The Hindu Business Line : How timing mattered for one-year stock returns

"Don't try to time your investments," is a refrain that we have often heard from investment gurus. But an analysis of the returns provided by Indian stocks from the market lows of last year shows that good timing could have made a huge difference to your stock market returns over the past one year. With the markets in yo-yo mode over this period, even a time gap of just a month in entering a stock could have made the difference between a bumper gain and a capital loss for the investor.

From the market low of June 14 last year (when Sensex hit 8,929), stock prices have bounced back with a vengeance, reflected by the 57-per cent rise in the Sensex since then. Sensex gains apart, there are several stocks from outside the index basket that have more than doubled investor money over the same period. Eighty-four of the CNX 500 stocks, or roughly one in five stocks delivered returns of over 100 per cent from June 14, 2006, while over 200 stocks returned over 50 per cent.

Stocks such as Divi's Laboratory, Aban Offshore, Bhushan Steel and Praj Industries have topped the gainers list from the June low, appreciating more than three-fold during the period. Only about 15 per cent of the stocks in the CNX 500 are now hovering at levels below their June 14 lows. Most of these, predictably, are sugar company stocks.

While investors would have reaped a windfall if they invested on June 14, 2006, those who did so barely a month earlier, in early May 2006, would have earned only a modest return on their investment. Investors who invested on the Sensex basket on May 10, 2006, (when the index peaked at 12,612 points) would have had to make do with a return of just 11 per cent till date. Investors who invested actively in mid-cap or small-cap stocks may even have earned a negative return on their investment as many stocks in the CNX 500 basket are still languishing below their May 10 price. Though the CNX 500 index has managed a 9 per cent return from last May, about two-thirds of the CNX 500 stocks (312 in number), continue to trade below their May levels. This is despite the markets soaring to a new high in the recent month. Only 178 stocks in the CNX 500 basket (about one in three) have managed to claw back past their May-2006 highs and turn in positive returns till date.

More Stories on : Stock Markets | Investments

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
Airport modernisation: AAI recast, role for private sector mooted

`India's oil reserves to last just another 19 years'

Virchow Labs hit by Chinese dumping duty

`India Inc's large leveraged buyouts a concern'

How timing mattered for one-year stock returns

ICICI issue price band at Rs 885-950

Centre's buy of RBI stake in SBI as per pricing formula