Saturday, December 17, 2011

Momentum Stocks - What Next ??

Billionaire investor Rakesh Jhunjhunwala, whose long-term bets have earned him popular titles such as 'the big bull', now faces a lot of red in his portfolio. 

Since December 1, as the market benchmark declined 6%, stocks that Jhunjhunwala owns have lost up to 30%. VIP Industries, a big chunk of the billionaire's portfolio, led the list with the maximum notional loss of 30.5%. 

Other losers include Provogue India, Subex andReliance Broadcast Network, Aptech and Delta Corp, all of which are down 16-25%. Broadly, Jhunjhunwala's entire portfolio is in the red, with 25 out of 28 stocks analysed by ET recording a decline in December. 

The other three counters include Sterling Holiday Resorts, which is up 3%, and Autoline Industries, up 22%. However, among those caught in the red are stocks that analysts believe have good fundamentals, and have been facing undue pressure due to the 'Rakesh phenomenon'. 

Reportedly, the investor has been selling his positions recently to cover for losses from loss-making silver trades. In a nervous market, any news of such a sell-off triggers a much broader sell-off from the investor's many followers. 

In a response to ET last month, Jhunjhunwala rubbished the claims and said, "People can say anything they want, I have no comments. I never talk about my trading bets." 

One stock caught in the crossfire of rumours is Lupin, in which the billionaire holds around 2%. Since December 1, the pharmaceutical company's shares have lost 7.6% and are trading around Rs 430. 

"Here is a huge sentimental overhang on the stock. However, weakness in the stock should be seen as a buying opportunity," Sarabjit Kaur Nangra, vice president of research at Angel Broking said. 

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