een ete eae INDIA’S NO.1 INVESTMENT MAGAZINE SINCE 1986 VMS a SE OS eee DEMOCRATIZING ee D a DecO5-18,2022 = Pages 132 » www.0SJin %150 Sy oJ=fo Fe] Clele) a} Value Investing Verus Growth Investing: Who is Winning in 2022? OC nuke Co eocc urs] \\ if \ Puce eed. ered Seftor Plastic Industry Analysis J FL Finance as Expert Speaks Cover Story Are Small-Caps & Mid-Caps Hurting Your Portfolio?© NSE =f Don’t act on anonymous tips. Do your own homework and research before investing. Never invest your hard earned money based on rumours or anonymous tips. Always do your own homework and research or take advice from trusted financial advisors. It’s your money, invest it wisely. For more details, visit www.nseindia.com or contact a SEBI registered NSE broker Bye smemsause Sis BO BOO | wmaseindiacom| — govmncie53.00 y sgyalst Aise Karte Hain Options Trading Trade in options with India's leading online discount broker. ca OG Derivatives as ponten Advisory jl Lightning Fast — Code to Download App a Investment in securites markat are subject to markat risk read al related documents caretuly betore investing. Brokerage of €10" per orcer is salable swith SUbscrinon Pack Only Wokeraae wil be love fat €20 per trade and not on oercentage bats Hrekerage wi not exceed the Seis prescribed limi. Digtal eccount would be opened ster al procedures relating to PV & clent due dligance are completed. Basket Order are net Exchange ‘a0ovoved products. The securites quotedare exemolary and are not recommendatony. Such representations are not ndicatve of future results. Mutual Spaia Capital Limited Re Sun Infotech Park, Road No. BV, Plot No. 0-23, Wogale Estate, Thane 400 604, Tl 89766 00766. CIN-Le7190¢H2007P.C289249, Stack Brower SEBI Regn INZOOCOIOZEI, SEBI RA Regn: INHOCOOOD248, SEB! IA Regn: INAOOCOI4252, SES! Depasitory Regn: IN.DP-102 2086, AMF! Regn No- ARN-104096, NSE Member 0: 14100, MCX Member ID: SSDUS, BSE MemberID: E363. Comollance Officer Nome - Narita Gedbole Te, +91 8976689766, Emil id - coralianceaSpasacomCONTENTS Are Small-Caps And Mid-Caps Hurting Your Portfolio? Vol, 38, No. 01 » DEC 05 - 18, 2022 Cover Story Recommendations 18 20 Low PricedScrip | Hot Chips 16 Choice Scrip Regulars 06 Editor's Keyboard 10 Company Index 12 Market Watch Analysis 22. Technicals WEL Finance ae PLACED IN A PRIME POSITION ( 91 Recbeide Bene Piet eet crag Indulging in Options Trading Valve Investing Verus Growth Inve: Primer on Stock indices. ena ek acu Pee ene eae eid Importance of Cash Flow Statements in Stock Pickin ‘Communication Feature sections Importance of Asset Allocation.. are advertorials provided by the DSU Wealth Creation ‘company & carried on “as is” basis. A DALALSTREET INVESTMENT JOUENAL 1 DEC05 18,2022 stnin13 BS eee SL S:ha (3. Ridham Desai Prashant Shah | Milan Vaishnav | R Venkataraman ‘Managing Director, ‘Ge-founder & EO ‘Technical Analyst and Founder of ‘Ghakman, FL Securites Limited ‘Morgan Stanley India Definedge Securities Gemstone Equity Research, Equity Research Asia and Chart Wiad FE Ecce Rajeev —~ v. ee Kishor — Vijay Chandok FO, LAT Technolgy Nanagng Diector.C60 ED and Managing rect, on ‘Managing Director and CEO, Services Ut, (OFC Fst Bank Lic PT Technologies i. Menage Director andro, KI Securtes Limited ‘Happiest Minds Technologies Lid. Cxnay ‘ ain D traa zB Manish Gupta Prakarsh Gagdani YS Chakravarti Maulik are Pradeep —y ‘Chairman and MD EO, Spatsa.com ‘Managing Director and CEO, Co-founder & Vice Chairmen Gujarat Amboja Exports Lid. ‘Shriram City Union Finance Lid feta ‘Anand Rathi Group a) Nl a A a B DB Virender Jeet Fredun Medhora © Mukeshkumar Nilesh Jobanputra —Sidhavelayutham (E0,Newren software Monagne Drectorand co, NaVnitray Bhatt ——snaging rector Mohanamoorthy ee Fred PramaceiclsUid. promo andéxectve recta, J ate Ln Founder &.cE0 AlceBue 2a) Jala Teennooges i. sisin ECO 18, 20091 OALALETREST INVESTMENT JOURNAL(20a fe eas af ya An ExtraordinaryALWAYS YOU FIRST Banking experience for Extraordinary Customers Een eee hee Anna Sumner) Pa i= 3 (een DAM Cue an eed ites Peloaree ry recipe Uecus eats Teo} aghast tact nl TS ee ee Se ae aed red Cte eee te ee1,000 and Counting hat a joyous moment itis for us at DSI} ¢ht now! So much so that even the dices appear to be in acelebratory mood, And what’ the reason? Well, this sour 1,000th edition! A big number, indeed! Ithas taken us an eventful 37 ‘years to reach this milestone, which hardly any other magazine «ean boast about. Our first magazine was published on January 11, 1986 and was in the form of a 12-page cyclestyled stapled booklet. Immediately gaining recognition as an “Investors Bible, it climbed upwards, and upwards, to become the segment leader and the highest-selling investment magazine in the country. 2022 Dalal Street Investment Journal (DSI), the iconic brand thatit, has become, continues to guide investors at large through DALAL STREET different market and economic cycles not only in print form but via all digital mediums whether ite mobile, web, app, et al. Dalal Street Investment journal has played a very important role in creating wealth for investors by recommending wealth: creating stocks, something you can know more about in our special report titled ‘How DSI} has been Creating Wealth for Investors Since 1986. This journey of nearly four decades reflects our quality of service towards our readers. I would therefore like to take this opportunity to thank all our readers and all the people who ‘were and are associated with us daring this glorious journey. To give you an overview and also toshare how important this victorious march has been to us, there were many publications from reputed houses covering the stock market that were started with much fanfare but are now either non-existent or have a marginal presence. If we have survived the odds and grown it is because of our research strength and our genuine interest in the wellbeing of investors that has helped us publish original stock market content leading to unparalleled wealth-creating, opportunities year after year. “The best investment processes and adoption of new technology has further helped us to meet the investors objectives as we now areable to serve lakhs of happy investors every year. The ‘buoyant equity market in India has been a great motivator for all of us. Recently, IMF announced that ‘India isa bright spot on adark global horizon: We would proudly lke to say that DSIJ too isa bright spot, or rather a beacon that projects guiding light for millions of investors. To move on to matters ofthe investment world, FFls are pouring in billions of dollars into the Indian markets. For instance, in November we have so far received USD 4 billion from the FPIs, In tandem, SIP investments are happening at a record pace, indicating strong demand from retall investors Further the credit demand isincreasing even asthe interest rates increase ~ it can't get any better for the banking industry. Adding to this amazing chemistry is the political stability incour country ata time when most countries in the developed and emerging world are facing leadership crisis All this has pushed global investors towards Indian equities. The Indian corporate world has delivered so far and there is no doubt in the minds of Indian business houses that India will continue to shine in the coming years. With both BSE Sensex and Nifty at record highs, the end of the story forthe Indian equity markets for CY 2022 hasbeen absolutely engrossing, thrilling and wealth-creating. ‘To move on, while all is wel with the large-caps of the world, everyone is talking about the underperformance of the broader markets. To have an insight on this anomaly wehave taken up this curious issue in our cover story wherein we have highlighted the underperformance of the broader markets with a fresh perspective. We have discussed why the underpecformance in the equity markets isan opportunity for long-term investors. The story also highlights the stocks that have fallen by a huge margin from their 52-week highs, creating some margin of safety in them, Allthis and more has found its way into this special edition. “The power-packed edition of DSI) that you have in your hands right now has 360-degeee content for both investors and traders alike. We have covered some trending topics like options ‘trading, value investing versus growth investing, bytes from industry leaders across various sectors and inputs shared by some ofthe best investment minds in India. As far asthe market goes, we all have seen huge outperformance in the most ignored and unexpected stocks in 2022, inclucling those of PSU banks, PSU railways and defence. There is achance that your portfolio