Weekly Portfolio Review: 19 December 2010

It is interesting to read the news reports to see the reason for up or down of share market every day – sometimes it is quite funny or weird! The last Monday Sensex closed up 183 points ‘taking support from positive Europe markets’, on Tuesday another 107 points high ‘amid hopes that dip in inflation rate will lead the Reserve Bank to halt the tightening of key policy rates for now’. However the Sensex was down by 151 points on Wednesday ‘reacting to profit booking in global peers. Rate sensitive sectors like realty and banks were under pressure ahead of Reserve Bank of India’s credit policy meet’ and then it closed higher by 217 points on Thursday, ‘after the RBI kept short term lending and borrowing rates unchanged’. Net effect is that the Sensex ended 356 points high at 19,865 and Nifty 91 points at 5,949 for the week.

In fact, one day it was up with the hope that RBI would halt the tightening of rate, next day it was down under pressure ahead of RBI’s meet and following day it went up as RBI kept rate unchanged!

The major news for the market last week was the official announcement of parting of Honda from the join venture, Hero Honda. It has been in the news for quite sometimes now and the uncertainty has ended with this formal announcement. But the ‘analysts’ are still divided on the outcome and long term effect on the company after Honda leaving the JV.

Good buys in my watch list

Script Sector 3 Years Target Current Price Expected Margin
KSB Pumps Engineering 1,072.00 501.15 114%
Graphite India Engineering 200.00 97.80 104%
Tata Sponge Iron Metal 700.00 352.95 98%
Mazda Engineering 207.00 111.80 85%
Tractors India Ltd Construction 1,150.00 631.30 82%
Divis Laboratories Pharma 1,095.00 602.10 82%
Zensar Tech IT 289.00 160.00 81%
Swaraj Engines Auto Ancil 850.00 481.45 77%
Tech Mahindra IT 1,074.00 669.45 60%
Opto Circuits Healthcare 450.00 280.95 60%
BHEL Engineering 3,567.00 2,304.70 55%
HUL FMCG 446.00 294.40 51%

I will be buying KSB Pumps and Tata Sponge Iron in coming week. Graphite India is within my top 5 holding, so not buying now.

News Update

Indian GSM telecom operators added a whopping 17.45 million new subscribers in November, taking the all-India GSM cellular subscriber base to 526.18 million, cellular operators’ association COAI said on Friday. Bharti Airtel, the largest GSM player, added 3.10 million new users in November, taking its total subscriber base to 149.39 million. It had 28.39 per cent market share as of the end of November, 2010, it added. – Indian Express, Dec 16, 2010

Bharti Airtel Ltd. plans to expand its mobile network coverage in Madagascar by about 25 percent in 2011 to attract customers in rural areas. The expansion will offer services to a further 5 million to 6 million people. The company plans to invest $50 million over 18 months and wants to increase customers to 3.2 million in Madagascar within a year from 2 million now. – Bloomberg, Dec 14, 2010

The Hero Group on Thursday announced that it would buyout the entire 26 per cent stake of its partner Honda Motor Company Group in Hero Honda thus breaking its 26-year-old partnership. Hero Honda will continue to produce and sell the existing models, while new models would be also launched. However, all future products will be rolled out under the new licensing agreement between Hero Group and Honda. Hero Honda brand name will also be changed over time. The new licensing arrangement signed between the Hero Group and Honda Motor Co., Japan, would also enable higher growth by giving it (Hero Group) the freedom to develop its own research and development capabilities and exploit global export and manufacturing opportunities.  The two-wheeler major will also start exporting products across the globe and look for manufacturing opportunities.  – The Hindu, Dec 16, 2010

State-run power producer NTPC may approach the government next fiscal for permission to raise funds through a follow-on public offer to part-finance power equipment purchases worth an estimated Rs 1,50,000 crore.  – The Economic Times, Dec 17, 2010

NTPC, the state-run power producer, signed a power purchase agreement (PPA) with the West Bengal government yesterday for a thermal unit it will be setting up at Katwa (Bardhaman district). “The total investment for the 2×800 Mw Katwa project will be Rs 9,600 crore, roughly around Rs 6 crore per Mw. Discussions are also going on for a greenfield (new) project at Santaldih (Purulia district),” – Business Standard, Dec 14, 2010

Public sector undertaking National Thermal Power Corporation Limited (NTPC) today signed a power purchase agreement with Punjab State Power Corporation Ltd (PSPCL) for a 2,640-Mw coal-based thermal power project at Gidderbaha, being undertaken at a cost of Rs 15,000 crore. – Business Standard, Dec 13, 2010

Gujarat plans to treble its cement production capacity in 3-5 years. Proposals have been invited from cement companies like ACC , ABG, Ambuja Cement, Emami , Indiabulls, Adani group, Ultratech and L&T and the state hopes to raise its capacity from 20 million tonnes per annum to 70 million tonne. – The Economic times, Dec 17, 2010

