SIP Performance: Canara Robeco Bluechip Equity Fund – Direct Plan.

SIP Performance: Canara Robeco Bluechip Equity Fund – Direct Plan.
by 5paisa Research Team 06/10/2021

Canara Robeco Bluechip Equity Fund is one of the highly rated equity funds within the category and has outperformed its benchmark in a 3, 5 and 7 year period.

An individual has various options available in the market in which he can invest his money. Every individual has a different level of income. Some of them have lower income, some are moderate-income earners, while some have higher income. The investment amount also varies according to the level of income an individual possesses. An individual with lower income or moderate-income levels cannot invest higher amounts regularly or they cannot dedicate a huge lump-sum amount at a single point in time. Hence, mutual funds offer investors to invest in amounts as small as Rs 500, which aids small as well as a big investor to get the habit of investing.

This encourages youngsters i.e. individuals who start their journey of earnings to invest right from a young age. It also enables the creation of a large corpus if investors invest for a longer time. Individuals, who are at an early stage of earning, have a high-risk capacity as compared to mid-earning or pre-retirement and retirement stage investors. So, investors with high-risk capacity can invest the amount in equity-related schemes in their early stage and further, can shift some proportion to debt once they get decent returns from the equity markets.

Now let’s look at the SIP performance of Canara Robeco Bluechip Equity Fund which is a large-cap fund investing in the 1st-100th company in terms of full market capitalization. This fund is outperforming its benchmark in 3, 5 and 7-year periods and it is the highest-rated fund within its category. All rating agencies such as CRISIL, Morningstar and Value Research have five rated this fund. If you had invested just Rs 1,000 every month i.e. Rs 12,000 per annum from October 1, 2018, till the present date i.e. October 6, 2021, then the worth of your investment would have been Rs 58,070 as against the amount invested of Rs 37,000. The following graph depicts the growth of the above investment.

 
Now the question arises, what rate of return would the above investment deliver? Let’s look at the same:

 

As we could see the calculation, if you had invested Rs.1000 every month for three years you would have received 29.34% return.

Top 5 holdings of Canara Robeco Bluechip Equity Fund – Direct Plan:

Company Name  

Assets %  

HDFC Bank  

7.87%  

ICICI Bank  

7.05  

Infosys  

6.95  

Reliance Industries  

6.28  

HDFC  

4.72  

The top 3 sector allocation of the fund is:

Sector Name  

Allocation %  

Financial  

34.14  

Technology  

15.15  

Energy   

8.31  

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Investment dilemma: Should you go for VIP or SIP.

Investment dilemma: Should you go for VIP or SIP.
by 5paisa Research Team 06/10/2021

Value-averaging investment plan helps investors to follow ‘buy low and sell high’ and achieve their financial goal in a pre-determined time frame.

The age-old wisdom of "buying low and selling high" is the only way you make money in the equity market. But for various reasons, be it behavioural and otherwise, fail to follow. However, there is a concept called Value Averaging Investment Plan (VIP) that utilizes the same concept to make money for you.       

What is a Value Averaging Investment Plan (VIP)

Investment in VIP is very much like the much-publicized SIP where you invest every month in a chosen mutual fund at a pre-determined frequency. However, the amount you invest is not constant and keeps on changing in VIP according to the market performance. Under VIP you set a target value of your portfolio that you want to achieve at the end of a period. Now you work backwards to achieve that target investment value every month.

Example

If as an investor you want to buy a car 12 months from now, that is valued at Rs 600000. Working backwards, you need to save and invest at least Rs 50,000 per month over the year in your mutual fund portfolio (For simplicity we are assuming no returns). In the first month, you invested Rs 50,000. In the second month, your fund performed better and now your fund value increased to Rs 51,000. Now in the second month, you need to invest only Rs 49,0000 as this will add up to Rs 1,00,000. In the third month, however, the market nosedived, and the investment value declined to Rs 98,000. Now to make up his portfolio value to Rs 1,50,000, the investor needs to invest Rs 52,000.

The above example clearly shows that when the market is high, VIP makes us invest less, while it forces us to invest more when the market is low, helping us to follow the classical strategy of “buy low and sell high”. One drawback of this strategy is you do not know beforehand what is amount you need to invest every month. Hence, you need to have extra liquidity to cover up any shortfall. Another disadvantage of VIP is that you may not invest during the bull run. This is the case in the current scenario where in the last one year Nifty 50 has increased by 53% or around 4% every month. So, depending upon your requirement, every month you will continue to contribute less towards your goal.

Nonetheless, VIP is mostly used by investors to achieve a target value for some specific purpose, like a car in the above example.

 

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Economic Update: Government Policy announcements in September 2021.

Economic Update: Government Policy announcements in September 2021.
by 5paisa Research Team 06/10/2021

Pro-growth government policies in September 2021 are propelling domestic stock markets higher.

