Four Sensex stocks outperform index in past 18 months

Four Sensex stocks outperform index in past 18 months
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First Published: Thu, Jun 11 2009. 09 45 PM IST

Ahmed Raza Khan / Mint
Ahmed Raza Khan / Mint
Updated: Thu, Jun 11 2009. 09 45 PM IST
Mumbai: In the past three months, the country’s most tracked equity index, the Sensex, recovered a large part of the ground that it had lost after rising to its lifetime high in mid-January 2008, but it is still about 5,800 points away from the 21,206.77 peak. At least four stocks, part of the 30-stock Sensex, however, are trading at higher prices now than their January 2008 prices.
In other words, these four stocks have outperformed the Sensex.
Ahmed Raza Khan / Mint
Overall, 92 listed stocks have done better than the benchmark index in past 18 months.
The four Sensex stocks that have outperformed the index are MarutiSuzuki India Ltd, Infosys Technologies Ltd, Hindustan Unilever Ltd and Sun Pharmaceuticals Industries Ltd.
Maruti that makes 50% of cars sold in India was trading at Rs1,009 in January 2008. On Thursday, it closed at Rs1,094.65.
Infosys, the country’s second largest software services firm, closed at Rs1,803.25 on Wednesday, higher than its January 2008 level of Rs1,785. However, it closed at Rs1,751.55 on Thursday.
Similarly, Hindustan Unilever, the country’s biggest household product maker, has gained 6.51% during this period, from Rs244.1 to Rs260 and Sun Pharmaceuticals Industries, the country’s biggest drug maker by market value, gained 9.82%, from Rs1,220 to Rs1,339.75.
Among the four, Infosys has the maximum weightage in Sensex—7.66%, followed by Hindustan Unilever at 2.55%, Maruti Suzuki at 1.42% and Sun Pharma at 1%.
Analysts are not surprised by the performance of these stocks as two of them belong to the so-called defensive sectors and all four have good track records.
A stock that tends to remain stable under difficult economic conditions is called a defensive stock.
Pharmaceutical and fast-moving consumer goods stocks belong to this category as consumers do not stop buying medicines and personal care products even in the worst of times.
Nitin Khandkar, senior vice-president of the research division of Keynote Capitals Ltd, a Mumbai-based brokerage, said most of the companies whose stocks are trading above their January 2008 levels now, have a long track record and strong balance sheets.
“Some of them such as Hindustan Unilever and Sun Pharma are from what can even be called recession-proof sectors. To some extent, declining interest rates have helped them. These stocks were beaten down but were the first ones to get investor funds once the sentiment started improving,” Khandkar said.
He also has a word of caution. “The run-up in prices have been quite sharp and one would need to be cautious at the current levels,” he said.
Deepak Jasani, head of retail research, HDFC Securities Ltd, said the rise in these stocks “could be a reflection of micro triggers like capacity additions”.
According to him, quite a few sectors such as software and fast-moving consumer goods did not participate proportionately in the last rally and they could now be catching up with other sectors.
“For example, Maruti’s financial performance was commendable even in bad times. Hence, people would expect it to perform even better in times of economic revival,” Jasani added.
Prominent among other top traded stocks of Bombay Stock Exchange that have outperformed the Sensex are Hero Honda Motors Ltd; Mphasis Ltd; LIC Housing Finance Ltd; GlaxoSmithkline Pharma Ltd; Nestle India Ltd; Godrej Consumer Products Ltd; Colgate-Palmolive (India) Ltd; Lupin Ltd and Cipla Ltd.
A Mint analysis of stocks traded across the exchange shows that among the 92 stocks that have out-performed the Sensex, many belong to the defensive sectors. There are eight pharmaceutical firms and nine personal care firms among them. The list also includes eight software companies and 16 finance firms.
Foreign institutional investors, or FIIs, the main driver of Indian market, pulled out $13 billion from equities last year and another $6.9 billion in the first two months of 2009, pushing the index down to its 40-month low of 8,160.4 in the second week of March.
Since then, the Sensex has risen 88% even as FIIs have pumped in $7.19 billion since March.
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First Published: Thu, Jun 11 2009. 09 45 PM IST
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