[hari_rama]

Originally Posted by SmartCat

Refer to my nine screener settings. All the stocks listed are "fair value" (but not necessarily a BUY) according to me. Eg: Largecap growth stocks I might pick up if it is trading below 20 PE. But I will buy midcaps growth stocks only if it is trading below 15 PE. Refer to this thread for my investing thought process:
https://www.team-bhp.com/forum/india...ve-sector.html (Guide: Investing in shares of the automotive sector)

SmartCat, first of all thanks a lot for the detailed thread on basics of investing (the automotive shares thread). I am have been investing (long term) in markets since past 8 years, but only following major brands such as L&T, SBI types and thanks to my luck so far, overall I am at gain.

But all that was purely based on trust of brand and often updates/reads on ET, Moneycontrol as such.

I have been reading through your thread and was trying to understand the basics. And I have a doubt related to statement in the quote of Largecap with P/E<20.

Here in below image, I have repeated your query for Largecap - but without the filter for P/E ratio.





Outcome of the above screen was as below :





Having removed the P/E ratio, 2 famous stocks came up - HUL, Asian paints. However these have P/E ratio more than 60.

On comparing the trend of these two stocks against sensex over last 5 years, at current bearish scenario sensex increased by ~12% while HUL increased by 162% and Asian paints increased by 94%





Whereas the same comparison for another shares from the screen - ITC and HDFC which had P/E ratio <15, ITC decreased by 19% and HDFC increased by only 35%.





Even Infosys, which has P/E of 16.31 rise only 29% over the same period.

Does this mean stocks for a safe long term investment (minimal slip during corrections), stocks with higher P/E will be stable?

I understand that high P/E is overvalued, however having a safe investment is worth enough right?

Your views here would be really helpful. Thanks

[SmartCat]

Originally Posted by hari_rama

Having removed the P/E ratio, 2 famous stocks came up - HUL, Asian paints. However these have P/E ratio more than 60.
On comparing the trend of these two stocks against sensex over last 5 years, at current bearish scenario sensex increased by ~12% while HUL increased by 162% and Asian paints increased by 94%.

Valuation of certain stocks like HUL and Asian Paints are inexplicable. And the past returns of these stocks are so huge because the valuations don't make any sense. And it is pretty simple to prove that:

HUL is trading at PE ratio of 72, has a market cap of Rs. 500,000 crores or $66 billion. It is not a scorching grower either - in the past 10 years, its sales have grown by 7% CAGR and profits by 10% CAGR.

However, HUL's parent company Unilever is trading at a valuation of just $110 billion and at 16 times earnings. Unlike HUL, Unilever has even larger product portfolio across all countries of the world (including ownership of HUL). It's sales and profits are in multiples of what HUL clocks. It's sales and profit growth is not too shabby at around 5% CAGR.



The problem with buying a stock at any price without looking at valuations is that there will be no end to it. Why should HUL trade at just Rs. 2,320 per share now? Why not Rs. 23,000 per share at $660 billion valuation? Why not Rs. 230,000 per share at $6.6 trillion valuation? That's how bubbles are formed.

Does this mean stocks for a safe long term investment (minimal slip during corrections), stocks with higher P/E will be stable? I understand that high P/E is overvalued, however having a safe investment is worth enough right?

FMCG stocks like HUL and Asian stocks are very stable. But the risk of buying such stocks at wrong price is that you might make zero returns for a long, long time. HUL was stuck in a broad range for 12 years (year 1999 to year 2011), before breaking out:

[Pancham]

Originally Posted by Pancham

Experts here, I have a few questions about opening a demat account. I do have Kotak Demat account which is linked to my savings account. But I was also looking at Zerodha since the charges are pretty low.

1. Can anyone please suggest if maintaining two accounts is advisable?

2. What are the key downsides of opening a Zerodha accounts? Any current users can help?

3. How seamless are the payments in Zerodha?

Opened a demat account with Zerodha. Submitted the documents on Sunday and received the log in details last night. Pretty quick. Also their app seems quite easy to use compared to the Kotak app.

One question: is there an online procedure to transfer my shares to the new broker or do I have to submit hard copy forms which essentially means I have to wait for the lockdown to get over.

[sunilch]

Originally Posted by Pancham

Opened a demat account with Zerodha. Submitted the documents on Sunday and received the log in details last night. Pretty quick. Also their app seems quite easy to use compared to the Kotak app.

One question: is there an online procedure to transfer my shares to the new broker or do I have to submit hard copy forms which essentially means I have to wait for the lockdown to get over.

No online process to transfer. You have to fill-in slips/forms that your new broker will provide to you. Details of old and new accounts will have to be clearly defined and it will need your signatures too.


-Sunil

[JMaruru]

Originally Posted by Pancham

Opened a demat account with Zerodha. Submitted the documents on Sunday and received the log in details last night. Pretty quick.

Is 'Zerodha' account opening procedure, completely online?

[carboy]

Originally Posted by JMaruru

Is 'Zerodha' account opening procedure, completely online?