may have underperformed in CY 2022 s0 faras the action was taking place in areas you would not have been present in. Itcan be frustrating to see underperformance in the portfolio, especially when the marketsare ‘making lifetime highs and several popular names keep making fresh headlines almost every éay about the bullish price-volume action. The secret isto continue to do your equity research and remain invested in quality names and add on to your high conviction stocks. Do not get disturbed by the other stocks which could be outperforming your set of stocks temporarily It usually happens that we churn a portfolio just forthe sake of outperformancezin the near term and then we pay a heavy price in the longterm as we replace quality stocks with poor quality ‘momentum stocks “That said, December looks to be promising for the Indian markets. ‘The outperformance may continue for awhile. Also, Ihave noticed that the pharmaceutical stocks haven't done much evenas the markets are trading at all-time highs. Watch out for that sector in the near to medium term. Several pharmaceutical stocks are availabe in the oversolé zone. To sum up on. this special occasion and edition, I take immense pride to be atthe helm of such a magyzine that has been every investors true friend across India. The market has evolved over the years in many ways and so has your magazine, Dalal Street Investment Journal. We put our heart and soul into this magazine to create content that is informative, precious and provides the right path in the maze that the Investment world is The journey continues! a, J ode RAJESH V PADODE Managing Director & Editor 9DALAL STREET INVESTMENTJOURNAL Vol 38. No. OL DEC 05-38, 2022 rene Shien Tne Pode Strnad Arco chant MancngDicortidine Aman Rajoh fade end Sah sane en Schein Catameer eos Sere Loa ‘Utkarsh Saale Revarch dion Mating Sale Slee ee: Farid han - VP Karen Bat ent Copy Etters Sica Take Nag Varin Foire D BonlGaece = Graphics hayes Dadi Vio DSI) Private Limited © er casterservie Mambel Ofice {9A 4th Foor, Aran Chamber, Tarde Nextt» AC Marat ‘Mamba 400084‘ 022-43476012/1617 Pune ice "Vason Plainum Square, ‘Nextt HyattRepency.Viman Nagar Pune 411014 ‘B 010 -66653.800/ 801 Lid ante o Acbleement hernia Ld Printed Pn Tiss) Pt. Ld, EL-179, TTC tna Area, lcm Zoe, Neat ‘Mahape Teephone Exchange. Matupe, Navi Mombut 40720 ad {bth for 49-4 4th Reor Anim Chambers Trl, Net to AC iret Mumba: 40054 malig ered. Whi lef ar ‘adeto enue thal the inermation pied correc and p-o-ate Bakistet vest ur hid report kr ay oes ‘night oc All mater corned herein belo fundamental ad {echical anlisand ter inous meth wich hohe ae ‘ot inflibeThe norman given inthe maguie i an ary ature Revers are seed mult expets tere Wing any ltmesmedt den and Dal Suet Journal hls so sparsity for ny bases tat mar arse ae toinvsenentecnns maeonbe Dato Information given ihn the magic Notepad fspemitel ‘nie oe pat watt writen consent ro Dal Ste Jusnal A ‘Sipe of abject tc eclave icon competent curs ond Reems ecb snipe Dc fred iroeacetfomt name INS/ARCs 10 ALALSrneermvestMeNT JOURNAL | DEC.03 20.2022 © 2 6] Analysing a Sector Lam a regular subscriber of the DSI] magazine. I enjoyed reading your cover story in the latest issue. in recent years I have been conducting thorough research and due diligence on my own before investing in a stock. It helps me build conviction for the long-run. Can you elucidate on how t0 carry out tn- depth analysis of any given sector? Ria Editor Responds: We appreciate your kind words of encouragement. To answer ‘your query, there are several high-quality resources easily available for sectoral research that a retail investor can tap into. These include annual reports, IPO. flings such as red herring prospectus (RHP) and initiating coverage reports of ‘rokerage houses. Take heed of expected growth outlook along with trends in products and technology at play in internationaland domestic markets. Make use of models such as Porter’ Five Forces and SWOT analysts to gain a better understanding of the external factors influencing the sector as well as the competitive environment and potential risks. 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TS Te MeN EU aL tcl aeMarket Watch Banks in the Limelight sa result of optimistic economic data, the Indian headline indices BSE Sensex and Nifty 50 surged 1 per cent over the course of afortnight. Broader indices lagged behind the main indices, ending the fortnight about 05 per cent higher. The wholesale price-based inflation figure fell below a double-digit mark for the first time in 19 months and isthe lowest since March 2021. According to data issued by the Ministry of Commerce and Industry, wholesale inflation declined to 8.39 per cent in October from 10.70 per ent in September, driven by a decine in commodity prices. Afier reaching a five-month high of 7.41 per cent in September, retail infiation fell to 677 per cent in October, primarily as, a result of falling food basket prices. ‘According to data issued by Ministry of Statistics and Programme Implementation, the Index of Industrial Production (I1P) showed that Indias industrial growth grew 3.1 per cent in September. The Reserve Bank of India said that for the week ending November 12, Indids foreign exchange reserves fell by USD 1.08 billion to USD 529.99 billion, Banking sector stocks experienced a significant upswing, making BSE Bankex the top: performing sector over the past two weeks with gains of about 2 percent. ‘Theeconomic recovery in the banking industry is promotingasset quality improvements and a decline in non. performing assets (NPAs), while improved balance-sheets and higher demandare driving up bank loan growth, According to a report by CRISIL, bank credit isexpected to grow by 15 per cent annually inthe fiscal years 2023 and 2024. In other developments, Sberbank and VT Bank, Russi largest and second- largest banks, are the first foreign lenders to beapproved to facilitate overseas trade in rupee. Moreover the Reserve Banko India (RBI) authorised HDFC Bank and Canara Bank to establish a separate “vostro accoun’ for rupee transactions with Russia The power sector, one of the gaining sectors in 2022, witnessed a significant fll due o several sectoral concerns. Adani Power was the \worst-performing stock losing almost 10 percent ‘This caused the BSE Power indexto tumble 4.78 per cent over the fortnight, With losses of roughly 2 per cent, BSE ‘Metals was also among the top losing sectors as base metal prices slumped due to worries about global demand. The two stocks that mostly caused the metal index to fall were Hindalco Industries Secs ror Ca) ae) oer 42401 ety 360816 fo ams Orkces 965, mane sb Ban 1924s aa gana 1599973 3s ‘ase n/t coe a) “0-478 3541-186 nimi 054 mars 087 ropes 134 mls 05 D558 086 ome 9 151205100 saan Ls 16505918037 Besar 05 ae ons 138 12 ALALeTREET INVESTMENT JOURNAL | DEEOS 18,2029 Case UU ETC AIH a UMC ea LN TO ee decline in non-performing assets while improved Eesti LT aL growth and Steel Authority of India. While Ds were the net buyers over the past two ‘weeks, Fllshave turned to being net sellers The FII outflow was recorded at 31,131.26 crore whereas DI inflow was recorded at ®4,056.4 crore inthe past a ‘Netiavestment hn Egulty Markets Bi 2 ion nn nn 22 e122 mein 160122 150122 10122 Total 36508 138 27886 $9183 19183 2512 wea an 06 mn e941 “1131.26Aso Available Online Invest once, enjoy guaranteed maturity with life cover Plan No. 866 UIN: 512N349V01 ANon-Linked, Non-Participating, Individual, Savings, Life Insurance Plan For details, contact your Agent/Nearest LIC Branch/visit wwwilicindia.in or Brel ea Use) a ae | - Har Pal Aaphe SaathPARTNERS IN THE PROCESS OF CREATING SPACES Featherlite has curated a variety of products for startups that allow for splashes of life in the office while not overtaking the space entirely ITH the rapid evolution of the workplace We the last two years, catalysed greatly by the Covid-19 pandemic, companies have been forced to innovate or risk being left by the wayside. Where once the workplace was a static environment, it has now become a dynamic hub of activity, a place for social interaction as much as work. For the many startups that were formed during the pandemic, this is likely the first office they have ever had, and represents an opportunity for them to build their brands persona ina way that up to now had been only a dream. Breakout areas — 4 challenge that employers have faced has been drawing their talent back to the office, Having become accustomed to working in the comfort of their own homes, whether it be on the sofa or at a desk, employees have been hesitant to return