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Lockdown is a process to limit the number of paid members in Prudent Equity. After the desired threshold is reached, membership to the site will get restricted. Existing members can renew anytime, whereas new incoming members will have to apply for membership.

The displayed number on the lock represents the number of members left for temporary closure. Whenever renewals drop, membership will open again to fill the gap between those who have left and new incoming ones. Membership thus will remain at a certain number and not exceed that.

The reason for lockdown is that we are recommending small and mid cap stocks. These stocks have daily trading volumes which are not suitable to a large membership base. Lockdown should not be construed as a marketing tool. This is a genuine effort to keep the base low so that entry and exit of small and mid cap recommended stocks by paid members is facilitated without affecting the stock price.

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Take Stock of the Future

“Equities as an asset class is also helpful to fund one's daughter's marriage, children's education, etc,” says Siddharth Oberoi, founder of Prudent Equity, a stock advisory firm. “One can keep adding to one's savings and investing those regular savings into equities. If the capital can compound at 20 to 25 per cen...

“Equities as an asset class is also helpful to fund one's daughter's marriage, children's education, etc,” says Siddharth Oberoi, founder of Prudent Equity, a stock advisory firm. “One can keep adding to one's savings and investing those regular savings into equities. If the capital can compound at 20 to 25 per cent per annum, most such future goals can be achieved. For example—If Rs 5 lakh invested in equities can compound at 25 per cent per annum, the capital becomes Rs 15.25 lakh at the end of five years and Rs 46.56 lakh at the end of 10 years.”


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Slow Work In Progress

The real estate sector has long been reeling due to a slowdown and oversupply. So much so, developers have been continuously selling their landholding to bring down debt. Reports suggest that the promoters of DLF would be infusing Rs.10,000 crore in the company by selling a 40% stake in the rental arm — DLF Cyber City Developers Limite...


The real estate sector has long been reeling due to a slowdown and oversupply. So much so, developers have been continuously selling their landholding to bring down debt. Reports suggest that the promoters of DLF would be infusing Rs.10,000 crore in the company by selling a 40% stake in the rental arm — DLF Cyber City Developers Limited (DCCD) — for an estimated Rs.12,000 crore.

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WAKE YOUR INVESTMENTS UP WITH KOTAK MAHINDRA BANK STOCKS

Indian banking industry is expected to witness consistent roll out of innovative banking models like payments and small finance banks. There will be 11 payment banks, 10 small finance banks which are expected to be launched in FY17. Meanwhile, country’s banking sector is these days passing through a critical phase due to abnormal rise in NPAs...

Indian banking industry is expected to witness consistent roll out of innovative banking models like payments and small finance banks. There will be 11 payment banks, 10 small finance banks which are expected to be launched in FY17. Meanwhile, country’s banking sector is these days passing through a critical phase due to abnormal rise in NPAs and declining asset quality. State owned banks like Bank of Baroda, State Bank of India, Punjab National Bank took a major cut in the income statement by increasing provisions for NPAs due to which their net profitability was affected.This has led to consolidation in banking space with SBI recently announcing merger with its subsidiaries and another smaller bank. We see that the sector will further consolidate.

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How to avoid risk while investing

 Individual investments can be usually summarised in two words – “Returns” and “Risks.” The typical thumb rule says the greater the potential reward, higher the risk. Unfortunately, the rule doesn’t stand true in reverse order. Many a times, greater risk is simply great, ...


 Individual investments can be usually summarised in two words – “Returns” and “Risks.” The typical thumb rule says the greater the potential reward, higher the risk. Unfortunately, the rule doesn’t stand true in reverse order. Many a times, greater risk is simply great, 

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Is stock buyback effective for shareholders?

Stock buyback, also known as share repurchase, refers to repurchasing of shares or the stock by the same company that issued them....


Stock buyback, also known as share repurchase, refers to repurchasing of shares or the stock by the same company that issued them.

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On GST in Dalal Street magazine

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FIIs will be positive on India opportunities

FIIs will be positive on India opportunities By Ritwik Mukherjee Jul 10 2016 Tags: Monday Market, Views     Equities will outperform most asset classes in India....