If you want a single account, you can do everything online with Aadhaar. If you want a joint account, it's offline and they are slow & and not very good at it - it can take a few weeks or so if you are unlucky.

[JMaruru]

Originally Posted by carboy

If you want a single account, you can do everything online with Aadhaar. If you want a joint account, it's offline and they are slow & and not very good at it - it can take a few weeks or so if you are unlucky.

When you say, with Aadhaar, are there any OTP verifications OR do we have to pick calls from the 'Zerodha' sales?

I am looking to open a 'single' account, being overseas. So, the questions!

[_chikku]

@carboy, @JMaruru
What is the annual maintenance charges in Zerodha?

[myavu]

Originally Posted by _chikku

What is the annual maintenance charges in Zerodha?

Rs. 300 + 18 % GST = Rs. 354/-

Rs. 88.50 per quarter

[hari_rama]

Originally Posted by SmartCat

FMCG stocks like HUL and Asian stocks are very stable. But the risk of buying such stocks at wrong price is that you might make zero returns for a long, long time. HUL was stuck in a broad range for 12 years (year 1999 to year 2011), before breaking out:

Attachment 1996604

Thanks SmartCat. That explains well.

By the way, is there some way to see the key matrices like P/E, ROCE, DPR during previous year time frames?

For instance, in case of HUL itself, monitor what was the matrices during last few months before breakout. Will it make sense to identify a possible increase in interest and leading to surge?

For quite some time, there are few quantities of ITC and Castrol in my portfolio which has not given a rise. Though both of them has consistently gave good dividends and most fundamentals are seemingly good.

Would there be possibility of these breaking out?

[SmartCat]

Originally Posted by hari_rama

By the way, is there some way to see the key matrices like P/E, ROCE, DPR during previous year time frames?

www.screener.in has all this data.

For quite some time, there are few quantities of ITC and Castrol in my portfolio which has not given a rise. Though both of them has consistently gave good dividends and most fundamentals are seemingly good.

I picked up ITC recently, but I have been owning Castrol for a few years. Waiting for it to perform price-wise is not too bad, because the dividend yield works out to be 5% - same as 1 year fixed deposit in one of those fancy MNC banks.

For instance, in case of HUL itself, monitor what was the matrices during last few months before breakout. Will it make sense to identify a possible increase in interest and leading to surge?

I guess one needs to know "Technical Analysis" to figure this out. I have read many books on technical analysis, but I can't make out "head or shoulder" of this field.

[WanderinNomad]

Originally Posted by SmartCat

www.screener.in has all this data.



I picked up ITC recently, but I have been owning Castrol for a few years. Waiting for it to perform price-wise is not too bad, because the dividend yield works out to be 5% - same as 1 year fixed deposit in one of those fancy MNC banks.



I guess one needs to know "Technical Analysis" to figure this out. I have read many books on technical analysis, but I can't make out "head or shoulder" of this field.

@smartcat. This is unrelated to the post but need your advice.

I am just 3 months old in stock market and your thread was a great read.
In the times of lockdown , Stock market is turning into my alternate hobby apart from cars.

I have been trading with long term investment in mind however I am pretty sure that the market is bound to fall huge in the coming 6 months ( Nifty to maybe less than 7000 ) and will take at least a year to slowly recover back. This has made me pause on the long term investment route.

During the type of situation at hand and seeing the current growth of more than 30% of Nifty Pharma in last 1 month , I have decided to swing trade on a bundle of pharma stocks via smallcase on a short term basis of coming 2-3 months.
What is your opinion about this strategy ?

[SmartCat]

Originally Posted by WanderinNomad

I am just 3 months old in stock market. In the times of lockdown , Stock market is turning into my alternate hobby

I am pretty sure that the market is bound to fall huge in the coming 6 months ( Nifty to maybe less than 7000 ) and will take at least a year to slowly recover back.

I would assign a high probability to this.

During the type of situation at hand and seeing the current growth of more than 30% of Nifty Pharma in last 1 month , I have decided to swing trade on a bundle of pharma stocks via smallcase on a short term basis of coming 2-3 months. What is your opinion about this strategy ?

Just put minimum amount in the smallcase and see how it goes. I personally don't invest or trade like that.

For those not aware of smallcase, it is a theme/idea based automated investment/trading strategy. Smallcase is perfect for those who are bored of equity mutual funds and want to start investing in stocks directly. www.smallcase.com startup has been incubated/funded by Zerodha and is quickly gaining in popularity.

[Sherlocked]

Originally Posted by SmartCat

I personally don't invest or trade like that.

Since you mentioned the quoted line, I couldn't resist myself to ask what's your trading setup like?

Is it Intraday, swing, positional or scalping?

Or do you only use Futures and Options just as a pure hedge against your investments?

Thanks.

[SmartCat]

Originally Posted by Sherlocked

Since you mentioned the quoted line, I couldn't resist myself to ask what's your trading setup like? Is it Intraday, swing, positional or scalping? Or do you only use Futures and Options just as a pure hedge against your investments?

I'm an options trader. I use a strategy called Delta Neutral strategy.