@hitesh2710 Sir, any book recommendations?
@hitesh2710 Sir, I have been trading a lot in Junk/microcap stock universe recently considering the rally that is happening in that part of the market… I wanted to understand what would be the ideal minimum daily average liquidity cutoff to consider? (Currently, I am considering only stocks which on average have at least 50L worth of daily trading value in the past 3 weeks and have not faced much problem. But I have not been able to find any formula or thumbrule for this online) Assuming I want to invest about Rs 5 lakh per pick, what should be my daily volume/value filter? I am doing a kind of swing trading / momentum trading where holding period can vary from few days to few weeks and in rare cases where the stock keeps going up, it can be months also… I don’t mind impact costs of few percentage points but I should ideally be able to buy or dispose stocks in one day by placing limit orders… Please suggest. Thanks
Gaps are basically of four types.
First is the common gap which is usually of little significance. It happens during periods of consolidation and gets filled up quickly and does not assume too much importance.
Second is a breakaway gap. This is a very important occurence in a stocks breakout. Stocks which have been stuck in trading range for long periods of time break out with gaps and then undergo strong change in trend from sideways to up. (or down as the case may be. ) Sometimes this gap remains unfilled if it is a small gap. If its a huge gap, there is often an attempt to fill the gap and part of it gets filled up. On some ocassions, the gap gets filled completely but the upmove resumes after this happens.
Third is the runaway gap. In strong uptrends where there are big upmoves, its common to see stocks gap up and move fast. This is an indication of strong momentum in the stock.
And the fourth is the exhaustion gap. After a prolonged rally stocks gap up only to correct and promptly fill up the gap and ultimately experience a halt or reversal in the upmove. This is often warning sign during an upmove.
An important even in the theory of gaps is ISLAND REVERSAL. Here suppose on the way down, there is a gap left behind between say price of 100 and 102. Now when the trend reverses, sometimes during the upmove, the stock gaps up within the same zone, say 100 to 103, or 100 to 102. This event is called island reversal and this zone often acts as a strong indicator of trend change and subsequently becomes a strong support.
@Anshan I dont track thirumalai chem too closely.
@Malhar_Manek I have mentioned books I prefer multiple times on this thread and on another thread specifically about investing books.
You are right. Lots of stocks showing bullish patterns and breakouts. Makes one wonder whether there is abundant froth in the markets.
I tend to be cautiously optimistic on the markets. As long as the bullish patterns play out I would be happy to stay invested. But once I see that a lot of patterns are failing, or in general there is loss of momentum in the broader markets, I would prefer to take a definite call.
While looking at volumes in small caps, it would be important to look at volumes during prior corrections. Usually on big breakout days, there is huge volume and even following few days, the volume is more than average. But when markets start correcting, volumes even in good companies dry up.
Idea should be to be choosy in the current frothy markets and try to catch small or midcaps which have sound fundamentals. Or if you like to get into kachra stocks, as they are called, there has to be definite exit plan. Idea should be to plan exit slightly before targets, or on days when there are big volumes.
It a tricky call playing poor quality names in current markets. Most names have started moving irrespective of fundamentals and hence we need to be focussing on companies wherein we can stay invested even if we are stuck because of whatever reason.
Any views on Hemisphere Properties.
778 Acer of Land
Tata as promoter
Valued at 20,000 CRS
Current Market cap 4000 CRS
Professor Sanjay Bakshi Invested
Some litigation on Pune Land ( 560 Acer )
For details please give a look on a Value picker
I dont think Tata are promoters. Here 1st page say, govt of India’s enterprise.
I am curious to know what your learnings have been with regard to your basket bet approach in a particular sector.
Generally the sector leader(s) pops initially and the rest of the pack gains strength little later. As we saw in case of Sugar lately, where Balrampur being sectoral leader was first to pop and gained strength right in beginning of March and was almost a doubler in 3ish months. Triveni started gaining strength in middle of April and became a 3x. Dhampur started moving in end of April and was a 2x. Shree Renuka and Bajaj Hindusthan joined party late in May beginning but gave a blasting 3x in matter of only a month.
As it has been seen many times - the weaker players go out to give much higher returns than leaders, when they join the party. But I am talking about this from little and recent experience that I have.
As per your experience, has it been better to keep moving the proceeds from weak positions (stocks which are going down after the bet is initiated) to strong positions as the thesis is playing out OR just stay put until the end OR keep booking profits from stronger positions and move to weaker hoping that they would catch-up the sectoral move little later and would provide much higher returns than leader(s).
Hi Hitesh, How do you view Aegis Logistics with them moving away from the core LPG business to the JV with Volpak? Even though they own 51% of the shares in the JV company can we at this point of time weigh in the business growth/loss (in short uncertainty) brought in with the deal and them venturing into new avenues of LNG? Thanks!