Interesting Read

Record car sales mark 2010 for Indian auto sector

Record sales made 2010 a special year for automakers in India, which also saw the iconic Maruti 800 take a bow from big cities, Hero split with Honda and demand for the promising Nano sputter following a string of accidents. For a country whose economy has been expanding at near 9% rate, it was not surprising that automobile sales broke all records between July and October to average a growth of 30%. Such was the appeal of the country and the appetite of the Indian motorist that Bugatti launched its Veyron 16.4 Grand Sport, which at Rs 16 crore became the costliest car in India, while other niche marques Aston Martin and Spyker Cars said they too would drive in soon. http://www.hindustantimes.com/Record-car-sales-mark-2010-for-Indian-auto-sector/Article1-640211.aspx

Car Trouble In India

India’s automobile industry has raced from a crippling slowdown to scorching growth in less than two years. But a severe shortage of parts is applying the brake in this otherwise rosy journey. http://www.forbes.com/2010/12/15/forbes-india-auto-industry-faces-ugly-turn.html

FMCG cos fastracked expansion in 2010

A total of 13 acquisitions in 2010, mostly global, that is how Indian companies announced their arrival in the global FMCG space as they looked to fastrack their way to international expansion. Led by Godrej, which had seven acquisitions on its account, domestic firms, including Marico (2 buyouts) and Dabur (2 acquisitions) and Emami (1 buyout) went on a global buying-spree during the year. The total valuations of the acquisitions could not be ascertained as the firms decided to keep it under wraps except in one or two cases.  http://www.indianexpress.com/news/domestic-fmcg-cos-fastracked-expansion-via-buyouts/726409/

Food in the fast lane

Although the market for ready-to-eat (RTE) and ready-to-cook (RTC) foods is still nascent, the fact that there is heightened activity from brands in both these segments points to the opportunities they see in them. While there is a lot more in Indian cuisine in RTE, RTC foods are more about non-traditional foods such as soups, noodles and pasta; vermicelli is also popular. For instance, Maggi is seeing some serious competition from big and small, national, regional and retail brands now. http://www.hindustantimes.com/Food-in-the-fast-lane/Article1-637647.aspx

HUL: from survival to revival

A year ago, India’s largest consumer firm by revenue seemed to be floundering. Here’s how the company achieved a turnaround. http://www.livemint.com/2010/12/13220503/HUL-from-survival-to-revival.html

Telcos unlikely to start tariff war in 3G

Consumers awaiting high-speed third-generation (3G) services should be ready to shell out a premium for data as telecom players gear up to rollout their services over the next few months. Industry experts say the price war fought during the 2G days will not hold true for the 3G services considering the hefty prices that operators have paid for acquiring licences. http://timesofindia.indiatimes.com/business/india-business/Telcos-unlikely-to-start-tariff-war-in-3G-/articleshow/7097008.cms

All that’s cheap is not good

Avoid buying stocks based on cost alone. Highly priced stocks may be expensive but provide better returns. Whenever we buy a product or service, we look at its cost. Cheaper products seem more affordable and hence attractive to buy. The same applies to stocks. Low-priced ones attract more buying interest. However, do they give good returns? One must know how to compare stocks, the pricing and how to find value for money. http://www.business-standard.com/india/news/all-that%5Cs-cheap-is-not-good/417884/

My Portfolio

Return

My Portfolio BSE Sensex NSE Nifty
This Week 1.46% 1.82% 1.56%
This month -0.21% 1.75% 1.46%
This Year 8.80% 13.74% 14.38%
Since 1-1-2009 122.78% 105.92% 101.04%
Since 1-1-2008 49.74% -1.69% -2.15%
Since 1-4-2007 86.03% 51.96% 55.66%

Top 5 holding in my equity portfolio

Company Sector % of Total Value Average Holding Period Absolute Return %
Infosys IT 8 3 Years 97
Graphite India Telecom 5 2 Months 1
HUL FMCG 5 5 Months 12
Mangalam Cements Cements 5 3 Months -17
Swaraj Engines Auto Ancillory 5 2 Months 3

Shares I bought this month

Company Average Cost
Tata Sponge Iron 368.41
Graphite India 95.62
BHEL 2,339.58
HUL 302.01
Tractors India Ltd 690.22
Swaraj Engines 491.85

Shares I sold this month

Company Average Price

Top 5 most gain (absolute)

Company Return % Average Holding Period
Gujarat Gas 219 2.6 Years
Dabur India 153 4.6 Years
Tata Global Beverages 115 2.0 Years
Berger Paints 159 3.8 Years
Infosys 97 3.0 Years

Top 5 most loss (absolute)

Company Return % Average Holding Period
KSB Pumps -11 3 months
Honeywell Automation -14 1 month
Tata Communication -25 11 months
Mangalam Cement -17 2 months
Divi’s Laboratories -15 1 month

Archive of previous portfolio reviews

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