InvestorQ : What attitude should I carry for current markets and become a winner? Sir, can you share your views on TATA Steel, Asian Paints.
Shreya Karn made post

What attitude should I carry for current markets and become a winner? Sir, can you share your views on TATA Steel, Asian Paints.

K V RAO answered.
3 years ago
Stocks included in Sensex have become darling of lazy but active investors. Why we brand them "lazy"? Because they don't study Sensex companies and take for granted without doing any homework even as they commit lakhs or crores of rupees. But "active" label owes to their immense interest in keeping those stocks in their portfolio.

This brief note insists on revisiting Sensex members on a case to case basis to get into nuances of certain companies. If any Sensex company has not been commented, it only means that we don't have the data to support our hypothesis. It also doesn't mean that those companies deserve to continue as Sensex member. Let's us first take Tata group(Tata Steel, TCS, Tata Motors). After the merger of Corus with Tata Steel, the company lost its importance (variable of performance) in the steel sector though in terms of size it gets dominance.

Again like Tata Steel, Tata Motors carries the baggage of two foreign auto companies. Not only this, private use of Tata Motors has declined and perceived more as a cab than a private car. It's market share has been declining fast and the company has never vetted dealers lazy response (compare this to the energetic attitude of M&M)to demands.Of course, Tata Motors has been dropped from Sensex with effect from 23 December 2019. As for TCS, with the group depending on this company for maintaining the coveted position of the group, it carries huge responsibility. Imagine one company in the whole universe of the group carrying the baton. Not a desirable phenomenon.

Further, Mistry-Ratan Tata episode will have ill effects on the group. The fact that succession issue in Tata group is still a big issue and would haunt the management. Now let's look at the FMCG leader HUL. Patanjali has knocked out its complacency and forced it to revisit it's dominant position. It's powerful parent no doubt has been infusing funds to keep its competitive position but how far HUL can carry on its " business as usual" attitude is a big question. Now the big "dada" of banking sector. You guessed it right. SBI's commanding position in total business handled by it (Banker to the Nation) unfortunately does not make it eligible for an equivalent position when it comes to market capitalisation. The market now takes over and has been rewarding private sector players(read HDFCBank, Kotak Bank).

What about Asian Paints? The only paint company in the Sensex. Recently the environment ministry issued a notice regarding its negative contribution to the environment due to inadequate pollution control equipments. A new project comprising these equipments will easily involve huge capital expenditure and a big dent on its revenue. Even a banking sector leader (read HDFC Bank) has succession issue as it's top executive Aditya Puri has put in papers. It's difficult to replace Puri (too good to believe) and the issue is pending during the last 9 months. Parekh- Puri duo have steered the Bank to enviable heights.

Pharmaceutical companies(read Cipla, Dr. Reddy's) have always been the target of foreign regulators with their fluctuating fortunes.

After reading this brief note, would you still believe in lazy investing? A revisit to your portfolio is overdue. Think of the NEXT INFOSYS, the NEXT BANK, likewise the NEXT......, the NEXT....., the NEXT.......from different sectors, especially the mid cap companies. If you're able to identify these candidates, you will be the NEXT WINNER.