Mid Caps crack…..

Mid Caps under performed against the broader indices by closing more into negative territory than the broad indices today (Sept 13th, 2017). SENSEX stayed positive and flat, NIFTY moved into negative territory. As the markets are climbing higher and higher, there is visible tiredness, while the fund flow is not letting them to correct.

Our portfolio had a bigger correction with 0.77% losses as we had more number of stocks closing negative than the positive ones. A correction is always healthy as it helps us to move out of the weaker holdings and add new stocks that are getting strength to get prepared for the next rally. Hopefully, this time the market should correct to some extent.

Feels good to think about the situation we are in today, from the periods where we used to fear a correction, now we are welcoming it. A clear sign of maturity, not only with Bravisa, the whole market or the managers who are managing substantial are looking for it.

In a couple of week’s from now, September results will begin to flow, which is expected to give some kind of guidance to the markets. As we hold a portfolio of high quality stocks, we should not fear a correction, we expect a churn in our portfolio too in the coming week’s.

Metals were the leaders in our portfolio today, JSL is about to reach 100% gains since our purchase. Gains were also seen in the home construction and Sugar space. KEI is among the major losers, giving up gains it had post its result announcement, where as the stock is strong and will get going soon.

Strong performance from KEI

On 11th September 2017, after a weak Friday, our portfolio bounced back. This time the super star was KEI, this company is in the power cables business, we have been holding this stock since July 2016. It was added into our portfolio when the price was at 128 levels. last week we increased exposure by 1%, through the value addition the current exposure in the stock is 3% on our portfolio.

KEI Logo

KEI is likely to be a big beneficiary of the Governments growth plans. There was news in the media that the company will have  very good FY19 numbers. Not withstanding the news, as we need our system to approve of holding or increasing exposure to any stock in our portfolio, following the result numbers, KEI moved up in our ranking tables.

Gave us permission to add exposure. And today the stock is up 18%, helping us outperform all the benchmarks for the day. The system has allowed us to have higher exposure at the right time. A very good experience being invested in this stock.

 

The profits in the first entry exposure is now tax free as the investment crossed the 1 year mark and along with those gains we have also received dividends from the company.

Dollar comes back to India.

Dollar comes back.22.10.15In August 2015, when markets crashed post China Crisis, FII money fled out of our markets. Though it did not cause much damage to the retail investors, because the losses were mostly in the large cap stocks while our retail investment was mostly in the Midcap space.

FII money went out of our country for a reason. The expectation that FED will reduce interest rates in the US made the FII’s pull out from the Emerging Markets to park the investments in their countries in order to reduce risk.

When FED postponed the decision to reduce rates, by which time most of the money had moved out. The only possibility was for the money to come back and India was the most favourable destination. On 15th September in our article “Mid Cap stocks are stronger than their large cap peers.” We had written that, all that is going to happen is positive for India. FII money will soon come back, it became a reality.

In the first 20 days in the month of October, India has received 4675 Crores from FII’s. As this money is reaching here our SENSEX has made a near 4% gain in the same period.

Somehow, FII’s made some wrong decisions, while they are pretty fast to take responsibility and change. Now, their investments are in the Midcap space. The advantage here is that, this segment is already low on liquidity and pretty strong. With the additional flow of capital, wanting to buy more in this space will increase demand far higher than supply and that will result it very high valuation for the stocks.

One of the Mid Cap stocks, Britannia has in fact given more than 10% profits in the last one month alone. Some stocks like KEI, DEEP Industries, ITD Cementation etc., are having good runs in the market.

In our portfolio that already has investments in these stocks; we have added exposure and have been gains. We look forward to have a small correction in the markets, post which, our market is going to have a big rally in prices.