Hitesh portfolio

[hitesh2710]

@Rudresh

At the time of announcement of dr reddys settlement for revlimid, there was some message going around on whatsapp that natco claimed that it had a better settlement with the innovator than drl. I dont know if its true or not since I dont track it too closely.

However if the above rumour/news is true, the impact of a big molecule like revlimid on natco will be very high in terms of spike in profits as compared to that on drl. Mainly because natco is a much smaller co as compared to drl and even a single molecule can make a huge impact on natco. Hence I think the strong upmove in natco. But if I were invested in natco, I would make sure to read the fine print and try to understand the impact of the molecule and act accordingly.

[hitesh2710]

@Caution_Investor

I am personally invested in Wipro. I could see similar patterns on charts of most large cap IT stocks like wipro, infy, tcs, hcl tech. Ended up buying wipro mainly because I could see technical targets clearly. Around 282-84, there was a clear flag breakout with target of 360.

I thought one could have picked a combination of all large cap IT stocks or pick a couple of them and there could be good trading gains. Part of that has played out in stock price movement and maybe some more to come. Some technical analysts are predicting that IT will outperform markets big time over next year or two. Need to see how it plays out.

[hary197]

Hiteshbhai,

What are your views on IOLCP? It’s ROCE is 68.87%, PE is 12 & profits are growing consistently since 2017. is it a good bet for the next 2-3 years?

[hitesh2710]

@SOHAN

Exit from any stock is a difficult thing to get consistently right. But from whatever I have seen on technicals, usually when pattern targets are achieved, one can book partial if not full profits.

The other way to go about exits is to raise trailing stop losses as the stock price keeps going up. But here the risk of whipsaws remains. Whenever a stock reverses from strong uptrend, there is a lot of volatility and hence high chance of getting stopped out unless one keeps deep stop losses.

What I do sometimes is to keep a sort of systemic sell plan. Here we sell predecided quantity at predecided levels of stock price and reduce holding to comfortable levels.

But there is no holy grail for selliing, so one has to devise one’s own methods. One can combine fundamentals along with technicals also and see how things work out.

@hary197 I don’t follow BR, Valiant, or IOL CP. VP threads on respective topics are flush with opinions and you can go through them.

[hary197]

Hiteshbhai,

If you were to invest today, would you still take positions in Pharma & speciality chem co’s considering the high valuations? Is there still room to make decent returns [20% CAGR] in near to medium term?

Lets say by the end of FY21, covid looser sectors like banking , retail or leading co’s in other sectors also starts to perform well. Wouldn’t money equally flow back from todays winner sectors to looser sectors?

Isn’t it a too much of a risk for concentrating the portfolio in momentum stocks i.e. Pharma & speciality chem?

[hitesh2710]

@hary197

First of all there is a lot of hypothetical stuff being discussed I think. Inspite of that, there could be companies in pharma space which could offer decent returns looking at their prospects going ahead and development and newsflows that have happened. Sharp run ups have been seen in companies like laurus, solara, other api players.

But there are companies like alkem, alembic and many others which even at current levels seem ok and which i would be comfortable buying. In fact my buying price in alkem is close to current levels.

About other sectors doing well at end of fy 21 and such other hypothesis, that is a bridge we cross when we reach there. The prices of those companies are beaten down for a reason and I don’t want to divert my focus in areas where currently I don’t see business clarity or strength on charts.

If u are interested in pharma companies, go thru the relevant thread on VP, read the annual report, go thru concall and you will get an idea about whether the company is worth investing or not.

[hitesh2710]

The markets today have gone below the 11000 levels and there is a small head and shoulders pattern visible on the nifty with targets in the range of 10500-10600. The crucial level of 10800 should be watched closely as it is the region of 200 dema. If markets do not get supported there and go to the head and shoulders target region of 10500-600, then it seems sentiments will be hurt big time.

In line with above thesis, I have exited most of my major positions with varying degrees of profits and losses. I would hence forth keep a watchlist ready to re enter the companies I like and specifically where i can clearly see tailwinds emerging. As of now, sitting with a lot of cash after having had a good ride since past few months.

[Ansh_Gupta]

Hitesh Bhai,
Very curious to know what led to you selling a major chunk of your investments?

I am an avid reader of this thread and remember you saying that you’re on the lookout for ‘loss of momentum’ for your investments.

What happened today (and broadly for the past few days), is that a sign for loss of momentum as per you? (Is that maybe because since September is almost over and q2 results will be coming very soon, coupled with the fact that Moratorium period is over and the real picture of the economy will soon emerge?)

