There are two set of investors in the equity markets,The first category of investors buy and sell their equities after they reach a target and the second set of investors are buy- and hold-ers they hold stocks forever with an impression that stocks only will grow manifold over the years and no need to monitor.
In the last 15 years Rs 1000 invested in 1999 would have grown by Rs 49696 and in the same period Rs 1000 invested would have become Rs 176.
That is why for our financial planning clients we do portfolio review twice a year.
Today i read an article in Money control i thought of sharing with you to drive the importance of monitoring the portfolio.
On November 9, 1999, the Nifty closed at 1,364 points. Through to November 7 2014, it has risen more than six-fold, closing at 8,337 – an absolute gain of 511 percent and a healthy annualized return of 12.83 percent. However, there has been a lot of action within the Nifty over the past 15 years. As would be expected, there are many stocks whose returns have handsomely outscored the benchmark while many others have trailed it. Below is a chart that shows how each of the Nifty’s constituents, as in 1999, have fared, in absolute terms and how much Rs 1,000 invested in each would have grown to today. Note that stock returns have been calculated after adjusting for stock splits and bonuses but do not include dividends.
Over the 15 year period, the top-three performing stocks have been the finance firms ICICI Bank (then ICICI), HDFC Bank and HDFC , in which Rs 10,000 invested would have grown about to Rs 49,696, Rs 49,366 and Rs 41,657, respectively. While the bottom-three performers, who were then part of the Nifty, are TVS Motor , MTNL and NIIT , in which Rs 1,000 invested would have become Rs 364, Rs 179 and Rs 178, respectively. But more interestingly, the Nifty itself has witnessed a major churn, with several stocks then no longer being part of the index today. Only about 20 stocks out of the original Nifty 50 stocks in 1999 continue to be part of the index. These are ACC , Ambuja Cement , Asian Paints , Bajaj Auto , BHEL , Cipla , Grasim , HDFC Bank , HDFC , Hero MotoCorp , Hindalco , HUL , ITC , ICICI Bank , Infosys , L&T , M&M , SBI , Tata Motors and Tata Steel . This goes against the wisdom of investing in a portfolio of bluechip stocks and forgetting about them (which comes close to the argument of indexing) as bluechip stocks today may fall by the wayside tomorrow. Admittedly though, investors today have access to index funds and ETFs that automatically reconstitute their portfolios in line with changes in the benchmark index, which would give buy-and-hold-ers a sound night of sleep.
|Nifty constituent (Latest name)||Price on Nov 9, 1999||Price on Nov 7, 2014||Absolute return (%)||Rs 1000 grown into|
|Bank Of India||21.9||286.5||1208.22||13082.19178|
|Bharat Heavy Electricals||26.8||249||829.1||9291.044776|
|Great Eastern Shipping Company||21.2||398.95||1781.84||18818.39623|
|Housing Development Finance Corporation||26.4||1099.75||4065.72||41657.19697|
|Indian Petrochemicals Corp*||NA||NA||NA||NA|
|Aditya Birla Nuvo||69.78||1738.65||2391.62||24916.16509|
|Larsen and Toubro||66.35||1653.8||2392.54||24925.39563|
|Mahanagar Telephone Nigam||171.4||30.65||-82.12||178.8214702|
|Mahindra and Mahindra||88.88||1239.1||1294.13||13941.26913|
|Oriental Bank of Commerce||41.3||291.4||605.57||7055.690073|
|Procter and Gamble Hygiene and Health Care||600||5833.55||872.26||9722.583333|
|GlaxoSmithkline Consumer HealthcareÂ||642||5677.95||784.42||8844.158879|
|State Bank of India||233.99||2742.5||1072.06||11720.58635|
|Tata Global Beverage||54.5||160.9||195.23||2952.293578|
Data complied by Captialine.