to the more formal settings of their offices. Innovative leaders have seen this as an opportunity to not only revamp their workspaces, but the culture surrounding them as well. Breakout areas have expanded from small corners to sprawling oases with a medley of couches, high tables, and soft seating. New lines of products have been introduced to facilitate a more socially balanced working environment, while still maintaining the ethic that is necessary in an office. Products such as the Arena allow for large scale, ad hoc ‘meetings and cross collaboration as well as quiet, comfortable moments of work, depending on the need of the moment, While these breakout areas provide a wonderful respite from the daily routine in an office, they cannot fully replace the traditional work set up. To balance these needs, furniture manufacturers have had to come up with innovative methods to utilise the space available. Our workstations are being made more agile to serve a variety of needs, often doubling as meeting tables and conference tables with simple, user-friendly adjustments. By integrating technology and design, we have forged products that facilitate an optimised use of space. Products such as our Nomad, a movable screen and whiteboard, allows for meetings and teleconferences to be held anywhere, without requiring a dedicated space that can now be better utilised. Integrated technology like hot desking systems allow for amore controllable and efficient workspace. Work better — in the world of startups, the scenario differs only in terms of scale. While studies show a significant growth in uptake of office spaces post Covid, they highlight the increased growth of the smaller office. Keeping this factor in mind, Featherlite has curated a variety of products for startups that allow for splashes of life in the office while not overtaking the space entirely, ‘The challenges faced by company leaders are vast, from ensuring th Qn is being followed to retaining talent and creating a platform for sustainable growth. Designing workspaces that keep these factors in mind is crucial. At Featherlite, we are excited to become partners that help in the process of creating spaces that help you work better and live better.ARENA MAKE GREAT WORK POSSIBLE ti functionality at ks 08047191010 8 Email: sales@featherlitefurniture.com Present in 66 locations across India, aiso in Nepal, Sri Lanka, and U.A.E. For more details vst our website @ wwvw featherlitelurniture comIRCTC ON THERIGHT TRACKS [he Indian travel and tourism, ‘industry has tremendous ‘growth opportunities with increasing travel in the post- pandemic scenario. As such, IRCTC has a huge role to play in making the journeys safe end joyful for its ‘cusiomers, IRCTC is the only firm authorised by Indian Railways to provide online ticket buying, Along with this it also provides catering service and packaged drinking water. Itis acentral public sector enterprise in which the Government of India owns67.4 per cent. in 2008, IRCTC was elevated tothe status of Mini Rain Internet ticketing, catering, travel and tourism and packaged drinking water are the four business segments of IRCTC. As of March 31, 2022, the internet ticketing firm had 8.03 crore users and (62.73 lakh daily user logins. The catering industry has seen a 65.57 per cent increase in licensing fees and 6.52 million meals ordered through its services. In terms of passengers travelled, the tourism segment reservations increased to 525,981. The packaged Recommendations NIFTY Index Chart Analysis CELEBRATE, BUT WITH CAUTION! Equity he Nifyis ata new lifetime sharp bounce to marka fresh all-time high on Monday. On a weekly chart it had formed asizeable bullish candleand with thiswe saw a higher high formation for the sixth weekin a row. In continuation ofthe trend, this sizeable bullish candle provides clue for further upside. Though it formed ahanging man candle on the daily chart on Friday it may not be a worry point for now asit ‘was negated in the very next trading session. ‘As we expected last week, the index tested the 61.8 per cent extension of the priorswing. Next, if it closesabove the level of 18,548 for two days, we ean expect it touch the levels of 18,780 followed by 19.034 and 19,180 in the short to medium term. The final pattern target is placed at 19,660. On the ownside if the index doses below 18,258 (20 DMA), we may get the first signsof weakness, The recent base low of ‘The Nifty is still above the breakout level, and there is no confirmed weakness in any of the timeframes. All the short, ‘mediumand long moving averages are in the uptrend. Last Monday, the index registered a distribution day, and the bears filed to violate the key support From Tuesday onwards, the index made higher high candles and cleared the indecisive moves witha strong breakout, Italmosttested the 20 DMA and 21 EMA and bounced. Now the support has moved higher to the level of 18,258. ‘Currently, the Nifty is trading 4.70 per 18,114 is also astrong support. Only below thislevel can we expecta reversal sign. The leading RSI indicator hes broken out ofa flagppattern and it given strong uptrend possibilities. the RSI closes above 69-70, the Nifty will test the level of 18,780 immediately. In the current structure, the RSI can test the 83-84 level. The daily MACD line's about to move above the signal line for a fresh bullish signal.'The ADX is also near strong bullish zone. Bank Nifty and. PSU Bank indices are also stronger as 22 oALALsTREET MVESTUENT JOURNAL I DEC05 18,2022 high. With this, the Nifty eas "iy Levets ‘Action tobe nated robable Targets ended its 13-month-long oon Cl ate the eel of 18,780 would poste - saat aneralays MSmEtenetimien seo iy 194-1160 ‘of tight-range consolidation, ‘sip bow 1258 oa sigs wold the breakout registered strong volume ‘“M#oaferttemedunerm 18158 esting eumpn of awn nv. a ‘on Thursday. On Friday, though, we saw a retest ofthe breakout and thereafter | cent shove the 50 DMA Rank Nifty is ata new high, led by the rally in PSU banks. Bank Nifty is losing ‘momentum and is near the weakening quadrant in the RRG charts, he PSU Bank index formed 2 bearish shooting ster eandle on Friday, which may lead to consolidation from now. Ifthis happens, the Nifty may face resistance around 18780. Despite the fact that D-Strect isin a celebration mode, there are some concerns one should not ignore. The advance-decline ratio is not so great in this phase. On Monday, asthe Nifty scaled toa fresh all-time high, the index breadth was not atits best. The RRG momentum isstil oscillating around the zone of 100.'The VIX isat the lowest evel, whieh hes an inverse relationship. Generally, when VIX reaches thelowest levels, the benchmark index forms a top. This is one of the reasons which make us cautious. Before March 2020 we had seen the sharpest fallin the VIX when it was almostat the current evel. All the major declines in the market have happened when the VIX has touched its lowest levels, including the 2008 historical bear market. Since October 2021 the foreign exchange reserves have been depleting. The rupee depreciation is ata record level. The DXY formeda base during last week with a positive divergence. Generally, December is the ‘month of NAV management and Fils investment regs. Most of the market tops were formed in the month of January. This means that though the ‘market is at a new high, caution is advisable. Till then, be with the trend. As stated above, the 20 DMA and the recent base low are the immediate supports for the index.der Rerra fre kitties, Rail Vikize Nigam timited, ATR BY (A Government of india Entorprisa) avesmem yer] nang |"ene Projects & 14,922 Km of Railway mee eee ke craer ts EY! and resource. efficient Workshops/Production Ne eee mer Per een ee atest Ce Can Rc koa ace Sn ee ee ee Ne ( more than 28% of electrification out of the es eee gd peal. Cn 7 Pest eet oe nied ee eee ee eerste Canny @ Rated as “Excellent” by the Department of CS Re Renee Contributing to reliable and efficient supply (Soest chains of the country fer “Atmanirbhar Bharat” Ng inited all vikas Mam imitedRecommendations Equity ‘STOCK RECOMMENDATIONS. . BUY . CMP 7183.65 207 | Target 2.....