[DDIS_RE650]

Experts please advise on long term aspects for JK Tyre, Tata Motors and ITC. Are these worth to hold and accumulate for next 10 Years. Any chance on revival of YES Bank.

[SmartCat]

Originally Posted by fordday

In buyback, the company buys a proportion of shares from the share holders and extinguish it. This reduces the total number of shares. So the share price increases immediately in proportion.

Small correction. You cannot attribute share price action to buyback either. Share price movements before and after corporate announcements like buyback/bonus/share split/dividend/rights issue are just random.

However, buyback increases EPS (earnings per share). So this reduces PE ratio of the company thereby making the company more attractive in valuation. But this also reduces cash balance of the company, possibly affecting its future potential

And if the share price increases after bonus, its because of secondary factors.

Right. Best to ignore all types of corporate action and focus on earnings/balance sheet.

In a bear market, all stocks including ones making fancy corporate announcements will fall. Conversely, in a bull market, all stocks including those NOT making any such corporate announcements will rise. Attributing long term stock price action to corporate announcement is just fallacy.

[VWAllstar]

Originally Posted by DDIS_RE650

Experts please advise on long term aspects for JK Tyre, Tata Motors and ITC. Are these worth to hold and accumulate for next 10 Years. Any chance on revival of YES Bank.

If people knew a definitive answer to this then by now they would have had a garage of 1CR

Its better to study the Fundamentals of the company, check for technical analysis (if you are looking short term) and lastly take advice from your financial advisor.

I too had asked such a question here before however only after many months of expererience in stock market, have known that NO ONE can time the market or any particular stock.

[avingodb]

@Smartcat

Why is the Sonata Software share falling so drastically despite good results and good projections?

[SmartCat]

Originally Posted by avingodb

@Smartcat Why is the Sonata Software share falling so drastically despite good results and good projections?

Can't say for sure why a stock is falling or rising. The entire smallcap index is heading south:

[ajayclicks]

I have a few shares in a couple of large caps that are doing well- took the SIP route 2 yrs back when the sensex was in the 30K- 40K range and now naturally their prices areup. I plan to hold on to them from a long term perspective.

However, given the abysmal returns from FDs I am also looking at investing from a short term perspective. Not intraday, but more like purchase a few stocks and "auto sell" and book profits if the price increases by 10% or 15%. The ideal scenario would be to book profits every month, but am willing to start slow and steady.

For this I have a few questions:

1) Sites like Screener allows us to create a watch list using various parameters. What are some of the parameters that can be used to identify the near term potential of a stock.

2) Does it make sense to adopt the SIP route for such short term holdings or is it preferable to make a single purchase.

3) Is it advisable to do short term on my long term portfolio as well. Say I have X units in company A. I hold those units for long term, but anything new I buy, I sell those the moment it crosses my trigger.

Any thoughts?

I do understand the risks and I have no aspirations of timing the market. The idea is to play with a nominal amount and see if I can generate modest returns to beat the inflation.

Thanks

[SmartCat]

Originally Posted by ajayclicks

but more like purchase a few stocks and "auto sell" and book profits if the price increases by 10% or 15%. The ideal scenario would be to book profits every month, but am willing to start slow and steady.

I'm doing something like this in one part of my portfolio. The idea is to benefit from stock movement like this:



After all, a fundamentally sound growth stock too can be stuck in a "zone". It can go up 10% or 20%, retrace and try again. When you try to take advantage of these moves, the strategy is called 'swing trading'. Although swing trading is usually done using technical analysis, we can do it based on stock fundamentals too.

Advantages of strategy:

- Generates cash flow
- Can generate higher returns if markets/stocks are stuck in a zone (consolidation)
- It is less boring than long term investing.

Disadvantages of strategy:

- You pay substantially higher transaction charges (NSE charges, STT etc) over time
- STCG of 15% is applicable (instead of LTCG of 10%)
- You miss out on "multibaggers" since you are booking profits early.

Sites like Screener allows us to create a watch list using various parameters. What are some of the parameters that can be used to identify the near term potential of a stock.

For this strategy, choose stocks that offer high dividend yield. Bookmark these 3 links:
https://www.screener.in/screens/3943...ecap-dividend/
https://www.screener.in/screens/394318/midcap-dividend/
https://www.screener.in/screens/3943...lcap-dividend/

Process that I follow for this strategy:

- Invest a certain fixed amount (say 10k or 50k or 100k) in high dividend yield stocks. Such a portfolio will generate minimum 5% yield (FD equivalent) in the form of dividends if you hold for an year.
- As mentioned in one of my previous posts, average down if a stock falls. If you had invested Rs. 50K in a stock and its value falls to Rs. 49K, invest Rs. 1000. After a week, if it goes down to Rs. 47K, invest Rs. 3000 more. But if stock goes up and current value of Rs. 53K, do nothing.
- In high dividend yield stocks, averaging down is not risky. Because you will get higher and higher dividends, since you are accumulating more stocks at lower price.
- If a stock goes up so much that it exits the screener filters, sell the stock.
- Buy back this stock if it falls again. If it has fallen enough, the same stock will appear in our screener.
- Keep a minimum target of 10%

[ajayclicks]

Originally Posted by SmartCat

I'm doing something like this for one part of my portfolio. The idea is to benefit from stock movement like this:

Thank you for the detailed response. Will take a look at the links you shared. One quick question- we can do this in the same trading account that we currently have, or should we set up a new account with another provider?

