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Stockselect Performance Review 1 January 2011 In 2010, the BSE Sensex managed to crawl back

Stockselect Performance Review

1 January 2011

In 2010, the BSE Sensex managed to crawl back to the levels seen in early 2008. But it was definitely not a smooth sail for the benchmark index. And there may be more negative surprises in store in 2011. In the past few months, scams shook the nation. So much so, that 2010 has been called as the ‘Year of Scams’. The 2G scam at Rs 1.8 trillion was probably the biggest case of political hoodwinking that this country has ever seen.

In the last quarter of 2010 (October to December 2010), QE-2 accelerated the inflow of cheap money from global markets. With a record level of FII inflows this year, the Indian indices hit their previous peaks once again. At the same time, stock valuations were sent rocketing skywards.

Insufficient liquidity levels prompted the RBI to temporarily halt its rate increases. However, with inflation showing no signs of easing off, further rate hikes are on the cards in early 2011. Rising inputs prices have now become a major tipping point. Companies which can pass on these increased costs to their customers may lose out on some volumes. The others who cannot will see margin pressures. All in all, things do not look too rosy based on the current inflationary environment.

In 2010, we saw some of our buy recommendations hitting their targets well before the time frame of 2 to 3 years. Select stocks in the banking, auto, and pharma space were amongst the top gainers. On the other side, over a third of our recommendations this year were ‘Sells’. We did see an up move in some stocks post our ‘Sell’ recommendation. But, the main reason why we asked you to avoid adding or holding them in your portfolio was because most of these stocks were trading at unsustainable valuations. We thus advised booking profits at those high levels. Rest assured that we will continue to track of their movements and advise you when the valuations once again offer reasonable upsides and margin of safety.

While stepping into 2011 we hope that the regulators and companies have learned from their mistakes in the past year. We also hope that the vices of greed and envy are shed and companies take into account the long term interests of their stakeholders. We advise investors to buy into only those companies which have strong and stable managements and ability to tide over margin pressures, at reasonable valuations.

With the completion of 52 StockSelect recommendations for 2010, we present you a review their performances and our outlook for their future. Nearly 91% of the large-cap stocks recommended Buy/Hold in 2009 and 40% of the stocks recommended so far in 2010 have already met their respective target prices. Here is a review of our StockSelect recommendations over the past twelve months.

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Stock Select recommendation review (January 2010 - December 2010)

Company

Reco. Date

View

Price on Reco. Date (Rs)

Target Price

Current price

% Gain/Loss

Current View

(Rs)#

BHEL

2-Jan-10

Sell

2,406

NA

2,325

-3%

Hold

Corporation Bank

9-Jan-10

Buy

441

700

635

44%

Buy

Ultratech Cement

16-Jan-10

Sell

1,031

NA

1,082

5%

Sell

ING Vysya Bank

23-Jan-10

Buy

268

365

368

37%

Sell

Hero Honda

30-Jan-10

Buy

1,565

2,030

1,986

27%

Sell

P&G

6-Feb-10

Sell

1,820

NA

1,827

0%

Sell

HDFC

13-Feb-10

Hold

477

609

728

53%

Sell

Biocon Ltd.