Seek your advise on the quant modelling - screener filter. I know you are not inclined into past number driven filters determining the choice of stocks. Rather it is the growth story and future outlook which you look for. I therefore, don’t seek feedback on individual scrips , rather some guidance on the over-arching theme and the filter . Do you see any major issue in the strategy.
Hi @hitesh2710 ,
In Israel there are concerns about the efficiency of Pfizer vaccine against the delta variant of covid-19. We don’t yet know the respective efficiency for other Vaccines. Even though, this is still an initial findings, but I think, virus is not likely to relent from creating new variants.
How do you see this as a risk to global equity and Indian equity.
Few times I have tried successfully to play sectoral plays especially basket approach, I think the key learning has been to first get into the sector leader because that’s where you get the first moves. Once the trend has been established by sector leader/leaders, the second and then the third rung stocks do tend to follow.
I prefer to form a basket of a couple of sectoral leaders and one or two from second rung and one or two from third rung (so called kachra) companies. Allocation wise of course the first and second rung take up most space.
Even after observing multiple such sectoral rallies its difficult to gather courage to bet big on the laggards of the sector inspite of knowing that they are the ones that will deliver most returns. I had this knowledge before hand in sugar sector where I felt Renuka sugars was going to move the most but still because of some or the other reason I did not allocate enough and exited with 40% gains whereas I could have made a four bagger in quick time. Maybe it might take more time for me to refine this style of playing sectoral bets.
One thing we are not too sure about while playing these sectoral bets is how much each stock from within the sector is going to run. Unless we have some clear technical patterns where targets could be predicted. So moving from so called strong stocks to weaker stocks etc is something that I am not too comfortable.
Most viral infections tend to have life cycles of their own. Usually the first couple of waves are of more severity and then the severity tends to peter off. Plus the preparedness of the authorities and the awareness of the general public (though one cannot predict the madness of crowds here too) is higher as newer waves keep coming.
Besides when markets are facing an unkown risk for the first time, the impact is maximum. We tend to overestimate (or underestimate as the case may be) the effects of the problem. Once we have gone through the effects of the problem we know what to expect and how to deal with the problems. Its the same with markets. Corona now is a known risk and markets know what to expect, so impact might not be as drastic as that seen in the aftermath of first wave.
first post here. mkt seems to be overheated. kachra stocks flying. pan-wala and others talking stocks. many signs of froth.
i was battered not exiting avg to good quality midcaps from 2017 crash. feeling anxious about - where we are in the cycle now. raised 15% cash in last trwo weeks. itching to make a complete exit. or move to laggard sectors - quality rail/power EPC companies, small pvt banks etc.
what are your thoughts on this? exit strategies (gradual ?) and when to kick those off.
Its a difficult call when to exit the markets. No one gets it consistently right. We have been hearing the noises about markets being overheated since nearly 3-4 months now and still they keep going up. So how long this party lasts is anybody’s guess.
If we are not comfortable I think a staggered selling approach can be taken… Sectoral rotations keep happening in the markets and we should stay alert for any sectoral rallies if and when they manifest and try to ride them, provided we are early enough to get decent returns.
Hitesh bhai. Are you looking at financial sector now. So much negative news around with NPAs. Most banks have beaten down and NBFCs are flattish over a year now. Is it too early in your opinion to venture in that sector or a turnaround can happen sooner?
In one of the posts on vst tiller thread in 2011, you had mentioned about stock screening criteria and methodology followed to assess potential prospects. Attached link VST Tillers and Tractors limited - #5 by hitesh2710
Would love to know how has it evolved over the years ?
Hello @hitesh2710 Hitesh Sir,
I like your analysis and views on sectoral plays, for years i have thought of doing it, but i haven’t managed to build a system and screening for sectoral plays.
What is your process for sectoral plays? How do you visually identify if a sector is going to take-off? Is it fundamentals based, is it technicals based? Do you use some tools, or all of this is manual analysis? Is there any alert based mechanism that notifies the sectorial positioning and tipping points?
@hitesh2710 ibull real showing immense strength.is it combination of revival of real estate sector + impending merger of Blackstone in FY22?
merge entity could be best place for institutions to play this sector…what could be value of merge entity?
Some companies in the financial sector seem to offer interesting opportunities. I think some banks and NBFCs which will be least plagued by NPA issues would do well.
In some pockets I think the fear of NPAs are overdone. So that’s another place where there could be interesting bets.
I like smaller private sector banks, prefer larger private banks like icici bank and axis and some housing finance companies. I think going ahead, there could be leadership change in banking space with axis and icici outperforming traditional powerhouses hdfc bk and kotak. (this though is a personal opinion and more to do with the chart patterns)