5 Share Market Tips by Swarup Mohanty
If you study the market for a period of time, you will realise that they always move in cycles, and these transitions strongly mirror economic cycles. Markets also respond to major internal events and macro developments such as government elections and economic growth as well as external events like global crises. A near-term example here is the ongoing pandemic which sent markets into a tizzy in the initial stages. When the market goes into a nosedive, it can be very challenging to continue investing as we are, inherently, emotional and biased.
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Yet, there is no rule as cardinal as the need to stay invested. Through the market cycles over the last three decades, there have been a number of learnings which continue to be relevant and can guide us in our future trading and investing journey.
Guest: Mr. Swarup Mohanty, Chief Executive Officer at Mirae Asset Investment Managers (India) Pvt. Ltd. With over two decades of experience in financial services, Swarup is someone who you can truly call a market man. Swarup has seen and navigated the market through everything, right from the post-liberalisation days of the ‘90s, to the recent COVID pandemic. And today, he has very kindly agreed to share with us his top 5 learnings from the markets, through the decades.
5 Lessons to learn on Share Market
1. The ‘90s were an interesting time for India. Literally everything changed. Stories of riches and crashes from that era continue to hold fancy. Any one incident from that time that had a particularly large impact on your learnings and journey?
The ‘90s was when things began to alter in India and the major factor behind this transformation was liberalization. As students of the stock market, the first event that shocked us, and the country at large, was the Harshad Mehta scam. Suddenly, the stock market fell sharply and everything collapsed. Key learnings from this event were:
i. Where there is money, there is theft.
ii. To counter this, there is a need for strong regulations.
iii. Rules must be followed strictly.
iv. Investment and regulatory frameworks ensure discipline.
Sticking to frameworks, both personal and regulatory, will ensure success and a prime example here is American business magnate Warren Buffett.
2. The ‘90s were also the time when the true meaning of globalization revealed itself – the fact that when the globe is closely integrated, then the good and the bad impacts everyone. Lessons from that time are more relevant today than ever before.
The first lesson during the ‘90s came during the 1997 Asian market crash. Even though the crisis occurred outside the country, Indian markets went down 20-30%. However, over the longer term, India and China benefited from the crash as the global money flow shifted from the impacted countries to emerging markets. Lessons from this time period include:
i. Realizing that we were not alone – global events would have an impact on India, especially as the country was opening up. When anything major happens on a global scale, your country will feel the tremors.
ii. We should not be caught by surprise when global events impact us.
iii. The impact could be both positive and negative.
3. Many of us would remember the turn of the century and the expected Y2K destruction. While, thankfully, that didn’t pan out, technology ensured that we started the century with a crash! Can you enlighten us on what crash this could have been and how you navigated that period?
What we went through in 2000 changed perspectives, perpetually, for asset management representatives in the market. Stock markets were clearly led by the technology boom and funds were being sold like never before. Realizing that fund NAVs could fall to 20-25% of the principal value was a shocking lesson from the period. People give fiduciary agents their money with the intention of growing it. From that perspective, it is important to understand that while the mutual fund business looks like a return generation business, it is, in fact, the business of risk management.
i. Focus on risk. The crisis made everybody assess risk better.
ii. There is a risk to investing and also to not investing in the markets.
iii. How a person should be investing depends on individual risk profiles.
iv. Every person’s risk profile is unique and consistently changing. It is about controlling the controllable aspects.
4. So far, the two decades of this century have been fairly eventful. Barely had we recovered from one crisis than the next was upon us. What are the two periods in this century that have impacted your thought process and urged you to reimagine the way you invest and even live your life?
