When the upcycle in a sector is very strong
Poorly managed companies also make returns

2021 steel cycle-
SAIL went up from 30 to 120

Now in the current credit upcycle:-
PSU Banks are making money!

But does this mean credit culture has changed for PSU Banks?
No evidence of that

Index Funds have been a red hot equity passive Mutual Fund strategy in the last 10 years!

A thread🧵explaining why index funds should be a part of ur equity MF portfolio!

Hit "Retweet" to educate maximum investors

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(1/18)

Passive vs Active Mutual Fund Strategy

Active Strategy:-

Active investing, as its name implies, takes a hands-on approach and requires that someone act in the role of a portfolio manager.

The goal of active money management is to beat the stock market’s average return

(2/18)

Passive Strategy:-

Passive investing entails a non-active role on part of the investor.

When you invest in a diversified portfolio with low costs and a long-term horizon, it tends to deliver returns comparable to the market average.

(3/18)

What are Index Funds?

Index Fund invests in stocks that imitate a stock market index like the Nifty, Sensex.

These are passively managed funds which means that the fund manager invests in the same securities as present in the underlying index in the same proportion.

(4/18)

The relentless rise of Index funds:-

The assets under management (AUM) of passive products will grow eight times from the current levels of ₹3 trillion to ₹25 trillion by 2025

Passive assets will grow to constitute 37% of the overall assets in the MF industry by 2025

(5/18)

From HDFC Bank to Kotak to Bajaj Finance to Canara Bank!

How did lenders perform in Q4FY21?🤔

A thread🧵on the Banking/NBFC results

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(1/24)

HDFC Bank:Stable

🏦Profits grow at 18.2%
🏦Asset quality remains stable with credit costs at 1.65% for the quarter
🏦CAR at 18.8%
🏦Gross NPAs at 1.32% vs 1.38%
🏦HDB Financial returns to profits
🏦Watching carefully on how the second wave will turn out

(2/24)

ICICI Bank Results:-Stable

🏦Operating profit grows at 20%
🏦Covid-19 provisions increased by 1000cr to 7475cr
🏦Deposits grow by 21%
🏦Net NPA declines to 1.14%
🏦Capital Adequacy at 18.06%
🏦Retail loan growth at 20%
🏦Corporate loan growth at 13%
🏦Dividend-Rs 2/share

(3/24)

Cholamandalam Investment:Stable

🏦Disbursements decline 13%
🏦Loan loss provisions at 1.4%
🏦Profits up 29%
🏦Positive on Auto financing

(4/24)

HDFC Ltd:Strong

🏦Loan disbursements grow 60%
🏦Month of March had highest ever disbursements
🏦Gross NPAs at 1.98%
🏦Individual loan NPAs at 0.99%
🏦Non-Individual Loan NPAs at 4.77%
🏦Dividend of Rs 23/share
🏦PAT grows by 19%

(5/24)

So many terminologies in Banking!

Confused?😥🤔

Dont worry.

A thread🧵 on basics of Banking

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(1/20)

Types of banks:-

Your money should be parked in scheduled commercial Banks

Scheduled Commercial Banks
-PSU Banks
-Private Banks
-Foreign Banks
-Small Finance Banks

Do not park money is Co-operative/Regional Banks

List is shown below

(2/20)

NPA, NPA, NPA! Kya hain yeh NPA?🤔

Gross NPA (GNPA)-

It is the total loans on which no payment has been paid for 90 days or more.
GNPA % is usually shown in each Bank’s quarterly results. The percentage is basically the GNPA amount as a % of the total advances.

(3/20)

Net NPA (NNPA)-

The total figure left after deducting provisions made for bad loans from GNPA.
(GNPA – Provisions+upgrades/writeoffs = NNPA)

(4/20)

Special Mention Account (SMA) –

SMA-0

SMA-0 is a category in which stress with respect to the principal and interest has remained overdue for a period of 0 to 30 days.

(5/20)

High Copper Prices Are Terrible for EV Makers. This Company Has a Fix. https://t.co/kWu59AUGO1 via @BarronsOnline

I don't understand all the puns and mocking of RJ on the news of a new airline.
He is putting 2-3% of his NW at a time when the environment is best suited for a new entrant. It's a bold but smart move from a smart investor. 1/n

Airplane lease rates are down. Manufacturers would be rolling red carpets. Incumbents are suffering and can't sustain price wars. Experienced staff looking for jobs. This is probably the best time to start an airline.
@finshots explains it very well. 2/n

Even if he loses this amt, it is not going to bankrupt him. It is less than a quarter's returns for him. He can make it back in no time. End of the day, he is one of the smartest investors around. He will also create new jobs. We shud be applauding this instead of mocking. End

Bull runs in small caps are usually fast and furious, and the cycle repeats itself every 3-4 years. Every time, retail is sold stories of business turnaround and stock charts look fantastic for meteoric wealth creation. For the class of 2020-21, here's a couple of past stars.

These small cap stocks with 30-40 crore market cap went up 23X and 11x in a span of 24 months between April 16 and April 18. The story looked great then, but subsequently once liquidity and interest disappeared, the prices went right back to where they came from.

When in the thick of the action, it can be difficult to keep a level mindset. To keep the narrative believable, these companies are able to massage their top-line and bottom-line for a short period of time to show an imminent turnaround. Note the trends in these financials.

The company usually exhausts its ability to massage the financial statements very soon and the business health plummets dramatically. One collapsed so dramatically it has been selling fixed assets. The other one is Uniply Industries - a simple search on Twitter will suffice.

Newer small cap investors may be subscribed to many Twitter handles, Telegram channels, groups and even premium advisory services. Don't take anybody's word for the narrative being sold to you. On-the-ground-research and scuttlebutt can be plain fiction.

Always read the oldest 10-K you can find on a company

Reading the oldest 10-K will give you added perspective on the business and it'll get you thinking about how the business has changed over time/how it will change in the future

Markets are all about patterns and tendencies that have an edge. Here are a few I have observed and learned over the years.

A Thread.

Identify the Sector(s) of this cycle. Typically mid caps which are enjoying an earnings tailwind due to the external environment and you have a 3 year visibility into a 25% or higher eps growth. Will seem expensive throughout the cycle but will make big money.

Breakout post a genuine earnings surprise. Popularly called PEAD. Structural pattern. Works like a charm at all points of any cycle.

Serious debt reduction. Drives as much shareholder value as a high growth stock.

52 week highs across stocks in a given sector. Something is happening. Pay attention.