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Dear Reader,
Since Jan 2018, broader markets i.e. small cap and mid cap indices are in bear phase. Over last few weeks, we have seen small & mid cap stocks getting butchered with fall in stock prices on almost daily basis. At current scenario, when Small & Mid Cap Index is down by 38% and 27% respectively from their peak made in January last year and significantly underperformed Sensex & Nifty, there is lot of pain in individual's portfolio due to carnage in the broader markets. Such pessimism, history suggests does not last for long and can be used to invest in good companies at significantly lower prices. Markets have rewarded those who have shown the conviction in tougher times.
“The first rule of investment is ‘buy low and sell high’, but many people fear to buy low because of the fear of the stock dropping even lower. Then you may ask: ‘When is the time to buy low?’ The answer is: When there is maximum pessimism.”
- Sir John Templeton
“The first rule of investment is ‘buy low and sell high’, but many people fear to buy low because of the fear of the stock dropping even lower. Then you may ask: ‘When is the time to buy low?’ The answer is: When there is maximum pessimism.”
- Sir John Templeton
Most of the liquidity in small & mid caps has dried up and found its way to large caps over last 18 months. At this juncture, large caps looks fairly valued or expensive in terms of valuations, however small & mid cap companies look attractive and can reward long term investors in big way. In fact, some of the worst times to get into the market turned out to be the best times for long term investors and same seems to be applicable now for small & mid caps.
We released Techno-Funda Stock Pick 2019 (Potential Multibagger Stock) Report on 12th Dec 2018. The stock selected under this report is a small cap company with market capital of less than 500 crores and is available well below our recommended price due to recent sell off in markets. We are glad to inform you that the company (our Techno-Funda Stock Pick of 2019) declared good growth in top line as well as bottom line in June 2019 quarter. At current valuations, we find limited downside risk with significant upside potential.
To encourage investment in equities during current scenario when overall market sentiments are subdued for broader markets - small & mid caps, we decided to share our Techno-Funda Stock Pick 2019 Report for free. This is a complimentary report for our readers. We are confident that you will find our research work useful in making informed investment decision.
This report covers both technical as well as fundamental analysis about the company along with positive developments in the company as well as sector. The stock offers significant upside potential and could be a multibagger stock delivering 2x to 5x returns from current levels over next 1 to 3 years.
Techno-Funda Stock Pick 2019 (Potential Multibagger Stock) report is a detailed report which covers company's background, Industry outlook, positive developments, financial performance of the company along with peer group comparison, key concerns & risks, technical analysis, fundamental analysis and Saral Gyan recommendation.
To receive our Techno-Funda Stock Pick 2019 (Potential Multibagger Stock) report, simply fill up the form below. Once submitted, you will receive the report directly in your inbox.
Techno-Funda Stock Pick 2019 (Potential Multibagger Stock) report is a detailed report which covers company's background, Industry outlook, positive developments, financial performance of the company along with peer group comparison, key concerns & risks, technical analysis, fundamental analysis and Saral Gyan recommendation.
To receive our Techno-Funda Stock Pick 2019 (Potential Multibagger Stock) report, simply fill up the form below. Once submitted, you will receive the report directly in your inbox.
If you are unable to view the form, click here to fill it online to receive our Techno-Funda stock report directly in your inbox.
Its always wise to be greedy when others are fearful. Fall in stock prices of small and mid cap companies by 50% to 60% from their peaks use to happen during panic times, if a particular company delivers 3x to 5x or even 10x type of returns on your investments in period of 3 to 7 years, it can easily fall by 50% to 60% or even more from its 52 week high during tough times which arises due to profit / loss booking, slowdown in economic growth across sectors, series of negative events / news flows and sell off due to panic across markets. Below are some of the major reasons of severe fall in stocks prices of small & mid cap stocks since beginning of 2018:
i) Rejig in Portfolio by Mutual Funds to meet guidelines defined by SEBI
ii) Introduction of Additional Surveillance Measures by SEBI to curb volatility
iii) Auditors exit from various companies on fear of stringent action from authorities
iv) Unfavourable macros with increasing crude oil prices and depreciating rupee
v) Trade war fears between US and China, rising interest rates, continuous selling by FIIs
vi) Panic in market due to liquidity concerns, IL&FS default on debt repayments
vii) Political uncertainty with setback of BJP in assembly elections in 3 key states
viii) Concerns in market due to severe sell off in large caps stocks like Zee, Tata Motors
ix) Panic arising due to stock prices of ADAG companies falling line nine pins
x) Defaults on payment by well known companies like DHFL, Cox & Kings etc
xi) Economic slowdown with automobiles sales hitting multi years lows in 2019
xii) Selling by foreign investors after introduction of super rich tax by FM in the Budget
Small Cap Index has not delivered negative returns for 2 consecutive years in past 16 years
We believe this is a blessing in disguise because for the first time in many years, several small companies having robust business fundamentals are available at attractive valuations. Do you know in last 16 years, small cap index have not given negative returns for 2 consecutive years. In 2018, BSE Small Cap Index has given negative returns of -23.4% and since beginning of this year, index is down by another -14.3%. Below is the table which indicates Small Cap Index returns YoY since 1st April 2003 (the data is available from April 2003 onwards only in BSE).
Whenever, Small Cap Index delivered significantly high negative returns in a particular year during last 16 years, it has delivered double digit positive returns the very next year. While Nifty and Sensex which are down by only 9% from their life time high and delivered positive returns of around 4% since Jan 2018, Small & Mid Cap Index have underperformed by wide margin delivering -38% and -27% respectively. This divergence between Sensex / Nifty and Small & Mid Cap Index will not last for long going forward considering valuations gap emerging between large caps in comparison to mid & small cap stocks.
Its important to understand that long term gains come in equities with such short term pain. We have seen such a severe correction in small and mid cap stocks after 2011. With continuous fall in stock prices during this year, valuations of many small and mid caps become attractive to reasonable. In fact, many good companies are available at valuations which look very attractive considering the earning growth these companies are expected to deliver over next 2 years. This is not the time to sell in panic, but to accumulate good companies available at discounted valuations. Bad sentiments will not last for ever, its time for long term investors (2-5 years) to start accumulating good quality stocks which after a long time are becoming available at attractive valuations.
Its important to understand that long term gains come in equities with such short term pain. We have seen such a severe correction in small and mid cap stocks after 2011. With continuous fall in stock prices during this year, valuations of many small and mid caps become attractive to reasonable. In fact, many good companies are available at valuations which look very attractive considering the earning growth these companies are expected to deliver over next 2 years. This is not the time to sell in panic, but to accumulate good companies available at discounted valuations. Bad sentiments will not last for ever, its time for long term investors (2-5 years) to start accumulating good quality stocks which after a long time are becoming available at attractive valuations.
Grab our Potential Multibagger Stock 2019 Report for Free. Click here to fill it online to receive our Techno-Funda stock report directly in your inbox.
Also Read: Multibagger Small / Mid Caps & Long Term Investing!
Wish you happy & safe Investing!
Regards,
Team - Saral Gyan
Also Read: Multibagger Small / Mid Caps & Long Term Investing!
Wish you happy & safe Investing!
Regards,
Team - Saral Gyan
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