%258 | Stoploss....2162(CLS) ‘The company is engaged in new-age technologies lke artificial inteligence (AL), robotic, big data and analytics, the Intemet of Things (101) ané 5G communications that arc opening new possbilitiss and opportunities Ithas @ presence in 38 global markets and isthe distributor of an entire gamutof IT products, smart phones, solar prodlucts ete. ako provides services like cloud ‘management, logistics, BPM, BPO and 3D printing services. With over 290 brand associations, it services ‘mote than 43,000 channel partners. Technically, the stock is trading ate new lifetime high. It has broken out of a Stage 1, 70-week consolidation base. For the last two ‘weeks, volumes have been recorded above average. Its relative strength line is at anew high and this shows outperiormance as compared to the broader market. Itis 22.74 per cent above the 50 DMA and 30.72 percent above the 200 DMA. All the short-term and long-term averages ae in an uptrend. After breaking ‘out of the base itis trading just 3 per cent above the pivot point, which isthe ideal buying range for a stock. The 20-period RSI isin a strong bullish zone. The weekly MACD shows strong bullish momentum. As the stock is at a new high, it has cleared all the resistances, The Elder Impulse System has formed three consecutive weekly bullish bars. The RRG RS and montentum are above 100, and the stock is in the leading quadrant. The ADX (25.10) shows sold strength in the trend, [tis also meeting Guppy’ multiple moving averages trend setup. In short, the stock has broken out ofa 70-weck, Stage | base. A move above 2180 is positiveand it can tes: £207 in the short term. Maintain stop loss at 2162. The medium to long-term targets €258, REDINGTON LIMITED BSE Code : 532805 | Target 1 BUY ~» CMP 7313.05 %341 =| Target2....%405 | Stoploss....7282 (CLS) “The company is aleading tyre manufacturer with a presence in over 100 countries. It has seven ‘manufacturing locations in India and Europe and two alobal research and development centres. The company ‘markets its products under its two global brands, Apollo and Vredestein. Its ready to exploit opportunities arising out of the electric vehicle (EV) ‘boom. The company is leveraging advanced technologieslike foam technology and sealants for EV tyres. Itis also working on improvements in rolling resistance and noise reduction to support the development of EV tyres. These new technology tyres will be exported to Europe in December. The market. for these tyres moy behuge in the next two-three years. The stock closed at a new all-time high and broke out ofa 10-week cup and handle pattern with higher volume. Before the pattern formation, it registered a one-year consolidation breakout. Its relative strength lineis ata new high. Itis trading 38 per cent above the 200 DMA and 10.17 per cent above the 50 DMA. all the short- term and long-term moving averages are in the uptrend. The ADX (2881) shows strong trend strength. The 20-period RSI isin a strong bullish zone. The Eller Impulse System has formed a strong bullish bar. The KST and the TSI indicators arealso in the bullish setup. In short, the stock has registered a sirong bullish breakout. The stock is still n the deal buying rangeafter the breakout. Accumalate this tock above 8306. Maintain stop lossat £282. The short-term target is®341, The medium to long-term target isat 2405, “LEGEND: EMA -Expenentl Moning Average OC. Rate of Change RSI- Relative Suenath index selon ates on atten roel an unset pth ben correo corns Fo ri sop bs erect, APOLLO TYRES LTD. BSE Code ; 500877 | Target 1 IMIACD - Moving Average Convergence Divagenss RMT Reavy Momentum Inde (Closing price as of Now, 28 2022) (24 oaLaLsraeer muEsTuENT JOURNAL 1 D5INDIAN RAILWAY FINANCE CORPORATION (A Government of india Enterprise) Future on Track Funded %5.05 trillion” to Ministry of Railways for progress of the Nation Cumulative funding of 26.05 trillion as of 30th September, 2022 Posted fhe Rom No 13161349, 3rd Foe, The Ade, SO8, Cipla con, Chaka New Duh 1|0021 Fel Me 01124105585 ma rftie con wieAnalysis oat) ra Coe cre) IIFL FINANCE PLACED IN A PRIME POSITION The company has a customer base of more than 8 million, out of which 2 million were added in FY22. The company has a nationwide presence with a thri c Cy Preircry rere pos ing network of more than 3,100 branches across more than 500 cities. Further, it has registered 27 per cent CAGR growth in AUM over the last five years. All this make: IFL Finance is one of the leading non-banking financial companies (NBFCs) in India, Itoffers various products such as home loan, gold loan, business oan, microfinas The company focuses on both the frontiers Le physical expansion of branches and digital adoption for better customer serviceand higher market penetration. Their major focus isto provide services to that part ncial services snd construction loan. ‘of society that is underserved by the fin companies and toachieve this they are expanding their business in Ter Hand IM citiesat an exponential pace. The compan branch network is equally diversified across the country. Asof FY22, 87 per cent of the company’s branches were in Tier Hand Uletties, 26 ‘a good bet for investors. “The company has a customerbase of more than 8 million, out, of which 2 million were added in FY22. It has a nationwide presence with a thriving network of more than 3,100 branches ‘cross more than 500 cities. Apartfrom this, the company has, also signed partnership agreements with various popular financial technology players to support the digital transition ‘movementin the industry. Ithad 20,000 employees as of FY22, ‘who are well-trained as the company runs a regular programme for training them. Ason September 30, 2022, the company had assets under management (AUM) of °§5,302 crore of which 36 per cent was of home loan, 32 per cent gold loan, 14 per cent business Ioan, 12 per cent microfinance, 5 per cent constn and 1 per cent from the capital markets. It as registered 2 ‘growth in AUM over the last five yeas. per‘Soch kar NSE = Keep your trading password secure. It’s the key to your financial assets. Your online trading password should always be a secret that only you know. To ensure it is never misused, don’t write it down or display it anywhere and remember to change it frequently. For more details, visit www.nseindia.com or contact a SEBI registered NSE broker Bye C2 BGO) worenseindia.com | — Sayarae tore sn nesting aeAnalysis Sector Overview ‘As compared to the global average of 54 per cent, Inds urban population is only 35 per cent which is way below and is expected to increase as Indians living in cities would be approximately 525 million by FY25 and 600 million by FY35 and at the same time India’s real estate market is expected to reach USD 1 trillion by FY30. This will increase the demand for more homes, commercial spaces and better infrastructure, [As NBFCs hold around 34 per cent sharein housing loan, opportunities are aplenty inthis segment. In addition, the Pradhan Mantri Awas Yojana (PMAY) isalso expected to boost the demand for housing loans. Outof India total gold, 65 per centis held by the sural population. This sector is currently dominated by the local lenders and only 23 per cent share remains with the NBFCs, As the gold lean sector is rapidly undergoing changes from "unorganised to organised, NBFCs are placed better to grab thisopportunity. The gold NPA stood at | percent and the sector is expected to grow at a CAGR of 19.5 per cent till FY25. There are more than 63 million MSMEs which employ ‘more than 110 milion people and to achieve Indids target of USD 5 trillion economy its necessary that they grow. Given this positive domestic outlook, NBFCscan cater the funding gap in this sector which is currently penetrated by the local players. On the other hand, the microfinance sector plays an important role for the economy's progress and is expected to grow at a CAGR of 0 per cent through FY25. NBFCs with share of 31 per cent are well-placed to grab the opportunity. In short, rapid urbanisation isexpected to boost the demand for home loans, increasing formalisation in the gold sectoris a prime opportunity for the NBFCs and to achieve the target of an economy of USD 5 trillion, there will bea boost in demand. for loans from the MSME sector. Financial Overview IIFL Finance reported outstanding financials for the quarter ended September 30, 2022. The company is expecting good demand in upcoming years ducto a positive domestic outlook. Total income for the company in Q2FY23 stood at 1,236 crore, up by 31 per cent YoY, whereas net profit stood at %397.1 crore, up by 36 per cent YoY. The company’s core CONE DERG NON) Equity ‘operating segments have delivered phenomenal growth on a sequential bass. Its AUM sawa robust growth of 25 per cent YoY to®55,302 crore, supported by growth in various segments. Homeloan AUM registered growth of 25 per cent, gold lean by 31 per centand microfinance by 49 percent YoY, showing a robust demand in all the segments, As of Q2FY23, grossnon- performing assets (GNPA) stood at 2.4 percent and net NPA.at 12 percent, placing