I don’t track iifl finance too closely but it has been showing good growth in profits since past few quarters. Only concern is the consistent increase in NPA numbers. Will have to look at it to be able to give an informed opinion.
Among the others, I don’t track either Rolex rings or Arman finance.
But overall I remain bullish on financials with a slightly longer term view. Most of the companies have been reporting good numbers and if credit growth picks up this could be a growth sector and current valuations do not reflect too much growth . So if these companies surprise positively with good growth, then there could be good returns to be made from hereon. Another factor is that there are many listed players and one can pick and choose among the many sub sectors in financials.
Sandhar tech chart as you say has not been showing any momentum. The crucial level for the stock price would be a clearing of levels of 320 and sustaining above that. Post that one can see strong momentum.
For momentum guys above could be the strategy. i. e to buy above 320 with an appropriate stop loss.
For someone convinced about the fundamental merits of the company, there might be a case of adding the positions in tranches over a brief period of time and build a position. The sideways range movements could help in adding to position steadily. If fundamentals improve, there will be moves on the upside and once 320 range is crossed convincingly additional position can be added to ride the momentum.
I personally prefer companies that have atleast one of the two … fundamental momentum, or momentum on the charts. Preferably a combination of both. Without either factor at play, the wait might be much longer than anticipated and can block precious capital in non yielding positions.
Sir, what should be the ideal number of stocks in a long term portfolio as this number keeps on increasing as I study and research and find a new stock to invest every now & then ( current number of stocks in my long term portfolio is 28 )…
Ideal number of stocks in a portfolio depends on one’s personality type and there is no one size fits all.
Assuming each of your 28 stocks have an equal allocation (unlikely but just for the sake of this mental exercise), then you’ve basically allocated 3-4% to each stock. Even if you were to get a 10 bagger on one of them, the needle won’t move much.
On the flip side, assume a person has a 5 stock portfolio with equal weightages allocated to each stock, then a blow up in one of the stocks can kill returns for a year, maybe two.
Now I know people who are okay with that kind of risk and people who are not and it depends on which category of the above 2 groups you personally fall into.
There are some very smart small/micro cap investors in this wonderful forum who take a diversified approach (perhaps rightly so), because small caps by their very nature are prone to a lot of volatility. A lot of their stocks are usually experimental bets with tiny allocations, just to keep track of a particular company’s business.
And then there are other smart investors here who take concentrated bets in momentum / technofunda stocks and have done extremely well too. Some of their big bets can/do go wrong sometimes and they are quick to cut losses when they realize a mistake has happened or something isn’t playing out as per what they had expected at the time of initiating the buy order.
So we have examples of both, diversified/concentrated investors who’ve done well on this very forum.
To summarize, here’s what I think:
Diversified with equal weightage = Big winners don’t move the needle.
Concentrated = 1 or 2 stocks blowing up can lead to a short to medium term disaster for the portfolio. One has to be relatively quick to cut losses in this type of investing.
@barathmukhi has beautifully articulated the merits and risks of concentrated and diversified portfolio.
I think we as investors should try to know ourselves… Idea should be to figure out whether you are comfortable with a diversified or a concentrated investor, and try to work on that and get better at that.
If you are a concentrated investor, like me, then before adding any stock to my portfolio, it has to clear the criteria of being able to occupy minimum 5% allocation in my overall portfolio. That helps in prevention of adding fringe 1-2% positions. And if the position works for me or if I feel outright that stock warrants higher allocation, I take up larger positions.
Ocassionally the investment thesis is very close to being all black and white, with very little shades of grey. Picture is often very clear. In such situations, I try to be super aggressive with proper risk management protocols.
Hiteshji,
If i am not wrong you are practicing Dental doctor. Recently read about Prevest Denpro. Their numbers looks amazing and accredition as well as the approvals across the world too. Reviews on the amazon shows they have good products too if not best. What bothers me is their reach. They hardly touched upon the surface even with the existence of 20 years which gives a different story altogether. If you have used their products and went through the company, what are your views?
hello hitesh sir, at present scenerio, lots of sector that was darling is brutally de rated speacially PE wise, when all macros are bad , investor search which type company or just sit tight at this current environment , any special sector look
promosing. thanks in advance
Currently ours and global markets are in a strong bear grip and a lot of stocks have corrected significantly. As mentioned previously, the previous market darlings have suffered a lot.
Usually a sector attains market fancy because market participants feel that earnings trajectory for the sector is going to be strong. In early phase when smart money is moving in, the changes in business dynamics are discernible only to the practiced eye. And the really smart guys start getting in then. This is usually a very silent accumulation, without noise and pomp. Then earnings start coming through and a lot of investors start noticing this and get in. And finally the sector/stock makes it to headlines everywhere. Everyone wants to own these and stock prices are pushed to crazy levels and narratives are woven around these. Naive investors fall for these, and often get in closer to the top thinking that the music is going to go on for ever. And then suddenly the tide turns. Again early signs of the tide turning are recognised by the really smart folks. They exit closer to or near to or slightly below the top’s range. And the narrative still continues and those who own these stocks don’t want to listen to contrary opinions and want to keep buying the dips. After a point they realise that they are duped or have made mistakes and try to exit. This kind of folks rush to the exit door and hence there are sharp cracks in price. Hardly anyone is there to buy and the stock/sector is overowned and hence cracks intensify and price corrects more than what is expected or deserved. But marked pendulum tends to swing to opposite extremes and that’s what we need to realise before trying to find value and get in.
