Gold & Oil are getting cheaper.

1 out of 10 investors I meet with these days, at least 6 of them ask me about buying Gold now as the prices are lower. Is it truly low? Who determined that it was high, so that it is quantified as low now?

It is just that we had witnessed Gold prices at 3500 a gram, which got recorded in our mind and now when we see the prices at 2500 a gram, it feels like it is cheap.

After a stupendous decade long rally and a false break out in 2013, Gold began to take rest. It is into a phase of slow decline, and every time it reaches a support zone, it will show a bounce, which will make people feel that they have missed a good buying opportunity that was available a few days back.

But, it will only coil back and move below the previous lows. Unfortunately, at least people in India forget the low and are only recording high prices in their minds. Don’t buy Gold till it has a confirmed breakout, which may take years to come.

Gold has done something that it did not do since 1999, Gold prices have hit lower levels for the 7th consecutive week, it is the longest period that Gold is down since 1999.

By the way, if you have a requirement to buy Gold for an occasion, please go ahead. At least for now, treating Gold as an investment will only erode value. If there is a requirement in future for a wedding or similar occasion, invest regularly into Equity, and when the time comes for the purchase, liquidate Equity holdings and purchase Gold, this will help you get more quantity of Gold than if it was accumulated slowly, just to meet a requirement on a later date.

Please don't worry about the risk in Equity investments, Equity gives 3 times more profits than Gold, if managed well.

Similarly, Crude has also been hitting lows and it is to some extent good news for our economy as we save precious dollars spent on importing Crude. Compared to Gold, Crude is on a different pace. The next time it reaches the previous lows, 2720 a barrel in Indian markets, one can see a strong rally. Beyond certain levels, lower Crude will have counter impacts on the economy. This said, should we keep paying higher price for this most essential fuel? Not required, it will just hold till there is an alternate fuel available or the environment gets adjusted to a convenient way of not using Crude.

OMC’s are making good profits because Crude is low, HPCL is one stock which has made 50% gains on its stock price since last 6 months, by far a biggest gain among other OMC’s.

HPCL has another advantage too with its lube oil sales, which is giving the stock more contribution in profits.

How long to be invested in a Blue Chip Stock?

When we meet the oldies of stock investing, there are always talks about some of their investments which they don’t remember the time they had invested in, but, now the valuation is so high. When a person hears such conversations, he immediately thinks that, if he invests in such Blue Chip stocks, he will be earning awesome profits, more important, that he is not required to do any work to earn this fancy return.

Is it true that, investing in Blue chips and leaving them for ever will fetch super doper returns?

At least I don’t agree with this term, the other day I had one of my clients who is having investment in Colgate, holding some 2000 shares currently, this investment was made in 1983 when Colgate issued shares to the public, the investment was very minimal.

Today the value of this investment is about 42 lakhs. Colgate was not a Blue Chip in the 80’s. It was a good company, it went through challenges too before it became a good stock. Once the stock became fairly priced higher, they started tracking it on a regular basis, so that, if they found it uncomfortable holding the stock, they were in a position to liquidate the holdings.

If the performance would have dropped, they would have liquidated and realized the profits, whereas the uptrend continued and so is the holding intact.

Take another case, Gujarat State Fertilizer Corp, this stock was the bluest of Blue Chips in the 90’s, it was priced at ₹40 in those days and it had all the reasons to be in the SENSEX at that time. The company had very less competition as the Fertilizer market was a regulated market, prices were dictated by the Government.

This stock moved out of SENSEX in 1996, and later the performance of the stock price was not very encouraging, though the company did fairly well on its business growth.

If someone had held on to his investment in this stock, buying a Blue and forgets it for years, today the stock price is ₹ 40. What gains were made here? Zero returns in 26 years.

Companies that belong to the regulated markets never grow in value, or the Government does not allow them to grow. Stock like NTPC, Power Grid etc., will not give any good returns, even though they are listed in the Indices of the country.

What this means is, Equity returns are the highest among any other asset class, but, the investments have to be monitored on a regular basis. Once you find that you were wrong on your decisions or the performance of the company changes, not fitting to the prevailing business environment, move out & invest the funds into a company that is doing what it has to in the current economic environment.

There are no free lunches, you need to work for your gains. If you are smart, you make the best.

PSU Bank results fall like Nine Pins

1^st Quarter results from PSU Banks were so perfect like all of them had planned and achieved it. All the results that have come so far have shown between 20-80% drop in profits. Bank of Baroda falls 23%, Oriental Bank 29%, PNB 41% and Dena Bank 81%. But, after this news, all the stocks had a good rally in their stock prices; this was because estimates from analysts were showing still higher devastation. When the actuals were a little better than that was expected, all the shorts in the stocks scrambled for cover. Always short covering will have a sharp reversal, but, once the shorts are covered, reality will show up.

Fundamentally these stocks don’t have anything to cheer; they will take few years before their balance sheets get cleaned up and for them to show growth that will be greater than others. In this scenario, if someone wants to invest in PSU Banks, they are sure to have bad times.

