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FIIs turned bearish on these small-cap stocks in Q2. Did you sell any?

by 5paisa Research Team 17/11/2021

Foreign institutional or foreign portfolio investors have historically dictated the movement of Indian stock markets. However, this is changing due to the rising flow of domestic money in the local bourses, especially after the demonetisation drive in 2016-2017 and asset prices getting punctured in the real estate market.

Indeed, a lot of the current froth in the market where the benchmark indices are trading near their all-time high is attributed to the domestic investors—both local mutual funds as also retail investors.

One segment of the stock market that is usually seen as a haven for punters looking to make a quick buck with trading opportunities and retail investors who get attracted by lower per share price is the small cap space or companies with market capitalisation of under Rs 5,000 crore.

This segment tends to have a high beta and tends to swing much more in a volatile market condition.

Offshore investors usually don’t play in this segment as it tends to be below their investment mandate radar. But that doesn’t exclude FII/FPI participation wholly from such stocks. In fact, many investors and analysts try to fish for hidden gems who can be a mid or large cap over the medium to long term.

Quarterly shareholding data shows they decreased their holding in more than 200 listed companies. In nearly one in three companies, they pushed down their stake by two percentage points or more.

There were around 100 small-cap stocks with current market valuation of under Rs 5,000 where FPIs cut stake. This is around the same number of small caps where FPIs increased their stake in the quarter ended September 30.

A sector-wise analysis shows that offshore investors sold shares in companies across pharmaceutical, financial services, hospitality, construction, engineering and industrial segments.

Top small caps

If we consider the larger firms within the small caps where FIIs cut their stake last quarter, Strides Pharma is at the top of the heap.

Other larger companies in the small-cap space with market value upwards of $500 million that saw offshore investors turn bearish include Deepak Fertilisers, Shilpa Medicare, Karur Vysya Bank, Varroc Engineering, Lemon Tree Hotels, Equitas Holdings, Mahindra Lifespace, Esab India, Minda Corporation, GHCL, Newgen Software, Vakrangee and Somany Ceramics.

Significant sale by FIIs in small-cap pool

If we track stocks where FIIs or FPIs were particularly bearish and sold 2% or more stake last quarter we get around 30 names.

These include companies like Antony Waste, Kirloskar Industries, Intrasoft, Artemis Electricals, International Conveyors, Capacit’e Infraprojects, Ador Fontech, Ujjivan Small Finance Bank, Jai Corp, Rollatainers, Esab India, Kolte-Patil, Shemaroo Entertainment and Arvind.

Among other small caps that saw bearish sentiment by FPIs were Usha Martin Education, Welspun Corp, Veto Switchgears, Wonderla Holidays, Zee Media Corp, CARE Ratings, Shilpa Medicare, IOL Chemicals, Gabriel India, Gayatri Projects, Ahlada Engineers, Karur Vysya Bank, Lemon Tree Hotels, Nucleus Software, Newgen Software and Sadbhav Infra.

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Momentum Trading: Here's why NRB Bearings needs to be on your radar!

Momentum Trading: Here's why NRB Bearings needs to be on your radar!
by 5paisa Research Team 17/11/2021

The stock of NRB Bearings Limited has formed Doji candlestick pattern as of July 09, 2021, and thereafter witnessed correction. During the corrective phase, the stock has traded in a range of Rs 154.40-Rs 115 level. This resulted in the formation of a symmetrical triangle pattern on the daily chart.

On Wednesday, the stock has given Symmetrical Triangle pattern breakout on the daily chart. This breakout was confirmed by nearly 15 times of 50-days average volume, indicating strong buying interest by market participants. The 50-days average volume was 3.46 lakh while on Wednesday the stock has registered a total volume of 50.69 lakh. Further, the stock has formed a sizeable bullish candle on breakout day, which adds strength to the breakout. 

The stock is meeting Daryl Guppy’s multiple moving averages set up rules as it is trading above both the short and long term moving averages. These averages are all trending up, and they are in a sequence. Further, now the stock is meeting Mark Minervini’s trend template rules. The current stock price is above both the 30-week and 40-week moving average price line. The 10-week moving average is above both the 30 & 40-week moving averages. These two set-ups are giving a clear uptrend picture in the stock.
 

