Top 5 stocks to watch out in October based on Seasonality Trend.

Top 5 stocks to watch out for in October based on Seasonality Trend:
by 5paisa Research Team 01/10/2021

Volatility has raised its ugly head. Want to know which stocks are likely to weather the storm and deliver alpha returns in October.

In this fast-paced society where several trading tools can be accessed with a one-click, ideas on how to succeed are in abundance. However, the abundance availability of tools and studies can become a double-edged sword, as it sometimes leads to analysis paralysis.

We know the fact that only a handful of traders manage to make consistent profits. What separates a consistent trader from an inconsistent trader is the trading strategy and discipline to follow the trading strategy.

In this article, we will share a list of stocks based on a very simple yet effective technique, one that would help you to strengthen the probability of success in trading.

The technique is Seasonality analysis. This technique helps to tell which stocks have performed well during a particular month. And as the saying goes ‘history tends to repeat itself’, it is expected that the stock is likely to perform well as it has done in the past during that particular period.

Since we have stepped into October, we will check out which are the top five performing stocks based on Seasonality analysis this month. This will help you to know which stocks to keep on your radar.

Here are the Top 5 stocks to watch out for in October based on Seasonality Trend:

Schaeffler India: Historically, the stock of Schaeffler has performed well during October. As out of 19 occasions it has managed to deliver positive returns on 15 instances. Moreover, the average change for this stock in October is 7.32%.

Gujarat State Fertilizers & Chemicals (GSFC): The performance of GSFC is similar to Schaeffler India when it comes to positive closing for October as the stock has closed in green 15 out of 19 instances. However, average gains for GSFC are 10.13% in October. Hence, market participants can keep this stock on their radar, as if history repeats itself this stock can do wonders.

Thermax: The stock of Thermax tends to perform well during October. As the stock has closed in green 14 out of 19 instances in the past in October. The stock’s average return in October is 5.46%.

Can Fin Homes: The stock has managed to close in positive terrain 14 out of 19 instances in the past in October. The average return delivered by the stock in October is 9.81%.

Polyplex Corporation: The performance of Polyplex Corporation is similar to Thermax and Can Fin Homes when it comes to positive closing for October as the stock has closed in green 14 out of 19 instances. But the average returns are quite fascinating as average gains for the stock in October is 13.14%.

 

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Hospitality and construction firm PKH Ventures joins growing IPO queue

by 5paisa Research Team 01/10/2021

PKH Ventures Ltd, a company that undertakes businesses in three verticals—construction and development, hospitality and management services, is looking to raise money from the primary markets.

The Mumbai-based company has filed its draft red herring prospectus (DRHP) with the Securities and Exchange Board of India to sell a total of 2.927 crore shares in its initial public offering (IPO). This comprises a fresh issue and an offer for sale of 50 lakh shares by its promoter Pravin Kumar Agarwal. According to market sources, the company plans to raise about Rs 500 crore.

The company could also consider a pre-IPO placement of 25 lakh shares. If it does so, it will reduce the number of shares in the fresh issue by the same amount.

PKH Ventures plans to use Rs 135.94 crore out of the fresh proceeds to invest in Halaipani Hydro Project Pvt Ltd for the development of a hydropower project.

It also intends to use Rs 100 crore to invest in Makindian Foods Pvt Ltd towards the development of a construction project in Amritsar and Rs 60 crore for funding in Garuda Construction for funding its working capital requirements.

PKH Ventures’s business and financials

The comany was incorporated in 2000 by Pravin Kumar Agarwal. It began with offering management services at several airports. Currently, PKH Ventures operates its business under three broad verticals—construction and development, hospitality and management services.

The debt-averse company largely manages its fund requirements through internal accruals. Its debt-to-asset ratio stood at 0.16 as on March 31, 2021.

Its construction and development projects include residential, commercial buildings and miscellaneous construction projects. These include the Amritsar project in Punjab, the Halaipani hydropower plant in Arunachal Pradesh, a food park at Jalore in Rajasthan, an entertainment centre at Nagpur in Maharashtra, a cold storage project near Indore in Madhya Pradesh and a wellness centre and resort at Chiplun in Maharashtra.

At present, the company has 11 projects under development and looks to focus on build-operate-transfer and hybrid annuity model (HAM) projects.

The company owns and operates two hotels and manages one resort and spa at Aamby Valley, Lonavala. Additionally, it owns and operates the restaurants Balaji, Golden Chariot, Casablanca and manages and operates restaurants under the brand name Zebra Crossing, Hardy’s Burger and Mumbai Salsa.

The company’s order book as of September 24, 2021 stood at Rs 1,174 crore. Its consolidated revenue from operations for 2020-21 stood at Rs 241.51 crore, up from Rs 165.89 crore the year before. Consolidated net profit for the period stood at Rs 30.57 crore versus Rs 14.09 crore last year.

