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#Knowledge : If purpose is solely investment, ETF is always better due to:
1. No issues of physical security / handling / fear of loosing.
2. No inheritance issues due to proper KYC documentation / nominations in demat account.
3. No erosion in value / standard cutting when one intend to sell the holdings.
4. At any point of time, if required can be converted into physical at prevalent market rate.
5. No extra cost of holding (like locker rent for physical), cost will be included in normal demat account.
#Discussion : Latest market updates : Finance Minister Arun Jaitley (Major Annoucement)
●Between 2014-15 and 2017-18, banks have made provisions of over Rs 3 lakh crore, more than 10 times the amount made in the preceding 10 years.
●Government announces unprecedented PSU banks re-capitalization program of Rs 2.11 lakh crore. Of this, Rs 1.35 lakh crore will come from recap bonds, while the rest will come from the market and budgetary support.
●Jaitley says it is essential to increase public spending on infrastructure, and that expenditure on infrastructure is taking place at an unprecedented level at the moment.
●Jaitley says that the recapitalisation of PSU banks will be accompanied by a host of banking sector reforms that will be detailed by the government at a later date.
●Jaitley says that whether or not the recapitalisation bonds will impact fiscal deficit is a function of what the nature of the bond will be and which agency issues the bonds. But even if it is a part of the fiscal deficit, it will be in the larger interest of the nation.
●Finance minister Jaitley says that the entire Rs 2.11 lakh crore of capitalisation will be spread over this fiscal year and the next.
●GST among traders has been very encouraging so far says Jaitley.
Impact : Capital Infusion may Boost PSU Banks in near term
DISCRIPTION : STOCK HAS TURNED FROM NEGATIVE TO NEUTRAL ZONE. WEEKLY CLOSE ABOVE 33.10 WILL CONFIRM IT IS IN THE NEUTRAL ZONE. BUYING IS COMPARATIVELY LOW WITH REGARD TO SUPPLY AT THIS POINT. IT HAS CONSOLIDATED IN THE RANGE OF 30 – 35 ZONE FOR FEW WEEKS. BUT TOOK A GOOD SUPPORT AT 30 WHICH IS A GANN NUMBER.IN FACT RED DESCENDING LINE IS FIRST TIME BROKEN UPSIDE YET IS FAILING TO CROSS BARRIER AT 35. IN MY VIEW THIS STOCK IS ABOUT TO GET MOMENTUM AND BREAK ABOVE 37 AFTER GOOD CONSOLIDATION MAY MOVE TOWARDS 39 & 42.VITAL GANN NUMBERS FOR THE STOCK ARE :
30.3 33.1 39.1 42.3 44.4 45.6 49.0
#Knowledge : All the multibagger stocks have many common factors, namely:
1. They have a small market cap (less than ₹1000cr, smaller the better).
2. The stock is illiquid. They are not tracked by brokerage houses and there is no/negligible institutional investor present.
3. They have a first generation management. (Like Sunil Mittal of Bharti, Dhirubhai Ambani of Reliance, Poddar of Mayur Uniquoter, etc.)
4. Zero debt or Debt to equity ratio of less than 0.5.
5. High ROE (return on equity) and High ROCE (return on capital employed)
6. Low P/E ratio. (It’s not a norm but chances are high since P/E re-rating exponentiation your return. There are many high PE stocks which go further up but that judgement will come from experience and knowledge. It can’t be taught.)
7. Ethical and Efficient Management – The single most important factor to watch out for while hunting for a multibagger. Since, it’s an intangible factor and can’t be found by equations or an excel sheet. It can only be evaluated by reading annual reports, articles on the management, researching about their past, their views on the business, and if you need a shortcut then look out for the business’ ROE. If it’s high, then most of the time the management will be efficient.
8. Scalable Business Model – Rakesh Jhunjhunwala gave example of Lupin, how it went up from 1 to 2000. It went up because the business was scalable. The Pharma industry is huge. It can accommodate 10 more Lupins.
9. Sector Leader – There are high chances of sector leader in a scalable sector to become a multibagger.
10. Future Growth Potential – In 1995, Hero Honda had a market cap of 200 crores. They sold one bike for ₹20,000. By conservative estimate, even if we assume that 10 million people will buy a bike, the whole 2 wheeler market was pegged at ₹20,000 crores (10m x 20,000). So, the sector leader was quoting at ₹200 crores and the whole sector was ₹20,000 crores. That itself gave Hero Honda 100 x potential. Whoever spotted that potential, is happily retired.
Happy investing 🙂
#Technical charts :
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