Trading – Investing Class

India ideas (Mar 29, 2021)

March 29, 2021March 29, 2021 investingclass

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.

India weekly updates: Sep 26, 2020

September 28, 2020September 28, 2020 investingclass

#India #weeklyinsights: It was a tough week with #Nifty50 -3.95% and #NSESmallcap250 -5.39% WoW. The strong move down flushed out a lot of excess during the week.

Sector performance:
#Pharma -5.88%
#IT -1%
#Chemicals -4.5%
#Auto -6%
#Banks -4.76%
#Media -4.76%

Friday had an upward push with Nifty and Smallcap index up +2.26% and 2.57% respectively. While it is possible that this is just a correction, I am worried because of few reasons:
– ferocity of the down move
– Friday’s volume < volume on sell-off days
– emergence of bearish H&S pattern on daily chart (shown in pic)

As of now, I have a bearish outlook but might change if the index comes up above 50DMA and stays above.

Key levels to watch on Nifty:
50DMA: 11299
200DMA: 10758, time to get more active on short side

Catalysts in next Q which can tilt the mkts downwards:
– Earnings
– US elections

Australia – Weekly Sector Review & Opportunities For The Coming Week (Sep 28, 2020)

September 28, 2020September 28, 2020 investingclass

Summary:

IT Services and Specialty Retail continue to gain strength. Software had a tough week inline with global sell off in tech.
Strong action in Banks on Friday due to new credit reforms.
Top 3 picks: Data#3, Elders Ltd, Temple & Webster Group.

Leading sectors:

IT services: +2.2%, continued on an uptrend

Specialty Retail: +0.6%, continued on an uptrend

Software: -1.5%, took a beating with the global risk off in tech. Can expect this to stay choppy unless the trend is established again.

Metals & Mining: -3.8%, the sector had some huge winners since July but came off last week as commodities sold off given the USD strength. I am medium term bullish on the sector given the fear of stagflation still persists. A lot of miners are small cap companies but have good institutional level liquidity. Will write about those in the next post if there are good setups.

Lagging sectors:

Banks: +3.8%, based on the “Consumer Credit reforms” that came out on Friday. These are not legislated yet, but look marginally good at the outset. It tackles the 1st line item of bank’s income statement i.e. extending more credit, hence more revenues. Still needs to be seen how the asset quality and provisions will be impacted in these reforms. (Link here)

Chemicals: -2.8%, continued on a downtrend

Top picks:

1) Data#3 (DTL.AX): undercut the previous base breakout and now giving a low risk entry (SL: AUD 6.14)

(Mkt cap: 994mm, avg volume: 600k shs)

2) Elders Ltd (ELD.AX): broke out of base last week and seems ready to go higher. (SL: AUD 10.55).

(Mkt cap 1.68bn, avg volume 670k shs)

3) Temple & Webster Group (TPW.AX): strong trending name, can start a small position with SL @ AUD 10.75.

(Mkt cap: 1.37bn, avg volume: 970k shs)

Risk Management: Stop loss levels have been posted in case anyone would like to buy the stocks. Needless to say, it is paramount to preserve capital to be able to play the next game.

Disclosure: I/we 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.