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Explained: What is swing pricing and how it can help debt fund investors

by 5paisa Research Team 01/10/2021

The Securities and Exchange Board of India (SEBI) wants to protect small investors who put their money, often significant chunks of their retirement corpus, into debt mutual funds. 

As part of this endeavour, the capital markets regulator has introduced a swing pricing mechanism in open-ended debt mutual funds. SEBI hopes this mechanism will shield small investors in case of redemptions by large institutional investors that lead to a fall in the net asset value (NAV) of debt mutual fund schemes. 

What exactly is swing pricing?

Swing pricing is a mechanism by which redemption costs are apportioned among those unitholders whose trades impacted the NAV. The mechanism is designed in such a way that the remaining unitholders don’t have to bear all the costs of the redemptions made by a select few. 

In a situation where there is a liquidity crunch the swing mechanism effectively ensures that those redeeming their monies are charged for the redemptions, thereby seeking to dissuade them from doing so. 

But why does the NAV fall when there is heavy redemption pressure?

Often times, due to low liquidity, fund houses have to sell their investments to meet redemption demand. This leads to a fall in the NAV of the fund. This also leads to an anomaly in which those—often big institutional investors—who exit first, benefit at the expense of those—often small retail investors—who are left behind to leave later. 

So, what has SEBI done?

A Moneycontrol report says that the Association of Mutual Funds in India (AMFI), the industry lobby group, has been asked to define broad parameters for determination of thresholds for triggering swing pricing and an indicative range of swing threshold for normal times.

The report said that the asset management companies (AMC) are allowed to have additional parameters for swing pricing and that it is up to the discretion of the mutual fund house to opt for swing pricing in normal times.

“If the AMC desires to implement swing pricing in normal times, then the AMC need to make necessary amendments in scheme information document and the same will be treated as a change in fundamental attribute of the scheme,” the report said. 

Moreover, SEBI has asked AMFI to put in place a model to determine the swing. “SEBI will determine ‘market dislocation’ either based on AMFI’s recommendation or suo moto. Once market dislocation is declared, it will be notified by SEBI that swing pricing will be applicable for a specified period,” the market regulator’s circular said.

Have any fund categories been kept exempt from the swing mechanism?

Yes, the new mechanism will not be applicable to overnight funds, gilt funds and gilt funds with 10-year maturity schemes.

When did SEBI begin the process for bringing in the new mechanism?

SEBI had brought a consultation paper on the matter in July this year. After discussions in the Mutual Fund Advisory Committee, it decided to implement the swing mechanism. 

What is the minimum threshold for an investor to be impacted by the new mechanism?

Swing pricing will be applicable only on the redemptions of Rs 2 lakh and more from the scheme at a PAN level.

From when will the new swing pricing be implemented?

Swing pricing—partial for normal times and full swing pricing for times of market dislocations—will be implemented from March 1, 2022.

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What are the essential components of financial planning?

Financial planning has five essential components.
by 5paisa Research Team 01/10/2021

Financial planning has five essential components. Planning for all five components is called a comprehensive plan which will help an individual to achieve his/her life goals.

Financial planning has become an essential aspect of an individual’s life. If an individual does not possess an adequate financial plan, then he/she might end in a financial crisis in the event of a mishap and cannot fulfil his/her life goals.

Unless and until an individual is already a millionaire and have bequeathed wealth everyone needs to plan their finances. Financial planning helps you give direction and meaning to your financial decisions. It is the process of meeting your life goals through proper management of your finances. It allows an individual to understand where he currently stands and what he desires to achieve and allocate adequate finances towards the same. Life goals can include buying a home, savings for your child education or marriage, planning for your retirement or estate planning, etc.

There are five essential components of a financial plan such as Insurance planning, Retirement Planning, Investment Planning, Tax Planning and Estate Planning.

Let’s look at these components further in this article:

I. Insurance Planning: Insurance planning is critical so that your major risks are covered. Insurance covers only financial loss which is caused by various risks. Essential insurance one should possess to financially cover any unfortunate mishap are as follows:  

  • Life Insurance Cover: This is the most important insurance and one must possess if one has dependents. In case of the untimely demise of the breadwinner, it will help his dependents to maintain their existing lifestyle.  

  • Medical Insurance Cover: One should buy this insurance in case of any medical emergency to avoid any financial stress and will help you pay your medical bills.  

  • Disability Insurance Cover: One should buy this to ensure continuity of income in case of any permanent or temporary disability.  

  • General Insurance Cover: One should buy this type of insurance to replace or repair tangible assets held. 

It’s very important to purchase adequate insurance because underinsurance can be highly damaging as it won’t cover all your losses and over insurance can also adversely affect the current cash flow as you will have to pay higher premiums. 

II.Investment Planning: Investment Planning is critical for helping you reach your financial goals. These financial goals are met through creating financial resources by investing savings generated over time. Every individual has different levels of risk appetite and thus the investment needs of every individual are different. The core part of investment planning consists of deciding on an asset allocation strategy that is in line with meeting the overall objectives of an individual. Asset allocation means diversifying money among different types of investment categories such as stocks, bonds, cash, etc. 

