There are 100s of papers pointing to the fact that “In an efficient market, portfolio managers cannot beat the market (once compensated for the management fees)”. If you also subscribe to this theory, the chart below from the 10th July closing price might give you some tips. Please note this was constructed when market was at an all time high. If a 10% correction happens, your money can buy you more stocks and help reduce tracking error further.
| Sector | Stock Name | Weightage (%) in index | Share price | no of shares | Actual investment | Portfolio weightage |
| ALUMINIUM | Hindalco Industries Ltd. | 0.77 | 3726.05 | 3 | 11,178 | 0.75 |
| AUTO ANCILLARIES | Bosch Ltd. | 0.59 | 662.85 | 13 | 8,617 | 0.58 |
| AUTOMOBILES – 2 AND 3 WHEELERS | Bajaj Auto Ltd. | 1.05 | 2731.9 | 6 | 16,391 | 1.10 |
| Hero MotoCorp Ltd. | 1.33 | 1673 | 12 | 20,076 | 1.34 | |
| AUTOMOBILES – 4 WHEELERS | Eicher Motors Ltd. | 1 | 28039.9 | 1 | 28,040 | 1.88 |
| Mahindra & Mahindra Ltd. | 1.75 | 1366.5 | 19 | 25,964 | 1.74 | |
| Maruti Suzuki India Ltd. | 2.67 | 7440 | 5 | 37,200 | 2.49 | |
| Tata Motors Ltd DVR | 0.37 | 268.25 | 21 | 5,633 | 0.38 | |
| Tata Motors Ltd. | 2.26 | 83.5 | 406 | 33,901 | 2.27 | |
| BANKS | Axis Bank Ltd. | 2.45 | 510.5 | 72 | 36,756 | 2.46 |
| Bank of Baroda | 0.42 | 166.5 | 38 | 6,327 | 0.42 | |
| HDFC Bank Ltd. | 9.3 | 1639.95 | 85 | 139,396 | 9.32 | |
| ICICI Bank Ltd. | 5.17 | 1070.4 | 72 | 77,069 | 5.15 | |
| IndusInd Bank Ltd. | 2.06 | 383.6 | 81 | 31,072 | 2.08 | |
| Kotak Mahindra Bank Ltd. | 3.23 | 963.35 | 50 | 48,168 | 3.22 | |
| State Bank of India | 2.82 | 285.25 | 148 | 42,217 | 2.82 | |
| Yes Bank Ltd. | 1.49 | 1511.2 | 15 | 22,668 | 1.52 | |
| CEMENT AND CEMENT PRODUCTS | ACC Ltd. | 0.37 | 1629 | 3 | 4,887 | 0.33 |
| Ambuja Cements Ltd. | 0.5 | 254.25 | 30 | 7,628 | 0.51 | |
| UltraTech Cement Ltd. | 1.15 | 4145 | 4 | 16,580 | 1.11 | |
| CIGARETTES | I T C Ltd. | 7.65 | 291.65 | 394 | 114,910 | 7.69 |
| COMPUTERS – SOFTWARE | HCL Technologies Ltd. | 1.35 | 849.5 | 24 | 20,388 | 1.36 |
| Infosys Ltd. | 5.19 | 332.9 | 234 | 77,899 | 5.21 | |
| Tata Consultancy Services Ltd. | 3.49 | 447.7 | 117 | 52,381 | 3.50 | |
| Tech Mahindra Ltd. | 0.66 | 383.8 | 26 | 9,979 | 0.67 | |
| Wipro Ltd. | 0.91 | 268.5 | 51 | 13,694 | 0.92 | |
| DIVERSIFIED | Hindustan Unilever Ltd. | 2.14 | 196 | 164 | 32,144 | 2.15 |
| ENGINEERING | Larsen & Toubro Ltd. | 3.85 | 1734.5 | 33 | 57,239 | 3.83 |
| FINANCE – HOUSING | Housing Development Finance Corporation Ltd. | 7.13 | 1097 | 98 | 107,506 | 7.19 |
| Indiabulls Housing Finance Ltd. | 0.96 | 1560.75 | 9 | 14,047 | 0.94 | |
| GAS | GAIL (India) Ltd. | 0.65 | 364.4 | 27 | 9,839 | 0.66 |
| MEDIA & ENTERTAINMENT | Zee Entertainment Enterprises Ltd. | 0.75 | 504.3 | 22 | 11,095 | 0.74 |
| MINING | Coal India Ltd. | 0.88 | 258.55 | 51 | 13,186 | 0.88 |
| Vedanta Ltd. | 1.29 | 260.75 | 74 | 19,296 | 1.29 | |
| OIL EXPLORATION/PRODUCTION | Oil & Natural Gas Corporation Ltd. | 1.23 | 161.85 | 114 | 18,451 | 1.23 |
| PAINTS | Asian Paints Ltd. | 1.38 | 1126.8 | 18 | 20,282 | 1.36 |
| PHARMACEUTICALS | Aurobindo Pharma Ltd. | 0.53 | 711 | 11 | 7,821 | 0.52 |
| Cipla Ltd. | 0.78 | 548.75 | 21 | 11,524 | 0.77 | |
| Dr. Reddy’s Laboratories Ltd. | 0.9 | 2725 | 5 | 13,625 | 0.91 | |
| Lupin Ltd. | 0.7 | 1148.5 | 9 | 10,337 | 0.69 | |
| Sun Pharmaceutical Industries Ltd. | 1.7 | 563 | 45 | 25,335 | 1.69 | |
| POWER | NTPC Ltd. | 1.09 | 160.1 | 102 | 16,330 | 1.09 |
| Power Grid Corporation of India Ltd. | 1.29 | 211.65 | 91 | 19,260 | 1.29 | |
| Tata Power Co. Ltd. | 0.41 | 558.85 | 11 | 6,147 | 0.41 | |
| REFINERIES | Bharat Petroleum Corporation Ltd. | 0.92 | 404.5 | 34 | 13,753 | 0.92 |
| Indian Oil Corporation Ltd. | 1.09 | 955.3 | 17 | 16,240 | 1.09 | |
| Reliance Industries Ltd. | 6.36 | 1489.55 | 64 | 95,331 | 6.38 | |
| SHIPPING | Adani Ports and Special Economic Zone Ltd. | 0.81 | 375 | 32 | 12,000 | 0.80 |
| STEEL AND STEEL PRODUCTS | Tata Steel Ltd. | 1.02 | 2432.1 | 6 | 14,593 | 0.98 |
| TELECOMMUNICATION – EQUIPMENT | Bharti Infratel Ltd. | 0.73 | 23832.05 | – | – | – |
| TELECOMMUNICATION – SERVICES | Bharti Airtel Ltd. | 1.39 | 408.8 | 51 | 20,849 | 1.39 |
| Grand Total | 99.98 | 104914.05 | 3,039 | 1,495,244 | 100.00 |
The reason for this 2% error: Bharti Infratel (not a fancy stock but still has a high stock price) making it hard to incorporate in the portfolio. Also Tata Motors & Tata Motor DVR are two separate scripts. If you choose one of the two, your tracking error can be further reduced.
Please note I am a passive investor. I trade only 1-2 times in a quarter. This strategy will involve trading one day in a month to rebalance.
Filed under: Musings
This post first appeared on E-Nagar | India News, Economy, Deceptions, Everyday Tit-bits| Mango-Man Since 2005, please read the originial post: here
