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Tuesday, October 17, 2017

Diwali Muhurat Stocks Picks - Releasing on 19th Oct 2017

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, 19th 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 2074.

Since last Diwali, Sensex and Nifty have given returns of 16.1% and 17.7% respectively (as on 14th Oct'17). The probability of the stock market giving double digit returns in Samvat 2074 is similar like the year gone by. Back to the present scenario, the road ahead seems promising. However, the global events are likely to dictate the trend in the near future.

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 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.

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 2017 of 10 stocks on 19th Oct'17 with all our paid subscribers of Hidden Gems, Value Picks & Wealth-Builder under Dussehra - Diwali Offer of the Year (closes on 25th Oct'17). To know about the offer, click here.

Its time to also review our Rs. 1 Lakh Diwali Muhurat Portfolio of 10 stocks of 2016 released by us on 30th Oct 2016, we are pleased to inform our Diwali Muhurat portfolio released last year has delivered returns of 10.1%.

Performance update of our 10 Diwali Muhurat Stock Picks - 2016
Five stocks out of ten of our Diwali Muhurat Portfolio of last year have given returns in the range of 25% to 70%. Star performers of our portfolio were Emmbi Industries (returns of 70.9%), GIC Housing Finance (returns of 51.3%) and HDFC Bank (returns of 47%), where as major laggard were Lupin and Cupid which have given negative returns of -28.6% and -22% respectively.

Honestly, we are not satisfied with the performance of our Diwali portfolio 2016 which has under-performed major indices Sensex & Nifty for the first time since inception. We will not leave any stone unturned to ensure that our Diwali Muhurat Portfolio - 2017 of 10 stocks outperforms all major indices delivering much better returns. Sensex has given 16.1% returns (27,962 on 29th Oct'16 to 32,433 on 14th Oct'17) and Nifty has given 17.7% returns (8,638 on 29th Oct'16 to 10,167 on 14th Oct'17) during the year where as Saral Gyan Diwali Muhurat Portfolio of 10 stocks have given absolute returns of 10.9% in same period.

Since inception, our Diwali Muhurat Portfolio which releases every year during Diwali has delivered positive returns and outperformed Sensex and Nifty by wide percentage points most of the times. Below is the performance update of Diwali Muhurat Portfolio released in previous years:

Diwali Muhurat Portfolio - 2015 has given returns of 14.1% compared to Sensex returns of 7%, outperformed Sensex by 7.1%

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 16.6% compared to Sensex returns of 9%, outperformed Sensex by 7.6%

Last year Muhurat Portfolio was shared with all our members on 30 Oct'16 and we will review the performance of the same and also share Rs. 1 lakh Diwali Muhurat Portfolio - 2017 on 19 Oct'17 well before muhurat trading session.

If you wish to receive our Rs. 1 Lakh Diwali Muhurat Portfolio - 2017 of 10 Stocks, you can subscribe to our services under Dussehra - Diwali Offer of the YearClick 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 2017 will also include 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 2017, it is close to 55,500 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 20% 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 19th Oct'17. 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 2017. To know more about the offer, click here. Hurry! Last few days, offer closes on 25th Oct'17.

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.