Hi Sir
Are you tracking logistics sector . Companies like gateway distriparks, allcargo etc has got tailwinds like opening up or DFCs which will reduce the travel time and thereby more efficiency. Gati another interesting one with management change and new promoters is trying to regain the lost market share . Allcargo is going for a 3 way demerger for value unlocking . Entire logistics express sector is expected to grow at 12-15% rate . Please let me know ur views
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Dear @hitesh2710 ,
Thank you for continued guidance to others and sharing your views for learning. It is a gold mine. You stated many times that you usually remain fully invested , also when you expect a prolong correction, you raise some cash to deploy if market corrects.
These times, many expects the bear market to last more (if we can call this bear market) and further severe corrections. There are counter views that bottom made as well. My question is to you is, are you raising your cash reserve or remain fully invested ? Looking at nifty/ sensex charts, what do you think a probability - market correction to stop or to get correct further tracking global weakness ?
I like you, struggle to be in cash and I am almost fully invested with 5% cash , but PF is only slightly in green. Hence, i am asking this question, as I am struggling to make decision, if I need to raise cash levels or deploy aggressively. I am investing in short term for tech bets, medium term for some and long term horizon (3+ years pov) for about 30% of PF.
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Agree with you sir regarding the cyclicals. But in specialty chemicals, even though sector is in corrective phase, there are few companies making good amount of profits. The thing is to find the gem out of scarp.
disclaimer: I’m novice when it’s come to charts and technicals. But I couldn’t help sharing this chart for your views.
There are certain aspects of investing in recent times that I feel we need to understand with respect to the current market times.
First and foremost, it seems the market cycles seem to have become much shorter than before. We had a phonomenal run in markets over a period of 2009-2018 wherein index went from 2300 to 12000, nearly a six times returns in 9 years. This bull run was marred by ocassional corrections of 20-30% which is usually par for the course. And specifically the rally from 2012 which began from 4600 to the 12000 level in 2018 was a slow but steady rally. The direction of market then was always very clear. (Maybe in hindsight this is what we feel and at that time a judgmental call may have been difficult. )
The 2018 correction might not appear much index wise, but it hit the midcap and small cap basket really hard. And it took two long years for that index to recover.
Post covid, we had a rally from 7500 in March 2020 to 15400 in Feb 2021 within only 11 months. Nearly doubling of index within less than a year is phenomenal. And that too in the backdrop of economic slump induced by Covid. Then again we had a good rally from 14150 in April 2021 to 18600 in October. Again 30% index move within 7 months. And since then we have been in a corrective phase.
So rallies have been very fast and furious. We do not know how long this type of market structure lasts, or we will ever have sustained bull and bear markets going forward. Or we will have this T 20 type market moves in either direction.
Hence the idea should always be to make the most of bull markets and be ready to lose lesser or minimum at portfolio level during corrections. This can be done by being in strong stocks, or by partial or full cash
Personally I prefer to make the most of rallies and try to be in the stocks that move fast and then it feels okay to face corrections and give up some of the gains.
As investors we have a choice of taking the T20 approach that current markets warrant, or play test matches by going the coffee can way. Or have a combination of both in portfolio with say 50-50% allocation to both styles, or any other ratio one feels comfortable.
Predicting market direction has been really difficult in recent times and I do not think anyone has got it consistently right. So rather than worry about markets, my focus has always been on stock picking and allocation, both of which are in my control. Idea is to get consistenly better at this game by learning and practicing things which I feel will work.
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I’m fairly new to the forum, but you can read this book, stock to riches by Parag Parik.
Dear @hitesh2710 Bhai,
It’s my first message on your thread and I am really thankful for the amount of information you share almost on a daily basis.
As we are well aware that small-caps have a greater potential to grow and equally provide great potential to make money. So, I would like to share two small caps with you i.e Infobeans Technologies and Sirca Paints which have almost all the ingredients for obtaining multiple returns. And if you see, in the past 5 years, the sales growth in these stocks is around 15-20% on a year on year basis.
If you follow these stocks, could you please shed some light on them?
@hitesh2710 Sir, Greetings! I have for some time now closely tracking three stocks. 1. HDFC 2. MGL and 3. Aditya Birla Sunlife AMC, Some how I feel these three stocks may be a good long term (at least 10 years) bets at current level. If you may please enlighten me about your views on these stocks, it will be of immense help. Thank you in advanced.
Sirca paints comes across as a promising small cap company, which seems strong in its niche of wooden coatings and paints. It has good backing from Sirca Italy which helps it in launching new and better products. Financial performance wise too, it gradually seems to be getting on a growth curve.
