On Shariah Tolerant Stocks in India


We began with constituent stocks of S&P BSE TASIS 50 index.(The list can be downloaded from here). The following screens are applied:
1. We apply a criterion based on Profit after Tax from Operations. 2 stocks are deleted in this stage. Interestingly all of the remaining stocks have a positive PAT.
2. Next, using annual sales growth, stocks having any negative growth in the preceding three years based on the latest available sales figure (in PROWESS database) have been screened out. After this screen, we are left with 28 stocks.
3. Finally, we applied the next stringent criteria; the BM ratio. Stocks having book values less than 1/5th of their market price are excluded.
The list of stocks remaining after the screening of already screened stocks (based on business and financial ratios requirements of Shariah), we are left with the following 14 stocks:
S.No.
Stocks
BM
Betaa
1
C E S C Ltd.
0.980
0.75
2
Crompton Greaves Ltd.
0.80
2.06
3
Bharti Airtel Ltd.
0.729
0.81
4
Tata Global Beverages Ltd.
0.393
1.17
5
M R F Ltd.
0.370
1.04
6
Wipro Ltd.
0.367
0.47
7
Glenmark Pharmaceuticals Ltd.
0.333
0.89
8
Tech Mahindra Ltd.
0.318
0.99
9
Mindtree Ltd.
0.299
0.61
10
Cipla Ltd.
0.283
0.65
11
Ultratech Cement Ltd.
0.248
1.23
12
Divi'S Laboratories Ltd.
0.234
0.89
13
Apollo Hospitals Enterprise Ltd.
0.218
0.63
14
Dr. Reddy'S Laboratories Ltd.
0.210
0.83

a Betas have been computed using daily prices between 1st  March, 2016 to 1st March 2017 relative to BSE500 index.

The above table also shows the betas of these stocks. A cursory look at the betas suggests that majority of these “relatively undervalued” stocks are not market sensitive. Four out of 14 stocks have a market beta of >1 rest are low beta stocks having beta <1. 


Disclaimer: This list is only for informational purpose. Dealing in equities is one of the riskiest investment in the world. So please be informed as much as you can before taking any decision in this regard.

Comments

  1. BasheerFebruary 13, 2018 at 8:00 AM

    how can we ensure we have an updated list everytime there is a change in constituents?

    ReplyDelete
  2. Tariq AzizMarch 12, 2018 at 11:22 PM

    S&P BSE TASIS 50 index has been discontinued by the BSE. An alternative broad-based Shariah Index has been introduced by BSE and Dow Jones "S&P BSE 500 Shariah". The details of the Index can be found here http://www.asiaindex.co.in/indices/equity/sp-bse-500-shariah

    ReplyDelete
  3. xameeramirOctober 27, 2019 at 3:41 AM

    We need a updated list every time the stocks gets updated This website seems pretty useful https://www.ansaar.in/

    ReplyDelete

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