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Keep away from the market laggards

BS Srinivasalu Reddy conducts a survey among the leading brokerages to choose stocks likely to do well and those not likely during the next one year.

business Updated: Jan 01, 2008 01:21 IST
BS Srinivasalu Reddy
BS Srinivasalu Reddy
Hindustan Times

By the end of 2007 the equity market turned volatile forcing a host of small investors out unable to fathom what it would be like in 2008. This is despite a 47 per cent return on the Sensex in 2007 and closing the year with a record high. Though it is difficult for even the seasoned players to chart the exact scenario over the next one year, there is a consensus that the successful path ahead lies in specific stock-based investment strategy.

At this juncture, Hindustan Times conducted a survey among the leading brokerages to choose the stocks that are likely to do well and those not likely during the next one year.

The important question is where you should not put money to avoid burning your fingers. The 13 leading brokerages surveyed voted down about 24 stocks in all. At the top of the heap is Hero Honda with four votes down citing its losing battle in the sector in which players are slugging it out to retain their market share.

This was followed by Hindustan Unilever Ltd (HUL), which is struggling to keep its head above water and fighting the unknown Lilliputs. The FMCG major was voted down with three votes. TVS Motors, Cipla, Infy and Wipro are the other major players voted down with a couple of votes each. (See Table)

And there are no prizes for guessing the top bets. Reliance Industries, Larsen & Toubro, State Bank of India and Maruti Suzuki topped the league among large cap companies ranked by 13 leading broking houses. RIL topped with five of them recommending, followed by L&T with four votes and both SBI and Maruti with three votes. BHEL, GAIL, DLF, Reliance Energy, Tisco, JP Associates and HDIL garnered two votes each.

Mid-cap bets include Punj Lloyd (3 votes), followed by IVRCL Infrastructure, Pyramid Saimira, Bharti Shipyard with two votes each. Gujarat Apollo, Gremach Infrastructure and Deep Industries stood out in the small-cap crowd with two votes each.

Coming to the bankable sector, infrastructure, which has at least eight elements including road, rail, ports, power, telecom etc along with banking and financial sector, was voted the best bets in the stock market in 2008. They garnered eight votes each. Power and real estate sectors followed them with four and three votes respectively. Capital goods, telecom, oil & gas and media and entertainment are also expected to do good, with each garnering two votes each. Finally, the stocks of the sectors that have to be kept at arms length was topped by textile sector followed by information technology stocks, which are facing woes of currency appreciation making them relatively uncompetitive in global markets. Auto ancillaries also facing equally big problem in the wake of slowdown in demand.

FMCG, pharma and cement sectors will be other laggards according to the survey.