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7 Muhurat Buys for 2011

| 10/24/2011 3:33 PM Monday

The performance of the Sensex over the last one year is evidence enough to indicate how matters change in a short span of time. The Diwali of 2011 and that of 2010 are indeed very contrasting pictures. Where there is pessimism, despair and dejection all over in the current environment, there was cheer, optimism, and happiness during the same period last year.

To put this in perspective, 2010 saw market optimism, the Sensex touching a historical high, a pickup in economic activity, a strong demand scenario and stronger industrial growth. In contrast, this year’s Diwali sees a fairly bleak picture, with the Sensex down by more than 16 per cent on a yearly basis, a decelerating economy, deteriorating IIP numbers, rising interest rates, ram-pant inflation, and rising concerns over the US and the Euro zone. No wonder then, that investor confidence is not only dented, but has been pressed to the lowest at this point of time.

As for the domestic story, the fundamentals are intact, but certainly strained by rising interest rates and hardened inflation. While many experts believe that the days of hardened interest are here to stay, a surprise move by the RBI to fuel growth could actually act as a trigger for the market. Our sense is that, though the markets have been range-bound for some time now, a possible uptrend in the near term cannot be ruled out either. Hence, the time seems right and also auspicious on the eve of Diwali, to do some new stock picking for the Muhurat day.

As has been our tradition, we, at DSIJ, have sculpted a strong Rs 10 lakh portfolio for your benefit, comprising about seven stocks that we believe could not only light up but also add that sparkle to your Diwali this year, and create that alpha for you in the coming period. The selection process has been a thorough research-oriented 
exercise, where we followed a top-down approach by selecting the sectors and then handpicking companies within those sectors.

This might seem easy, but it has indeed been a toiling task for our research team, which has been very choosy and has focussed on a small group of sectors that could do well even in the current scenario. The sectoral themes that we have selected include pharmaceuticals, auto, select auto ancillary, PSU plays, fertilisers and last, but not the least, banks. While many might be surprised at our selection of the auto sector, it should be noted that we have selected companies that are related to the two-wheeler segment, which has been doing well. Besides, the remaining sectors are more of a mix of safe play, aggression and contra calls.

As for stock selection, the approach was to select fundamentally strong businesses available at low valuations. While this may sound easy, the actual search surely wasn’t! The final hand-picked list came up after a lot of discussions, deliberations and certainly a lot of rejections, as many scrips could not meet our stringent criteria.

What follows is an extensive write up on the scrips, indicating why they would do well. Besides, a review of last year’s recommendations is also appended below, which gives our take on the current status of those recommendations and the action to be taken.

Review Of Last Year’s Recommendations

Staying Put - The Right Strategy

We, at DSIJ, have always been transparent when it comes to our recommendations, and we may be the only magazine to also carry a review of the same. This review has twofold benefits. First, it benefits our readers/investors, who can take timely action. It helps them book profits, exit and make money, or hold on to an investment for better returns. Secondly, it is also a ready reckoner for us, as it helps us to gauge our own performance.

Like every year, last year too we had recommended a portfolio of stocks for Diwali. This was a pack of 11 stocks as Muhurat Buys, with a total portfolio value of Rs 10 lakh. If one dissects this portfolio, one can see that we had a very good mix of sectors that included the likes of pharmaceuticals, PSU logistics, chemicals, banks and financial

 

Find More Articles on: DSIJ Magazine, Cover Story, Stock Recommendations, Fundamental Picks, Product, Mid Cap, Large Cap, Small Cap, PSU

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