The events that unfolded in 2008 were unbelievable. The top 5 entities crashed and global markets reacted in an unprecedented manner. Every fund was correcting itself, making people realise that markets are not under our control. The thing we can control is asset allocation. Volatile markets create great opportunities and it is imperative that we learn from past crises. When COVID-19 happened, we incorporated previous learnings into asset management and these include:
i. Never stop your SIPs during a crisis as volatility is the best time for investments and rebalancing portfolios.
ii. Every crisis has a start and end date and the world will move on.
iii. Sharp market corrections at the beginning of a crisis is an opportunity.
iv. It is necessary to build a strong emergency fund and have sufficient health insurance.
v. During a crisis, and even otherwise, transition from a straight-line financial plan to a glide path financial plan. This means that you need to rebalance in response to a change in your personal circumstance and the market environment and also systematically shift money from risky assets to safer assets as you near your goal as it ensures a safer landing.
vi. You cannot control the market. But, you can control how you react to the markets during a crisis.
vii. Never repeat your mistakes, rather, apply lessons from the previous crisis to the next one.
5. What is your advice to investors out there?
i. Frameworks, rules and regulations need to be followed
ii. Asset allocation and following the glide path financial plan is of utmost importance.
iii. Allocations should be based on unique circumstances. Rebalance to ensure these circumstances are reflected in your portfolio.
iv. Never stop your SIPs as the market fall is the best time to continue.
v. When you are investing, remember that volatility is your best friend. Accept and build it in your portfolio. If there was no volatility, there would be no opportunity.
vi. Before beginning your investment journey, ask yourself why you are investing. If you know why you are investing, you can easily figure out where to invest.
5 best swing trading ideas for the week
5paisa research provides investors with the best short-term and long-term investing ideas. Every morning we offer 5 best stocks to buy, in the afternoon we provide five best buy today and sell tomorrow (BTST) ideas, while at the beginning of every week we provide five best swing trading ideas. We regularly update our success rate and issue special commentary during special market events.
Swing Trading is a kind of fundamental trading strategy where positions are held for more than a single day. Since corporate fundamentals generally require several days or even a week to cause sufficient price movement to render a reasonable profit, most swing traders are also considered fundamentalists as well.
Some others also explain swing trading as a trading strategy in the middle of day trading and trend trading. While day traders hold stocks not more than a day the trend trader holds stocks as for a week or even a month or months based on fundamental trends. Swing traders trade in a particular stock based on intra-week or intra-month oscillations between pessimism and optimism.
Here is the list of 5 best swing trading strategies for the week
HLE GLASSCOAT (HLEGLASS)
Current market price: 5175
Stop loss: 5040
Target 1: 5350
Target 2: 5520
Reason: Strong volumes seen for HLE Glass share
AVENUE SUPERMARTS (DMART)
Current market price: 4240
Stop loss: 4100
Target 1: 4430
Target 2: 4600
Reason: Momentum is positive for DMART share
TATA ELXSI (TATAELXSI)
Current market price: 5491
Stop loss: 5135
Target 1: 5650
Target 2: 5800
Reason: Further buying is expected for Tata Elxsi share
VENKEY'S INDIA (VENKEYS)
Current market price: 3060
Stop loss: 2975
Target 1: 3130
Target 2: 3250
Reason: Sideways move is likely to end for Venkey’s India share
DCM SHRIRAM (DCMSHRIRAM)
Current market price: 1037
Stop loss: 1000
Target 1: 1065
Target 2: 1110
Reasons: Uptrend is expected to start in DCM Shriram stock
Paras Defence IPO off to flying start as retail investors lead the rush
The offering of 71.4 lakh shares, excluding anchor allotment, was covered 16.6 times after receiving bids for 11.8 crore shares at the end of the first day.
Retail investors led the bidding. Their quota of 35.86 lakh shares was covered 31.36 times after getting bids for 11.24 crore shares. The non-institutional investors’ quota was subscribed 3.77 times while institutional investors mostly stayed on the sidelines.
The defence engineering company’s IPO began today as it seeks to benefit from bullish sentiment that has pushed stock markets to record highs. The IPO will close on Thursday. It has set a price band of Rs 165-175 a share for the IPO.
