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Saturday, October 29, 2016

Diwali "Muhurat" Stock Picks - Releasing on 30th Oct'16!

Dear Reader,

Muhurat trading is the auspicious stock market trading for an hour on Diwali (Deepawali). It is a symbolic and old ritual, that has been retained and observed for ages, by the trading community.  As Diwali also marks the beginning of the New Year, it is believed that muhurat trading on this day brings in wealth and prosperity throughout the year.

The "muhurat" trading session will be of 60 minutes, to be conducted between 6.30 PM to 7.30 PM on the Diwali day, 30th October on leading bourses NSE and BSE. The special trading session would be conducted to pay obeisance to Lakshmi, the Hindu goddess of wealth and prosperity. It would also mark the New Year for traders as per the Hindu calendar, or Samvat 2073.

Since last Diwali, Sensex and Nifty have given returns of 7.5% and 11.7% respectively (as on 25th Oct'16). However, the probability of the stock market giving better return in Samvat 2073 is higher than in the year gone by. Back to the present scenario, the road ahead seems promising.

The future looks bright for Indian equities as economy is on the cusp of turn-around with decreasing interest rates, inflation under control, stable commodity prices, GST implementation in 2017 and expectation of earnings catching up with valuation. Investors with the horizon of 12 months can utilize ongoing correction to invest in Indian equities. However, the global markets are likely to dictate the trend in the near future.

Saral Gyan Diwali Muhurat Portfolio - Outperforming Sensex & Nifty since Inception
We are pleased to inform our readers that we are in process of finalizing our 10 scrips as “Muhurat Picks” that we believe should do well on the bourses during next one year outperforming major indices, Sensex and Nifty. 

Saral Gyan Deepawali Muhurat Buy - One Lakh Rupee Portfolio - 2016 will be mailed to all our Hidden Gems, Value Picks and Wealth-Builder members on 30th Oct'16 before 11.00 AM.

If you wish to receive our Rs. 1 Lakh Diwali Muhurat Portfolio - 2016 of 10 Stocks, you can subscribe to our services under Dussehra - Diwali Offer of the Yearand we will activate your subscription within few minutes. We will ensure that you receive Saral Gyan Rs. 1 Lakh Diwali Muhurat Portfolio of 10 stocks before "Muhurat" trading session. Click here to know more about the offer.

Our stock selection is done with lot of research and data analysis. We first identified the sectors that are likely to do well in the next 12 months. Having that done, we further refined our search to select companies from those sectors. We have created a portfolio worth Rs. 1 Lakh comprising 10 scrips so that it can help investors to create a model portfolio with lump sum investment of 1 Lakh with time horizon of one year.

We have given 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 so that the investors can invest in a complete mix of stocks to balance their portfolio.

We have also included some of our best Hidden Gems and Value Picks recommended by our equity analysts during this year and previous years in our model portfolio.

Its time to also review our Rs. 1 Lakh Diwali Muhurat Portfolio of 10 stocks of 2015 released by us on 11th Nov 2015, we are glad to share that our portfolio has outperformed major indices Sensex and Nifty by 9.5% and 5.3% respectively (as on 25th  Oct'16). Sensex has given 7.5% (26,121 on 10th Nov'15 to 28,091 on 25th Oct'16) and Nifty has given 11.7% (7,783 on 10th Nov'15 to 8,691 on 25th Oct'16) returns during the year where as Saral Gyan Diwali Muhurat Portfolio of 10 stocks have outperformed both indices giving absolute returns of 17% in same period.

Performance update of our Best 10 Diwali Muhurat Stock Picks - 2015
Four stocks out of ten of our Diwali Muhurat Portfolio of last year have given returns in the range of 10% to 100%. Star performers of our portfolio were Capital First (returns of 101.6%) and Century Plyboard (returns of 44%), where as laggard were Pokarna and Granules India which have given negative returns of -16.6% and -13.6% respectively.

Moreover, since inception our Diwali Muhurat Portfolio of each year has outperformed Sensex and Nifty by wide percentage points. Below is the update of our performance:

Diwali Muhurat Portfolio - 2014 has given returns of 23.5% compared to Sensex returns of -3.9%, outperformed Sensex by 27.4%

Diwali Muhurat Portfolio - 2013 has given returns of 129.1% compared to Sensex returns of 26.1%, outperformed Sensex by 103%

Diwali Muhurat Portfolio - 2012 has given returns of 13.1% compared to Sensex returns of 11.6%, outperformed Sensex by 1.5%

Diwali Muhurat Portfolio - 2011 has given returns of 15.1% compared to Sensex returns of 8.3%, outperformed Sensex by 6.8%

Saral Gyan Rs 1 Lakh "Muhurat" Portfolio - 2016 will be emailed to all our Hidden Gems, Value Picks and Wealth-Builder subscribers on 30th Oct before 11.00 AM. The performance of the same will be reviewed next year a day before Diwali festival.

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 2016, it is close to 33,100 crores. The fact that India is a booming marketplace of 130 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 past 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 GemsValue Picks and Wealth-Builder members on 30th Oct'16 before 11.00 AM. 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 valuable freebies under Dussehra - Diwali Offer of 2016. To know more about the offer, click here. Hurry! Last few days, offer closes on 2nd Nov'16.

You can any time contact us in case of any queries, we will be delighted to assist you.

Wish you happy and safe investing!

Team - Saral Gyan.