What if we were a mutual fund company and launched a new scheme in a bullish market? That would be the true test of stock-picking and market-timing skills. That’s exactly the test we are putting ourselves to
The long-term stockgrader, which has been running for just under four years, has proved its worth. Compounded returns of the portfolio were 38.37% over these years when returns from the Sensex were 16.34% while the best equity scheme, SBI Emerging Business Fund - Growth, returned 40.27%. Not bad for our portfolio.
The equity market has run up a lot now; we are possibly near a cyclical peak. This is a challenging period. Should new money be put to work now or should some profits be booked? What should be the strategy when bullishness is so high? This would be the right time to challenge our stock-picking and market-timing skills. We are, therefore, closing the existing long-term stockgrader and launching a revamped portfolio. We are excited about navigating the treacherous waters ahead. In one important way, the new table will be a big improvement. It will be a portfolio with specifed exposures, based on the following principles:
• At any time, there will be a maximum of 50 stocks;
• We are starting with a list of 20. This means that the portfolio starts with 60% in cash;
• The stock allocation will be equally weighted for each sector barring exceptional situations;
• Stocks will be picked only from from the large- and mega-cap segments of the Moneylife database.
We hope to not only beat the Sensex and the Nifty but also be as good as the best five large-cap mutual fund schemes over the long term.
To know about the stocks recommended, please see the latest issue of Moneylife.
Do write to us at [email protected] and tell us what you think of this intiative and the portfolio.
We expected a small bounce back yesterday before a bigger decline. This has not happened. Is a big vicious decline on the cards?
The market closed lower as the government lowered its GDP growth estimate for the current fiscal to 5%. We expected a small bounce back yesterday before a bigger decline. This has not happened. Is a big vicious decline on the cards?
The National Stock Exchange (NSE) saw a volume of 67.39 crore shares and advance-decline ratio of 966:1062.
The market opened marginally lower on cautiousness ahead of the GDP estimate for the current fiscal later in the day. Markets in Asia were mostly lower on lower-than-expected forecasts from corporates and nervousness ahead of the outcome of the European Central Bank’s meeting later today. US markets closed flat overnight on profit booking after the recent gains.
The Nifty opened 23 points down at 5,936 and the Sensex resumed trade at 19,589, a cut of 51 points from its previous close. Buying activity in early trade soon lifted the indices into the positive terrain. Gains in IT, technology and realty stocks led the market to its high in mid-morning trade. At the highs, the Nifty rose to 5,979 and the Sensex climbed to 19,703.
However, the lower estimate of the country’s GDP at 5% for the current fiscal by the Central Statistical Organisation weighed on the market, which then witnessed a downward trend. Across-the-board selling led the indices further southwards in noon trade. International investors are awaiting announcements from the ECB and the Bank of England on policy rates.
Feeble recovery attempts were thwarted by strong selling pressure. The benchmarks fell to their lows around 2.30pm with the Nifty falling to 5,928 and the Sensex going back to 19,540.
The benchmarks settled near the lows weighed down by the government’s downward revision of the economic growth estimate for the current fiscal. The Nifty closed 20 points (034%) lower at 5,939 and the Sensex dipped 59 points (0.30%) to 19,580.
The broader indices were punished in today’s trade, as the BSE Mid-cap index declined 0.88% and the BSE Small-cap index dropped 1.34%.
The sectoral gainers were BSE IT (up 0.63%); BSE Auto (up 0.30%) and BSE Fast Moving Consumer Goods (up 0.03%). The main losers were BSE Consumer Durables (down 3.34%); BSE Realty (down 1.47%); BSE Power (down 1.39%); BSE Metal (down 1.16%) and BSE Capital Goods (down 1.12%).
Twelve of the 30 stocks on the Sensex closed in the positive. The chief gainers were Mahindra & Mahindra (up 1.26%); TCS (up 1.20%); Tata Motors (up 0.89%); Infosys (up 0.56%) and Coal India (up 0.47%). The top losers were Sterlite Industries (down 2.92%); NTPC (down 2.72%); Cipla (down 2.61%); GAIL India (down 2.29%) and Bharti Airtel (down 2.08%).
The top two A Group gainers on the BSE were—Hexaware Technologies (up 3.73%) and Jubilant Foodworks (up 3.41%).
The top two A Group losers on the BSE were—Strides Arcolabs (down 12.52%) and Titan Industries (down 5.16%).
The top two B Group gainers on the BSE were—Sankhya Infotech (up 19.60%) and Ennore Coke (up 16.50%).