FIIs will be positive on India opportunities

By Ritwik Mukherjee Jul 10 2016

Tags: Monday Market, Views
FIIs will be positive on India opportunities
 
 
Equities will outperform most asset classes in India. The bull market has many decades to go before a saturation is reached. Obviously, it will have its peaks and troughs, said Siddharth Oberoi, founder of Prudent Equity and Dess Equity Advisors, an independent investment advisory company focusing on providing investment advice, portfolio structuring and research services for retail investors as well as institutional clients, in an interview withRitwik Mukherjee. The Indian economy is slowly picking up pace and the second half of this financial year is likely to be even better, Oberoi added. Excerpts:

What’s your outlook on the Indian economy and the capital market in the post-Brexit scenario?

There has been no major change in the Indian economic scenario due to Brexit. The market is in a bullish phase and likely to remain so. I have no doubt, whatsoever, that expectations about the passage of the goods and services tax (GST) bill, reasonably good monsoon and improvement in corporate earnings will keep the market afloat.

What are your main concerns about the market at this point of time and why?

I have many concerns about the present market situation. Some of them are:

A. Low inflation: The lower crude oil and commodity price would lead to lower inflation. Falling inflation would result in lowering of interest rates by the Reserve Bank of India (RBI), which could re-start the consumption cycle.

B. GST bill passage: The constitution (122nd amendment) bill, 2014, commonly known as the GST bill, will be beneficial for the organised sector. With the passage of the bill, the unorganised sector will come under the purview of the new tax, which could lead to their inability to compete with the organised sector in several industries.

C. Reforms percolating to corporate profits: Changes that are being made in the power sector, cleaning of the public sector banks (PSBs) of non-performing assets (NPA), ‘make in India’ initiatives, tax rationalisation, among others, will eventually lead to increased corporate profits.

D. Good monsoon: With more than 50 per cent of the country still dependent on agriculture, a good monsoon should improve the purchasing power of consumers in the rural India.

How are foreign institutions (FIs) and investors (FIIs) looking at India? Will this outlook continue for some time?

India remains an oasis in the desert. It remains a fast-growing large economy. The positive outlook will continue with a stable rupee. FIIs will continue to look favourably towards India as the country offers a large domestic market that is expected to grow at a fast pace in the coming times.

Are there opportunities in the present equity market?

Though opportunities are less, carefully chosen stocks at the right price can give good returns in this present scenario. Some of the sectors to look for are chemicals, capital goods, real estate, infrastructure and power-related segments. These sectors are having favourable tailwinds and growth in the economy will also spell a bright future for them.

n Where do you see the Indian market five years down the road? Would you like to put any number for the Sensex in 2017?

Equities will outperform most asset classes in India. The bull market has many decades to go before a saturation is reached. Obviously, it will have its peaks and troughs. I see the market higher than today in five years. The Indian economy is slowly picking up pace and the second half of this financial year is likely to be even better.

Which are the sectors that you would bet on at this point of time and why?

I would bet on chemical and capital goods sectors. The chemical sector is having industry tailwind with several plants in China closing due to pollution issues. With the impetus on the economy by the government of the day, capital goods sector stocks should perform well in the future.

How do you make your own investments? Do you use technical analysis or employ fundamental data for taking your picks?

I take investment as a field that cannot rely much on technical metrics. Market analysis requires a personal gaze. I only follow fundamental analysis in my investment approach. Reading and researching annual reports, balancesheet, revenue, growth projection and earnings are part of the process. I make sure to follow and analyse the market and make investment decisions. I select stocks that meet my strict investment criteria and have a significant margin of safety.

An important trait we look for in an investment are: size of the opportunity – companies that generate high returns on capital and have reasonable debt levels and are available at a significant discount to its estimated intrinsic value.

How long will the pain persist for public sector banks? Is there value in the private banking space now?

Any change in the non-performing assets situation in public sector banks would prove to be temporary. PSU banks need a structural change in their working systems. The private bank space is priced to perfection, and I do not see much value in them except for very few stocks.

How should investors handle investments for the near future? What would be your message to retail investors at this juncture?