III.Retirement Planning: It is extremely critical to carefully evaluate the lifestyle you will require at the time of retirement. The purpose of retirement planning is to ensure that an individual will be able to maintain his/her current standard of living after retirement, even in absence of regular cash inflows by way of any income such as salary income. Generally, many individuals ignore and underestimate the amount of financial capital required for comfortable retired life. One should plan their retirement right from the age they start earning.  

IV.Tax Planning: A lot of individuals invest only to save tax. No considerations are given to where the money is invested and how does it fit into the overall strategy of meeting life goals. Tax planning is all about using allowable strategies to reduce tax liabilities. Tax planning is supposed to be used as part of the overall strategy and not independently. Tax planning helps an individual minimize taxes, not evade taxes. 

V.Estate Planning: This is a very important component of a financial plan as a majority of people neglect and ignore estate planning as they don’t want to think about their death. Estate planning is crucial as a means of providing for one’s family over the long term. Failing to plan for the legal and financial aftermath of death usually results in much heartache and pain for survivors. So, to peacefully bequeath the wealth to their legal heirs it's important to do estate planning.

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Multibagger Alert: This top multibagger from IT sector gained 214% in one year.

Multi-bagger Stocks
by 5paisa Research Team 01/10/2021

Mindtree Ltd share price appreciated 16.66% in September alone, creating a fresh 52-week high of Rs 4242.95.

The IT sector has been at the forefront whilst taking the Indian stock market by storm. Mindtree Ltd has not been left behind when it comes to multiplying shareholders’ wealth by over three times and being crowned as a multibagger stock of the year.

The bull rally in the stock was supported by robust fundamentals. The company started with a strong first quarter in FY22. The revenues were up by 8.65% sequentially reaching Rs 2,291.7 crore. The pandemic has been a blessing in disguise for the IT sector, as it drove the urge for digital transformation throughout the enterprises. ‘Digital or die’ has been the meta for businesses around the globe.

For Q1FY22, the operating profit margin stood at 17.7% which witnessed a drop of 90 basis points from the previous quarter primarily due to higher employees’ addition. The net profit increased to Rs 343.4 crore, a decent growth of 8.23% on a QoQ basis. This multibagger stock has witnessed a strong pipeline for its products and services as reflected by the order book for the quarter which was at a record high at more than Rs 3700 crore. A resilient business performance throughout the year has led this relatively midsized IT corporation to become a multibagger.

Recently the company has acquired L&T NXT, which is into digital transformation business to further strengthen digital capabilities and drive sustainable growth. To cater for the rising demand for its services, the company is actively hiring employees which might come at the cost of margin cuts. However, the management expects double-digit growth in FY22.

On BSE, the stock was trading at Rs 4178.70, slightly down by 0.5%, as of 12:17 pm on October 1, 2021.

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Superstar Stocks: BTST Trading and stocks that could deliver good returns till 04 October 2021.

superstar BTST stocks for October 04, 2021.
by 5paisa Research Team 01/10/2021

Watch out for these stocks, Stocks that are in focus, Stocks to buy for tomorrow, Superstar Stocks selected on basis of a three-factor model, ATUL, GMR Infrastructure, Muthoot Finance.

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 04, 2021.

ATUL: The stock of Atul has advanced 2.5% on Friday and with this strong up-move the stock is placed on verge of neckline breakout of the double bottom pattern on the daily chart. Volume activity is quite profound as the volume is greater than its previous trading session and also, greater than its 20-day average. The RSI on the daily time frame has marked a fresh 14-period high and it’s in bullish territory. Meanwhile, on the weekly and hourly time as well RSI is in bullish territory. The stock can probably test levels of Rs 9880 followed by Rs 9975 on the upside, while on the downside, support is seen around Rs 9570.  

GMR Infrastructure: The stock of GMR Infrastructure has hit a fresh 52-week high on a day when the market is seen tanking. The stock has jumped over 6%. The stock has formed a strong bullish candle and it has been trending high and volume activity has again picked up in the last hour or so. The daily volume so far has already surpassed its previous day volume and it is the highest since September 20. The RSI has marked a fresh 14-period on the daily time frame, and it is in a rising trajectory. On the weekly time frame as well, RSI is above 60 and on the hourly time frame as well it's above 60. The stock has the potential to test levels of Rs 43.5 followed by Rs 45. On the downside, the level of Rs 39 is likely to act as immediate support for the stock.

Muthoot Finance: The stock has formed a strong bullish candle and it has seen its best gains for a single day for a long time. Interestingly, nearly 40% of the volume of the day so far has been seen during the last two hours of trade. Overall, the volume for the day has already surpassed its previous day volume and it is the highest since July 5. The RSI is in the bullish territory on the hourly time frame. The stock has the potential to test levels of Rs 1560 followed by Rs 1600 and immediate support for the stock is placed at Rs 1490.