The current market wrath is faced by chemical sector/ bulk drugs/certain recent fancied IPOs etc. I think these are the sectors to be avoided.
Some sectors that are showing relative resilience as of now or until now are autos, capital goods, power related stocks, good fancied PSUs, defence, and few financials. Now these too can correct, but if they manage to hold on to their key supports/ranges, or show resilience then these could be the sectors to look at study.
The current time period should be spent to study companies with good earnings visibility and tailwinds by going through annual reports, concalls, scuttlebutt and then short list companies to buy.
@hitusohi1 I don’t track globus spirits or other alcohol companies.
@Vikky9995 RBL bank today went below its key bottom of 100 and gapped down with huge volumes. For me levels of around 100 were stop loss in my position, and hence i exited it. Will look at it once the dust settles.
Sir I have been reading your post for quite a some time.I am a big fan of you . By profession I am pathologist. What I feel cancer patients are increasing day by day in our country. In my opinion any company who is doing some work in cancer medicine can benefit of this situation.in India i feel natco pharma is doing some work and they are ahead of others .
Please enlighten us.
Hi Hitesh Sir,
Based on the chart of BHEL on 14th June EOD what to you feel.
BHEL has been falling since Oct 2021
It made 2 dips - 24th Feb and 13th May. So now this 13th June fall is again a base or it can crack further?
You may not be tracking this. But I just want to know when such patterns are formed and what is the thought behind that.
While as you say cancer cases might be increasing in our country, there is no direct way to play this theme by say investing in a company. Natco is an oncology player but the bet in Natco is more on success of its molecules in overseas geographies. The most recent trigger I remember was launch of Revlimid in Canada and the US markets. I don’t track it too closely so not much idea how it is going.
One way to play this could be through HCG, a hospital which specialises in cancer treatments and probably major chunk of its revenues comes from oncology segment. (need to check that too.)
@Prathamesh_Nalawade There are no fixed number of days or time duration for stocks to reach golden cross or death cross after crossing each other. One has to keep observing on a daily basis and calculate number of days. But I don’t attach too much importance to these patterns as these seem to be overhyped.
@saurabhshares There is nothing to write home about in BHEL charts. It has been stuck in a broad range of 44 to 59 since Feb 22. One can play that range if one wants, till the breakout happens on either side.
Sir do u track idbi bank , they are showing improvement quarter on quarter ,gnpa is high but provisining is almost 100%. Lic brought them at 65 and they have to either merge idbi with lic housing finance or have to sold their stake by next year. Fairfax is showing interest in govt stake
Hi Hiteshji would be good to know how has last few months worked for you, what strategy you followed and now what are your strategy on these recession/bear possibility…thanks
Are you holding on to your picks, buying the dips or coming/already come in substantial cash? Thanks
I don’t track idbi bank too closely but whenever we invest in a company, banking on some kind of corporate action reeks of hope investing. The company in question has to have good fundamentals or atleast some kind of promise of improvement in its fortunes. That doesn’t seem likely in idbi bank.
If and when LIC picks up full stake of govt sells it to fairfax or some other suitor, we can have a look at it. But in current market, with so many stocks undergoing big cuts in prices, there could be better options in the market.
As is the case with most investors, the last few months have been painful with portfolio taking some hit. But I have been following the policy of trying to maximise the returns during bull markets by proper stock selection and more importantly better allocation. This helps in alleviating the pain induced by portfolio drawdowns.
However this time part of the pain has been reduced by having been in strong stocks like HBL Power, Fluorochem and some like Vimta which have not gone anywhere but has not cracked big time. Have been stopped out in some portfolio holdings and have been using that gun powder to get into companies with good growth visibility and good charts.
One of the positions I took recently and have been nibbling is Mahindra and Mahindra. As shown in the charts I will put up, the stock price cleared its previous all time high of 993 it made back in 2018. And it has managed to hold above that level in this recent carnage too. It has hit a swing high of 1057 and has corrected around 5-6% from its recent highs which seems okay and in line with current markets. Another important thing for me is the kind of consolidation the stock price went through before breaking above its ATH. It spent nearly 16 months between Jan 21 to May 22 between 730 to 950 and in the process has built up a strong base which can act as a launchpad once the market sentiments improve and if and when the stock price starts its upmove.
On the fundamental front the monthly numbers gives a good picture with sales in April and May showing decent growth as compared to average of previous 3 months. The company’s passenger vehicle segment has some blockbuster products like XUV 700, Thar, and the upcoming revamped version of Scorpio also looks impressive. Plus its CV segment seems to be picking steam. There are the usual rumours of value unlocking through demerger of M&M but I do not attach too much importance to these kind of news/rumours, If it happens, well and good, if not the business itself has seems to be doing good.
Thanks Hiteshji for your thoughts. Good to know your picks are doing good in recent corrections.
I agree with you on M&M showing relative strength and seems better pick compared to Tata Motors - which does have significant traction in EV and new models but its end result is more complex because of the large non-domestic piece involved…
Apart from M&M, another company in similar league showing relative strength after a long consolidation is ITC…do you have any thoughts on ITC as well? Over next year, could it be coming out of a decade long consolidation when it hit around 200 in Nov 2012 (like how HUL came out of a decade long range in 2010…although HUL is a much simple business as compared to conglomerate structure of ITC)