the company. ina better position in the industry. For FY22, the company’s consolidated revenue stood at 87,006.27 crore whereas net profit was highest at?1,188.25 crore, up by staggering 56 per cent YoY, This growth was registered due to strong AUM and increasing digital presence of the company across India Froma liquidity perspective, the company had9,399 crore, which is sufficient enough to manage the short-term obligations. Ithas, reported healthy return on equity (ROE) of 20 per cent for FY22 and return on assets (ROA) of 2.74 per cent, the highest ever reported in the company’s history. ‘The NBFC industry's average gross NPAs were around 6.5 per cent and net NPAs around 2.3 percent, whereas for the company the gross NPAsstood at 3.2 per cent and net NPAs at 18 percent, thus placingit ina comfortable position, The company’s net interest margin (NIM) was at 7 per cent as of FY22 whereas the borrowing cost declined by 0.4 percent to 86 per cent duringthe same period. EBIT margin was at 71 per cent and net profit margin was at 20 per cent. Segment-wise, the company is not dependent too much ona single segment, giving them protection from any cyclical change in that industry. Loan AUM grew by CAGR of 18 per cent forthe past five years compared to the industry's CAGR of just 9.31 per cent “This was driven by demand from ‘small ticket’ home loans, microfinance and the gold loan segment, Over the past five years, the company’s home loan segment has registered robust sgrowth at CAGR of 27 per cent while gold loan, microfinance and business loan grew at a CAGR of 4I per cent, 92 per cent and 5 per cent, respectively. The company’s portioliois now ‘more focused towards retail loans in Tier Il TIT and IV cities. ‘The company’s shareholding pattern as of September 30, 2022, ‘was as follows: promoters own 24.89 per cent, FIs own 25.57 per cent, DIls own 3411 per cent and others own 46.13 per cent, Peer Comparison Ve Ce eT Baja Finance Ltd 400872. i BI Cards dnd Payment Services Ut 737.47 | 529 Td MuttootFhance id 4536.8 | 53 3853 ‘Shriram Transport Finance Company td 3516215 | 192 004 FL Financ td. rme764 | 331 B64 holamandalam Financial Holdings Lid 1091693 | 425 296 Indiebuls Housing Finance Ud. sess | 088 1486 2B DALAL sraEET IMVESTMENTJOUANAL 1 DEC05 18,2929 stninaes #SafelnvestmentDrive Monitor markets conditions to make the right investments. Just like you would monitor traffic to reach your destination on time. SUM MRR michAnalysis Equity Long term financial trends for the last 5 years @UFLeinance Robust financial performance and growth any Prom ater a reeD ec) ok and Rot (8) o— GEE _ 2m ae aan ae Hes ‘netinuest Maron Balance Sher Ameta(Q)_Pre-provislonopwating prof (Gr =e ete Colencng neds BumessCoeigongence and Co engin (Souce: stor resentation: (2°23, IL inane) Outlook Increasing urbanisation rate, changes inthe gold industry, “The company’s management committee has vast experience in requirement of loans for MSME developmentand BFSI which can help them to identify opportunities that are microfinancessector growth are the supporting factors for the | untapped by others. The NPAs of the company are lower as NBIC industry. The company is wel-positioned to cater to this compared to the industry average due to more exposie demand through its vast network of branchesand digitaised retail loans. In FY22, the company generated net cash of products Ithasa diversified portfolio, making it ess prone to | 3,568 crore after all the payments of capital expansion, {impact from any changes in particular industry. The loan financing casts, etc,, making it more stable and aggressive for portfolio of the company is well-balanced as 85 per cent of __ rapid expansion, if required. kis rapidly expanding its busines Joans are secured and 15 per cent are unsecured, That apart,the _ to-cater to customers who are underserved making itan ‘major focus of the company is on stall ticket size loans and —_ attractive player to grab opportunities in this flourishing sector. retail loans and the result of thisis that 94 per centof their Hence, dueto sectoral suppor, right business expansion, clear portfolio comprises retail, which places iton the betterside management strategy, lower cost of finance and strong from an NPA perspective, fundamentals, we recommend BUY. SuPer, A Steady Multicap Builder For more information give a missed call on 02066663882. Se eee eee {ev pn RUD Five years investment Ae ae i a ae nda period (SU Pv Li: orice a 21, asco Matin Sear, Nest ya Regency, Viueragy Pee 1014| BO DALAL rater IMVESTMENTJOUANAL 1 DE¢05- 18,2929 stninSave HUGE on Brokerage with Freedom 15 Plan (Intraday and FnO Trading at just 215/Order) Ultra Lite and Smooth Der Mella arctan) EM Daan hg Riera ela PORT Pe RE er a ele ered ear eta a aad and Educators Sat nae Tema Comer Cesta B ett ta) An Analytics Studio for your Pre ee Nae g eT Tee Reureh in) eerie hse! “TSC opply Disclaimer: httpa:/tnyuricom/S2ypberhCommunication eh © NSE Retail Participation in a USS 5 Trillion Economy Indian economy gradually making a significant mack by its growing prominence across shores. In an uncertain global ‘macroeconomic environment that is marred by escalating geopolitical tensions, itis certain that Indian economy stands apart. Various multilateral agencies like IMF and OECD have also acknowledged its resilience while estimating its growth at 6.5%-6.8% placing it as one of the fastest growing economies of, 2022, Indian economy is relatively better placed in terms of its fiandamentals in termsof growth-inflation outlook accompanied with robust external vulnerability metrics healthier balance sheet of banks and corporates. These, along with efforts by the government to push forward a fiscal impulse through capital expenditure and targeted distribution bodes well for the near: and medium-term economic growth outlook [I a world dominated by greater power competition, we see ‘With strong fundamentals in place, Indian economy isnot only on course to become USSS trillion economy by 2026 (FY27) but also holds the ability to surpass USS7.5 trillion mark by 2031 (E22) owing to favourable demograpbies sccompanied with policy measures adopted in the field of digitization, ‘manufacturing, and renewables. These are likely to cater to @ popalation with a per capita income over US$2000, with incremental consumption likely to be discretionary, making the Indian economy an attractive long-term investment destination. ‘The US-China trade war, followed by the COVID-19 pandemic and more recently the China slowdown, have led to more and ‘more countries considering a ‘China-plus-one’ supply-chain diversification strategy. Multinational corporations are looking at countries with stable governments and strong economic fundamentals, such as India, Vietnam, Indonesia, Malaysia, Thailand, Philippines, and Bangladesh, With its’significant competitive advantage in several industries such as textiles, specialty chemicals and pharmaceuticals, conducive business environment and incentivizing government policies such as the LI and tax cuts, India is ideally placed to leverage this opportunity. This indeed is likely to further augment Indias potential growth, 32 ‘rere inte come tech US Seen i. nda a rach USSStm by 2026; Pra227 CNOR: 126%, ‘As the Indian economy ascends ahead, capital markets are likely tomove in tandem and possess the potential to generate 10-12% annual growth helping to reach a market capitalization of S10 trillion in the coming decade. Indian equities have been one of the best performing markets this year and last five years—a testament of investors’ belief in India’s strong fundamentals and long-term growth story. The market capitalisation of NSE listed companieshas become 4x over the last 10 years. Figure 4: Trend in market Capitalisation on NSE listed Companion Market eapltalleation (MSE Usted Coe.) etger ‘With the maturing Indian financiel markets, the domestic retail investors are taking @ lead on the bandwagon. The last two years have seen a significant growth in new investor registrations, which has augmented net investments in the equity markets. ‘The last fiscal year saw an addition of record 34.6m new Demat accounts by NSDL and CDSL combined, on top of 143m registrations in the previous year, The total number of demat accounts across the two depositories has crossed 100m. The direct ownership of retail investors in the NSE listed universe has also increased by 110bps to 9.5% as compared to the pre- pandemic levels ro ae & vt — . — oo?Entry of retail investors has been a stand-out feature ofthe Indian | Several factors have driven the ise in retail participation in equity markets since