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Stockselect Performance Review

1 January 2011

In 2010, the BSE Sensex managed to crawl back to the levels seen in early 2008. But it was definitely not a smooth sail for the benchmark index. And there may be more negative surprises in store in 2011. In the past few months, scams shook the nation. So much so, that 2010 has been called as the Year of Scams. The 2G scam at Rs 1.8 trillion was probably the biggest case of political hoodwinking that this country has ever seen. In the last quarter of 2010 (October to December 2010), QE-2 accelerated the inflow of cheap money from global markets. With a record level of FII inflows this year, the Indian indices hit their previous peaks once again. At the same time, stock valuations were sent rocketing skywards. Insufficient liquidity levels prompted the RBI to temporarily halt its rate increases. However, with inflation showing no signs of easing off, further rate hikes are on the cards in early 2011. Rising inputs prices have now become a major tipping point. Companies which can pass on these increased costs to their customers may lose out on some volumes. The others who cannot will see margin pressures. All in all, things do not look too rosy based on the current inflationary environment. In 2010, we saw some of our buy recommendations hitting their targets well before the time frame of 2 to 3 years. Select stocks in the banking, auto, and pharma space were amongst the top gainers. On the other side, over a third of our recommendations this year were Sells. We did see an up move in some stocks post our Sell recommendation. But, the main reason why we asked you to avoid adding or holding them in your portfolio was because most of these stocks were trading at unsustainable valuations. We thus advised booking profits at those high levels. Rest assured that we will continue to track of their movements and advise you when the valuations once again offer reasonable upsides and margin of safety. While stepping into 2011 we hope that the regulators and companies have learned from their mistakes in the past year. We also hope that the vices of greed and envy are shed and companies take into account the long term interests of their stakeholders. We advise investors to buy into only those companies which have strong and stable managements and ability to tide over margin pressures, at reasonable valuations. With the completion of 52 StockSelect recommendations for 2010, we present you a review their performances and our outlook for their future. Nearly 91% of the large-cap stocks recommended Buy/Hold in 2009 and 40% of the stocks recommended so far in 2010 have already met their respective target prices. Here is a review of our StockSelect recommendations over the past twelve months.

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Stock Select recommendation review (January 2010 - December 2010)

Company BHEL Corporation Bank Ultratech Cement ING Vysya Bank Hero Honda P&G HDFC Biocon Ltd. Crompton Greaves Exide Industries Power Fin Corp L&T ICICI Bank Glenmark Pharma HPCL NTPC Power Grid Corp Bajaj Auto Axis Bank TCS Novartis Tata Power Grasim Aventis Pharma Bank of Baroda Dr. Reddy's IDFC Tata Motors GSK Pharma Infosys HDFC Bank Voltas Pfizer GE Shipping ABB Essel Propack SBI Cipla Tata Steel IDBI Bank Piramal Healthcare Asian Paints Dabur Reco. Date View 2-Jan-10 9-Jan-10 16-Jan-10 23-Jan-10 30-Jan-10 6-Feb-10 20-Feb-10 Sell Buy Sell Buy Buy Sell Buy Price on Reco. Current price Target Price % Gain/Loss Current View Date (Rs) (Rs)# 2,406 441 1,031 268 1,565 1,820 477 265 238 109 264 1,620 948 270 309 207 109 1,051 1,190 764 594 1,271 1,780 1,840 705 1,480 180 772 2,065 2,782 2,127 213 1,172 303 760 48 2,983 309 630 159 518 2,684 104 NA 700 NA 365 2,030 NA 609 360 287 138 330 NA NA 335 NA 265 135 1,250 1,850 1,160 810 1,840 2,557 NA 1,030 2,100 250 1,100 NA 3,560 2,685 NA NA 450 NA 64 NA 410 811 210 675 NA NA 2,325 635 1,082 368 1,986 1,827 728 422 310 167 310 1,979 1,145 362 391 201 98 1,542 1,350 1,165 654 1,366 2,341 1,950 897 1,663 182 1,306 2,357 3,445 2,347 218 1,133 344 801 60 2,811 370 679 165 469 2,875 100 -3% 44% 5% 37% 27% 0% 53% 59% 31% 53% 17% 22% 21% 34% 27% -3% -10% 47% 13% 52% 10% 7% 32% 6% 27% 12% 1% 69% 14% 24% 10% 2% -3% 13% 5% 24% -6% 20% 8% 4% -10% 7% -4% Hold Buy Sell Sell Sell Sell Sell Hold Hold Sell Buy Sell Sell Sell Sell Hold Hold Sell Buy Sell Hold Buy Sell Sell Hold Sell Buy Sell Sell Sell Hold Sell Sell Hold Sell Sell Sell Sell Hold Hold Buy Sell Sell

