A stock screen is a filtered list of stocks which is arrived at according to some criteria that are likely to remove less investment-worthy companies from the list. They throw up investment ideas which can then be evaluated closely. Membership of BSE 500 index is basic qualification for our screen.
This screen provides details of the stocks which have caught the fancy of institutional investors over the last quarter. To be specific, we have picked out the top 10 stocks in terms of increase in institutional holding. The list is sorted in the descending order of the institutional holding in March 2007.
The most noticeable stock among these is Teledata Informatics. This Chennai-based software solutions provider has posted phenomenal growth rates in the last one year. During FY 2006-07, its top line grew over 90 per cent vis-à-vis the previous year, while the bottom line surged 156 per cent. And the growth has come consistently as the profits have grown by more than 100 per cent in each of the last three quarters vis-à-vis the corresponding quarters in the previous year. As a result, its stock has also witnessed tremendous appreciation of 445 per cent over the last one year. But since the earnings have kept pace with the price appreciation, its price-earning is just 5, which is extremely low for a technology stock.
After a sharp decline at the time of the budget, markets have staged an equally smart recovery over the last one month. While stocks across the sectors and market capitalisation ranges posted gains, some looked literally unstoppable. We have attempted to identify them in our next screen. The constituents of this list have surged more than three times the returns of the Sensex (7 per cent) in the last one month. Not only that, their rally extends beyond the last one-month period as they boast of double digit returns even on a three-month horizon. The broad nature of the rally can be gauged from the diversity of this list. It includes stocks from sectors like steel to sugar to IT to telecom.
Investors who are willing to assume big risks for quick gains may find this list to their interest. But keep in mind that no fundamental variables have been factored in the screening of these stocks, and these are pure momentum plays. If you do invest in them, don't forget to keep a close track and sell them the moment you see signs of a reversal. The list is sorted in the descending order of one-month returns.
Steel stocks were high on fund managers' buying list in the month of March. And this interest was not restricted to large stocks like Tata Steel and Steel Authority , but relatively smaller steel stocks like JSW Steel also attracted fund managers.
Fund managers also accumulated shares of Reliance Industries in March, and it has also rewarded them well. The stock has appreciated by an impressive 16 per cent during the one month period ending April 25, 2007. The company has posted better than expected results for the fourth quarter of FY 2006-07, as its profits grew by over 14 per cent on a quarter-on-quarter basis.
On the other hand, cement stocks continued to face the axe. Stocks like India Cements and Shree Cements were sold in significant numbers by the fund managers.