It wasn’t an easy task to choose seven stocks from the over 200 scrips we cover for Samvat 2077.
In November 2020, while global equities rallied on unprecedented monetary and fiscal stimuli and our own markets danced to global tunes, there were looming uncertainties such as COVID’s spread, its macro impact and the efficacy of forthcoming vaccines.
We at Moneycontrol Pro Research decided to cut through the clutter and identify companies from a purely bottoms-up perspective and focus on the resilience of a business and earnings growth rather than hazarding a guess on which stock could rerate on account of the gush of liquidity.
While markets have been generous overall, we are delighted to report that our equal-weighted seven-stock portfolio has significantly outperformed the benchmark Nifty 50.
The portfolio -- consisting of Axis Bank, Cochin Shipyard, Hawkins, Kirloskar Ferro, Laurus Labs, Minda Corp and SBI – has returned 80 percent (till October 27, 2021) compared to the Nifty’s 44 percent, an outperformance of 36 percentage points.
Since Diwali 2020, we have seen a lot with a deadly second wave of COVID, vaccine shortages followed by a steady acceleration in vaccination, and an economic recovery from the pandemic lows.
Looking at the coming year, while the Indian economy looks to be on a stronger footing, but there are headwinds galore. Supply chain shortages and commodity price increase have resulted in inflation rearing its ugly head globally, threatening to squeeze corporate profitability and probably forcing central banks to reverse their ultra-loose monetary stance earlier than anticipated. With equity valuations exceeding the comfort zone and a plethora of primary issues sucking out liquidity from the secondary market, selecting the set of outperformers for the coming year is a job easier said than done.
However, our stock picking philosophy is simple: We focus on businesses with moats, a predictable earnings trajectory and a management to repose faith on.
Our portfolio of ten stocks for Samvat 2078 is created on these winning principles and we hope they will turn out to be shining ideas for the readers.
We are releasing the portfolio shortly. Watch this space.