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Nath Balakrishnan

TO ASSESS how we at Business Line performed with its stock calling compared to the broad market, we collated all the calls we made from last November to October this year. We made a total of 376 calls on 250 distinct companies.

Looking at the returns our calls have fetched, we would not be unreasonable in stating that we have had a fair share of hits; we realise that with the unpredictable nature of the market, there are bound to be a few calls that end up going awry, though the proportion of such calls has been minor.

The accompanying Tables summarise how our recommendations have fared and list stock calls that delivered returns of about 100 per cent.

Admittedly, after the significant returns that some of our recommendations returned in 2003, the current year was always going to be a tough act to follow. And we also had to suffer the mortification of a few of our `buy' calls in the early part of the year going wrong when the market took a nosedive in May.

The recovery thereafter has more than made up for the fall earlier. Within our coverage universe, we have thirty `buy' calls that would have delivered returns in excess of 100 per cent for investors, with Madhucon Projects leading the pack.

One of the offbeat buy calls that clicked over the past year was on Kirloskar Brothers in June, when the stock was trading at Rs 335. The recommendation was predicated on a scaling up of irrigation-based projects given the pro-agriculture stance of the new Government at the Centre.

Kirloskar Brothers, which derives half of its revenues from the irrigation business, was expected to be a major beneficiary. Mirroring the growth prospects, the stock too has traced an upward path and now trades at Rs 725.

Of the total of 211 `buys' we had during the period under consideration, investors would be sitting on negative returns on 13 such calls. Recommendations that have not played out as we had anticipated include those on TV Today, Reliance Energy and TVS Motor. For TV Today, our call was predicated on an improvement in business prospects, coupled with favourable changes to the regulatory environment that would permit foreign investors to buy into stocks in the media space. Both did not plan out as expected, resulting in the poor performance of the stock.

In TVS Motor, our optimism stemmed from the possible success of the Centra, which was not the case.

Reliance Energy was a call expected to play itself out over a longer time-frame; in recent times, extraneous events pertaining to ownership of the Reliance group have had a dampening impact on the stock.

Shareholders would be sitting on gains of about 35 per cent had they stayed put acting on `hold' recommendations. We believe this underscores the importance of the recommendation, especially when market movement tends to be choppy.

A few stocks on which we had a `hold' stance and which appreciated significantly thereafter included Nagarjuna Construction, ABC Bearings, Hotel Leela, Hindustan Construction and Goodyear.

A few of our `sell' calls too have been a tad off the mark, though. Stocks that did run up sharply after our `sell' recommendation include Bajaj Hindusthan, Madras Cements, Tata Finance and Titan Industries.

A couple of `sell' calls we put out this year are deserving of mention, as they were well-timed.

On ING Vysya Bank, we put out a sell recommendation on the stock last February, when it was trading at about Rs 600. The stock shed value significantly thereafter.

A couple of months ago, we reversed our stance on the stock when it was trading at Rs 302; since our recommendation, the stock has appreciated close to 100 per cent.

Another case is that of Agro Tech Foods, on which we had a sell when it was trading at Rs 72; we reversed the call when the stock slipped to Rs 54. The stock looked up 70 per cent thereafter.

The way ahead: For 2005, we remain positive on the prospects of the banking, technology, cement, metals and pharma sectors.

We will be watching with interest ICICI Bank, Kotak Mahindra and UTI Bank in the banking space, TCS and Infosys from the technology domain, Gujarat Ambuja and Shree Cement from the cement arena, Hindalco and Tata Steel in the metals business, and a basket of Nicholas Piramal, Sun Pharma, Aventis. Cipla and Ranbaxy to piggyback on the pharma theme.

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