[rajguleria]

Holding on to my positions which i painstakingly built in Apr/ May …as those are the lowest rates for those stocks ( Consumption / Financials etc ) and i am still comfortably only 3% down at Portfolio level after today’s fall ( mainly due to the mistakes of 2018 ) – as what i bought in Apr/May is still more than 20/30% Up …so i am still watching this space and dont intend to sell but add to my positions if prices come to those lows of Apr-May …this strategy works for me hence sharing my own plan …Hitesh Sir what do u think of this plan of action …would appreciate your critique on this ?

[hitesh2710]

@Ansh_Gupta

In the first place I was never convinced about the merits of this rally. But when you are invited for a free lunch with no strings attached, and especially when you have nothing better to do, you don’t say no.

I was clearly seeing momentum in the markets and my theory is if you can’t beat them, join them. I was lucky to find momentum in pharma stocks and being convinced about the business prospects, joined the party. But at some point every party has to end. So my logic is if I have to panic, i have to do it early before I get mauled badly. This was a mistake I made in March and by the time I sold most of my holdings, I was down 20-25%. But now that I have had a phenomenal run, I don’t want to try to be too clever and stretch my luck. Hence today was the turning point for me.

The most important part of the chart for me was the huge BAR REVERSAL on nifty on 31st August. The head and shoulders breakdown merely completes the picture. When a big bar reversal candlestick happens at what looks like a top, it is a significant observation.
And when its followed by a H&S breakdown, there is additional follow up proof to the bearish thesis.

I myself tend to think clearly during market correction when I don’t have too many positions. Besides currently I want to preserve the gains enjoyed in past 2-3 months. There are times to be attacking and times to be defensive. Current market seems to be the time to play defensive.

The other views of sitting tight in view of expected good earnings is all ok if it were not for a mega event like the pandemic. I do not yet know what are going to be its complications on economy and markets.

Hence for me, there is too much uncertainty around that’s making me nervous. So knowing myself as a momentum investor , my course of action is to act, when I see a shift in momentum. There will be a few of my portfolio stocks which might go up, but I don’t know which ones. So better be safe than sorry.

This is my thesis and I have acted on that. I can be wrong on my thesis or on my action or both. But I believe on acting quickly if I am investing based largely on momentum.

[Malkd]

Hey Hitesh. This is just a general question regards the nifty and our portfolios and not directed towards your momentum based strategy(though it obviously takes inspiration from it). Is the nifty really a reliable indicator of a downtrend/uptrend? The nifty is made up of companies that are in the oil industry/PSUs(dying sectors) and Auto/Cement/Metals(Cyclicals) along with leveraged companies(banks) and overvalued 30+ PE companies many of whom are in stagnant growth phase. Considering one’s portfolio may not have any of those companies and may be restricted to only a few sectors(FMCG, Pharma, chemical, digital) for whom we have some good earnings visibility and who may be undervalued( in comparison to the nifty companies ) then isn’t the nifty actually a bad indicator for one’s own portfolio especially if almost none of ones portfolio comprises any companies from the nifty since these companies have their own aforementioned reasons to fall/stagnate? Would it not be more prudent to work with supports of one’s own companies and maybe the weighted average of one’s own portfolio for a better indicator of when to expect a crash/rise within ones own portfolio? It’s always confused me why totally unrelated companies fall with the nifty too(I’m assuming it’s purely an emotional response from the market since these companies always rise back up again via earnings which are just a few weeks away now). For eg The nifty is just a pre determined chart based on giving weightages to x companies and x sectors based on mcap. If we assume that Pharma, chem, tech, FMCG, agro for eg have more weightage and the sectors above have less weightage just for the next few months(and not based only on arbitrary mcap) then we’d have a nifty which looks healthy in the charts. If we were to create that with our own portfolios ie increase weightage towards unaffected and booming sectors wouldn’t that be a better indicator on when to expect a crash in our own portfolios? Cheers.

[oash]

Hi Hitesh,

Thanks for all your wonderful insights and advice/suggestions on nitti-gritties of stock market.

Would you care to opine on the probable causes for the rally since April and its recent rapid fall? There are a lot of theories going around: low interest rates, lot of liquidity in the market, no other comparable attractive investment option, a phenomenal increase in the number of new investors trying their luck, exaggerated expectation about rapid economic recovery or over subscriptions for successive recent IPOs……

[Aj99]

Hitesh bhai,
I have learnt so much from this forum . Your replies are like a treat for Investors.The way you articulate your thoughts is very interesting and easy to understand for beginners. I refer this forum as one of an investment books and make notes from your replies.
As you told you will re enter again in companies you like, and where you can see tailwind emerging. Which sectors and companies are on your watchlist?
How to identify sectors, where tailwinds are emerging?
Thanks.

