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India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
UBS Investment Research
India Market Strategy
A stock picker’s market
๔ Focusing on specific stocks can generate alpha
We analyzed the returns of Nifty stocks from 1 Jan 2008 to 13 June 2011. We
conclude 1. Sector selection can play a role in generating returns over and above
the market 2. Within that, stock picking is the key to generate alpha. For instance,
Hero Honda has outperformed the Nifty by 159%, TCS by 134% and Dr. Reddy’s
by 124% during this period. What is interesting is that these stocks have driven the
performance of their respective sectors as well. Autos, healthcare and IT are the
best performing sectors. Telecom, utilities and energy have done poorly with the
worst performing stocks being Reliance Communications and Reliance
Infrastructure.
๔ Indian stocks price in a fair amount of bad news
We believe that Indian stocks factor in high inflation, high crude prices, Indian
government’s poor fiscal position, negative news flow around corruption/scams
and negative earnings momentum. Indian stocks have limited downside from here,
barring an external shock or an unknown risk playing out, in our view.
๔ Model Portfolio- Focus on specific stocks
We believe that focusing on bottom up stock ideas is the key to generating superior
returns. Our highest conviction ideas are: Infosys, Federal Bank, Idea Cellular,
Maruti and Hero Honda. Some of the key additions to our portfolio include Tata
Steel, Reliance Industries, Phoenix Mills and Cholamandalam Investment &
Finance. We have removed Shriram Transport Finance, Coal India and ONGC
from our portfolio, among others.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
UBS Investment Research
India Market Strategy
A stock picker’s market
๔ Focusing on specific stocks can generate alpha
We analyzed the returns of Nifty stocks from 1 Jan 2008 to 13 June 2011. We
conclude 1. Sector selection can play a role in generating returns over and above
the market 2. Within that, stock picking is the key to generate alpha. For instance,
Hero Honda has outperformed the Nifty by 159%, TCS by 134% and Dr. Reddy’s
by 124% during this period. What is interesting is that these stocks have driven the
performance of their respective sectors as well. Autos, healthcare and IT are the
best performing sectors. Telecom, utilities and energy have done poorly with the
worst performing stocks being Reliance Communications and Reliance
Infrastructure.
๔ Indian stocks price in a fair amount of bad news
We believe that Indian stocks factor in high inflation, high crude prices, Indian
government’s poor fiscal position, negative news flow around corruption/scams
and negative earnings momentum. Indian stocks have limited downside from here,
barring an external shock or an unknown risk playing out, in our view.
๔ Model Portfolio- Focus on specific stocks
We believe that focusing on bottom up stock ideas is the key to generating superior
returns. Our highest conviction ideas are: Infosys, Federal Bank, Idea Cellular,
Maruti and Hero Honda. Some of the key additions to our portfolio include Tata
Steel, Reliance Industries, Phoenix Mills and Cholamandalam Investment &
Finance. We have removed Shriram Transport Finance, Coal India and ONGC
from our portfolio, among others.
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