The top two B Group losers on the BSE were—20 Microns (down 19.99%) and Jay Mahesh Infra (down 19.98%).
Out of the 50 stocks listed on the Nifty, 18 stocks settled in the positive. The major gainers were Power Grid Corporation (up 2.42%); IDFC (up 1.75%); M&M (up 1.37%); ACC (up 1.19%) and TCS (up 1.13%). The key losers were Reliance Infrastructure (down 4.63%); Sesa Goa (down 3.01%); Bank of Baroda (down 2.94%); Ambuja Cement (down 2.84%) and NTPC (down 2.70%).
Most markets in Asia lower on worries that the Chinese government might put in additional curbs to rein in property prices. Sentiment was weak as investors wait for a policy decision from the ECB later in the day.
The Shanghai Composite declined 0.66%; the Hang Seng fell 0.34%; the Nikkei 225 dropped 0.93%; the Straits Times contracted by 0.45% and the Seoul Composite tumbled 4.42%. On the other hand, the Jakarta Composite added 0.09%; the KLSE Composite rose 0.345 and the Taiwan Weighted settled 0.25% higher.
At the time of writing, the key European markets were up between 0.12% and 0.35% and the US stock futures were trading with minor gains.
Back home, foreign institutional investors were net buyers of equities totalling Rs1,137.95 crore whereas domestic institutional investors were net sellers of shares amounting to Rs1,224.07 crore on Wednesday.
Bharat Forge, belonging to the Kalyani Group, and lbit Systems Land and C41, a wholly-owned subsidiary of Elbit Systems of the US, have announced the establishment of a joint venture company to address the needs of the Indian ministry of defence and other potential Indian customers’ requirement for the most advanced artillery and mortars systems solutions. The stock gained 0.92% to close at Rs225.90 on the NSE.
Cholamandalam Investment and Finance Company has decided to raise Rs300 crore through the Qualified Institutional Placement (QIP) route. The company has set the floor price of the issue at Rs279.69 per share, it said in its filing with the exchanges. The stock closed at Rs288 on the NSE, down 0.02% from its previous close.
Venus Remedies (one of our stockletter picks) has posted satisfactory third quarter results, with both sales and profit trending upwards. We had recommended the stock on 18 May 2012 at Rs 161.10. The stock closed at Rs248.55 today, up by 54% in 9 months
We had written about Venus Remedies, a research-based global pharmaceutical company, in our Moneylife issue dated 29 November 2012. The company has reported has reported 18% year-on-year (y-o-y) increase in net sales to Rs112.64 crore for the quarter ended December 2012 compared to Rs95.83 crore for the corresponding quarter last year. Its net profit rose 55.5% y-o-y to Rs16.06 crore against Rs10.33 crore it recorded for the same period last year.
A closer look at the Moneylife database reveals that the company has indeed been performing decently over the last few quarters. We looked at the net sales as well as operating profit pattern of Venus Remedies and found out that the company has not shown any negative growth in either, which shows consistency. The company’s three-quarter y-o-y growth rate is 16% whereas it has beaten the average this time around by growing at 18%. Likewise, its three-quarter y-o-y growth average for operating profit was 15% whereas it grew 26% for the December 2012 quarter. Yet, despite putting a string of good quarters, its valuation remains surprisingly low. It is quoting with market capitalisation at just over two times its operating profit, while its return on net worth is an impressive 20% for a company that is rarely tracked by analysts.
During the quarter, Venus Remedies received its first patent from Mexico for ‘Vancoplus’, a novel antibiotic formulation to combat Methicillin Resistant Staphylococcus Aureus ( MRSA ) infections. The patent has been granted from the Mexico Patent office and is valid till February 2026. Vancoplus has the potential to restrict transfer of bacterial resistance to other strains by preventing conjugation and transfer of plasmids containing resistant genes. Vancoplus is also the only known therapeutic option for breaking of bacterial biofilm formed by gram positive bacteria, one of the most common causes of bacterial resistance.
It also received approval from Drugs Controller General, India (DCGI) to conduct Phase-III clinical trials of its cancer detection new chemical entity (NCE). After thorough screening by the IND committee for the investigational NCE VRP1620, the DCGI has found clinical Phase-I and Phase II data satisfactory and thus granted permission to conduct Phase-III clinical trials on the molecule. The molecule is for early cancer detection.
It also launched CSE1034 under the brand name ‘Elores’. It is a novel Antibiotic Adjuvant Entity (AAE) to combat antimicrobial resistance caused by MDR, ESBL producing strains.
Venus Remedies closed at Rs248.55 on National Stock Exchange (NSE), down 0.22% from its previous close.
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