Ahead of the IPO, the company raised Rs 51 crore from anchor investors including existing investor Abakkus. It had also mopped up Rs 34 crore through a pre-IPO sale.
Paras is the 42nd company to float an IPO in 2021, underlining the rush among Indian firms to launch share sales this year. In addition, an equal number of companies have filed their draft red herring prospectuses (DRHPs) and are awaiting approval from the Securities and Exchange Board of India.
This IPO rush comes even as benchmark indices continue to touch new highs. The 30-stock BSE Sensex, for instance, hit another record on Friday, going past 59,700 before cooling off. On Tuesday, the Sensex was trading around the 58,600 level.
The Paras IPO comprises a fresh issue of shares worth Rs 140.6 crore and an offer for sale of up to 17.24 lakh shares by its existing shareholders including the promoters Sharad Virji Shah, Munjal Sharad Shah and Ami Munjal Shah.
The founders—chairman Sharad Virji Shah and managing director Munjal Sharad Shah—hold a 59.53% stake in Paras Defence. The total promoter and promoter group stake in the company is 79.4%.
The company plans to use the money raised from the fresh issue to buy machinery and equipment. It also plans to fund working capital requirements, repay debts and use the money for general corporate purposes.
Paras Defence’s business
The company designs, develops, manufactures and tests a range of defence and space engineering products. It caters to four major segments—defence and space optics, defence electronics, electro-magnetic pulse (EMP) protection solutions, and heavy engineering.
It is also the sole Indian supplier of critical imaging components such as large-sized optics for space applications. It has two manufacturing facilities in Maharashtra, located at Nerul in Navi Mumbai and Ambernath in Thane.
The Nerul plan is an advanced nano-technology machining centre to produce high-quality optics and ultra -precision components. The Ambernath facility makes heavy engineering products such as flow-formed motor tubes, vacuum brazed cold plates, titanium structures and assemblies. The company is expanding the Nerul facility.
Paras gets most of its revenue from defence public-sector undertakings and government organisations involved in space research. Its customers include Bharat Electronics Ltd, Hindustan Aeronautics Ltd, Bharat Dynamics Ltd, Hindustan Shipyard Ltd, Electronic Corporation of India Ltd, Tata Consultancy Services Ltd and Solar Industries India Ltd. Its foreign customers include Advanced Mechanical and Optical Systems of Belgium and Tae Young Optics Company of South Korea.
Paras Defence’s financials
The company’s top line hasn’t grown in the last two years and its profit has fallen.
Its consolidated total income was Rs 144.6 crore for the year ended March 31, 2021, down from Rs 149 crore and Rs 1,57.17 crore for the previous two years.
Its consolidated profit after tax fell to Rs 15.78 crore in 2020-21 from Rs 19.66 crore the year before and Rs 18.97 crore in 2018-19.
The company had an order book of Rs 305 crore as of June 30, 2021.
Will Puranik Builders be third time lucky as it files for IPO again?
Real estate developer Puranik Builders Ltd has filed its draft red herring prospectus (DRHP) with the Securities and Exchange Board of India to raise funds through an initial public offering (IPO).
The IPO comprises a fresh issue of shares worth Rs 510 crore and an offer for sale of up to 9.45 lakh shares by the company’s promoters, according to the DRHP filed with the capital markets regulator.
The offer for sale involves Ravindra Puranik and Gopal Puranik divesting up to 4.725 lakh shares each.
The Mumbai-based developer may also consider a pre-IPO placement to raise as much as Rs 150 crore. If it does so, it will reduce the amount to be raised via the fresh issue of shares in the IPO.
The company plans to use the fresh proceeds to repay loans and for other general corporate purposes.
Elara Capital (India) Pvt. Ltd and YES Securities (India) Ltd are the merchant bankers managing the issue.
