Thursday, May 14, 2009

Building a mid-cap, small-cap portflio

I am thinking of building a mid/small cap portfolio of not more than 10 stocks with a part of my monthly investable surplus. The strategy that I have thought of is to have a 70:30 debt:equity ration. So, I will be putting about 30% each month in either a recurring deposit or PPF. The rest of 70% I am planning to break up into two chunks of 40% and 30% each of mid-cap/small-cap stocks and equity mutual fund SIPs respectively.
In the equity mutual fund space, I think I will focus more on large cap funds like HDFC Equity, Franklin Templeton Prima Plus and Reliance Vision with an allocation of 10% each.
Amongst the stocks that I am currently looking at are:
1. Opto Circuits
2. Sintex Industries
3. Yes Bank
4. Sundaram Transport Finance
5. Bartronics
6. ICSA
7. Everest Kanto Cyclinders
8. Power Finance Corp
9. IDFC
10. Voltamp Transformer
11. Punj Llyod
12. Savita Chemical
13. Pidilite
14. Blue Star
15. Voltas

And maybe a couple of cyclicals/special situations like Tata Steel, Tata Motors, Grasim, Ambuja Cement, McLeod Russel etc.

The idea is to look for growing companies which can deliver superior returns over a 3-5 year horizon. Companies with high RoE/RoCE, + cashflow, stability of earnings, industry scalability is something to be looked at.

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