Even though these are businesses owned by the government and are pretty safe, they are not likely to give any comparative returns when compared to companies that have good growth in their sales and earnings.

Among a basket of stocks that are growth stocks which are in the mid cap space and those that are owned by the Government and are big ones  by numbers, if the former will give us 100% growth and the later would give flat or negative returns, it is obvious anyone will prefer growth. Hence, our portfolio does not have even a single Banking stock.

BTT Portfolio tops with 7.54% profits in July 2015

BTT Diversified Investment portfolio achieves 7.54% profits in the month of July 2015. By returns it stands 2^nd in the diversified category of investments against mutual fund performance in the same category. ICICI Prudential Exports Fund tops the month with 8.23% gains and HDFC Core Satellite stands third.

BTT investment portfolio always consists of industries groups and stocks that have the best sales and

earnings growth. This has ensured that we are invested into the top performing stocks only. The advantage of the same was witnessed in July 2015, with 20 out of 22 Industry groups that we had invested in being positive.

The strength of stocks like Tata Elxsi, Sonata Software, Take, Indo Count & Welspun Industries with their 40 to above 100% gains in the month of July 2015 contributed to 7.54% profits in our portfolio for the month of July as against the 2.86% returns by the Benchmark NSE 500 Index.

At present our portfolio does not contain any exposure in the Banking

sector because there are no banks that have their sales and earnings growth that are above 25% against their numbers of the previous year.

Deweshwar sells 90% of his stake in ITC.

ITC Chairman, Y C Deweshwar has sold 90% of his holdings in the company in the financial 2014-15. An indication that the business at ITC is going to slow down and it has got fairly reflected in the stock’s performance. Deweshwar has announced to step down as Chairman of ITC from 2017, and the next suitor for the Chairmanship is said to be Kurush Grant.

The beauty was that, even the incoming Chairman has parred his holdings in the last financial year.

ITC has been losing volumes in its mainstay cigarettes business. As the

duties have been on the rise, which has been increased nearly 300% since 2 years to control consumption of cigarettes, the actual situation is that, the increased duty is not bringing down consumption. In fact there is something unique happening here, foreign brands have begun to get smuggled into India and are available at a lesser price.

In the process of cleaning up the economy, India has been losing around 7000-14000 crores of revenues due to lower consumption of national brands.

ITC stock was a must have in any portfolio. But, today after muted performance numbers and pressure in its FMCG business, it is time to say good bye to this all-time favourite.

We have exited our small exposure in ITC, which we had been holding since long, we have made small gains, but, it is truly not worth writing when compared to the earnings other growth stocks have made in the same period.

Eicher Motors has grown more than 300%, Page Industries has grown more than 200% in the same period and some Mid ca stocks like Hitachi, Ceat, JK Tyres have done triple digit growth. When there is an opportunity to grow our investment in three digits, holding on to ITC with a long term stability and earning near to flat returns will not justify any portfolio.

EPFO starts investing in Equities

EPFO organisation has began their investments in the Equity markets, to invest upto 15% of the corpus into Equity. To start with they will be doing it though ETF's only and they have opted to invest in the PSU ETF's. The confidence that our decision makers have on the PSU's is enormous, while the PSU's are deemed to be the worst wealth growers. The EPFO feels that they will be safe with PSU's, & in fact this feature of safety and the fear of losses are the reason why Insurance investments are giving the lowest returns.
 But, to some extent, safety is required as the funds are required to meet emergencies, else the confidence on the whose system will diminish. Soon, with the experience of having better returns from Equity will help them take the decision to buy direct equities and also into companies that are doing well and not only into PSU's With about 1.00 lakh crores coming into EPFO per annum, in few years from now,
Indian Equity markets will be a behemoth on their own very soon & need not be dependent on FII's for money to fuel the markets and not fear about the major sell offs that FII's do at one clip. At the lowest allowed exposure of 5% of the corpus per annum itself will bring in 30K crores into the capital markets.
 Returns on PPF investments will now show an uptick and this will fuel competition for advisors & fund managers to show better return possibilities on their managed funds to have an edge and have bigger AUM's. All these competition will improve the quality and eliminate weaker hands, all of it is good news on the whole.

7 out of Top 15 Mid Caps in our Portfolio

Midcap stocks have been the Show Toppers this year, In the last 7 months, they have rewarded between 7000 to 15000 Cr to investors. The following is the list of best performing stocks.

Out of the 15 toppers our portfolio has 7 stocks. Eicher, HPCL, Bajaj Finserve, Aurobindo Pharma, Ashok Leyland, Marico & Glenmark Pharma. Our holdings in the top performers have been helping us give high return on investments on a consistent basis.

Midcaps have given 10.50% profits in the current year, while the SENSEX has given only 2.10%. Large cap stocks have been the laggards this season.

The best part is that, all these investments have come into the portfolio through our automatic stock selection mechanism. Our application ensures that we are invested in the right place, at the right moment. This feature has been helping us give best outcomes on the invested funds.