The month that went by has seen the Indian Government taking several steps to offer relief to the telecom companies under pressure by large regulatory dues and attract foreign capital to the telecom sector.

The Union Cabinet approved a set of nine structural and procedural reforms to address the short-term liquidity needs as well as long-term issues of telecom companies. These measures included a relief on computing dues relating to AGR, adjusted gross revenue, a four-year moratorium on dues, and the option for the government to convert dues into equity after the moratorium period expires are key elements of the relief package approved by the Union cabinet. Vodafone India which has a debt of close to 1.9 lakh crore is likely to be a key beneficiary.

The cabinet also liberalized foreign ownership rules in the telecom sector by allowing 100% foreign direct investment through the automatic route. Currently, 100% FDI is allowed in the sector, but only 49% was on the automatic route, and any investment above that limit required government approval.

Another major announcement in September was the approval of a Rs 26,058 crore production linked incentive (PLI) scheme for auto, auto-components and drone industries to enhance India’s manufacturing capabilities. The incentive structure is expected to encourage the industry to make fresh investments for the indigenous global supply chain of Advanced Automotive Technology products. According to government sources, it is estimated that over five years, the PLI Scheme for Automobile and Auto Components Industry will lead to a fresh investment of over Rs 42,500 crore, incremental production of over Rs 2.3 lakh crore, while at the same time creating additional employment opportunities of over 7.5 lakh jobs.

Meanwhile, India’s manufacturing sector activities picked up in September 2021 as the easing of Covid restrictions helped in strengthening demand. The IHS Markit India Manufacturing Purchasing Managers' Index (PMI) improved from 52.3 in August to 53.7 in September – indicating an expansion in business conditions across the manufacturing sector. In PMI parlance, a print above 50 means expansion while a score below 50 denotes contraction. The expansion in Manufacturing PMI in September marks the third straight month of improvement in business conditions.

Economists believe that the Reserve Bank of India (RBI) is expected to continue with its accommodative stance in its October 6 to 8 monetary policy discussions. No surprises on the policy rate front are expected, especially at a time when the economy is expected to see the much-awaited boost in consumption triggered by the festive demand. Inflation as per the latest poll is forecast to be well above RBI's medium-term target of 4% but was projected to remain below the 6% upper threshold until at least end-2024.

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Superstar Stocks: BTST Trading and stocks that could deliver good returns till October 7, 2021.

Superstar Stocks: BTST Trading and stocks that could deliver good returns till October 7, 2021.
by 5paisa Research Team 06/10/2021

The Bulls are facing the heat as Nifty slips into negative terrain and sheds almost 140 points from the days. Amidst, this we bring to you the top stocks to buy for tomorrow.

Many times market participants see a stock opening with a gap-up and wish they should have bought this superstar stock a day before to take advantage of the gap-up move. To fulfil this wish, we have come out with a unique system, which would help us to get the list of candidates that can be probable superstar stocks for tomorrow.   

The superstar stocks for tomorrow selected are based on a three-factor prudent model. The first important factor for this model is price, the second key factor is pattern, and last but not least is the combination of momentum with volume. If a stock passes all these filters it would flash in our system and as a result, it will help traders to spot the superstar stocks for tomorrow at the right time!

Here are the superstar BTST stocks for October 7:

Kajaria Ceramics: The stock of Kajaria Ceramic is seen outperforming the benchmark as well the broader market indices as it rose nearly 3% on Wednesday. The stock has formed an opening bullish Marubozu candlestick pattern carrying higher high and higher low as compared to its previous trading session. Interestingly, almost two hours are remaining in Wednesday’s session and the stock has already surpassed the volume of its previous trading session, plus the volume witnessed for the day is highest since October 1. The RSI on the daily time frame as well as weekly and hourly is in bullish territory. The stock can probably test levels of Rs 1270 followed by Rs 1300 on the upside, while on the downside, support is seen around Rs 1220. 

Sun TV Network: The stock is seen outperforming the benchmark indices as it has gained 1.5%. The daily volume of the stock has already surpassed its previous day volume. The volume activity is seen picking up in the last one and a half or so. The 14-period RSI has marked a fresh 14-period high on the daily time frame, and on the hourly time frame, it is in bullish territory. The stock has the potential to test levels of Rs 560 on the upside. On the downside, the level of Rs 529 is likely to act as immediate support for the stock.

Tata Consumer: The stock has registered its best single day in a long-time and it is seen trading near the day’s high. Interestingly, the stock has already surpassed its previous day volume and it is highest since August 23. The RSI is in the bullish territory on the hourly and weekly time frame. The stock has the potential to test levels of Rs 850 and immediate support for the stock is placed at Rs 817.

 

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Check out the large caps that have run up the most against their 200-day moving average

Largecap 200 DMA
by 5paisa Research Team 06/10/2021

The Indian stock market continues to trade close to record highs with the 30-stock benchmark Sensex near the 60,000-mark. No wonder, then, that many companies have recorded way too much spike and are seen in the danger territory if the markets see any reversal from the current levels.

