• Investment World
• eWorld
• Catalyst
• Mentor
• Life
• Canvas
• Praxis
• Urban Pulse
• Brand Quest

Stocks

• Quotes
• SE Diary
• Scoreboard
• Open-End Mutual Fund

Shipping

• Ports
  
  

Archives

• Yesterday
• Datewise
• Resources

Group Sites

• The Hindu
• Business Line
• Sportstar
• Frontline
• The Hindu eBooks
• The Hindu Images

Aarati Krishnan

MISSED the entire stock market rally from Sensex 5,000 to 10,000 because you were wary of valuations? Maybe you needn't despair; for there are still a large number of stocks that haven't kept up with the markets' furious pace over the past two years.

A good 206 out of the 500 stocks making up the CNX 500 have lagged the Sensex between mid-May 2004 and now, a period over which the Sensex roughly doubled in value. 106 stocks out of the 500 have severely under-performed, managing less than half the Sensex return over the same period.

There were even a fair number of stocks that have barely moved. About 51 stocks have returned 15 per cent or less over the past two years. The CNX 500 basket was chosen because it captures a cross-section of well-known companies with reasonable fundamentals.

Several of the laggards over the two-year period came from the pharma, banking and mid-cap IT space.

Mid-cap IT stocks were hit by a slowdown in growth rates and order flows, relative to their frontline peers.

The reversal in the direction of interest rates, which started heading northwards in mid-2004, dampened the enthusiasm for bank stocks.

Lupin, Reliance Energy, Biocon, Oriental Bank and Tata Power were some key stocks that have stayed flat or lost ground between May 2004 and now.

This analysis shows that the market rally from 5,000 to 10,000 hasn't been as "broad-based" as is widely believed. Capital goods, auto and FMCG stocks have accounted for much of the gains, while sectors such as banking and pharma have stayed out of the limelight.

This has made fund houses confident of coming up with winners, if they sift through this list of under-performers. Both Chola Mutual Fund and ING Vysya Fund have recently rolled out new "contrarian" funds that will focus on stocks ignored by the herd over the past two years.

These funds claim that investing in a carefully selected portfolio of under-performers has consistently delivered good returns, both in bear markets and in bullish ones.

More Stories on : Stock Markets | Events | Mutual Funds

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

Stories in this Section
GMR submits Rs 500-cr bank guarantee for Delhi airport modernisation

Copyright © 2006, The Hindu Business Line. Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of The Hindu Business Line