Between 2010 and 2014: the two best performing stocks in index: 1. Sun Pharma and 2. TCS. They were the Leaders.
Sun Pharma: The stock broke out above 150 in Feb 2010. Post breakout, the stock consolidated till May 2010 and then just took off. On the way up, it took support at 50 week moving average and rallied relentlessly. By October 2013 - the stock reached 650. A move of 4.3x in span of 3.5 years.
When in October 2013 - the broader market was turning around - Sun Pharma stock started under performing. It became frustrating for the investors and when the entire market was rallying, this stock was coming off sharply. As a matter of fact, the stock sold off in the week of election results. It looked like the end of Leadership perdiod....but remember never bet against the leadership.
Sun Pharma delivered one of the best bounce from 50 week moving average again and stock today is at NEW LIFE TIME HIGH well above 650 right at 723. A move of 24% in just 1.5 months.
Here's the weekly chart
The same is the case with TCS with stock now at life time high. The lesson is pretty clear: Never bet against leadership. They deliver the best returns even when you think they have done their bit.
Disclaimer – The state of the market notes is Deepak’s perspective on the market. The column is purely for educational purpose. Nothing contained herein is a solicitation to trade or a recommendation of a specific trade. By reading this publication you agree to make no trade relying in whole or in part on the comments of the writers