This is the company's third attempt to go public. The company had first approached SEBI for IPO approval in June 2018. It filed its DRHP again in November 2019 and even received regulatory clearance to launch the offering but didn’t follow through with its plans.
Puranik Builders’ business
The company has been operating for three decades. It develops housing projects in the mid-income affordable segment in the Mumbai Metropolitan Region and Pune Metropolitan Region.
As of July 31, 2021, it had developed almost six million square feet of space across 35 completed projects in the two regions.
It also had 23 ongoing projects with an aggregate developable area of 14 million square feet with ticket sizes ranging between Rs 47.3 lakh and 1.25 crore in the MMR and between Rs 34.1 lakh and Rs 97.2 lakh in the PMR for mid-income affordable housing segment. The ticket size ranged from Rs 11.5 lakh to 34.2 lakh for low-income affordable housing segment.
In addition, it has 17 forthcoming projects with an aggregate estimated developable area of 13.6 million square feet.
The company develops most of its projects through joint development or joint venture arrangements with land-owners. As of July 31, it had carried out 32 projects on its own and 43 projects through the joint venture model. The company also has a land bank of 70.09 acres.
Puranik Builders’ finances
The company’s total income fell to Rs 513.56 crore for 2020-21 from Rs 730.24 crore and Rs 721.23 crore for the previous two financial years, as sales were affected because of Covid-19 and measures to tackle the pandemic including lockdowns.
“Due to the nationwide lockdown and inability to conduct site visits, sales enquiries from prospective customers that typically follow site visits were significantly affected,” the company said.
Similarly, its net profit for 2020-21 dropped to Rs 36.3 crore from Rs 51.23 crore for 2019-20 and Rs 71.27 crore the year before.
Earnings before interest, tax, depreciation and amortisation (EBITDA) for 2020-21, 2019-20 and 2018-19 were Rs 164.27 crore, Rs 192.29 crore and Rs 209.26 crore, respectively. The EBITDA margin came in at 32.71%, 26.68% and 29.26% for the last three years.
For the four months ended July 31, 2021 it clocked a net profit of Rs 17.5 crore and EBITDA of Rs 51.3 crore on total income of Rs 191.13 crore.
Zee Entertainment to merge with Sony. All you want to know
India may have just got its biggest entertainment deal yet. The beleaguered Zee Entertainment Enterprises Ltd has got a saviour, with the Indian subsidiary of the Japanese media and electronics giant Sony Corp agreeing to merge the company with itself and taking a majority stake.
As part of the deal, which the Zee board has approved in principle, Sony Pictures Networks (SPN) India will effectively hold a 52.93% stake in the merged entity. The remaining 47.07% will remain with Zee shareholders.
The deal announcement propelled Zee’s shares higher by 25% to as much as Rs 319.50 apiece on the BSE. The shares later cooled off a tad to Rs 302.40 apiece, valuing the company at Rs 29,000 crore.
What exactly is Sony getting in the deal?
All assets owned by Ze including the entertainment TV channels it owns, its OTT platform Zee5, its catalogue of TV and online programmes and movies, and its film studio Zee Studios. These will be controlled by the merged entity.
The merged entity will also house Sony’s TV channels (75 in all), the OTT platform Sony LIV, Sony Pictures Films India and Studio NXT, which makes digital content.
The new entity will effectively own the biggest suite of entertainment content services in India, bypassing Disney India and Star India.
Why is Sony the majority owner here?
This is because SPN India, Sony’s India entertainment arm, is investing an additional $1.575 billion or Rs 11,615 crore, to capitalise the merged entity. This money will allow the new entity to grow its business further.
Had Sony not infused more cash, Zee shareholders would have held a majority stake with 61.25% shares.
What did Zee’s board of directors say about the merger?
Zee’s board said the “merger will be in the best interest of all the shareholders and stakeholders”. The board also said that the deal is in line with Zee’s strategy of achieving higher growth and profitability as a leading media and entertainment company across South Asia.
Who will head the merged entity?