Technically, it has had previous multiple resistances in the zone of 320-370 and one can look at these levels for support in the future, if stock corrects for whatever reason.
I do not track inofbeans.
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All the companies listed by you, HDFC, MGL and AB sunlife AMC have very strong visibility for growth for many years to come. And these are sectors that are less likely to be disrupted. (Disruption these days can affect any business, but looking at the dominant positions these companies have in the field, these can respond in a better way to any challenges.)
Whether they have corrected enough, or are at attractive levels, is something I do not track. However if you plan to buy these companies for next 10 years, you may as well take 1-2 years for gradual accumulation in these names to have cost averaging effect and then hold them for long term.
But if you widen you horizon to pick stocks for long term, you might find other companies too. Some names that always impress me, are companies like Pidilite, Bajaj Finance, Nestle, etc. You may also look at some names that can benefit over the next decade out of EV revolution coming our way.
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Hiteshji, regarding EV theme there seems multiple ways to play it (like many other themes)…one is via OEM (2 or 4 or commercial) and others like ancillaries or commodities (like metals) or battery players or green energy or electric infra players (various sub categories in infra)…i may have missed few as well…
Which according to you holds greater significance if investing for the next decade in this EV theme? Thanks
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@hitesh2710, after you advised looking into Capital Goods stocks, I’m trying to understand pockets in the sector.
Came across Praj Industries, apparently a proxy play on Ethanol blending story. Saw you initiated the thread way back in 2016. Requesting to share your views on the long term potential of the stock.
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Regarding Praj, read this posted few posts back. Praj is a proxy to sugar sector and the ethanol story and it seems most of the juice is out of the story. But many a times investors remain caught up with winners of last cycle and cannot think of other things.
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Hello sir, in view on agro chemical space at present?thanks in advance.
Namaste Sir,
How do you plan to have liquidity\Cash for these kind of market. No matter how much we have, these kind of correction will suck out everything. If we don’t buy aggressively there will be an apprehension that we might miss out the next rally. So what are your thoughts on how much cash we need to have, how to allocate?
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Hitesh Bhai, small banks like Karur, CSB, CUB and maybe DCB too have been doing well and valuations are also in favour I suppose.
If I compare the price performance of all the above banks since their listing with Bank Nifty then CUB is the only one that has outperformed Bank Nifty in the long run (post March 2020 I think all of the above would have lagged BN).
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Should one then prefer CUB and not other banks given the above? What’s your view on this?
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Also do you think that small banks may not be able to get valuations of the past as maybe there has been a realization post Covid specifically that Banking is a scale game and Size does matter?
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Any views on well run smaller banks being acquired eventually?
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Lastly what’s your views on MFI NBFCs, do you think these can be looked at from next 2-3 yrs PoV as valuations are beaten down, worst maybe over and growth maybe coming back?
Thanks.
HR.
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Agrochem space seems to be getting over the woes and now ready for another strong leg of growth. Excess inventory in the system seems to be settling over and now as per March qtr results, most agrochem companies have reported decent numbers.
PI Inds, Bharat Rasayan (recent accident at its plant offers a good entry point for someone who wants to buy 3 plus years), etc seem interesting. I do not have any positions in any of them. Both above companies remain in watchlist.
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Its a tough call on managing cash in portfolio during the current markets. I think hardly anyone has any clue as to where the markets are headed in the short term.
I prefer to remain invested in the companies where I feel growth visibility is quite high for near to medium term and variables affecting business and profitability are few.
I have friends who feel comfortable with 10-20 % cash position at most times in portfolio, to get benefit of any severe correction in any individual company or market in general.
For me during bear markets like the current ones, the major activity is churning, where I get rid of the losers (irrespective of the percentage loss) and add more of winners, or add companies where as said before growth visibility is high.
At an individual level, it depends upon the investor mindset how much cash is enough and how to deal with it, as there are no rules etched in stone. There can be no one size fits all kind of answer.
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I have already written about smaller banks/financials in the past. The view remains the same as before.
If one is not too clear about how to go about it, then a basket approach should work well.
I prefer smaller banks where there is a lot of discount to book value at current levels and still there is promise of good times ahead. The low hanging fruits of write backs contributing to profits seem to have been plucked and now onwards, those banks that show loan book growth and improving profitability will be preffered.
CUB remains a good choice , but its a tough call which ones are going to run the farthest and fastest among small banks. My bet is on RBL bank as of now. It may change going ahead as things unfold.
MFI NBFCs and other NBFCs also look interesting. Same logic applies to them as to other banks/financials. Most SME facing companies mention strong prospects of growth.
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