the beginning of the pandemic, Interest in | Indian markets over the past few years, especially during the participation (numbers), restment (net inflows) and activity | pandemic. Cheap and reliable internet connectivity and accesso, (turnover) have moved in line with the market, exhibiting traits | affordable smartphones have added to the policy intervention of well-known in behavioural finance (exuberance, buyer’ | Aadhaar, allowing first-time access to markets feasible as never remorse). With the markets correction this year, investor | before. Contrary to the past, it takes no time to open a trading participation is getting back to being led by the steady investor, | account, a demat account,and then link them to an existing bank ‘but numbers remain meaningfully higher than prepandemic | account. Unlikein the past, investors no longer must call brokers, sufficient. Such ease of access has enabled investors from diverse segments of the population, from students. to housewives, to retired individuals, in addition to ‘working professionals, ‘An ofi-quoted maxim in the ‘markets is caveat emptor—or “Let the buyer beware”, What it levels, implying the new investors are here to stay. or even trade through a computer—their mobile phones are aaa a a Sc oem : —— ! | ! SILTEGTDRGAL ARLE : Figure 7: Ownership patter by total market cap (4) Figure 8: Ownership pattern by total market cap () ‘March 2020 neo grometee compote, 33, morsenow 2a ter asin ssrprometon Oa ee one tenes =2 emma 43 rome (turnover) Ritrlien Giz gr — a0) azo eri = orm on m+ grat orm orm orm orm orm orm FA orm orm gem ‘romtyintlerat hawt regu ae 7 Ao Wan neha at havePaet wa ere gt ee ‘means is in an era of electronic treding and unprecedented participation in the markets, investors should also take the right precautions. These include basic. steps like Keeping. the ‘mobile number and email ID ‘updated, observing safety rules wasnt trading and dealing only with SEBI registered trading firms, to more nuanced measures Like understanding broker fees, steering clear of assured return schemes, and the reasons behind a Po. Investments in stock markets is subject to market risk, and past performance is no guarantee of future returns An understanding of these basic tenets is essential for any investor, in addition to ‘knowledge about the scrips or strategies they employ. The investment scene is India is poised for long-term growth, on the back of an economy that ‘would zeach USS5ten (nominal) GDP in a few years, where retail ipation is finally taking off, and would have a key role to play in market performance. A lisciplined approach to investing would be the key to reaping long-term benefits of this growth. pstsin (OFC 05 98, 20091 MALALSTREETINVESTMENT JOURNAL — 33Special Report tts < O@® asl = a v~ Indulging in Options Trading ‘What is a subtle options strategy as a move towards choosing the right short strike? The article provides some insights "e have seen that nowadaysa lot of time is speat talking about how options trading has made its mark in the domestic markets. The popularity of options trading is such that a lion share of contribution to the total daily turnover of the NSE is contributed by the options segment and, the participation in this segment by retail traders has been on the rise ata rapid rate. Options are vastly misunderstood and typically used improperly by inexperienced traders. Ofientimes, new options traders attempt to make inherently greedy decisions by choosing pie in the sky’ strategies rather than @ ‘methodical, steadfast approach, ‘They want the chance of striking gold, which is basically the same as buying a lottery ticket. But in this article, we wil tal 34 about a subtle options strategy as a move towards choosing the right short strike. What are the three uimost important aspects, you need to be aware of in any kind of business or any kind of ‘options strategy? These ae: @ Reducingrisk © Maximising reward ‘= Minimising the breakeven, Bull Call Spread Strategy Letusfirstbegia with an understanding ofthis particular strategy. The bull call spread by itsvery nature comprises two call options that crete a range with a lower and higher strike price. The bull call spread is ideal for traders with an outlook in ‘which they expect the prices to rise only moderately. ThoughYou want to select a strike price that is the following: Dee TE oer ty ‘when the higher strike cll ades to the gans through time decay, the higher strike al option shouldbe low enaugh EOE UUM soe eta I) OTe raa a coe IO Yyour net debitand therefore your risk and breakeven Po Oe Co see TOE Rue car set ccs Reo a 200 per cent f maximum return onmaxium risk ifthe Se eS LE ne ecm menom tc) Bere Te this options trading strategy enables the trader to limits losses, atthe same time it also caps his upside gains. Lets see how thisstrategy is constructed: Step 1: Buy lower strike call, = Step 2: Sell samenumber of higher strike calls with the same expiration date. ‘The lower strike calls will be more expensive than the higher strike calls, so this strategy will bea net debit strategy ie. there would be a fund outflow out of your trading account. Usually, the bull call spread is alower risk alternative to buying a naked call, Here isa hypothetical case which will help you to ‘understand why this strategy isa lower rsk alternative to buying anaked call option. ¥ Situation 1 (Long Call: Let’ say you have a bullish view on a Stock named ABCand you bought the December series 70 strike call at €13, ' Situation 2 (Bull Call Spread): Your view on the underlying is similar but you opt for a bull «all spread in the same stock. So, you buy the December series 70 strike call at 713 and alternatively youssell the December series 100 strike call at 5 (the net cash outflow of this strategy standsat 8). Hence, thisis also known as a debitbull spread, The respective risk profiles of the first and second situation are as follows: Een sialon? balan re ee “You Pay (Net Debit) 13 8 imi 5 z Taito iia 2 sea 3 73 (Strike Price+ Premium Paid) | (Lower StrikePrice + Net Debit) Tiara] ole So, from the above illustration we can clearly see that the bull «all spread is less risky in terms of ower risk and breakeven points while at the same time it offers you a limited (still attractive) potential reward. Now comes the most important part ofthis strategy ic. selecting the long call strike and short call strike. Usually, one trades the bull call spread when the underlying is expected to rise. the maximum profit ‘occursat the higher strike price and maximum loss occurs at, the lower strike price, The question is: which options do you select for the long side and the short sic? Usually, one should select the lower strike price (forthe option you are buying) to benear the money (NTM)—that is, close to the underlying asset price. ‘On the other hand, the short side i higher trike call of the bull call spread involves you selling the higher strike call option against the one you just bought. The Time Factor ‘While initiating a bull call spread strategy, time decay is detrimental to your position here and so you willbe atthe safest level when you treat the bull call spread over more days to expiration. Remember, as an option buyer you want to have as much time as possible to be right. Traders buy options hoping the option’ value will increase during the option’ lifetime o sll options and hope that the value will decrease. Conclusion Ifyou are a trader who doesn't mind low-risk trades, the bull call spread isa perfect option you can consider, Because, if you initiatea naked long cal option (ATM) and you get the direction wrong your postion willbe decimated quickly: With a bul call spread, the effect will be slower, which can give you the opportunity to exit the trade before more serious damage isdone 35NX TSU e i | Growth INVESTING Who is Winning in 2022? Value investment has the potential to perform better over the long run. However, there is a theory in favour of growth investing too. Bhavya Rathod provides insights into both the strategies and their performance in 2022 thus far cc riceis what you pay fos, value is what you get” This well-known comment from the legendary investor Warren Buffet captures the essence of the value investing philosophy and provides the key to how Butfet amassed his wealth, Warren buffet being the icon of “value investors” has builta stupendous amount of wealth by practising disciplined. value investing over years. Value investors believe that you are likely to find undervaluation of assets in place and tend to invest in mature firms with substantial existing assets, albeit underperforming ones ‘Value