The Relative Strength Index (RSI), is currently quoting above the 70 mark on the daily chart and it has surged above its prior swing high. The weekly RSI has also given positive crossover and it has surged above its prior swing high. The daily MACD histogram is suggesting a pickup in upside momentum. On the daily timeframe, ADX is 20.14 which suggests that the trend is yet to be developed. Directional indicators continue in the ‘buy’ mode as +DI continues above –DI.

In a nutshell, the stock has registered a bullish pattern breakout along with volume confirmation. Hence, we would advise the traders to be with a bullish bias.

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These stocks see huge volume burst in the last leg of the trading session!

These stocks see huge volume burst in the last leg of the trading session!
by 5paisa Research Team 17/11/2021

AstraZeneca Pharma India Limited, BEML Limited, and ITI Limited have witnessed volume burst in the last 75 minutes of the trade.

As the saying goes, the first and the last hour of each trading session is the most important and active in terms of price and volume. More so, the activity in the last hour is said to be of utmost importance because most of the pro traders and institutions are active at this time. Hence, when a stock sees a good spike in volume in the last leg of trade along with price rise, it is said to be the pro and institutions have a keen interest in the stock. Market participants should keep a close watch on these stocks as they can witness good momentum in the short-medium term.

So, based on this principle we have shortlisted three stocks, which have witnessed volume burst in the last leg of trade along with price rise. 

AstraZeneca Pharma India: The stock gained a decent 1.11% on Wednesday. The stock traded negative throughout the day, but the last 75 minutes witnessed an up move of about 2% before retracing a little. About 75% of the total volume was traded in the last 75 minutes. The stock has corrected a lot from its recent high and today’s volume burst tell us about the institutional activity. Traders should closely watch the stock for upcoming days.  

BEML Limited:  The stock surged about 2.31% on the trading session that ended Wednesday. The stock traded flat during the initial hours of the session but made some volatile moves towards the end. The latter session witnessed about a 2.5% change in its price. The stock trades near its 52-week high with huge volume and one can expect a breakout in times to come.

ITI Limited: The stock rose 3.94% on Wednesday. It traded flat to negative but witnessed a huge rally of about 4% in the last hour. Major institutional buying was seen as most of the day’s volume was recorded towards the end of the session. The stock looks to gain some momentum, as this might possibly be the start of the trend.

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Falguni Nayar - The visionary who made Nykaa

Falguni Nayar - The visionary who made Nykaa
by 5paisa Research Team 17/11/2021

The brains behind the beauty and lifestyle retail empire Nykaa -Falguni Nayar.

“Today, heading a team of over 1600 Nykaa-ites, Falguni has built a beauty and lifestyle retail empire with a portfolio of 1500+ brands, including its private label, available online and across 68 stores in India,” reads the LinkedIn Profile of the Founder of India’s first woman-led unicorn, Nykaa.

A top banker at the Kotak Mahindra Capital Company for nine years, called it quits in her career’s prime to pursue her entrepreneurial venture in the untapped online cosmetics range segment in 2012. With her keen business acumen inherited from her father(Ball bearing Businessman), in a short span of 18 months, the visionary could make Nykaa, India’s premier online portal for beauty and wellness.

A dream venture started with seed capital from family and friends of Rs 20 crore is now eyeing a valuation of Rs 53200 crore or USD 7 billion. Together with her family, she holds a majority stake in the group companies. Falguni Nayar holds 22.32% or 104,305,770 equity shares of pre-offer paid-up capital of FSN E-Commerce Ventures Ltd through her trust Falguni Nayar Family Trust which she will continue to hold after the IPO.

She is a graduate of Sydenham College of Economics and Commerce and alumni of IIM Ahmedabad started as a consultant in a management consulting firm AF Ferguson & Co. She later joined the M&A team of Kotak Mahindra Capital Company and escalated to become the company’s Managing Director before she launched her beauty retailer, Nykaa.

Currently, she serves on board of several blue-chip companies including Tata Motors Limited, ACC Limited and Dabur India Limited. She also served as India Advisor at Temasek, a subsidiary of Temasek Holding Singapore. She was a Founding Member of the Asia Society in India and a Board Member with Business Standard.

