16 sweeter for loyal investors this Sept

ALL those who stayed invested throughout the Sensex's journey from 16K in 2007 to 16K in the current market have reasons to smile. At almost the same level of the index, some of the blue-chip companies in their portfolios are valued much higher than the 2007 level.      PSU oil major ONGC tops the list of outperformers. Its market capitalisation amounted to Rs 2,48,305 crore on Friday, when the Sensex closed at 16,741. This was substantially higher than Rs 1,92, 822 crore on September 19, 2007, when the index for the first time breached the 16,000 to close at 16,323. Investor wealth in ONGC increased by 29% against the 2.6% rise in the index during the period. ONGC is followed by Jindal Steel & Power, the State Bank of India (SBI), Indian Oil Corporation (IOC), Infosys and Reliance Industries (RIL), the market cap of which rose between 9% and 308% in the past two years. Analysts attribute the striking difference in the valuations at two different periods to a sectoral shift in market focus.      "A change in macro dynamics in the past two years has resulted in a change in sectoral leadership. Last time, realty and infrastructure sectors had led the rally while the current market is driven by IT, banking and oil & gas sectors," said Mumbai-based retail broking firm Sharekhan's head of research Gaurav Dua.      Analysts, however, would like to take a cautious view on those highly-valued companies where valuations are driven by expectations of positive company or sector-related developments. There may be a risk of downward correction if the expectations are not met, they feel. Growing demand makes power cos a good bet  ONGC has been outperforming the market for the past few months on hopes of the government lowering the subsidy burden of oil companies in general, which according to analysts, looks uncertain.      Foreign brokerage firm Macquarie, in its report on ONGC, has said the earnings upside for the company is capped, as it is likely to report a decline in earnings for the second consecutive year in 2009-10, despite the expected decline in subsidy burden.      Jindal Steel & Power (JSPL) has seen a threefold rise in market cap to Rs 58,916 crore since September 2007. Analysts feel power generation and equipment companies have a good potential for growth, as electricity demand is on the rise. Besides, there is continued slippage in new power capacity addition programmes.      "While there should be continued demand for power equipment, we believe a better play in the Indian power sector may be a company with business model like JSPL," said Deutsche Bank in its past month's research report on 'Indian Infrastructure'.      Apart from ONGC and JSPL, few other notable companies that are enjoying substantially higher valuations than when the Sensex was last at 16K, are SBI, IOC, Infosys, and RIL.      Robust April-June quarter numbers seem to have helped push up SBI's valuation, with its shares recording 27% jump in the past one month. IOC also saw good action partly on the back of the liberal 1:1 bonus announced by the company recently. The stock recorded a monthly gain of 12% to close at Rs 653 on Friday.      vijay.gurav@timesgroup.com