Diwali Dhamaka 2013: A Dozen reasons to smile
It’s not really been a cracker of a year and indices are celebrating near new highs with less fireworks. However, the market liquidity is back just in time to welcome the festival of lights. Whether it was destined or not, we are not sure! Coincidentally, two Governors have been instrumental in bringing back cheer and optimism to the Indian bourses. A litany of fresh hopes has further improved the sentiment in anticipation of what lies ahead. There are many macro problems that pose a hurdle to the dream run, but for now, a new high seems round the corner and the liquidity tap is very much on.
|
Company |
Sector |
Mkt Cap (Rs bn) |
Weight (%) |
CMP |
Target |
Upside |
|
Cipla |
Pharmaceuticals |
332 |
10.0 |
413 |
482 |
16.7 |
|
Emami |
FMCG |
111 |
9.0 |
497 |
576 |
15.9 |
|
HDFC Bank |
BFSI |
1,628 |
10.0 |
681 |
777 |
14.1 |
|
Hero Motocorp |
Auto |
417 |
7.0 |
2,078 |
2,350 |
13.1 |
|
Hindalco |
Metals |
237 |
6.0 |
115 |
129 |
12.2 |
|
Idea |
Telecom |
563 |
8.0 |
172 |
200 |
16.3 |
|
Infosys |
IT |
1,909 |
10.0 |
3,310 |
3,744 |
13.1 |
|
ING Vysya |
BFSI |
111 |
8.0 |
589 |
712 |
20.9 |
|
M&M |
Auto |
409 |
8.0 |
888 |
1,041 |
17.2 |
|
Reliance |
Oil & Gas |
2,907 |
10.0 |
915 |
1,027 |
12.2 |
|
Shriram Transport Fin |
BFSI |
139 |
6.0 |
611 |
722 |
18.2 |
|
Wipro |
IT |
1,173 |
8.0 |
478 |
576 |
20.5 |
The best way to approach this market would be to adopt an asset allocation strategy; broadly, a 60% exposure to fixed income and other assets and 40% to equities. Within equities, we favour companies catering to rural demand, global markets that are recovering and beneficiaries from rupee depreciation.
Last Diwali, we had recommended nine stocks, out of which eight were successfully closed, in what was a difficult year for stock markets. Only one stock remained open but that too with positive return. Assuming equal investment in each stock, the portfolio delivered an absolute return of 17%, excluding dividends. If annualized, these returns would be significantly higher. We had also recommended fixed income investment in NCDs, which have been serviced timely.
These 12 scrips account for ~15% of India’s equity market capitalisation. Wishing you and your families a Happy Diwali and a bright and prosperous Samvat 2070!
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