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Sunday, October 19, 2014

Diwali Muhurat Picks 2014 - 10 Best Stocks of Saral Gyan

Dear Reader,

Festival of lights, Diwali has its own significance to the stock markets, as the start of the new year, festival is meant as an auspicious start for new business as well. Hence, the stock markets every year conduct a ‘Muhurat Trading’ session on the day of the festival.

The word Diwali has originated from the Sanskrit word “Deepavali”, in which Deepa means light and Avali, means a row. In all, Diwali or Deepavali means a row of lights that ideally looks to vanquish ignorance and enlighten the world with a ray of knowledge. This age-old custom in India has immense importance for its economy as well as it drives the growth of consumer market, and the festive mood all over the country sparks up spending. 

The same is true for Indian stock market also, as every year traders, brokers and foreign investors, look at Diwali with much hope and expectation since the festival of lights and prosperity could bring in a wave of cheer in the 30-share Sensex of Bombay Stock Exchange and the 50-share Nifty of the National Stock Exchange.

If we look at the trend over the last few years from 2009 till 2014, it indicates that this particular year – from Diwali 2013 to Diwali 2014, has been one of the best years for the Sensex. The Sensex has rose by as much as 4,900-odd points as of today, since the  last Diwali on 3rd November 2013.

This marks the biggest gains from previous year Diwali to next year Diwali in the last five years. This year was one of the best year on the back of majority win of Narendra Modi led BJP in the Lok Sabha elections to form a stable government.

As per the latest economic data, India’s Wholesale Price Index (WPI) based inflation dipped to 59-month of 2.4 in September 2014. The Consumer price inflation (CPI) also shed to 6.5 per cent in September, which are a promising signs.

Back to the present scenario, the road ahead seems promising with the new government at its action. However, the pace of the reforms and global markets are likely to dictate the trend in the near future.

We are pleased to inform you that we are in process of selecting 10 scrips from universe of large, mid and small cap stocks which can benefit investors during next 1 year. We are confident that these carefully selected stocks can outperform major indices like Sensex and Nifty during next 12 months. We will share Diwali Muhurat Portfolio of 10 stocks on 22nd Oct'14 with all our paid subscribers of Hidden Gems, Value Picks & Wealth-Builder.

Its time to also review our Rs. 1 Lakh Diwali Muhurat Portfolio of 10 stocks of 2013 released by our team on 2nd Nov 2013, we are glad to share that our portfolio has outperformed Sensex and Nifty by whopping 91% and 90.6% respectively. Sensex has given 22.9% (21,239 on 02nd Nov'13 to 26,109 on 19th Oct'14) and Nifty has given 23.3% (6,307 on 2nd Nov'13 to 7,780 on 19th Oct'14) returns during the year where as Saral Gyan Diwali Muhurat Portfolio of 10 stocks have outperformed both indices giving absolute returns of  113.9% in same period.

Performance update of our Best 10 Diwali Muhurat Stock Picks - 2013


Four stocks out of ten of our Diwali Muhurat Portfolio of last year have given returns in the range of 150% to 350%. Star performers of our portfolio were Acrysil (returns of 346%), Aurobindo Pharma (returns of 298%), Wim Plast (returns of 246%) and Atul Auto (returns of 173%) where as laggard was J & K Bank which has given marginal returns of 2.3%.

Muhurat Portfolio was shared with all our members on 02 Nov'13 and we will review the performance of same and also share Rs. 1 lakh Diwali Muhurat Portfolio - 2014 on 22nd Oct'14.

If you wish to receive our Rs. 1 Lakh Diwali Muhurat Portfolio of 10 Stocks, you can subscribe to our services under Dussehra - Diwali Offer of the Year, Click here to know more about the offer.

Our selection process includes lot of research and data analysis. We first identify the sectors that are likely to do well in next 12 months. Having that done, we further refine our search to select companies from that sector. We create a portfolio worth Rs. 1 Lakh comprising 10 stocks so that it can help investors to create a model portfolio with lump sum investment up to 1 Lakh.