is very difficult to find in inflated markets and can oniy be seen when the markets have been sharply corrected. Bul market conditions make value investing look pointless. The value investing strategy will prepare investors for market corrections because undervalued stocks do not experience BG DALAL eTREET NVEETMENT JOURNAL | DE them, Value investment has the potential o perform better over the long run. A lengthier time might exsily extend tointervals, of more than five years. However, if Warren Buffet isthe icon for value investors, Peter Lynch occupiesa similar position for growth investors, “Whenever you invest in any company, youare looking for its market capitalisation to rise. This can't happen unless buyers are paying higher prices for the shares, making your investment ‘more valuable” This thesis by Peter Lynch completely stands on the opposite side of what value investing believes in. Growth investors are animated with the belie that growth too can be tunder-priced in some companies, and that the payoff to seeking out these bargains in growth is sufficient to justify the cost. Peter Lynch’s reputation was made during his stewardship of Fidelity Magellan, a small high-growth fund that he took over,in 1977 and madeinto the largest equity mutual fund in the world over the next decade. The reason for its growth was its performance. An investment of USD 10,000 in the Magellan fund would have growa 20-fold over the next 10 years. Many. services define a growth investor as one who buys stocks that, trade at high multiples of earnings. Though this may bea convenient way to categorize investors, itis not an accurate one. In fact, itTeaves us with a misleading picture of growth investorsas being uninterested in the value of what they are buying While this may be true for some growth investors, doesanyone really believe that Peter Lynch cares less about value than Warren Butfet does? Warren buffet despite being allergic to tech companies for the longest time has APPLE as his biggest investment. History shows that growth stocks, in general, have the potential to perform better when interest rates are falling and company earningsare rising. However they may also be the first ones to punish when the economy is cooling. Value stocks, on the other hand, may do well early in an economic recovery but are typically more likely to lag ina sustained bull market Performance of Value Stocks versus Growth Stocks in 2022 Note: For discussion purposes, we have assumed value stocks to have a TTM PEof less than 10 and growth stocks to havea TTM PE of more than 100. Speaking ofthe global markets, many of the indices took icant losses and have produced negative YTD results with the Dow Jones losing 7.76 per cent ofits value while the other indexes such as the $ & P 500 value index losing 6.01 per cent and the § &P 500 growth index losing 26.33 per cent. The ‘markets have been extremely erratic this year. The geopolitical crises, arring swings in the price of commodities, large swings in the price of crude oil, and rate hikes by the Federal Reserve and banks have all contributed to the volatility to some extent Despite all ofthis, the Indian stock market has provided relief toall investors worldwide, with the Sensex returning 3.4 per cent ona year-to-date bass ‘When it comes to market trends in India this year, we have seen significant outperformance from value stocks when compared tothe BSE Sensex, with PSU banks leading the way to produce notable returns and Nifty PSU Bank producing a staggering 5398 per eent year-to-date. On a YTD basis, some of the notable PSU banks in the value segment (TTM PE < 10) have produced extraordinary returns, including Karur Vysya Bank Ltd. and The Karnataka Bank Ltd. giving 124.42 percent and 124.37 per cent, respectively, whilst Bank of Baroda and Indian Bank have given 98.66 per cent and 96.63 per cent, respectively, Another sector in the value segment which caught the eyes of investors and gave massive returns was the paper sector. West ‘Top Performing Value Stocks VTD (TTM PE<10) Hemang Resources td Tong 6593 151650 239 tare Spiming Ms Ld Tote 83.68 59572 556 Last ile Emeriss i Inradrocue 11288 5388 516 Narayan Sees it rank Stes 8264 514 106 Swadesh Plytex i Wissen 13884 7980 324 Suni Industies Tete 3322 4628 688 olecha Gnbal Fiance Fiance 585 as 806 (vote Foot. id wo2e 517 718 ord here al Genial a 71906 976 Hazor Muli Projets id Realty 10338 250 59 Top Performing Growth Stocks VTD (TTM PE>100) S&T Corporation. featy 35051 1705.05 19007 ‘Gensol ngieering Lid bres m7 123858 15980 RUC Shears ital Goes im 678 PB ‘Dut. ecrials 73.20 35580 724934 TV Engineering ail Goo 105.40 8378 081s tales. ital Goes 17404 5882 11990 Shani Educationalnitiatves Eatin &Traning ia oa 36810 BEL Teste 36805 La 14659 Varinan Gbal ners featy ‘878 558) 25 alos Entepises Lid, Fiance 1508 18 70046 “Data is on Novertr 18,2022 2605 18,2021 OALALSTREETINVESTMENT JOURNAL — 37‘Coast Paper Mills Ltd, Sangal Papers Ltd, Tamil Nadu ‘Newsprint and Papers Ltd. and JK Paper Ltd. are one of the few names which skyrocketed and gave 100 per cent plus returns ‘with West Coast Paper Mills topping the lst with 149.57 per cent returns on a YTD basis. Speaking about the growth segment (TTM PE > 100), the ‘Adani Group stocks such as Adani Enterprises Ltd, Adani ‘Total Gas Ltd, Adani Transmission Ltd. and Adani Green Energy Led. showed massive momentum with Adani Enterprises providing the largest return of all four at 135.28 per cent. Ona year-to-date basis, the hospitality sector's equities also showed strong growth due to increased bookings and ‘consumer expenditureon both food and travel We at DSIJ back-testedall the 5,934 stocks listed on BSE, Based on YTD returns and TTM PE, we found that out of al value stocks with TTM PE ofless han 10, as many as 281 companies outperformed BSE Sensex while out of high growth stocks with ‘TTM PE of more than 100, up to 87 companies outperformed the BSE Sensex. As per the data, outof the 806 value stocks, close to 281 managed to beat the BSE Sensex (assuming that value stocks are defined as those that trade with a PE of less than 10), That is arespectable 35 per cent of value stocks that, haveso far outperformed the BSE Sensex in 2022 At the same time, we note that at least 318 growth stocks are ——_—— currently trading ata PE of greater than 100 (this is with the assumption of growth stocks as stocks with a PE greater than, 100). We discover that out of 318 growth stocks, atleast 87 of them outperformed the BSE Sensex bya significant margin exhibiting that 27 per cent of growth stocks were able to surpass the BSE Sensex. Thus, what we observe from this data, is that the probability of value stocks outperforming the BSE Sensex was higher than the growth stocks outperforming the BSE Sensex in 2022. ‘When comparing the long-term performance of the two approaches, neither the growth nor the value strategy shines ut asa definite winner in terms of wealth creation. According tothe forementioned data, growth companies do, on average, ‘outperform value stocks by a slight margin when the economy isdoing well. Value stocks, on the other hand, are the ones that actually shine and provide comfort to investors amid the harsh winds when the economy isin a slump. ‘Your portfolio may perform best ifit has exposure to both growth and valve stocks. The inherent relationship between the two tactics was correctly noted by Warren Buffet. In his renowned 1992 Berkshire Hathaway letter to shareholders, Buffett stated, “In our view, these two techniques are connected atthe hip: growth is always a component ofthe calculation of value, constituting a variable whose relevance might range from small o tremendous. ey iMG ela uieg Pick Flash News Investment. oe tee ve fi eet omprehen PEE oi ee Sox Ctr eon Ee! Ce potas iaiat Pee cuan a n vides you with ne muy Pee ucunt Taio To subscribe or for more information give a missed call on 02066663889 SEDI Researeh Anelyat Regn No-INH0D0006296 Refer given URL to rexd Disclosure hitp://wwn ell. in/dleclosure and Disclalmer bp: //www. de incl ei oA nagar, Pune- 41SINCE 1986 DEMOGRATIZNGWEALTHCREATION (G Investment ALL NEWS BOOKS IMAGES MAPS Dalal Street Investment Journal https-/www.dsi.n Dalal Street Journal India's #equity research and capital investment magazine also provides Indian stock market news, share/stock market trading tips and... DSIJ Magazine Stock Market Challenge Dalal Street Investment Journal DSIJ Stock Market Challenge have latest issue preview and content ... helped millions of individuals DSIJ Investor Products © DSlJ Personal Finance Unique investor, unique needs, Helps you to achieve complete DSIJ Investor Products serves financial freedom ... ke Sensex at DSi MF Stay Tuned to Markets www.dsi. SEBI Research Analyst Regn No.