Sharekhan has advised that it is not the right strategy to wait for corrections to enter the market. It is better to start investing in a systematic and phased manner especially if one is looking to play the rally that is expected in the domestic equity market over the next two to three years.
Sharekhan’s Top Picks basket has comfortably outperformed the benchmark indices with superlative returns of 10.6% last month.
Two stocks added during the last revision, PTC India Financial Services and TVS Motor Company, have appreciated by well over 25% each in the past one month. The only under-performer has been Zee Entertainment Enterprises (down 1.5% in the same period) where the sentiment was dented by the further extension of the deadline for phases III and IV of the digitisation of cable television services. However, Sharekhan says that is only a temporary setback and Zee Entertainment Enterprises is its preferred pick in the media sector. It is slated to get inducted in the Nifty in the forthcoming round of changes in the index composition.
Sharekhan has made three changes to the Model Portfolio. Profit has been booked in TVS Motor Company (a gain of 27% in a month) and PTC India Financial Services (a return of 31.4% in a month). These have been replaced by Maruti Suzuki and Axis Bank as part of the churn within the auto and financial sectors respectively.
Sharekhan has also replaced UltraTech Cement with Reliance Industries Ltd (RIL). Reliance has underperformed in the past few months and could catch up with the benchmark indices on the back of some favourable policy announcement and the commissioning of its expansion project in both the refining and the petrochemical business. There is scope for the doubling of its earnings over the next four years if the petrochemical cycle improves, Sharekhan says.
Sharekhan has also added Salzer Electronics, an engineering company, to the Top Picks Mordel portfolio. It is a well managed company (26% stake held by Larsen and Toubro [L&T]) with a wide product portfolio and marquee clients like L&T, Schneider Electric and General Electric among others and could be an early gainer of an improving macro scenario along with its increased focus on the overseas business, Sharekhan says.