20-Feb-10

Buy

265

360

422

59%

Hold

Crompton Greaves

27-Feb-10

Hold

238

287

310

31%

Hold

Exide Industries

6-Mar-10

Hold

109

138

167

53%

Sell

Power Fin Corp

13-Mar-10

Hold

264

330

310

17%

Buy

L&T

20-Mar-10

Sell

1,620

NA

1,979

22%

Sell

ICICI Bank

27-Mar-10

Sell

948

NA

1,145

21%

Sell

Glenmark Pharma

3-Apr-10

Hold

270

335

362

34%

Sell

HPCL

10-Apr-10

Sell

309

NA

391

27%

Sell

NTPC

17-Apr-10

Hold

207

265

201

-3%

Hold

Power Grid Corp

24-Apr-10

Hold

109

135

98

-10%

Hold

Bajaj Auto

1-May-10

Hold

1,051

1,250

1,542

47%

Sell

Axis Bank

8-May-10

Buy

1,190

1,850

1,350

13%

Buy

TCS

15-May-10

Buy

764

1,160

1,165

52%

Sell

Novartis

22-May-10

Hold

594

810

654

10%

Hold

Tata Power

29-May-10

Buy

1,271

1,840

1,366

7%

Buy

Grasim

4-Jun-10

Buy

1,780

2,557

2,341

32%

Sell

Aventis Pharma

11-Jun-10

Sell

1,840

NA

1,950

6%

Sell

Bank of Baroda

18-Jun-10

Buy

705

1,030

897

27%

Hold

Dr. Reddy's

25-Jun-10

Hold

1,480

2,100

1,663

12%

Sell

IDFC

2-Jul-10

Hold

180

250

182

1%

Buy

Tata Motors

9-Jul-10

Buy

772

1,100

1,306

69%

Sell

GSK Pharma

16-Jul-10

Sell

2,065

NA

2,357

14%

Sell

Infosys

23-Jul-10

Hold

2,782

3,560

3,445

24%

Sell

HDFC Bank

30-Jul-10

Hold

2,127

2,685

2,347

10%

Hold

Voltas

6-Aug-10

Sell

213

NA

218

2%

Sell

Pfizer

13-Aug-10

Sell

1,172

NA

1,133

-3%

Sell

GE Shipping

20-Aug-10

Buy

303

450

344

13%

Hold

ABB

27-Aug-10

Sell

760

NA

801

5%

Sell

Essel Propack

3-Sep-10

Hold

48

64

60

24%

Sell

SBI

10-Sep-10

Sell

2,983

NA

2,811

-6%

Sell

Cipla

17-Sep-10

Hold

309

410

370

20%

Sell

Tata Steel

24-Sep-10

Hold

630

811

679

8%

Hold

IDBI Bank

1-Oct-10

Hold

159

210

165

4%

Hold

Piramal Healthcare

8-Oct-10

Hold

518

675

469

-10%

Buy

Asian Paints

15-Oct-10

Sell

2,684

NA

2,875

7%

Sell

Dabur

22-Oct-10

Sell

104

NA

100

-4%

Sell

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Ashok Leyland

29-Oct-10

Sell

76

NA

64

-16%

Sell

Corporation Bank

4-Nov-10

Hold

790

1,025

635

-20%

Buy

Wipro

12-Nov-10

Sell

425

NA

490

15%

Sell

Power Fin Corp

19-Nov-10

Hold

340

455

310

-9%

Buy

Axis Bank

26-Nov-10

Buy

1,327

1,910

1,350

2%

Buy

BHEL

3-Dec-10

Hold

2,210

2,930

2,325

5%

Hold

Britannia

10-Dec-10

Sell

400

NA

410

2%

Sell

Union Bank

17-Dec-10

Hold

329

445

348

6%

Hold

Biocon Limited

24-Dec-10

Hold

409

515

422

3%

Hold

Bharat Forge

31-Dec-10

Sell

379

NA

379

0%

Sell

* Current price as on December 31, 2010 ** Price adjusted for 1 : 1 bonus issue NA - Not applicable # Calculated by dividing current price by

recommended price

Also, our past recommendations that met their target prices during the October-December 2010 quarter are as follows:

Recommendations that hit targets during the October-December 2010 quarter

Company

Reco. Date

View

Price on Reco. Date (Rs)

Target Price

% Gain/Loss

Target met on

Zee Ent.*^

13-Sep-08

Buy

113

160

41.6%

20-Jul-10

G.E. Shipping

25-Oct-08

Buy

162

350

116.0%

2-Nov-10

Glenmark Pharma

28-Mar-09

Buy

151

350

131.8%

2-Nov-10

IDBI Bank

5-Dec-09

Buy

131

175

33.6%

27-Oct-10

Infosys

26-Dec-09

Buy

2,585

3,220

24.6%

16-Dec-10

Glenmark Pharma

3-Apr-10

Hold

270

335

24.1%

29-Oct-10

TCS

15-May-10

Buy

764

1,160

51.8%

20-Dec-10

Bank of Baroda

18-Jun-10

Buy

705

1,030

46.1%

28-Oct-10

Essel Propack

3-Sep-10

Hold

48

64

33.3%

28-Dec-10

# Calculated by dividing current price as on 31st Dec 2010 by recommended price * Prices adjusted for 1:1 bonus ^ Target met based on intraday

performance, not taken in the previous SS review (July-Sept)

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