2011 Performance Cycles of Sensex Stocks-

                         2011 Performance Cycles of Sensex Stocks

It’s a bounded oscillator that moves in a range say from 1 to 30. 1 is top relative performance and 30 is worst performance. The idea is that performance is cyclical. A top performer will underperform in future and vice versa. A top relative performer is also the worst value pick and the top relative underperformer is the best value pick.

As per this I have rank all the 30 stock of sensex below, 1^st the best performer of 2011 and last is the worst performer of the 2011.

Now if we look at the sector wise performance then FMCG was the clear winner and METALS –CAPITAL GOODS-BANK was the worst hit in year 2011.

Now if rally comes then metal-capital good-bank to outperform and fmcg to underperform.

If index is set to rise then the biggest contributor will be by those stock which has the highest weight in sensex and those stock which has highest beta value, means if index rise some % then high beta stock will gain more than index.

So we have to choose those stocks which have high weight in sensex and having high beta value and the stock has given near highest negative returns in last year so our portfolio can outperform the index.

On all three conditions I like TATA STEEL (metal)-L&T (capital goods)-ICICI BANK (banking).

Apart from one stock which has highest beta value and higher weight in index is Big Daddy of market Reliance Ind.

Reliance Ind-Tata Steel-L&T-Icici Bank may be the 4 ACE in the upcoming rise.