We tracked the list of large cap stocks (with market value of over Rs 20,000 crore currently) and looked at names that have shot up the most compared to their 200-day moving average (200 DMA) as also their 30 DMA.

On an average, the large cap pack had a median rise of around 26.5% in their share prices compared to the 200 DMA. As against this, the Sensex has moved up around 15% compared to its own 200 DMA.

This shows that a good number of large caps have climbed over the last six-seven months and even as the Sensex itself may have been led by a few stocks, a number of bigger companies have given high returns to their investors.

On the flip side, these stocks may be the first to crack if the market sees any sharp correction.

At the top of the heap is none other than ‘PSU but tech play’ IRCTC, which runs the nodal railway ticketing venture in the country and has been trying to expand its revenue sources. The stock is currently nearly twice its 200 DMA and commands a market cap of over $9 billion.

As the fear of the third wave of the Covid-19 pandemic recedes, analysts see a rosy picture for its ticketing operations as also its catering and FMCG play with its mineral water business.

IT companies MindTree, which is now controlled by L&T Group, Persistent Systems, L&T Technology and Mphasis are also among the companies that have seen their share price zoom around 50% or more compared to their 200 DMA.

Other companies in the list are Adani Transmission, Deepak Nitrite, Linde India, Bajaj Finserv and Adani Total Gas.

We also went down deeper to scan the list of stocks that have gained at least 25% compared to their 200 DMA. This list has names like Coforge, Piramal Enterprises, L&T Info, Astral, Adani Enterprises, Gland Pharma, Titan, Bajaj Finance, Schaeffler India, Alkyl Amines, HAL, Tata Steel, HCL Technologies, Tech Mahindra, Crisil, SBI Life Insurance, Balkrishna Industries, Oracle Financial, Alkem and Dr Lal Pathlabs.

30 DMA picture

If we look at the 30 DMA numbers, six stocks have recorded a double-digit rise. IRCTC again leads this pack. The other stocks in the list are Supreme Industries, Deepak Nitrite, Astral, Piramal Enterprises and Honeywell Automation.

There were also several companies that saw a dip in their stock prices compared to their 30 DMA as the Sensex went through a minor correction over the last few weeks.

These include Dr. Lal Pathlabs, ACC, Tata Steel, PI Industries, Pfizer, ICICI Lombard, Tech Mahindra, HDFC, Hindustan Unilever, Infosys, Eicher Motors, Asian Paints, Alkyl Amines and Endurance Tech.

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All about Asset Allocation.

All about Asset Allocation.
by 5paisa Research Team 06/10/2021

Asset allocation decision involves deciding the percentage of investable funds to be placed in stocks, bonds and cash equivalents.

The crucial decision every investor is required to take while investing is on asset allocation. There are various asset classes such as equities, bonds, real estate, cash and also foreign investments, etc. available to resident Indian investors. It has been a well-established fact that asset allocation is primarily responsible for portfolio performance more than stock selection and timing issues. Asset allocation is the key to portfolio returns and hence it is of supreme importance.

The asset allocation decision involves deciding the percentage of investable funds to be placed in stocks, bonds and cash equivalents. It is the most important investment decision made by investors because it is the basic determinant of the return and risk taken. This is a result of a well-diversified portfolio, which we know is the primary lesson of portfolio management. Therefore, asset allocation serves the purpose of diversification among different asset classes.

According to analyses, asset allocation is closely related to the age of an investor. This involves the so-called life-cycle theory of asset allocation. This makes spontaneous sense because the needs and financial positions of workers in their 50s should differ, on average, from those who are starting their investment journey in their 20s.

Generally, individuals who approach retirement become more risk-averse and hence they should allocate fewer amounts in percentage terms to equity and equity-related instruments in their portfolio.

Types of Asset Allocation:

  1. Strategic Asset Allocation: It is essentially a long-term investment plan. It is the structuring of the individual asset classes within a portfolio to meet long-term investment objectives. No switches between securities or asset classes are normally done in the short term. Defined exposures are made to different assets providing for some minor adjustments within the asset class without shifting the focus of the portfolio. A right allocation among different classes of assets shall ensure that investors’ investment objectives are met.

  1. Tactical Asset Allocation: Tactical asset allocation is beneficial when strategic asset allocation fails i.e., in this type from time to time, asset allocation is changed when market conditions create opportunities for investors in order to gain extra returns. Tactical asset allocation is not static and rigid like strategic asset allocation. This allocation adopts the strategy by occasionally deviating from long term strategic asset allocation to take full advantage of market conditions.

  1. Dynamic Asset Allocation: This allocation technique seeks to take advantage of short-term movements and opportunities in the market. You continuously adjust your asset allocation mix depending upon market conditions.