NIFTY juggernaut continues as global narrative takes over
Also, how Q1FY22 continues to give investment opportunities, if 'Taper Tantrum' threat has taken a backseat, why investors should remain cautious with Auto sector and more....
Large Caps leading large, IPO sentiment turns on its head
India equities markets continued to climb every wall of worry (from US Fed’s minutes indicating slowing down of Bond Purchases coming sooner than later, major geopolitical developments in Afghanistan, surge in virus cases in USA etc.) with headline benchmark NIFTY hit all time high of 16,722 (gaining +1.07%) while NIFTYNEXT50 added 2.29%. Weakness was however clear in the Mid Cap (-2.09%) & Small Cap index (-1.58%). The sell-off which started last fortnight around the BSE circular on ‘Add on Price Band Framework’ (we have explained the circular here) continued this fortnight as well. The negative sentiment of HNIs was well reflected in discount listing in 4 out of the 5 IPOs which hit bourses last fortnight, failing to recover unsuccessfully as well. Lone IPO with listing pop - Devyani International continued to shed its gains through the week.
Q1FY22 earning brings along new opportunities
As stronger than ever Q1FY22 quarterly results came in for certain sectors, we at Vantage looked to capitalized on such opportunities. Star performer of this fortnight was IT space and we closed one of our short term investment ideas on LARSEN & TOUBRO INFOTECH (read about it here). The good thing about such post earning plays are the lethal mix of earnings growth & momentum which gives superior low risk index beating return generating opportunities. We believe this sector has more steam left.
We leveraged something similar in KAJARIA CERAMICS (generating 15% in just 10 days!) which you can find more about on here.
FIIs continue selling Indian Stocks, Taper ‘Tantrum’ could take backseat
This fortnight also saw some incessant selling from Foreign Institutional Investors (FII) to the tune of INR 11,148 Crores with Domestics Institutions (DII) being net buyers of INR 6,545 Crores. Clearly private investors are making more than up for any selling.
USD/INR continued to show exemplary strength even after US FED minutes which released on Wednesday and bought Dollar Index very close to a break-out level of 93.5 (chart bellow). Indian Rupee was one of the top performing currencies among the Emerging Markets.
The much awaited speech of Jerome Powell Jackson Hole Symposium seems to be well received by market. The key takeaway as per us is, US FED wants to avoid anything like 2013 Taper Tantrum and the reaction that followed in global markets (read massive sell off in risk-on assets). This is soothing to our ears as we have always treated sudden raise in interest rates as source of shock to Indian equities markets specifically. In the coming fortnight we are expecting USD/INR to further strengthen which can act as a tailwind for further upside in Indian equities market.
AUTO SECTOR could be on a slow lane
It is as important to stay away from poor performing sector as it is to stay with the winners, if not more. We recently started the DOWNSHIFT report for Vantage Members to address this . Although we haven’t yet released such a report on Autos, we are cautious on this sector. Not only is it very weak on charts but at a fundamental level chip shortage and lack of strong sales (barring the intermittent pent up demand) is marring auto companies. We are cognizant of the fact that festive season is on its way which seasonally has been strong period for this sector but we want to wait for evidence (on ground or price charts!) before considering any opportunities in these stocks. The 3rd wave of COVID-19 could add insult to this injury, and if the time of its strike in India as mentioned by various media is believed (end of September), it cannot be possibly more damaging to Auto sector.
Vantage Large Cap Model Portfolio continues outshining benchmark-NIFTY
Being the last issue of Vantage Fortnightly for August, we look back at the Vantage Large Cap Model Portfolio. Since its inception (16th Dec, 2020) its has generated 27.72% returns till date compared to NIFTY Benchmark doing a 22.10% in the same time. The portfolio is true to its name and has only NIFTY50 & NIFTYNEXT 50 as its constituents. Last fortnight we added BHARTIARTL to this portfolio with a 3% allocation (read about the few developments here which added strength to our thesis).
BAJAJ FINANCE (introduced in this portfolio on 20th April, 2021) crossed 50% return mark. It strengthened our investment philosophy that multi-baggers need not be exotic & unknown names. Low risk ones could be hiding in plain slight too!
Who’s the right choice? - Gold ETFs vs. SGBs
Last week we released an article to help readers decide which instrument could suit them well for their Gold investment strategy. Unbiased comparison was done between Sovereign Gold Bond (SGBs) and Gold ETFs on different paraments ranging from duration of investment, taxation, interest income, fees etc. It should have been in your mailbox if you are subscribed to Vantage Fortnightly. If not you can find the article below.
(This is also a good reminder to subscribe to Vantage Fortnightly, if you haven’t done yet. Its FREE! But you can always make money from the shared ideas & information! )
Power of Attorney to your Stock Broker - Should you or should you not?
Lastly, we wrote a thread on twitter about PoA - Power of Attorney, a document that stock brokers earlier needed it mandatorily from their clients signed until it was made optional by regulator. If you were one of them you got excited about stocks & trading and jumped into financial markets after March-2020 their is high chance you did not submit your PoA to your broker. Just like most things in life, this has its pros and cons. Read about it here. An aware investor is a successful investor!
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Disclaimer: This article is for information only, and should not be considered as a recommendation to buy or sell any stocks etc. Stocks etc. mentioned maybe part Vantage Model Portfolio, Vantage Short & Medium Term investment ideas and Vantage members might have been advised on it.
Vantage Investment Advisory is a registered Investment Advisory focused around momentum & value investing in Indian Equities Markets. We are currently helping our members across 15 cities in India, US, UAE & Singapore better their investment performance with our stock picks. Do check our social media handles to know more about us.