13-Feb-10 Hold 27-Feb-10 Hold 6-Mar-10 Hold 13-Mar-10 Hold 20-Mar-10 27-Mar-10 10-Apr-10 Sell Sell Sell

3-Apr-10 Hold 17-Apr-10 Hold 24-Apr-10 Hold 1-May-10 Hold 8-May-10 15-May-10 29-May-10 4-Jun-10 11-Jun-10 18-Jun-10 Buy Buy Buy Buy Sell Buy

22-May-10 Hold

25-Jun-10 Hold 2-Jul-10 Hold 9-Jul-10 16-Jul-10 Buy Sell

23-Jul-10 Hold 30-Jul-10 Hold 6-Aug-10 13-Aug-10 20-Aug-10 27-Aug-10 10-Sep-10 Sell Sell Buy Sell Sell

3-Sep-10 Hold 17-Sep-10 Hold 24-Sep-10 Hold 1-Oct-10 Hold 8-Oct-10 Hold 15-Oct-10 22-Oct-10 Sell Sell

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Ashok Leyland Corporation Bank Wipro Power Fin Corp Axis Bank BHEL Britannia Union Bank Biocon Limited Bharat Forge

29-Oct-10 12-Nov-10 26-Nov-10 10-Dec-10

Sell Sell Buy Sell

76 790 425 340 1,327 2,210 400 329 409 379

NA 1,025 NA 455 1,910 2,930 NA 445 515 NA

64 635 490 310 1,350 2,325 410 348 422 379

-16% -20% 15% -9% 2% 5% 2% 6% 3% 0%

Sell Buy Sell Buy Buy Hold Sell Hold Hold Sell

4-Nov-10 Hold 19-Nov-10 Hold 3-Dec-10 Hold 17-Dec-10 Hold 24-Dec-10 Hold 31-Dec-10 Sell

* Current price as on December 31, 2010 ** Price adjusted for 1 : 1 bonus issue NA - Not applicable # Calculated by dividing current price by recommended price

Also, our past recommendations that met their target prices during the October-December 2010 quarter are as follows: Recommendations that hit targets during the October-December 2010 quarter
Company Zee Ent.*^ G.E. Shipping Glenmark Pharma IDBI Bank Infosys Glenmark Pharma TCS Bank of Baroda Essel Propack Reco. Date View 13-Sep-08 25-Oct-08 28-Mar-09 5-Dec-09 26-Dec-09 15-May-10 18-Jun-10 Buy Buy Buy Buy Buy Buy Buy Price on Reco. Target Price % Gain/Loss Target met on Date (Rs) 113 162 151 131 2,585 270 764 705 48 160 350 350 175 3,220 335 1,160 1,030 64 41.6% 116.0% 131.8% 33.6% 24.6% 24.1% 51.8% 46.1% 33.3% 20-Jul-10 2-Nov-10 2-Nov-10 27-Oct-10 16-Dec-10 29-Oct-10 20-Dec-10 28-Oct-10 28-Dec-10

3-Apr-10 Hold

3-Sep-10 Hold

# Calculated by dividing current price as on 31st Dec 2010 by recommended price * Prices adjusted for 1:1 bonus ^ Target met based on intraday performance, not taken in the previous SS review (July-Sept)

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