We have given the different allocation to each of the scrips keeping in mind the risk versus returns ratio. We have also fine tuned the portfolio with large cap, mid-cap and small cap scrips from different sectors so that the investors can invest in a complete mix of stocks to balance their portfolio. Saral Gyan Diwali Muhurat Portfolio of 10 Stocks for 2014 includes best of Hidden Gems and Value Picks recommended by our equity analyst’s team during last couple of years.

We continue to follow our simple but effective approach by evaluating each stock on the basis of below mentioned criteria’s.

(i) Top Quality management with high integrity:

This is an absolutely non-negotiable condition. If the management is not honest, will they want to share the goodies with you? No, they will look for the first opportunity to siphon off the profits and pull the wool over your eyes.

(ii) The scale of opportunity must be big:

Multi-bagger stocks are created because they are able to scale the opportunity rapidly. Titan Industries is a great example. In 2003-04, Titan‘s market cap was 500 crores. In 2014, it is close to 33,700 crores. The fact that India is a booming marketplace of 120 crores consumers means that most products and services have a head start at trying to scale up their activities.

(iii) Low debt; free cash flows:

We learnt from the great crisis of 2011 that companies with high debt on their books simply get slaughtered. While debt per se is not bad (if the company is able to borrow at a lower rate and deploy it in its business at a higher rate, the operating leverage works in its favour), excessive debt with high interest and repayment obligations can crunch the stock in times of downturn. So, as a long-term investment philosophy, it is best to steer clear of high-debt companies.

(iv) High ROE – Efficient users of capital:

Some company’s management is able to squeeze that little extra of every buck. A ROE of at least 25% is necessary to make into the hallowed list of model portfolio.

(v) No High Capex Requirements – No Serial Diluters of Equity:

We know from (bitter) experience the demerits of investing in stocks like Suzlon & GMR which have an insatiable appetite for more and more capital. To feed their perennial hunger, these companies dilute their equity by making FPOs, GDRs & FCCBs resulting in total destruction of shareholders’ wealth. Companies should be lean and mean requiring minimal capital but generating huge returns there from.

(vi) Reasonable growth expectations:

“If you get a tax-free return of 18% for your portfolio, you must be very happy”. So, stop craving for that overnight multi-bagger. You’ll only end up losing your precious capital that way. Instead, look for well established small, mid and blue chips companies that are growing at a reasonable rate of return (15 – 25%). With time and the magic of compounding, you will have your muti-bagger in your portfolio.

(vii) Valuations:

Most investors are obsessed about valuations, refusing to buy any stock that is “expensive”. However, one must remember that “expensive” is a relative term. If a stock is compounding at 25% on an annual basis, paying a price of 30 times earnings may be very reasonable. A stock like Nestle, for instance, has always been “expensive”. However, if an investor had gone ahead and bought the stock, he would have had an incredible multi-bagger on his hands. On the other hand, in trying to buy a “cheap” stock, one may get saddled with unsavory companies. After all, there is a reason why such stocks are “cheap”.

Of course, one should be careful not to buy in euphoric or bubble times when the pricing may be extravagant and not at all reasonable.

(viii) Concentrated Portfolio:

We like Warren Buffett approach, a believer in the concept of a concentrated portfolio. If you believe in the prospects of a stock you should be prepared to put a substantial chunk of money in it – or nothing at all. There is no point in buying a bit of this and a bit of that because that dilutes your returns.

Of course, we are no match for Warren Buffett and we do not have his conviction levels. So, we’ll stick to 10 stocks to begin with, which means that from 5% to 12% of the wealth will be invested in each stock.

(ix) Diversification:

Last but not the least; a proper portfolio must be diversified across sectors. A bit of Finance, a bit of consumption, some autos, a pinch of chemical etc will make a balanced portfolio.

Saral Gyan Diwali Muhurat Portfolio of 10 Stocks will be emailed to all our Hidden Gems, Value Picks and Wealth-Builder members on 22nd Oct'14. Portfolio stocks holding period is minimum of one year, same will be evaluated by our analysts next year before Diwali festival.

Enjoy discount up to 30% and attractive freebies under Dussehra - Diwali Offer of 2014. To know more about the offer, click here. Hurry! Last few days, offer closes on 25th Oct'14.

Regards,
Team - Saral Gyan.