Happy Diwali

Dear friends,

So we finally had a good Diwali even courtesy the stock market. We hit 5 year highs today and broke the record for daily turnover.

What makes me proud of this is the belief in the run. I was so embossed by reading of reports on the inevitable market crash that all I did was to trash them. In school in a simple lesson we were taught that the break of dawn comes immediately after the darkest hour of night. But in the darkest of predictions on the markets, we forgot some basics. It’s so ironical that investing is a habit and is intended to be cultivated over the long run but is seen as a scratch card where the result must be revealed instantly.

Now justifications on why the rally occurred are being propagated by those who know what they lost. Who cares. Stocks are meant to give you returns and if you have made your money you are at liberty to decide to keep it, encash it or whatever.

This market has truly rewarded investors while exposing the difference between the best and the impacted cos. In this polarization, have stood out some fine cos that remained egged on to their business growth and didn’t spend too much time overpaying analysts to write on them.

What disturbs me a bit now is the same reasoning. When you stand out initially, you could be a loner and thus any company added to a loner doesn’t make a crowd. When too many people collect, a crowd is formed and crowds compel silly actions. We now have swarms of web sites, blogs, investor forum, twitter accounts etc where the same names are being recycled.

Picture this: I invited many of you to post your Diwali picks on twitter. The results are almost the same cos. If all of us are buying, aren’t we being fooled into valuations.

May be yes. May be not. My take is a few scrips despite being great cos are overdone now. They may not fall much or may well fall but don’t seem to offer the same excitement to own them as they did when they stood apart. Remember crowds attract curfews and arson too.

Turning to my picks, I am following a strategy of capital protection now in my decision making as greed amongst many leaves lesser food.

I see the Information technology sector doing well and continue to believe in tech m and Hcl tech as my best picks.

In pharma, there has been a huge run up. I would not like to venture into just any pharma name as if it’s the last journey in town to ride. I see some safety in Biocon and a potential for value unlocking. A great co lead by a great leader and now ready to take off. Product development is a time oriented process and when the gestation is done with, the results can be fantastic. Divi labs also affords comfort in the fact that it has completed its capex and should benefit from that and it’s forex ratio.

I trust the words of mr rajiv bajaj when he says exports would propel his co ahead. I continue to like bajaj auto as also Bosch where a huge capex has been completed even amidst a cost reduction by weekly plant shutdowns.

There is such a dearth of sanitation facilities in india that it does not escape my attention that for years to come, sanitation ceramic cos should do well. Hygiene, privacy, public amenities, population growth, food explosion, contraction of field land etc are all pointers. Cera remains a top pick.

I have avoided reference to many other ideas in my mind for two reasons:

One we all agreed to list 5 picks and I am amongst you.

Two: I encourage discussion on stocks including alerts on negatives or difference of opinion. While it gratifies me to see many followers on twitter and here, it does. Of feel good to see most people as inactive and reading posts for tips.

I don’t advocate naked buying ie without understating the logic as logic alone will guide you. The views expressed are my own and what I am doing. I do not suggest or recommend cut copy paste as each person has a different horizon despite different situations of investing.

I thank all of you who interact and give valuable comments. It’s been a great year of returns and prayers and hard work will continue.

Wish you an enlightened Diwali and much prosperity. In the midst of cloudy Diwali night skies, I shall look out for a new star. : ) be inspired.

Cheers.

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10 thoughts on “Happy Diwali

  1. Vipul says:

    Good post again..but i am wary of buying rite now after this huge run up..also see no fundamental potential for more upwards trends..
    Still have a few picks which have not participated in this rally..

  2. Manher Desai says:

    Safirbhai Happy Diwali and Prosperous New Year
    Enjoyed reading your message . I also feel Pharma sector is safe and sound bet during volatile period in market. Hope all your picks brings lot of wealth and cheers for all your followers.

  3. Cera is one stock that has already been appreciating since last few months. Although it is a good business do you consider that it is still cheap and their is potential of further growth in price at the CMP?

  4. umesh mishra says:

    sir
    you have been guiding us with your good market sense. thanks. here’s wishing you a happy Diwali and prosperous new year.

  5. Sumit says:

    Like you, was concerned to see the same picks and believe that most of them will disappoint for incremental returns. Own divis as core in the portfolio and also top pick in this space with similar rationale. It will take time to materialize but will do well. Agree on Cera as well. No view on biocon.

  6. Hitesh Patel says:

    Hi Safir,
    It’s always a great insight whenever I read your blog, and as I have also mentioned earlier I like the clarity of thought that you bring in your approach to investing.

    I agree with most of the thought you have shared about sectors and specific stocks, however I would not comment on individual pharma names as I haven’t looked at those in details but I feel anyone who wants to look at the pharma may well look at some of the established names such as Sun, lupin or mid caps like Ipca. IT may well continue to do well and personally I think midcap names will outperform the large caps going forward. One specific small cap name I will like to highlight here RS software. Really like the business model with clean balance sheet and growth potential.

    Without getting into much detail about each company I will share my top 5 picks:
    (Not in order of preference)

    1- Swaraj Engines
    2- Bajaj Corp
    3- RS Software
    4- VST Tillers & Tractors
    5- Kaveri Seeds

    – – –

    Happy Diwali.
    Happy Investing.

  7. Venkatesh Pabbisetty says:

    wishing you and your family a very happy Diwali…..

  8. Rahul says:

    Excellent write-up Safir! It is commendable how you manage to successfully track such a large portfolio

    Wish you a Happy Diwali !

  9. harshit jain says:

    hi,
    since divis lab has come up with good results and as u suggested its capex cycle is also done with …can it be purchased even if it jumps on monday market opening by 5-7 % i mean at price range of 1050-1080….i can remain invested in it for 9 – 12 months for gaining
    20 % or more.

    following you from 3-4 months and amazed at your fine stock picking quality.

    regards
    Harshit Jain

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