Synergy Finserve

06/09/2020

Banking on Banking & NBFC Funds

SIP investments in Mutual fund schemes have not been rewarding in last few years. Most of the schemes have underperformed the benchmark Nifty returns. According to me, one of the primary reason of such low returns in SIP investments is fast recovery in markets and shorter bear market period as compared to previous bear markets. Falling market is a friend of SIP investor as it helps in accumulation of higher units while in a rising markets the investors are buying at higher levels. I have advised sectoral funds to my investor clients in past. In 2016, i recommended Pharma Funds when it was going through tough period (Problems in price erosion in US generics markets, US FDA issues, NPPA issues in domestic markets etc). I knew very well that it would not perform well in next 2-3 years and this would help investors to accumulate pharma stocks at cheap valuation. Finally the big rally came from March 2020 onwards. I am happy for those clients as they are sitting on an average 22-30% CAGR returns depending on the month they started investing.

What Next : SIP investments in Banking & NBFC funds is likely to provide good opportunity to make money in long term. It is to be noted that i am not advising Lumpsum investment in Banking fund. My rationale are as follows : 1) I am expecting banking sector to remain lacklustre as compared to broader markets. This would mean an opportunity to buy Banking names at comparatively cheaper prices 2) Many businesses are facing demand slowdown and liquidity problems, which i feel will not be solved in a hurry. The balance sheet repair could take couple of years. 3) Credit growth and expansion projects will take time to get back on track.

What Next : Now I am recommending SIP investments in Banking & NBFC funds. It is to be noted that i am not advising Lumpsum investment in Banking fund. My rationale are as follows : 1) I am expecting banking sector to remain lacklustre as compared to broader markets. This would mean an opportunity to buy Banking names at comparatively cheaper prices 2) Many businesses are facing demand slowdown and liquidity problems, which i feel will not be solved in a hurry. The balance sheet repair could take couple of years. 3) Credit growth and expansion projects will take time to get back on track.

Disclosure : I am not a SEBI registered Investment Advisor. It is prudent to consult your Financial Advisor before acting on any investment opportunity.

08/02/2020

MidCaps continue to outperform

On the first week of Jan this year, i.e on 2nd Jan and then again on 12th Jan i came out with a recommendation to invest Lumpsum in Midcap Funds. I was very clear and could foresee the acceleration of rally in the midcap stocks. This note is an update to what happened after one month. What is interesting is that,while the Midcap index (NIFTYMID100) rallied from 17386 on 10th Jan to 18367 on 7th Feb, a gain of 5.64%, Nifty fell marginally from 12257 to 12098, loss of 1.3% during the same period. This is in contrast to what we have been witnessing since last 3 years wherein Nifty would rally on the back of few handful of large cap stocks while portfolio value or NAV would remain stagnant as the buying interest was missing in broader markets.

There were three Midcap funds that i recommended at that time. They were Axis MidCap, DSP MidCap and Invesco India fund. The absolute returns for the same period (just one month) for the above funds are 6.6%, 8.4% and 7.01% respectively.

"Making Money has never been easy" and will remain so for those who are not willing to act swiftly and grabbing the opportunity in Equity Markets. I have heard complaints from investors regarding muted returns in MFs even as I am trying to do my part. As an Advisor i will continue to present you such opportunities as and when it is available. Your portfolio returns are thus a function of 1) Market performance 2) Advisor Skill 3) Your action

12/01/2020

Midcaps to Outperform :

Technical structure of MidCap Index

I have been continuously mentioning in my last few updates that the time is ripe for Mid Caps to outperform. This view has been echoed by many experts too and i feel there is merit in the argument. This update is on the technical aspect so i will not discuss about the fundmental factors.

Technical points

1) The MidCap index has broken out of a downward sloping trendline (weekly timeframe) which started from Jan 2018. This has happened after a consolidation of around 21 months. The index had made a top at 21840 and a bottom made at 14975 on 23rd August 2019. In technicals, it is said that longer the consolidation, greater is the magnitude in terms of price advancement. Best Examples are Hind Unilever consolidation of 11 years from 2000 to 2011) and then on break above Rs340 in 2011 to Rs2180 in 2019 (6.4 times in 8 years) and Reliance Industries (consolidation of 8 years from 2009 to 2017) Above Rs580 went all the way to 1617 (2.8 times in years) and i feel we are yet not done with Reliance Ind.

2) The Index has managed to break out of 16920-17250 zone, which was an important horizontal supply zone. As we have seen two important levels being breached the medium to long term trend has turned up.

3) The medium to long term target appears to be atleast till 19800, which is 14% upside from the current levels. We will review once it is achieved.

Please note that my original buy call on Midcaps was on 24th Aug 2019, one day after it hit a bottom of 14975.

One need not repent on having missed the rally but rather be bold and Invest some Lupsum at the current levels and some more on declines if we have one.

For selection of Funds we can discuss one-to-one.

12/12/2019

USDINR : Contd

“USDINR : One more today as it took exact support at 70.55 and made a sharp bounce.”

12/12/2019

USDINR : Previous accumulation zone of 68.25-69.10 acted as precise support thrice. This is a good market to trade as Fakeouts are significantly lower than Equity markets. Will post few more to check.

“USDINR : Previous accumulation zone of 68.25-69.10 acted as precise support thrice. This is a good market to trade as Fakeouts are significantly lower than Equity markets. Will post few more to check.”