She is a true woman achiever who has many laurels in her hat. She is one of the four Indian businesswomen on the Forbes Asia Power businesswoman list 2019. Also named Businessperson of the Year 2019 by Vogue India, Businesswoman of the Year at the Economic Times Awards for Corporate Excellence 2019. Most recently, she was awarded the EY Entrepreneur of The Year 2019 – Start-up Award by Ernst and Young.

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Meet the celebrity stock market investor - Raamdeo Agarwal

 Meet the celebrity stock market investor - Raamdeo Agarwal
by 5paisa Research Team 17/11/2021

Fall is temporary, up is permanent” quips the Guru of wealth creation, Raamdeo Agarwal

 “It is not necessary to do extraordinary things to get extraordinary results” Raamdeo Ramgopal Agarwal.

An ordinary man with a humble background, brought up in a village in Chattisgarh, who moved to Mumbai to become a Chartered Accountant, has transformed into an extraordinary celebrity stock market investor. Cofounded a small sub broking firm in 1987 with Motilal Oswal, Raamdeo Agarwal has created an enviable empire that enjoys an Iconic Status in the Indian investor fraternity.

His investment philosophy is largely inspired by Warren Buffet, whom he lovingly addresses as his guru. 

Buffet’s annual letters to the Berkshire Hathway shareholders hold a biblical status in Agarwal’s investment philosophy, which he ardently reads till date.

He calls his investment philosophy QGLP – Quality, Growth, Longevity, at a reasonable Price. Recently, he has authored a book by the same name - The QGLP Checklist – 25 questions, 25 frameworks”. The book, marked the 25th year of the Motilal Oswal Annual Wealth Creation Study, which Agrawal had himself been authoring since 1996.

How the seasoned investor interprets recent corrections?

Ramdeo Agarwal is unperturbed by the recent corrections in the market. He feels the correction is a part of a classic bull market. In the overheated bull market, where each trading day witnesses some stocks rallying to a 52-week high, the anxiety level of market participants on edge of the seat was all set to experience a correction. He firmly believes in the rolling motion of market cycles, corrections or mini crashes are possible but the bigger picture is that market has the power of turning 4x or even more. It has done it in the past and is capable of repeating in the future. 

In such jittery times, his investment philosophy can definitely guide the naïve investors on the stock markets- 

“Fall is temporary, up is permanent” quips the Guru of wealth creation.

“Concentrate investments in a few stocks and have the fortitude to hold through price fluctuations” a quote from Wealth Creation Thoughts.

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Ramesh Damani – The stock picker who makes concentrated bets.

Ramesh Damani – The stock picker who makes concentrated bets.
by 5paisa Research Team 17/11/2021

As per the latest corporate shareholdings filed, Ramesh Damani publicly holds a portfolio of just 1 stock with a net worth of over Rs 34.2 crore. 

Ramesh Damani, born to a successful broker, became a member of BSE in 1989, only to realise that brokerage income wasn’t the means to fulfil his aspiration for wealth creation. With his strong analytical skills and foresight, he has invested in high-quality value companies (The “Warren Buffet” Approach).

He had spotted that spark in Infosys and CMC in 1993 which swelled his portfolio hundredfolds. Later he found the same conviction in the liquor stock- McDowell (now United Spirits) and the Navratna PSU- Bharat Electronics. His investment style can be classified as Concentrated Stock Picking (a Bottom-Up approach) wherein he identifies a potential investment at lucrative valuation, strong management and promising growth potential. The level of conviction in his methodology is evident in a couple of stocks in the portfolio at a particular time. The strategy works only for those who look for fundamentals in a company for wealth creation, not those who time the market.

As per the latest shareholding data, during the September quarter, the stock picker is invested in Goldiam International Ltd, a 1.57% stake in the company for 349,000 shares held since June Quarter of 2019. During the same period, the stock has given a CAGR of 393%.

Parting Thoughts - 7 Stock Investing lessons by Ramesh Damani.  

The ace investor has presented his thoughts in a conference on investing as under- 

1. Bear markets can be cruel enough to erode wealth accumulated during the bull rally. 

2. The more the sharp rally, the longer it would take to come back to its previous peak. 

3. Long term trend of the market is always up. 

4. Longer the stability, the greater the subsequent volatility.

5. Very, very few businesses have permanent moats-Nothing is permanent.

6. Diversification is the key to success as it is not obvious which business will outperform. 

7. Buy stocks at a cheap valuation to make compounded returns in the next 5-10 years.

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