2011 Jan Review
3
Stockselect Performance Review 1 January 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. http://www.equitymaster.com/qr/detail_sq.asp?story=4&date=01/01/201... 1 of 3 12/15/11 11:40 AM
Transcript of 2011 Jan Review
Stockselect Performance Review 1 January 2011
In 2010, the BSE Sensex managed to crawl back to the levels seen in early 2008. But it was definitelynot 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 ‘Yearof Scams’. The 2G scam at Rs 1.8 trillion was probably the biggest case of political hoodwinking thatthis country has ever seen.
In the last quarter of 2010 (October to December 2010), QE-2 accelerated the inflow of cheap moneyfrom global markets. With a record level of FII inflows this year, the Indian indices hit their previouspeaks 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, withinflation showing no signs of easing off, further rate hikes are on the cards in early 2011. Rising inputsprices have now become a major tipping point. Companies which can pass on these increased coststo 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 2to 3 years. Select stocks in the banking, auto, and pharma space were amongst the top gainers. Onthe other side, over a third of our recommendations this year were ‘Sells’. We did see an up move insome stocks post our ‘Sell’ recommendation. But, the main reason why we asked you to avoid addingor holding them in your portfolio was because most of these stocks were trading at unsustainablevaluations. We thus advised booking profits at those high levels. Rest assured that we will continue totrack of their movements and advise you when the valuations once again offer reasonable upsidesand margin of safety.
While stepping into 2011 we hope that the regulators and companies have learned from their mistakesin the past year. We also hope that the vices of greed and envy are shed and companies take intoaccount the long term interests of their stakeholders. We advise investors to buy into only thosecompanies which have strong and stable managements and ability to tide over margin pressures, atreasonable valuations.
With the completion of 52 StockSelect recommendations for 2010, we present you a review theirperformances and our outlook for their future. Nearly 91% of the large-cap stocks recommendedBuy/Hold in 2009 and 40% of the stocks recommended so far in 2010 have already met theirrespective target prices. Here is a review of our StockSelect recommendations over the past twelvemonths.
http://www.equitymaster.com/qr/detail_sq.asp?story=4&date=01/01/201...
1 of 3 12/15/11 11:40 AM
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
http://www.equitymaster.com/qr/detail_sq.asp?story=4&date=01/01/201...
2 of 3 12/15/11 11:40 AM
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 2010quarter 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)
If you have any questions or queries about your subscription, please write to us.
Now, Latest Recommendations Delivered to Your Desktop. Subscribe to RSS for StockSelect
PLEASE NOTE: This report is for your personal use only. We request you, our subscriber, NOT tocirculate this report or share any information contained therein with any person or group. Please note that ourTerms of Use policy, which you have accepted at the time of signing up for our services, prohibits you fromsharing our research. If you have any queries or wish to report any misuse of our research, please write in tous. Thank you.
http://www.equitymaster.com/qr/detail_sq.asp?story=4&date=01/01/201...
3 of 3 12/15/11 11:40 AM
