Hi Friends,
After sharing couple of #StockDiscussion last month, I kept searching for new names to discuss, but it turned out that all of them ran up (in range of 20-30%) within very short period of times before I could finish researching them. So I am just publishing that list for your further research.
But a note of caution before you go through the list that these are still under research from my side, and some of them have run quiet a lot in last two months.
So let me start we the infra theme itself, here I had shortlisted few stocks for research and apart from Premier Polyfilm and Bansal Roofing, the other one to make cut was Time Technoplast - they are into manufacturing of large size plastic drums and related polymer products and bodes well for next leg of infrastructure growth.
Going into the list, I had other sector that could see a revival, mainly chemical and pharma. So lets discuss about chemical first. Here I was researching these three names.
Sree Ryala Hypo, Bhageria industries and Vital Chemtech(SME platform). All of these are into various chemical spaces, and are competing in already struggling chemical space. They had fallen big time in last crash of chemical and a new beginning sound imminent but revival of sector and China policy can play a huge role in making them more attractive at this point of time.
Next coming into pharma space, apart from my existing portfolio stocks like Vinati organics, which has given subpar returns in last two years, I found another interesting name called Anuh pharma. Though the stock couldn’t sustain momentum created in last bull run, the impressive list of product launches and capex makes it a bet worth considering. Revival of pharma sector is the only caveat that can derail this story at this point of time.
When you see charts of these shares, you will realise my struggle as the price momentum created unnecessary bias and my summer holidays didn’t help either. Next time onwards, I would try to share my watchlist in advance. So that it helps you with your own research.
Now, I wish to introduce another aspect to you folks, regarding how to play sectorial themes in stock market, without taking undue risk.
How play sector revival?
Last month, I was pretty much convinced that, the revival in pharma sector is imminent but when I started searching for stock, every stock had one or other negative aspects attached to it.
Later I realised that, when sector is in bad shape for long time, its usual for specific stocks to get some or other negative attached to it. So how do we play such sector?
And the answer I found was in ETF, yes the electronically traded fund. Instead of waiting for stock specific breakout and research, I dipped my fingers into nifty pharma etf fund, and after a month of its performance, all I can say is less and show you more of it. Here is the chart.
Last month itself, the growth was in double digit, whereas my favorite (biased) share in pharma space *Vinati Organics, had subpar outing. So going forward, I am getting more inclined to use ETF for sectorial opportunities until there is clear breakouts in that sector specific stocks, we are watching.
Having tried this approach successfully for third time (once each with US and HK tech sector previously), I can now dissect this approach for you. There are few positive attached to this style, which you will notice when you see the history of it.
When a sector turnaround after prolonged period of dullness, more likely there are new leaders of stock, and we with our bias ingrained (by virtue of last bull run), mostly fail to notice them.
And before the leaders become clear, you can easily miss out 30-40% of gain in them.
The other aspect is regarding failed breakouts, sometime, we see one or two outperforming shares and think that the industry has revived. But in reality, the sector revival takes lot of effort from all stocks.
So putting money in etf till such confirmation, helps you minimise your risk during failed breakouts and you can come out with much less loss. HEADs you win, TAILs you don’t loose much.
The third point is you avoid, unnecessary love for single stock and increase you chance of maximising profit.
Off course, the downside of this approach is that you get a sub par return vis a vis top performing stock of sector. But remember, all I am suggesting to stick to it, till the sector revival is confirmed. Post that a suitable swap with next leader of sectors can be made.
Let’s see how this idea plays out in future. (I am already keeping a tab on next big sector that can revive in future using this method. You may guess IT right!)
Now before we close out, if you are getting jittery that the market is at all time high and the fed policy has hiked rates again, what if market crashes? The answer is no one knows that, and there is no way to predict it in advance.
All I would recommend is to take this opportunity to clean your portfolio of any crap and streamline them to good quality and well researched names. If anything is making your uncomfortable, better to trade it with peace and put the money in areas you trust.
Hope you enjoyed reading my thoughts, will see you with some other ideas, till then, trust yourself and keep investing.