Investing In MNC Stocks


Though MNCs shock shareholders occasionally as when they decide to delist or pay hefty royalties, they have always rewarded investors handsomely. In fact, MNCs have been wealth creators for investors across time cycles. Even in turbulent times such as the last three years ended March 14, the CNX MNC index has returned 7.93% compounded annual growth rate (CAGR) against 5.55% CAGR returns generated by CNX Nifty. That is why MNC shares are good for long term investments.

There are some corporate governance issues in this space. But the management quality is good and investors  can consider MNC shares for investment with a three-year time frame.

The CNX MNC index consists of eight different sectors that fall in both — defensive and cyclical segments. Defensive include FMCG, IT and pharma whereas cyclical include metals, industrials, chemicals, consumer discretionary. Defensive MNC stocks do well on the bourses in tough economic times when the overall economic growth is anaemic. Cyclical stocks  suffer  during low-economic growth. So investors can invest in MNC cyclical stocks during downturns to harvest a gain when recovery takes place.  Read more of this post

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