A live session was conducted by Mr Parimal Ade, addressing many industry-specific & company-specific queries of various investors. We aimed to provide credible financial information & reliable investment advice to our fellow investors. With over 600+ people joined the live session and over 500+ people participated in the same. We have provided a bunch of questions with their respective answers, posed during the live session. We are sure that these will be valuable to many. This live session helped investors look for the financial advice, some of the questions answered were as follows.
Is it a good time to reallocate more funds towards small & mid-cap mutual funds? How would I come to know which time is best to reallocate funds towards the small & mid-cap?
If your investment horizon is 10-15 years and provided that you are an aggressive investor, then you can allocate towards small & mid-cap. Recently, small & mid-cap funds have performed better than the large caps, blue-chip funds & hybrid funds. Thus, small & mid-cap can be a better allocation, but the allocation should be in a staggered way. Though, you should ask your advisor, assess your risk profile and then only invest. You can check our Model portfolios for Small & Mid-cap funds.
I am bullish on the auto sector for long-term (5-10 years). How can one invest in the auto index? Are there auto sector-specific mutual funds?
There is indeed a Transportation Fund by UTI, i.e. a sectoral fund. However, about the auto-sector fund, I doubt it. Whereas, while about the auto-sector, the coming 1-1.5 years will be a sluggish horizon for this particular sector. Moreover, this particular sector was in an upward trend between 2014-2019. Normally, we have seen, in this sector, that there is a sluggishness of 1-2 years after an upward cycle. Moreover, due to the COVID scenario, it may get a little prolonged. The sector has already seen it’s major lows in terms of valuation & prices in the previous months. Thus, in the upcoming 4-5 years, one can expect an upward cycle in this particular sector. You can also check the stock-o-meter feature providing you with sector-wise analysis.
How should one manage asset allocation? Does it have to be done manually, by calculating the debt portion & equity portion? Do you know any app or website that can help in managing asset allocation?
We do have calculators for asset allocation available on our platform Fin Plan Yadnya. This will help you in allocating funds in equity, debt, liquid, gold & real-estate. Normally, we suggest you rebalancing the allocation annually or half-yearly. It’s a simple excel sheet where you can mention the valuation on that particular day & further, the excel sheet will provide the appropriate allocation.
What’s your take on NTPC, NHPC, SJVN & NMDC. Should one continue to hold or move out of these stocks?
These stocks are quite defensive. One can expect dividend yield, however, there are seamlessly low chances of capital appreciation. These stocks might be good for a conservative investor, however, not for moderate & aggressive investors.
I had invested in Shoppers Stop, should I hold it?
The retail industry is more likely to face troubles, especially during the pandemic. These companies also face serious competition from online retail stores. We would advise avoiding the companies where there is heavy debt, the industry is disrupted, considering the pandemic. It’s better to stick to simple consumption themes.
What do you think about the United Spirits Company?
For alcohol & cigarette companies, there can be an issue in the Foreign Institutional holdings, however, consumption theme will remain, thus, earning visibility is pretty good. But, re-rating of this industry is another problem. Thus, there can be problems from the institutional holdings point of view.
Can you tell about the Earning visibility & earning growth visibility of Relaxo footwears?
Both earning & earning growth visibility are pretty good for Relaxo Footwears. The scope of the Organized sector in footwear is very high. Thus, long term visibility, growth visibility & earning visibility is very good for the company.
What is your preferred metric for valuing the stock? Is it Price to earning ratio, Price to free cash flow, price to book or EV EBITDA or some other metric?
Price to earnings is not favourable as there is a disruption in most of the businesses. The earnings will go down but prices will come to the same level, thus P/E ratio increases. However, the price to book ratio can be a good metric. EV/EBITDA metric is useful depending on the type of industry. If it’s a capital intensive industry, then it’s good for comparative analysis. But there are other options as well like growth aspects of the sector/company, the vision of the company, projections given by the company. You can check out various financials, ratios, stock rations of different companies & sectors on our Stock-o-Meter feature.
Can you recommend 10 stocks to be picked on the dip for 3-5 years investment span?
You can check out the Model Portfolio feature on our website. You can assess all your requirements depending on your risk profile.
What should be the parameters that should be studied and analysed before making an investment decision?
We would recommend you to check our Model portfolios to make an optimal allocation. Furthermore, before making an investment decision it's very important to understand the business, its products, read, learn & understand more about the company & the industry. Analyse the present & past financials of the company, it’ plans, past valuations, growth aspects & also corporate governance. If all these are towards the positive side, it's a good sign. You can check financials, ratios & ratings of different companies through our stock-o-meter feature. However, sometimes overvaluations can be seen, then one can take allocation in low proportions. Thus, do proper research - analyse results, attend analyst calls, watch & read management interviews. Listen to the management & look for the long-term.
Could you suggest the investment framework during a bull and bear market?
We advise the investors to plan and invest based on the free flow of cash available with you at a given time. This can be understood clearly with the Asset Allocation of your portfolio. Asset allocation depends on the kind of investor you are - Conservative, Moderate or Aggressive. There is no specific strategy for the bull and bear markets, it should be based on the asset allocation weights.
To know more, check out our videos on the Model Portfolios which explain each kind of investor’s portfolio.
What are the parameters for Fundamental Analysis except for the valuation ratios of the company?
For a complete fundamental analysis of the company, we should look into these 5 parameters - Company, industry, financial, valuation and corporate governance. These give a collective view about the functioning of the company and the future perspectives. To know more about fundamental analysis of a company, do check out the Stock-O-Meter which gives an analysis of 950+ companies.
How much will the US 2020 Elections affect the Indian Stock Market?
According to our opinion, it should not impact the Indian stock market much be it in the short term or long term. But, a slight impact may happen.
Is it advisable to take a regular dividend-paying mutual fund? Also, is regular advice required?
In Parimal Ade’s, the moderator of the Live Sessions opinion, there isn’t much impact of taking a dividend-paying mutual fund. There are multiple ways to book profits be it SWP or redeem the units. Also, if you think, you’re capable of managing your investments, one can directly do so. If not, mutual fund advisors can help with the management of the investments.
What is the meaning of understanding a business?
Understanding a business in simple terms means to understand the functioning of the business - to understand the products and services provided by the business. It also means understanding the demand for the services and products - which in turn helps in understanding the prospects of the company. To understand the business of the company - it is better to do a fundamental analysis of the company. We provide immense free resources to help you do the same. You can check out the video articles of company analysis to understand specific companies.
Is it advisable to invest in a single or multiple Debt Fund which is liquid?
According to Mr Parimal Ade, the moderator of the session, an investor can invest in a single debt fund as most of the liquid debt funds have the same portfolio. But when investing in other debt funds prior research is needed to understand the portfolio of the debt fund, the ratings, risk allocation, and the credit risk taken by the fund. Invest Yadnya helps you review the mutual funds on their website MF Yadnya. Do check it out for further analysis.
We suggest you do a collective analysis of the portfolio and not act on any selective advice and a collective approach always gives returns in the long run. It is better to connect with the Relationship Manager at Invest Yadnya and explain your future requirements before acting on any advice.
A few company-specific questions were also addressed in the video, to know more about the company’s fundamental analysis you can check out these pages - L&T, HDFC AMC, Shoppers Stop, Bajaj Finance, M&M Finance, United Spirits, Reliance Industries, Tata Consumer Products, HUL & many more.
Thus, we advise you before making any viable investment decision, do a thorough analysis of the company as well as the industry. You can take the help of the stock-o-meter feature & model portfolio feature on our website. For more quality discussions, video articles, stock & company analysis, check out InvestYadnya.