- INHO00006396 *For visual representation purpose onlyonal 1 oe stock index isa statistical measure that exhibits the changes inthe trends of the stock market in general. Indices are used ‘0 represent the performance of the broader security market, ora particular segment of it. An index is created by clubbing together stocks based on a pre-defined criterion which depends on the characteristics ofa specific index. The value ofthe indexis, calculated using the values of the underlying stocks that make up the index. Consequently, any changesin the prices of these stocks will impact the overall value of the index. Therefore, et’s say that if majority of the stocks inthe index were to witness an increase in their prices, the value of the index will go up as a ‘whole and vice-versa Index Construction and Management Indices are constructed by using various methods. A good index isa trade-off between diversification and liquidity The process starts by identifying stocks to include in the index. These are laid down by the index construction mansgers or entity. However, index providing entities must make several critical decisions such as whats the target market the index is intended to measure, which stocks from the target market shouldbe included, how often should the index be ralanced and when AQ — DALAL rAEET NVESTMENT JOURNAL 1 DE05-18, 9 A Primer on Stock Indices The words Sensex and Nifty are the most commonly heard stock market terms. Every investor encounters these terminologies frequently while taking heed of stock market discussions among friends and relatives. Sensex and Nifty are two popular indices that indicate the overall performance of Indian stock markets. Armaan Madhani furnishes a detailed understanding of the nuances of stock indices, its types, significance and application should the selection and weighting of securities be re-examined, The target market may be defined very broadly (e.g. stocks in India) or narrowly (eg. small-cap stocks in India). It mayalso be defined by geographic region or by economic sector (eg. cyclical stocks). The underlying stocksin the index could be al the stocks in that market or just a representative sample. The selection process mey be determined by an objective rule or subjectively. Abo, in order to keep the index comparable across time, maintenance is done in which various corporate actions like stock splits, mergers, bonuses and right issues are into consideration. The process is known as index maintenance and revision. (One should keep in mind that each underlying stockin an index has a different price and the price change in one particular stock would not be proportionately equal to the other stocks. Ergo, the value ofthe index cannot be determined asa simplestim of the prices ofall the stocks which are part of the index. Hereis when the importance of assigning weightage to each underlying stockin an omes into play. The ‘weight represents the extent ofthe impact that the stock’ price change has on the value of the index. The different weighting schemes used in index construction are as follows= Price-Weighted— Itis simplyan arithmetic average of the prices ofthe stocks included in the index. = Equal- Weighted — Herein equal weight is assigned to each stock in the index. = Market Capitalisation- Weighted — Weights are based on the market capitalisation of each index stock (current stock price multiplied by the number of shares outstanding) as « proportion of the total market capitalisation ofall the stocks in the index. Itis also known as value-weighted index. = Float-Adjusted Market Capitalisation Weighted — Weights are based on the proportionate value of each company’s shares that are available 1 investors (i. free float) to the total market value of the shares of index stocks that are available to investors. Index Rebalancing Index rebalancing refers to adjusting the weights of securities in a portfolio to their target weights after price changes have affected the weights, For index calculations, rebalancing to target weights on the index stocks is done on a periodic basis, which is usually quarterly. Index reconstitution refers to ly adding and removing stocks that make up an Stocks are removed if they no longer meet the index criteria and are replaced by other stocks that do. Indices are reconstituted to relect corporate events such as bankruptcy, merging or delisting of index firms and are subjective. It should be noted that additions and deletions from indices also require thatthe weights on the returns of other index stocks be adjusted to conform to the desired weighting scheme. Significance of Indices Frontline stock market indices act asa barometer of a country’s financial infrastructure, They rellect the ups and downs in an economy on a macro level. Indies are useful for assessing the general direction in which the equity market seems to be Treading as well as gauging the current trends. An indexis a key indicator of investor confidence and sentiment. An index can be used to evaluate the performance of a particular mutual fand or PMS. Since portfolio performance depends to a large degree on its chosen style, the benchmark index should be consistent with the manager's investment approach and style to assess the manager's skill accurately, The index stocks should be those that the manager will actually choose from. For example, performance of a FMCG thematic fund should be compared against an FMCG sectoral index and not a broad, market index because portfolio stocks will be selected from among FMCG stocks. Stock indices act as model portfolios for index funds. Invescors who wish to invest passively can invest in an index fund, which tracks a particular index to replicate the returns delivered by that specficindes, There are index ‘mutual funds and index exchange-traded funds, as well as private portfolios that ae structured to match the return of an index. Price action in the underlying stocks of sectoral indices ‘makesit easer to understand which sector is gaining traction and finding favour among investors. It helps in identifying well timed investment opportunities from the mushrooming sector. Frontline Indian and Global Indices Sensex — Sensex is the most popular index under the Bombay Stock Exchange’ umbrella. Established in 1875, BSE is Asils oldest stock exchange. A blend of two terms, sensitive and index, Sensex constitutes 30 ofthe largest and most actively traded stocks on the BSE from 12 different sectors. BSE Sensex ‘was fist published on Janary 1, 1986 and is often regarded as the pub ofthe stock marketsin India. Sensex is calculated using the free float market capitalisation methodology. This ‘method takes into account the proportion of shares that can be readily traded. Ratio and proportion is used on the base index (0100 to arrive atthe value of Sensex. The formula isas follows: Sensex = Total fre float market capitalisation | Base market capitalisation x Base index val. Nifty — Niftyis the index of the National Stock Exchange (NSE), another popular stock exchange in India It represents the weighted average of 50 of the largest Indian companies listed on the National Stock Exchange. It 1996 and is maintained by India Index Services Limited (IISL) which is joint venture of the National Stock Exchange and CRISIL. Its computed using the free float market capitalisation-weighted method wherein the level ofthe index reflects the total market value of all the stocks in the index relative to the base period, Novemiber3, 1995. The formula forcalculation of Nifty is as follows: Nifty = Current market value | Base market capital x Base index value, Note: The base index value, in this case is 1,000. The following table summarises some of the noteworthy characteristics and year-to-date (YTD) performance of various global indices. Notice from the table that mos security market indices are ‘market capitalisation-weighted and often adjusted for the float (securities actualy available for purchase). The number of securities in many of these indices can vary. Pe ed Index en ‘Sesex iia free Foat Marketa {378 ‘ity 50 wala ree Foatwarket@) | 351 FE 100 | Eland | —100_| Ree Fat Marketa | -117 Witte 225 | pan | 205 Price 405 ‘Dou jonesInd | us Ey rie 79 acto Fane | 0 Wet 30 302 a Gemany | 40 | ee Foat Market | 999 S500 w 300 wart (ap iss co Sout Kore | 928 ret (ao 1852 Hangsere | Horglong | 73 | ee Poet ret ap | 2514 Nasdaq wo] US 100 ‘weainedGap “299 "Data sn Noveniber2. 2022 2605 18,2009! 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