portfolio allocation – Investing Class

The market seemed ready to rollover just before the budget on Feb 1. But as the budget was being announced, there was a huge rally that spread across almost all sectors. #Nifty was up +4.7% and 2.6% on Feb 1 and Feb 2 respectively and made a recent high on Feb 16. Since then, it has been struggling to move back up and looks ready to roll over again.

Portfolio Allocation: Looking at the setups of some current leaders, I have a few test trades with small allocation right now. These will guide me whether to increase my exposure over the coming days and weeks.

Here is what I am seeing currently on the sector level:
– Secular trends (leadership in 3m+ period) continue to persist in Software and Trading companies (eg, Indiamart). Most of the stocks in these sectors have been rangebound/declining for the past 3 months or so. Whether it is a time correction or a sign of an impending downtrend in overall market, time will tell.
– New leaders have started emerging in Retail (eg. Vmart), Professional Services (eg. Quess, Teamlease etc.) and lot of re-opening related plays.
– Financials drove the whole market up since November last year and are taking a breather right now.
– Chemicals participated on the upside post Covid upto September/October and then lost leadership for 5-6months. They have started moving again in the last one month or so. So that’s another area to keep an eye on for the next run up.
– Metals is another area which is grabbing global attention. Stocks (Hindustan Copper, Vedanta, Tata Steel etc) have a nice tailwind with the global inflation narrative. Some allocation in this sector with right risk reward would be advisable.
– Cement companies seem to have a consistent bid as well. With re-opening, this sector is expected to contribute to growth in this fiscal.

Few names that look interesting right now for Long exposure – in no particular order of preference:

Disclosure: I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

Disclaimer: This is not investment advice, please do your research before committing capital.

In this post, I am going to explore few themes that became dominant over the last 3 months in HK equity market.

Technology related sectors (Software, Semis, Internet marketing etc.) dominated the returns in almost all markets globally for a good part of last decade, and had monstrous returns post the Feb-Mar sell off. However, a lot of Tech companies are either consolidating their earlier gains right now or downright breaking down from an uptrend. It is of utmost importance to recognize the shift in investor sentiment.

I won’t talk about banks, airlines and hotels coming back to life as everyone sees these sectors as the direct beneficiaries of re-opening and vaccine related optimism.

Below is a list of select sectors and companies that have been exerting their dominance over the last 3 months. I invite active traders to take a look at graphs of these companies. Try to identify the points where one could’ve/should’ve noticed the changes in market sentiment. For fundamental analysts, this could be a useful exercise to recognize the catalysts which were not accounted for.

That said, this post in no way implies the demise of tech sector. It will probably come back and sooner than most people would expect it to. Aim of this analysis is to maximize the returns one can make at any given time.

Would you rather sit on an investment with say negative to +2% monthly return (given ongoing consolidation in your favorite companies) or find a way to make that capital work for a relatively higher return?

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

Disclaimer: This is not investment advice, please do your research before committing capital.

Tag: portfolio allocation

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