Investors should take the advice of experienced professionals with a good track record. They need to control emotions and be disciplined while dealing with equities. Investors should study companies well and buy when risk and reward is in their favour. Controlling ones greed and fear is important. One also needs to keep in mind that staying disciplined while investing ensures capital protection.

ritwikmukherjee@mydigitalfc.com

 
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Catching The Big Fish In A Small Pond

Blue chips are supposed to be the best stocks you can possibly own -- the crème de la crème of the stock market. These are pretty solid companies overall. They are supposed to be dependable stocks that will deliver steady returns year after year to investors. However, for investors who have lost dimes by the dozen in the re...


Blue chips are supposed to be the best stocks you can possibly own -- the crème de la crème of the stock market. These are pretty solid companies overall. They are supposed to be dependable stocks that will deliver steady returns year after year to investors. However, for investors who have lost dimes by the dozen in the recent crash by staking their hard-earned savings in those so-called blue chips, the losses have proved to be fatal.

Is there an alternative to Blue Chip investing? The answer lies in investing in small companies that dominate a niche. These companies specialize in a product or service and control a small but very profitable niche . It is a fundamental tenet of prudent stock investing that market dominance is an important factor in picking companies. Companies, whose dominance in their niche segment appears to be sustainable. These companies target a particular market niche, perhaps that is not yet recognised by - or is too small to be of interest to larger companies.

By virtue of their dominance in the niche they operate in, these companies are able to retain their competitiveness and margins. In today's cut throat world, businesses that understand the power of specialization are thriving. Small niche companies usually provide a product or service that large companies percieve as either beneath their need or non core to their operations. Moreover, a substantial group of niche businesses are family-oriented or familyrun.

Look at some examples of successful niche players - some that have gone on to become household names. Others, not so popular but continue to achieve phenominal success in their own niche.

- Navneet Education has been a pioneer in educational publication content industry. Its Guides which makes education more simple and intelligible have strong brand recall. Over the years in the educational space, it has emerged as a preferred household brand.

- Garware Wall-Ropes manufactures ropes and nets for fisheries, aquaculture, shipping and the sports industry. The companyeven supplies nets for the Wimbledon matches. It has further ventured into niche products like Landfill, Rockfall protection, Geosynthetic lining etc.

- Control print provides industrial grade coding and marking solutions. Once a machine is installed at a premise, the ink and other consumables have to be purchased from the same manufacturer or atleast that is the preferred choice (because the machine is configured for the company's consumables). Therefore, after a machine is installed, there is a regular source of revenue derived from supplying ink, various consumables and repair & maintainence. This makes it difficult to grab market share by competitors.

- Indo Borax & Chemicals manufactures products which can be classified as boring, such as Boric Acid and Borax powder. The product finds application in Shampoos, Ointments, Mouthwash, Dishwashing products among others. Out of the three competitors in the field, it is the only profitable company in its space.

Several of the big fish in small pond companies are sole players in their small fields or are dominating their industry. These companies have created a moat around themselves, which is difficult to penetrate. Despite stiff competition, these companies enjoy very high operating margins. All niche players are into value- added products and services, not commodities. The very size of the niche they operate in, limits competition to these companies. It has been observed that successful niche businesses have responded to competition with innovation and higher-quality products, rather than cost-cutting measures.

There is a bright chance that some of the small companies operating and dominating in niche areas go on to become blue chips of tomorrow. An investor must keep a watchful eye on such opportunities.

 

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Five Investing Risk Factors And How To Avoid Them

 On asking how feasible is it to invest in companies which trade higher than their industry average, Siddharth Oberoi, founder Prudent Equity, said, “Companies which have competitive advantages, brands, predictable earnings, pricing power have higher price-to-earnings ratio. It makes sense to invest in these companies. Companies tradin...


 On asking how feasible is it to invest in companies which trade higher than their industry average, Siddharth Oberoi, founder Prudent Equity, said, “Companies which have competitive advantages, brands, predictable earnings, pricing power have higher price-to-earnings ratio. It makes sense to invest in these companies. Companies trading at high P/E’s too can be undervalued. However, the growth rate needs to be both significantly higher and assured to justify a lofty P/E.”

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Inculcate A Disciplined And Opportunistic Investment Approach

Siddharth Oberoi, Founder, Prudent Equity Siddharth Oberoi is the Founder at Prudent Equity, an independent investment advisory website. His company Dess Equity Advisors is an independent investment advisory firm, focusing on providing investment advice, portfolio structuring and research services for retail investors as well as institutional cl...