Zee managing director and chief executive officer Punit Goenka will head the combined company for five years. This is significant because a group of Zee’s institutional investors led by Invesco had been demanding his ouster.
It is unclear if Sony India chief NP Singh will continue to be a part of the merged entity or will move on to another role.
How much stake does Zee’s promoter family own? What can they now do?
The existing promoter family of Zee, including Goenka and his father Subhash Chandra, currently own barely 4% stake in Zee Entertainment.
However, as per the deal with Sony, they will have an option to increase their shareholding to as much as 20% in the normal course of business.
Who will have a majority on the board?
A majority of the board of directors of the merged entity will be nominated by Sony Group.
What happens to Zee’s news business?
The news business is not part of the merger deal and remains under Zee Media Corp, which is controlled by Subhash Chandra’s Essel Group.
However, media reports this week speculated that Zee Media could be on the radar of billionaire Gautam Adani, India’s second-richest man who has announced his group’s entry into the media business.
Check out the mid-cap stocks where FIIs have sold shares
The Indian stock market’s rapid rise to record highs has made several foreign institutional investors (FIIs) more cautious over the past couple of months. As a result, there has been a rush of money towards large-cap counters as investors look for safer bets rather than chasing the riskier mid- and small-cap stocks.
Indeed, FIIs have dumped a clutch of mid-cap stocks over the last few months. Quarterly shareholding data show they cut their stake in as many as 54 listed companies that currently have a valuation between Rs 5,000 crore and Rs 20,000 crore or are presently included in the mid-cap index.
Also Read : Why did FIIs Invest Rs.16,300 crore in September?
A sector-wise analysis shows such stocks are spread across several industries. However, some sectors like financial services and hospital chains stand out.
Top mid-caps where FIIs cut stake
The largest mid-caps that saw offshore portfolio investors turn particularly bearish during the three months ended June 30 include diagnostics chain Thyrocare, Jubilant Ingrevia, Granules, Escorts, PVR, Hinduja Global, Just Dial, Rain Industries, Easy Trip Planners and Ceat.
In all these mid-cap stocks FIIs cut their holding by 3% or more.
To be sure, FII stake shrank the most in Poonawalla Fincorp (previously Magma Fincorp). Their stake skid 13.5% last quarter, but this had to do with fresh capital infusion by the new promoters rather than any actual selloff.
Interestingly, FIIs’ stake in at least two companies fell just ahead of separate deals where those firms are being acquired by other companies. For instance, Thyrocare is being bought by online medicine delivery company PharmEasy. Similarly, Just Dial is being acquired by Reliance Industries. While the Thyrocare deal was announced in late June, the Just Dial transaction was unveiled in July.
Other mid-caps that saw FIIs slash holding
FIIs cut their stake by two-three percentage points in around half a dozen mid-caps last quarter. These include gold finance company Manappuram Finance, drugmaker Natco Pharma, diversified financial services firm Edelweiss, Heidelberg Cement, Sunteck Realty, auto component maker Mahindra CIE and CCL Products.
Many mid-caps that command a market value of Rs 10,000 or more also saw FIIs selling less than a 2% stake. These companies include broadcaster Sun TV, Sanofi India, developer Prestige Estates, Apollo Tyres, UTI Asset Management, power utility CESC, Galaxy Surfactants, City Union Bank, Redington, and Mahanagar Gas.
Hospital chains Aster DM Healthcare and Narayana Hrudayalaya also lost favour among FIIs. Fortis, which now commands a market value just over Rs 20,000 crore assigned for a mid-cap firm, is another top hospital chain that saw FIIs turn bearish on its counter.
Tata Chemicals, L&T Finance, Minda Industries, Happiest Minds Technologies, M&M Financial, Zee Entertainment and Endurance Technologies are other such firms that are still seen as a mid-cap even though their current market cap is above the threshold. These companies, too, reported a fall in their FII shareholding.