[SmartCat]

Originally Posted by ajayclicks

Thank you for the detailed response. Will take a look at the links you shared. One quick question- we can do this in the same trading account that we currently have, or should we set up a new account with another provider?

Many of these stocks are in my long term portfolio too, and I don't want to mess with that. That's why I have this strategy in a separate brokerage account. It is also easier to calculate STCG this way when most of short term trades are in one account.

[Gansan]

Originally Posted by SmartCat

- Keep a minimum target of 10%

Can you elaborate? Minimum target for what?

[SmartCat]

Originally Posted by Gansan

Can you elaborate? Minimum target for what?

10% is the minimum stock target level that I keep for this strategy for exit. But before that, the stock should no longer be visible in the screener filters.

[warrioraks]

Originally Posted by SmartCat

I'm doing something like this in one part of my portfolio. The idea is to benefit from stock movement like this:

I have been doing something like this for the last few months as well. All thanks to Screener. It has brought true democratisation of stock data to the masses.

Around investing more in case of a downfall, what I have realised is - one needs to invest based on some conviction. People who invest based on tips, etc are the first ones to panic when things go downhill. They would typically not be able to buy more.
Folks with conviction consider any downfall as an opportunity because they understand that they are getting the same thing at a cheaper cost now.

Here is the screener.in inputs I rely mostly on:

Price to Earning <25 AND
YOY Quarterly profit growth > 5 AND
YOY Quarterly sales growth > 5 AND
Return on capital employed >20 AND
PEG Ratio > 0 AND
PEG Ratio < 10 AND
Interest Coverage Ratio > 10 AND
Working Capital > 1.5 AND
Price to Free Cash Flow <50 AND
Price to Free Cash Flow >0

[graaja]

Originally Posted by SmartCat

- If a stock goes up so much that it exits the screener filters, sell the stock.

I am also experimenting with the swing trade strategy for a few weeks. I have been using the condition of the stock price supported by the 50 day moving average and buy at this time. I set a target of 4 to 6% and a stop loss at 2 to 3%.

Want to check out your method as well. I have a doubt with the screener queries that you have shared.

The screener queries use market capitalization and dividend yield as parameters. How will a stock leave the results if its price goes high enough? I don't see a condition that mentions the price.

[neeraj0272]

Originally Posted by fordday

I knew it , just wanted to validate. This is all trickery to remain in the news or worse to divert attention from poor performance.

.

I avoid everything about capital markets and even it's news so as to not get lured in this money sink pit.
I think Reliance Power bonus issue can be a classic example where Mr. Anil tried to boost investor confidence in his company by this 'trickery'.

[SmartCat]

Originally Posted by warrioraks

Here is the screener.in inputs I rely mostly on

1) Add dividend payout ratio to the filter (minimum >10, but >15 recommended). This filters out accounting fraud companies because only real money can be paid out as dividends.

2) Return on equity is a better metric (as a filter) and more widely accepted than RoCE. That's why even screener.in gives it lots of attention, with its own "box"



RoE > 15 is a good filter. If you input RoE > 20, it will filter out all finance stocks

3) PE ratio < 25 is fine, but only for largecaps. But historically, midcaps and smallcaps have traded at average PE of 20 and 15 respectively. So setup separate screeners for different marketcap companies.

Originally Posted by graaja

I have been using the condition of the stock price supported by the 50 day moving average and buy at this time. I set a target of 4 to 6% and a stop loss at 2 to 3%.

This is the traditional old school swing trading method, but I'm not too eager on this idea because 2 to 3% drop can happen for no reason. But this traditional method uses other voodoo techniques like support/resistance, MACD, Fibonacci levels, RSI etc - not just moving average.

Moving average is very logical though. If you want to adopt this style of swing trading, let the profits run. Eg: buy above a certain moving average or crossover and hold on to the position as long as the stock is above the moving average. Refer to this post:
https://www.team-bhp.com/forum/shift...ml#post5134035

Make sure you do some backtesting with different moving averages and crossovers. Not all stocks have the same volatility, so ideally, moving averages should be different and based on marketcap.

The screener queries use market capitalization and dividend yield as parameters. How will a stock leave the results if its price goes high enough? I don't see a condition that mentions the price.

Current dividend yield is inversely proportional to market price. Current dividend yield = dividend per share / price per share * 100

If market price goes up, current dividend yield will fall. If market price goes down, current dividend yield will rise. After buying a stock, if it shoots up high enough, dividend yield will fall below the minimum filter (3% for largecaps, 4% for midcaps, 5% for smallcaps) and gives me my sell trigger.

As an example, Bajaj Auto declared Rs. 140 per share as dividends in FY21. It's current price is 3700. So current dividend yield of Bajaj Auto is 140/3700 * 100 = 3.8%. If I buy Bajaj Auto now, the stock price has to go up from 3700 to 4700, for dividend yield to fall from 3.8% to below 3% (my minimum filter). So in this case, my target for Bajaj Auto will be 4700.

Unlike traditional swing trading strategies, since I'm using dividend yield as core:

- I can average down losers. Assuming the company declares the same dividend the next year, my dividend income will go up if it turns out to be a long drawn out correction in the stock.
- I will never sell at a loss. Why would I sell if I'm getting "close to FD" as dividend yield? So psychologically, these trades are easier to handle.