Siddharth Oberoi, Founder, Prudent Equity

Siddharth Oberoi is the Founder at Prudent Equity, an independent investment advisory website. His company Dess Equity Advisors is an independent investment advisory firm, focusing on providing investment advice, portfolio structuring and research services for retail investors as well as institutional clients. It also runs a stock advisory portal PrudentEquity.com. A full time investor right from his graduation, Oberoi has extensive investment experience in the stock market for over twenty years and has successfully managed portfolios. Starting with just a few lakh Rupees, the portfolio has compounded at a 35% CAGR over the last 20 years. In 2012, he started the Investment Advisory business with the launch of Prudent Equity website. Currently, it has crossed 700 paid members from across the globe. An MBA in Finance, this Market Wizard in conversation with Dominic Rebello describes his method and advises investors to have a disciplined and opportunistic investment approach, because that is the most sensible and rational approach to building wealth

A little background about your company?
I’ve been involved in the investment sector since 1996 as a fulltime business. In 2012, I started by official website with the name ‘prudentequity.com’ an investment advisory and stock recommendation website, focusing on providing investment and stock advice, portfolio structuring and research services for retail investors as well as institutional clients. The website focuses on providing valuable stock and investment advices, portfolio structuring and research services for retail investors as well as institutional clients. Since its inception, our subscription services have generated over 60% compound annual returns.

At what point had you given a thought to making a career in the stock markets?
Since college, investment and stock market always attracted me. The first time I tried my hands in investment was during my days in graduation. There was no looking back since then. I thoroughly enjoyed the tricks of the trade and loved the rush of the industry. It was then I decided to pursue it as a full time career.

How do you pick your investments? Do you use technical analysis, or do you employ fundamental data?
I take investment as a field that cannot rely much on technical metrics. Market analysis according to me requires a personal gaze. I only follow fundamental analysis in my investment approach. Reading and researching annual reports, balance sheet, revenue, growth projection, earnings, etc. are part of the process I follow to analyse the market and make investment decisions.

How would you describe your methodology?
I select those stocks that meet my strict investment criteria and those that have a significant margin of safety. Some of the important traits we look for in an investment are: Size of the opportunity; Companies that generate high returns on capital; has reasonable debt levels and is available at a significant discount to  its estimated intrinsic value.

What appeals to you about trading... the short side or the long side?
The long side...the Buy side.

What differentiates you from other Investors?
I believe I have a disciplined and opportunistic investment approach that offers the most sensible and rational approach to building wealth.

What gives you that edge?
My 20 years experience as a full time investor

Is there any applicable lesson to trading/ investing?
Controlling ones greed and fear is important. Staying disciplined while investing ensures capital protection.

How much of what you do is gut felt?
At times, the collective experience is nothing but gut felt. In that sense, sometimes investments are made with the gut feeling.

Do you try to anticipate or follow market trends? What is the basis?
I buy and sell irrespective of market levels; my focus is always on individual stocks.

When you put money on a trade and it goes against you, how do you decide when you're wrong? What do you do next?
If I realize that I have made a mistake in the first place by buying that stock, I usually accept the mistake, cut my losses and move on.

Any positions you ever lost sleep over? What happened...?
There was a stock that I had bought with a wrong premise. By the time I realized it, the stock was on a lower circuit with no buyers. I was eventually able to sell it later.

What would make you wary about an Investment?
Bad corporate governance in a company is something I am wary about.

Where do you see the Indian markets five years down the road? Any number for the Sensex in 2017?
Equities will outperform most asset classes in India. The bull market has many decades to go before a saturation is reached. Obviously, it will be with its peaks, crashes and troughs in between. I see the market higher than today in five years. The Indian economy is slowly picking up pace and the second half is likely to be even better.

Of the tens of thousands of investments that you have done, which was your best investment?
My best investment was in a stock Revathi Equipment. I had a large part of my portfolio in this stock. The stock went up 11 times when I sold it.

What was the story there?
The company was taken over by a new management. It had a large market share in its space. The company generated substantial free cash. Most of all, the stock was cheap when I had bought it.

Your success mantra?
Being disciplined and always sticking to one's own investment principles are the qualities of a successful investor. I have been able to avoid repeating the mistakes made in the past, which have put me in good stead.

Any final words?
An investor must understand his/her own investing style and stick to it.

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