Overall markets continued to reach new highs this month. Market movement in recent times has been led by a few select large stocks in telecom and banking. About 60% of the A group stocks are trading at prices well below previous highs reached in May 2006, despite the Nifty trading about 7% higher than its May 06 levels. The broader market is lagging the larger stocks, with the BSE Midcap Indices trailing the Nifty by over 8%.
Our portfolio lagged the market this month, despite Plastiblend’s stock doing quite well. The company announced its intention to expand capacity by over 70% and expects its growth rate to be in excess of 30% over the next couple of years. Some of the larger holdings were weak this month and we expect stock price movement to catch up with the broader market over the coming weeks.
Interestingly, despite the market trading at over 18X earnings, the average stock in the portfolio is trading at almost a 60% discount to the market. Many of the companies are also growing well and business conditions for these companies are favorable. Overall, one can be optimistic over the coming months.
We are also migrating to a new fully automated accounting system that would enable us to generate reports instantaneously and make the accounting process far more efficient. We are in the test phase now and I expect to start sending the monthly reports in a different format from next month.