23/05/2019

Market View & Investment Strategy :

We are witnessing a pecuiliar market situation wherein there is strong divergence in the performance of Large caps and Mid cap stocks. The leading indices, Nifty and Sensex
are trading at all time highs. At the time of writing this note, Sensex crossed an important psychological level of 40000, while Nifty crossed 12000 level today. Nifty/Sensex
a benchmark for Large Cap stocks is indicating now that these stocks are not cheap and has discounted to a large extent a stable political regime.
At the same time time, Mid Cap indices are still trading at much lower levels, compared to its all time highs seen in Jan 2018. NiftyMid 100 Index, a benchmark for Mid caps is trading at 17530, a good
20% off from its peak of 21800 in Jan 2018. What this indicates is the dichotomy between Large caps and Mid caps has widened and i feel that this cannot continue for long. We must not forget that we are currently
witnessing a very weak economy which cannot be repaired immediately. There is slowdown in Core Sector/Industrial activity, Huge slowdown in consumption theme as indicated in the quarterly results of
FMCG companies, Slack Auto sales, which ofcourse is nothing new to write about ( In April we saw the weakest sales growth in last 10 years, wherein Sales of passenger vechicles declined by 17%).
Globally, we are precariously placed as the escalation of ongoing US-China trade war can potentially derail our economy further.

What should we do to protect our investment portfolio is a million dollar question on the minds of investors? I suggest a quick exit from Large Cap funds as the recent sharp rise in the NAVs has discounted a strong political situation in the country, whereas investors should stay put on the Mid cap funds, if one is patient.The rationale for a HOLD call on Mid caps is that
the stock prices are not expensive. We would like to sell them only when there is euphoria in this space and valuations are exorbitant.

14/04/2019

USDINR : Since my last update one month back, the pair has remained absolutely flat. We had 4 weekly Dojis, which represents indecision of market participants. USD Bulls are holding on to Monthly support area marked on left side whereas the USD Bears are not letting it cross 70.

18/03/2019

USDINR : It is so important to admit that you are wrong and take corrective action in markets. Once the currency pair broke 69.20, i sent the updates to all my clients on Friday that the trend was very weak for the dollar. Exporters were advised to hedge their receivables.

15/03/2019

USDINR has closed below 69.20. This is clear sign of weakening USDINR trend. Today, USDINR filled up the gap area of 69.03-69.40 created on 13th Aug 2018 as it made a low of 69.03 today but the buying pressure was missing after the gap was filled.

15/03/2019

https://twitter.com/kthacker05/status/1106519625746010112

“USDINR has closed below 69.20. This is clear sign of weakening USDINR trend. Today, USDINR filled up the gap area of 69.03-69.40 on 13th Aug 2018 as it made a low of 69.03 today but the buying pressure was missing after the gap was filled.”

11/03/2019

My note to all the clients on the "Why it is time to invest in Mid and Small Caps" sent on 23rd Feb was timely. In just 10 trading sessions, the Mid Cap Index has moved up from 16500 to 17600 currently, i.e a return of 6.7%. In the same time Nifty has moved up 3.1%. What is more important is the visible improvement in investor sentiments. Our markets has outperformed most of the other global markets during the same time. My efforts will continue to provide you with such updates so that you can generate above average returns. Happy Investing

23/02/2019

Good time to start looking at Mid Cap Funds : The carnage seen in Mid and Small cap stocks is not new to me. I have seen worse times than the current one that we are in. The two significant declines worth studying are the ones in 2008 crash and then during Nov 2010-Aug 2013 period. The mid caps saw much sharper erosion during 2008-09 when the Mid cap index declined from 9781 to 2931, a fall of whopping 70% in just 13 months. The decline was of lower magnitude in Nov 2010-Aug 2013 period, when the mid cap index fell by 36%. In percent terms, the current fall from 21840 in Jan 2018 till 15800 in Oct 2018 is lesser at 27.5%. Currently we are trading at 16540, which is at the lower end of the range. What is interesting and exciting for investors are the returns Mid caps generate after their declines are over. After 2008-09 correction, the mid cap index went up from 3137 in Feb 2009 to 9853 in Nov 2010, a mind boggling return of 214% in just over 21 months. The ascent from 6330 in Aug 2013 to 14230 in Aug 2015,a return of 125% was also too good to be ignored. I am not sure whether we have hit the bottom or not, but what i can say with certainty is that we have seen a significant correction, both price wise and time wise. Therefore, the Risk-Reward is favourable tilted towards the investment thesis. There will surely be an argument regarding Political Uncertainty as we are headed towards General Election. Please bear in mind that Markets would not provide you entry in case of a favourable outcome in Election. We must not forget a straight 20% upper circuit after the 2009 Election verdict. Therefore, this is one of the best times to invest in Mid Caps. I am not talking about Large Cap Funds because we have not seen fall in them and secondly it has significantly outperformed the Mid Caps in last 2 years.
My advise : Invest 1/3 of your "Investible surplus for Equity" in a portfolio of 2-3 Mid Cap Funds. Investors with higher risk appetite can also invest 10% of "Investible surplus for Equity" in Small Cap funds too. Ideally, i recommend SIP in Small Cap and that too in a portfolio of 4-5 small cap funds. The rationale is to avoid concentration risk.