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SHAREKHAN TOP PICKS
Markets tend to surprise investors. But this time around, it was the government waking up from its policy slumber that surprised the investors. Taking heart from the new-found assertiveness shown by the policy makers in India and the central bankers globally, the domestic stock market has surged in the past one month or so-the benchmark indices, the Sensex and the Nifty, have registered gains of 7.9% and 8.6% respectively since our last update on the Top Picks basket on September 3, 2012. In the Top Picks basket, four stocks (namely ICICI Bank, Larsen & Toubro, IRB Infrastructure Developers and Selan Exploration Technology) registered gains of over 15% each and enabled the Top Picks basket to appreciate by over 6% in this period. In the first nine months of CY2012, the Top Picks basket has given returns of 27%, ahead of the Sensex, the Nifty and the CNX Mid-Cap Index, which have given returns of 21%, 23% and 24% respectively in the same period.
We are making as many as five changes in the basket this month to increase its exposure to the sectors that are likely to benefit from the ongoing policy vigour (refer to our special report, "High on cocktail of policy measures" dated September 17, 2012) and are attractively valued as compared with their peers. Accordingly, we are introducing Axis Bank and Bharat Heavy Electricals Ltd (BHEL) and reducing the basket's exposure to the fast moving consumer goods (FMCG; GlaxoSmithKline Consumer Healthcare) and pharmaceutical (Torrent Pharmaceuticals) sectors. As part of the churn within the FMCG sector, we are replacing ITC with Godrej Consumer Products, which has much higher upside potential from these levels. Lastly, we are replacing Selan Exploration Technology (which has appreciated by about 30% in the last one month) with Polaris Financial Technology.
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| Sharekhan Limited, its analyst or dependant(s) of the analyst might be holding or having a postition in the companies mentioned in the article.
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