SmallCap Hunter : Trying to find the dark horses with triggers

Anyone tracking Greenchef Appliances?

Yes 17 days minimum as i predicted plus say till elections volatility shall be there. Small and midaps are not cup of tea of everyone. The one saying it’s not normal hasn’t seen any correction and butchering in past! Investor’s duty is to stay invested with his companies and not run away like a trader when market is checking one’s conviction.
After this correction, rally will definitely come. Numbers will keep coming and market will keep rewarding good companies.

It’s again natural, what’s so unnatural here. When valuations get overstretched such sharp corrections are bound to happen. This is nothing in front of 2018 fall. And why March ? Any HNI investor can tell this March month tax harvesting along with of course election related volatility and stretched valuations.

Not many retail investors were around in the market in 2018 or 2020 and have seen real carnage.

Recent correction of 20-40% fall in small caps is nothing. When the same stocks went up 2-10x in the space of just few months everyone thought it was normal :). 55% up move in small caps index in a single year cant’ sustain. I expect a very long time before we see the same pricing action across the small and microcap patch.

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Okay so I see Lot of People here some are just blaming smallcaps and midcaps only because they missed it, and They were just invested in Largecaps and bunch of blue-chips on the other side some are supporting Smallcaps and Midcaps only Because they were Invested in Small and Midcaps which made them crazy Returns last Year.

But leaving This aside let’s look at some facts

The EPS of smallcaps which used to Be around 340rs has increased by more than 50% to be around 520rs in These Last Two Years.

And For Midcaps The EPS has Gone up by 65%+ From 390 Rs to 660 Rs.

So when Earnings Grow Why shouldn’t the stock move up??

The P/E of Small caps was around 26 which has risen to 28 which is not much to consider it as bubble valuation

And same with Midcaps as well P/E remains almost same.

So I personally beleive that this price growth Is real w.r.t earnings Growth and is not valuation Bubble and one should use This fall to increase Their allocation in High conviction stocks.

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But I also understand The point That there are numerous companies Where Stock price Rised despite of Their bad earnings growth and definitely they will get butchered.

So I believe The conclusion is to Hunt for good Companies showing Growth With Their Numbers.

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This 2year data comparison is hiding the recent slowdown in earnings and sales.

The YoY sales/profit growth for Q3FY24 is worst in the case of smallcaps.

image

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@avneesh can we say CNXSMALLCAP steered clear of H/S pattern ? or is it too early ?

I don’t think it may be called as H/S pattern. Since the so called Head is too deep compared to the shoulder and being too deep, on Weekly chart nothing is evident as such.

I’ve right to be wrong.

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What about Q2FY24? If you have data for that, can you please share?

For sure we need to watch the trend, and particularly track down companies individually. But i believe since economic growth is robust we can start to see the industries posting good results again. But will have to observe the trend closely and usually q3 is slow for many industries.

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I don’t know the accuracy of this data. The source is the video at the end.

@LarryWink I guess it’s too early. Honestly, it’s too hard to predict what will happen next. I posted the chart just because I found it interesting.

Data Source:

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Weird! So as per this data the sales of smallcaps have declined by 23% from Q2FY22 to Q3FY24. And profits down by around 40% in the same period. Then how did the eps grew by 50%? :thinking:

All these stocks have seen their prices surging far ahead of their earning performances.

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So the markets had a good fall on 13th march, after the SEBI chief had said SME’s could be in bubble territory.
The most hurt is chemical sector, from past 1 year it has already been underperforming, and now it has corrected more with the bloodbath.
Can the chemicals lead the next leg of rally ?

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Technically, chemicals are still looking weak. And I think fundamentally also not much has changed.

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Can anyone suggest a good book / article on smallcap investing?

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peter lynch books: One up on Wall Street, Beating the Street

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A Zebra in Lion Country by Ralph Wanger

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Check Ian Cassel’s blogs.

https://microcapclub.com/turnarounds/

They are simply awesome.

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@avneesh

I think we are again in for the ride, CNXSMALLCAP started to show the same “dope moves”. :stuck_out_tongue_closed_eyes: . are we past the bubble phase or still circling the bubble ?

What does history say about such moves after a drop…is there a way to corelate to history ?

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