cement 16-Jan-10 Sell 1,031  NA   1,082 5% Sell
ING Vysya Bank 23-Jan-10 Buy     268 365    368 37% Sell
Hero Honda 30-Jan-10 Buy 1,565 2,030 1,986 27% Sell
P&G 6-Feb-10 Sell 1,820  NA  1,827 0% Sell
HDFC  13-Feb-10 Hold     477 609    728 53% Sell
Biocon Ltd.  20-Feb-10 Buy     265 360    422 59% Hold
Crompton Greaves 27-Feb-10 Hold     238 287    310 31% Hold
Exide Industries 6-Mar-10 Hold     109 138    167 53% Sell
Power Fin Corp 13-Mar-10 Hold     264 330    310 17% Buy
L&T 20-Mar-10 Sell 1,620  NA   1,979 22% Sell
ICICI Bank 27-Mar-10 Sell     948  NA  1,145 21% Sell
Glenmark Pharma 3-Apr-10 Hold     270 335    362 34% Sell
HPCL 10-Apr-10 Sell     309  NA     391 27% Sell
NTPC 17-Apr-10 Hold     207 265    201 -3% Hold
Power Grid Corp 24-Apr-10 Hold     109 135      98 -10% Hold
Bajaj Auto 1-May-10 Hold 1,051 1,250 1,542 47% Sell
Axis Bank 8-May-10 Buy 1,190 1,850 1,350 13% Buy
TCS 15-May-10 Buy     764 1,160 1,165 52% Sell
Novartis 22-May-10 Hold     594 810    654 10% Hold
Tata Power 29-May-10 Buy 1,271 1,840 1,366 7% Buy
Grasim 4-Jun-10 Buy 1,780 2,557 2,341 32% Sell
Aventis Pharma 11-Jun-10 Sell 1,840  NA  1,950 6% Sell
Bank of Baroda 18-Jun-10 Buy     705 1,030    897 27% Hold
Dr. Reddy's 25-Jun-10 Hold 1,480 2,100 1,663 12% Sell
IDFC 2-Jul-10 Hold     180             250    182 1% Buy
Tata Motors 9-Jul-10 Buy     772           1,100 1,306 69% Sell
GSK Pharma 16-Jul-10 Sell 2,065  NA  2,357 14% Sell
Infosys 23-Jul-10 Hold 2,782           3,560 3,445 24% Sell
HDFC Bank 30-Jul-10 Hold 2,127           2,685 2,347 10% Hold
Voltas 6-Aug-10 Sell     213  NA     218 2% Sell
Pfizer 13-Aug-10 Sell 1,172  NA  1,133 -3% Sell
GE Shipping 20-Aug-10 Buy     303             450    344 13% Hold
ABB 27-Aug-10 Sell     760  NA     801 5% Sell
Essel Propack 3-Sep-10 Hold       48               64      60 24% Sell
SBI 10-Sep-10 Sell 2,983  NA   2,811 -6% Sell
Cipla 17-Sep-10 Hold     309             410    370 20% Sell
Tata Steel 24-Sep-10 Hold     630             811    679 8% Hold
IDBI Bank 1-Oct-10 Hold     159             210    165 4% Hold
Piramal Healthcare  8-Oct-10 Hold     518             675    469 -10% Buy
Asian Paints 15-Oct-10 Sell 2,684  NA  2,875 7% Sell
Dabur 22-Oct-10 Sell     104  NA     100 -4% Sell
Ashok Leyland 29-Oct-10 Sell       76  NA       64 -16% Sell
Corporation Bank 4-Nov-10 Hold     790           1,025    635 -20% Buy
Wipro 12-Nov-10 Sell     425  NA     490 15% Sell
Power Fin Corp 19-Nov-10 Hold     340             455    310 -9% Buy
Axis Bank 26-Nov-10 Buy 1,327           1,910 1,350 2% Buy
BHEL 3-Dec-10 Hold 2,210           2,930 2,325 5% Hold
Britannia 10-Dec-10 Sell     400  NA     410 2% Sell
Union Bank 17-Dec-10 Hold     329             445    348 6% Hold
Biocon Limited 24-Dec-10 Hold     409             515    422 3% Hold
Bharat Forge 31-Dec-10 Sell     379  NA     379 0% Sell
* Current price as on December 31, 2010 ** Price adjusted for 1 : 1 bonus issue NA - Not applicable # Calculated by dividing current price by recommended price

Also, our past recommendations that met their target prices during the October-December 2010 quarter are as follows:

Recommendations that hit targets during the October-December 2010 quarter
Company Reco. Date View Price on Reco.
Date (Rs)
Target Price % Gain/Loss Target met on
Zee Ent.*^ 13-Sep-08 Buy 113   160 41.6% 20-Jul-10
G.E. Shipping 25-Oct-08 Buy 162   350 116.0% 2-Nov-10
Glenmark Pharma 28-Mar-09 Buy 151   350 131.8% 2-Nov-10
IDBI Bank 5-Dec-09 Buy 131   175 33.6% 27-Oct-10
Infosys 26-Dec-09 Buy        2,585 3,220 24.6% 16-Dec-10
Glenmark Pharma 3-Apr-10 Hold 270   335 24.1% 29-Oct-10
TCS 15-May-10 Buy 764 1,160 51.8% 20-Dec-10
Bank of Baroda 18-Jun-10 Buy 705 1,030 46.1% 28-Oct-10
Essel Propack 3-Sep-10 Hold 48     64 33.3% 28-Dec-10
# Calculated by dividing current price as on 31st Dec 2010 by recommended price * Prices adjusted for 1:1 bonus ^ Target met based on intraday performance, not taken in the previous SS review (July-Sept)

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