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11 Muhurat Buys

| 10/25/2010 12:38 PM Monday

'Kaun Banega Crorepati’ is back on our television sets with superstar Amitabh Bachchan once again keeping the spirit of the quiz session vibrant. Taking a cue from there, we too have started this story with a question. Let’s see if you can get it right. Of course, there are no immediate prizes to be won for the correct answer but yes, you could stand to gain in the long run. Are you ready? On which day of the year does the Indian stock market start in the evening instead of the usual morning hour? Easy, wasn’t it? That’s right - this is a once-in-year phenomenon that happens on the Diwali day when the stock markets starts trading in the evening. It’s called ‘muhurat trading’ and it lasts for only a couple of hours. The belief is that this is supposed to be the most auspicious day when investors buy shares mostly as a token gesture to signify that their perspective is bullish on the market for the next one year. As normally happens, the trading that takes place on this day shows no signs of aggression or volatility but moves in a very narrow range and with low volume. Our analysis suggests that the volatility is less than 1 per cent for the Sensex. However, there is something interesting that has been unravelled by the DSIJ research team. This is the fact that the market behaviour in the wake of the muhurat trading remains buoyant at least for the next 30 days. The data compiled by us shows that out of the past six years the Sensex yielded positive returns post one month from the day of muhurat trading in five years, barring last year when it underwent some minor corrections. Another interesting fact is that this is the first time in the history of the stock market when the Sensex is above the 20,000 level during Diwali. The previous high was in 2007 when the Sensex was at 18,907 on the day of muhurat trading. However, this time the returns from the stock market have not been as exciting as those of last year when the Sensex surged by 71 per cent from the Diwali of 2008 to the Diwali of 2009. This year the returns have been more subdued at 17 per cent and a major portion of that gain has come in the last few months. That’s because the Sensex kept swinging in a narrow range for almost eight to nine months.

Keeping the tradition alive, this year we have carved out a selection of 11 scrips that we believe should do well on the bourses in the next one year. Our selection process, as is the custom, has been made with lots of research and data crunching. We first identified sectors that are likely to do well in the next 12 months. Having done that, we further refined our search to select companies from that sector. From there started the process of selecting companies and contacting the management to get more insights into the company’s operations and future outlook. In the process we had to drop a few companies as they either did not beam out that wave of excitement or else our discussion with the management did not build up the required confidence which is so very essential for being included in our ‘mahurat’ portfolio. We have created a portfolio worth `10 lakh comprising these 11 scrips so that it can serve as a readymade model for anyone wishing to invest on those lines. We have given different weightages to each of the scrips keeping in mind the risk versus the returns ratio. We have also fine-tuned the portfolio with large-cap, mid-cap, and small-cap scrips so that investors can make the most of this portfolio. We are sure that our readers would make the right use of this information. As a matter of transparency we have also provided alongside last year’s portfolio vis-a-vis the current year’s valuations. The returns calculated do not include dividend that the investors must have received. We also take this opportunity to wish all our readers a very happy and safe Diwali. Let Goddess Lakshmi shower on each of us her blessings for prosperity, health, and progress.

 

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