By S M Wasiullah,
Vikram Samvat is a lunisideral calendar and uses lunar months and sidereal years for timekeeping. This calendar is used by Hindu community in India. The legendary Indian King Vikramaditya is said to have been the founder of Vikram Samvat calendar.
On the occasion of Samvat 2073 New Year, more than 70 stocks are recommended by various popular publications. It is presumed that these stocks were recommended by the concerned experts on the basis of their expected better performance in future.
Out of the 70 recommended stocks we have randomly selected only 25 stocks for current analysis. The selected stocks are analyzed on their Business compliance, Shariah compliance and Continuously Shariah compliance status and are presented before the investors.
When the selected 25 stocks are screened on the business compliance parameters, it is found that out of the 25 stocks 19 stocks qualify as business compliant stocks. This is around 76% of the selected stocks. Based on the sample of 25 stocks, it can be said that a large proportion of the total Samvat 2073 recommended stocks are business compliant according to Shariah.
Similarly, when the business compliant stocks are screened on the financial parameters, it is found that out of the 19 stocks 8 stocks qualify as Shariah compliant stocks. This is around 42% of the business compliant stocks and 32% of the total 25 selected stocks. In this case also it can be said that the Shariah compliant stocks constitute a notable proportion of the total number of stocks recommended as better performers in the market for Samvat 2073.
When the compliance history of the Shariah compliant stocks is tracked it is found that out of 8 Shariah compliant stocks 4 stocks are compliant for last 36 months (3 years) and 4 stocks are compliant for last 60 months (5 years). It means out of 8 Shariah compliant stocks 50% are continuously compliant for last 36 months and 50% are continuously compliant for last 60 months. In terms of total selected sample stocks, 16% stocks are continuously compliant for last 36 months and 16% stocks are continuously compliant for last 60 months. Please refer to Table-1 below for more details.
Table-1: Shariah Analysis of 25 Stocks in the News
| S. No. | Name of the Stock/ Company | BSE Scrip Code | NSE Symbol | Business Compliant | Shariah Compliant | Continuously Shariah Compliant | |
| 36 Months | 60 Months | ||||||
| 1 | Arvind Ltd. | 500101 | ARVIND | Y | N | N | N |
| 2 | Ashok Leyland Ltd. | 500477 | ASHOKLEY | Y | N | N | N |
| 3 | Axis Bank Ltd. | 532215 | AXISBANK | N | N | N | N |
| 4 | Cipla Ltd. | 500087 | CIPLA | Y | Y | Y | Y |
| 5 | Dewan Housing Finance Corpn. Ltd. | 511072 | DHFL | N | N | N | N |
| 6 | Engineers India Ltd. | 532178 | ENGINERSIN | Y | N | N | N |
| 7 | Equitas Holdings Ltd. | 539844 | EQUITAS | N | N | N | N |
| 8 | Finolex Cables Ltd. | 500144 | FINCABLES | Y | Y | Y | Y |
| 9 | Globus Spirits Ltd. | 533104 | GLOBUSSPR | N | N | N | N |
| 10 | H C L Technologies Ltd. | 532281 | HCLTECH | Y | N | N | N |
| 11 | H D F C Bank Ltd. | 500180 | HDFCBANK | N | N | N | N |
| 12 | India Cements Ltd. | 530005 | INDIACEM | Y | N | N | N |
| 13 | Infosys Ltd. | 500209 | INFY | Y | N | N | N |
| 14 | Kansai Nerolac Paints Ltd. | 500165 | KANSAINER | Y | Y | Y | Y |
| 15 | Kei Industries Ltd. | 517569 | KEI | Y | N | N | N |
| 16 | Mahindra Lifespace Developers Ltd. | 532313 | MAHLIFE | Y | N | N | N |
| 17 | Natco Pharma Ltd. | 524816 | NATCOPHARM | Y | Y | N | N |
| 18 | Navkar Corporation Ltd. | 539332 | NAVKARCORP | Y | N | N | N |
| 19 | Nilkamal Ltd. | 523385 | NILKAMAL | Y | Y | N | N |
| 20 | Nocil Ltd. | 500730 | NOCIL | Y | Y | Y | Y |
| 21 | Persistent Systems Ltd. | 533179 | PERSISTENT | Y | N | N | N |
| 22 | Power Mech Projects Ltd. | 539302 | POWERMECH | Y | Y | N | N |
| 23 | S H Kelkar & Co. Ltd. | 539450 | SHK | Y | Y | N | N |
| 24 | Sanghvi Movers Ltd. | 530073 | SANGHVIMOV | Y | N | N | N |
| 25 | Satin Creditcare Network Ltd. | 539404 | SATIN | N | N | N | N |
It is hoped that the above information can help investors seeking Shariah compliant investments to identify those stocks which are Shariah compliant out of the 25 stocks discussed above for investment. As Shariah compliance status of stocks is subject to change, Shariah conscious investors could choose to focus on those stocks which tend to be compliant over an extended period.
Notes:
1) These stocks were randomly chosen from the newspapers and web-portals in which they were recommended and published on the occasion of Samvat 2073.
2) Y indicates ‘Yes’ and N indicates ‘No’ in the table.
3) Shariah Compliant status as on 31.10.2016.
4) TASIS does not take any responsibility for the future performance as well as future Shariah compliance status of these stocks.
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[Mr. S M Wasiullah is Manager at Taqwaa Advisory and Shariah Investment Solutions (TASIS) Private Limited, which is India’s premier Shariah Finance advisory institution in India located at Mumbai. He is also pursuing Ph.D in Management in the area of Islamic Finance. He can be reached on wasi@tasis.in ]
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