[james_kerala]

Dear Hiteshji,

Thank you for clearly articulating your views.

@hitesh2710

, I have exited most of my major positions with varying degrees of profits and losses.

Would this means that you exited most of your pharma positions like Alkem, APL etc as well as you were heavy of pharma if I remember correctly? If yes, that would mean that you would expect pharma and speciality chemicals pack also would correct allowing better entry points. Like to know if you are holding on tightly to any names based on fundamentals in this correction, if you can reveal.

[Caution_Investor]

At first, I was really shocked. But then Hitesh Ji is different and his style is different. If in near future markets were to turn around he knows exactly when to enter and which stock. He is a techno-funda guy. But how many of us have such insights in the markets.

I am watching this space closely…

[hitesh2710]

@james_kerala

For stock prices to rise consistently and provide reasonably good returns, the markets also have to be uptrending. The argument against this is that there will be some stocks which will go up and even become multibaggers in a declining market too. Well, good luck to those folks. Even if there are multibaggers in a downtrending market, base rate of finding them is very low. And latching on to them and sticking through market corrections is a tough ask.

Its a matter of common sense that its much easier to make money when markets are in a strong uptrend. So if I feel that markets in general have turned weak, prices of even fundamentally strong companies could go sideways/down.

Among the pharma pack, I hold cipla, trimmed positions in alembic and have not scaled up the initial allocation in alkem. Booked profits in dr reddys at around 5400-5500 which was the technical target I had mentioned when I put up the chart of Dr reddys on 52 week high thread. I would re consider it once it settles down into a consolidation mode.

Sectors under my watchlist remain same as before, which is pharma, speciality chemicals and agrochem. Another theme I like is the agro based theme which includes all things to do with agriculture. Tractors, pipes, fertilisers, agrochem products, etc. But this is only a sector currently under watchlist and no action as of now.

My thesis is that having ridden the unexpected rally, I would prefer to be in profit perservation mode. This can change if markets were to change direction in a convincing manner.

For those with a very long term horizon of 3,5,10 years, or those who believe in coffee can investing, no action is usually the best action and they can sit back and stay invested. For someone like me who relies heavily on momentum in markets and in stocks I have invested in, its time to sit up and take notice. Idea should be to know oneself as an investor and act accordingly. “Suno sabki, karo man ki.”

@Aj99 Sectors in watchlist are listed above. Besides these, I would keenly watch out for any new sectors which start showing consistent strength. That will be visible when markets make a comeback from the ongoing correction. (wherever and whenever it ends.)

[Ajjugattu]

@hitesh2710
Hitesh sir,
There are certain stocks that are showing strength for example Vaibhav global. Does this mean they will be leaders going forward? Because the stock is not at all participating in the market fall but consistently goes up.

[Himanshu_Nigam]

Thanks for your views and detailed posts. Since you mentioned Agro/Agrochem sector currently being in your watchlist, wanted to know your views on Bayer Cropscience, in case this is one of the companies you’re keeping track of.

[rkirana]

Dear Hitesh Sir,

Very surprised you sold all your holdings yesterday.
The Nifty breaking 200-DMA has nothing to do with individual stocks breaking 200-DMA. I believe the high momentum stocks will continue to garner greater momentum

Thanks

[hitesh2710]

@rkirana

Nifty today respected the 200 dema and bounced strongly from that level. But I would look out for how markets behave next week. If there is a strong follow up buying post today’s rally next week, we might have a shot at taking out the recent swing high of 11794 and going higher towards all time high.

But as long as the head and shoulders pattern is not negated convincingly, I would prefer to remain sceptical. For me, getting out was a calculated gamble considering the potential risk reward. There were two very crucial patterns namely a big bar reversal followed by a head and shoulders pattern breakdown. For me, who believes in following technicals this is an important pattern that has played out. Usually post a head and shoulders breakdown, there is a pull back to re test the neckline which currently stands at 11200-300. I would keenly watch that level and see how markets behave at those levels. Whether there is hesitation there and resumption of fall or the upmove takes out the previous swing high mantioned earlier.

Coming to the importance of the 200 dema, I have seen in the past also that whenever the 200 dema gets taken out things tend to get sticky and markets often correct swiftly. And in a bear market, its difficult to make money on the long side. I think the current rally has erased the scars of the Feb-March fall and the memories of how precipitous falls in individual stock prices can be.

I usually do not have any problems to change my stance when I see evidence that does not match my thesis. One cannot afford to have ego issues of being always right. I do not want to sound alarmist but remain cautious. Idea should be to course correct as soon as one is confident. As of now fingers crossed. So better to sit on sidelines.