SANDIP SABHARWAL

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MONTHLY UPDATE MAY 2022

The month of May followed the tradition of volatility of the last few months where initially the markets sold off and were down as much as 7-8% during the month before finally ending down by 3% for the Nifty and around 5% for the Midcap Indices.

Results continued to flow in during the month and stock movements were quite dependant on results and the outlook of the companies. The global markets remained on the edge due to persistently high inflation as well as continued supply side issues on both agricultural and industrial commodities. Crude prices continued to rise with brent crude ending at $ 124 nearly 20% up during the month.

The RBI also finally seems to have recognized the inflation threat and have started acting on that. The question is whether its too late as the monetary policy largely is more effective on manufacturing inflation where a big move has already happened and recent inflation upmoves are more food driven where monetary policy is ineffective largely. However overall inflation is way beyond comfort at this stage and needs to be addressed. The supply side remains an issue so the central banks have no option but to curtail demand and bring growth down to address inflation in the short run. The key is what this does to asset markets which have not priced in such aggressive monetary tightening. Headwinds remain strong and this year will be a tough one and stock picking will be extremely important.

The big change in trend which I see happening is going to be on the way sectors are going to perform this year. The big movers of the last year Technology and Commodities seems to be reaching a peak of performance and could underperform. Automobiles and Capital Goods look interestingly poised.

As we ended the month we saw the bond yields continue to rise and the 10 year bond yield ended at 7.44% near a multiyear high. Given hawkish commentary of central banks we could see more selloffs here.

The value Vs growth argument is going to be substantial this year. I do not believe that very high valuations of growth stocks can sustain, on the other hand as growth of value and growth stocks converge we will see better value play in that segment. The key to invest this year will be to identify value stocks with growth triggers.

The good part for equity investors in India is that domestic flows into equities continue to be strong and as such good companies at the right valuations picked up early can make decent money even when overall market valuations are stretched. As I write today in my view the worst case downside in the markets seems to be around 8-10%. Either we need to spend a long time sideways or finish off the corrective move with a sharp decline over the next few weeks. Which way will we go is the thing that needs to be observed. The strategy is to be cautious while looking for opportunities as many companies still continue to do very well.

In a recovering economy opportunities will always present themselves and we should be ready to capture them as they arise.

ASKSANDIPSABHARWAL.COM PRODUCT PERFORMANCES

The month of May was a good month overall for us. The Long Term Plans continued to maintain their strong long term track record. Trading plans did exceptionally well with huge profits in a tough month thus generating huge alpha. The only laggard at this stage continues to be our short term investing product where market volatility is hurting generating sustainable profits. Our outperformance across products helped us build on the gains made during this year and increase the gap with competing products further.

POWER ALPHA STOCKS

We will first deal with Power Alpha Stocks where we could not book any profits during the month given the way markets behaved. This has been the most challenging product for this year and its important to address this upfront. Our best alpha generating product over several years is having a tough 2022. Our aim is to provide good ROI to investors with us and I assure all subscribers to this product that we will adjust subscriptions of clients so that they recover their fees and make money. The high ROI of this product has continued over the last many years and I believe that the current phase is an aberration. Overall profits were over Rs 400000 for the last two calendar years a very high ROI. on a Rs 6-8 Lakhs peak capital and Rs 6 lakhs average capital deployed. Overall opportunities will be good for this product even in the future and we will see to capture them. This is an ideal product for those who want to keep the capital as it is and book regular profits so as to make reasonably higher returns over fixed deposits/Hybrid Products etc.

TARGET MIDCAP PORTFOLIO

The TARGET MIDCAP PORTFOLIO had a corrective month after a series of spectacular months. The portfolio was down 7.7% thus underperforming the Midcap Index with was down 5.3%. However this was something that had to be expected as we were outperforming so much over the last many months and quarters. The portfolio now up 13% from 31st of December as against negative returns of 7% for the Midcap Index as well as most Midcap Mutual Funds as well as PMS Products which are down 5-20%. The portfolio is up a huge 38% over a 12 month period as against just 9.7% for the MIDCAP Index and 8% for an average midcap mutual fund. The performance of this plan has been much beyond my expectations. The portfolio is now up 159% since inception and we hope to continue to do well going forward. Our value with growth strategy is working well.

TARGET BLUECHIP PORTFOLIO

The Target Bluechip Portfolio had a very good month with the portfolio was down just 0.94% while the Nifty declined 3% We have a good cash holding in the product driven by a cautious near term outlook. I believe the time to deploy will come earlier than later now over the next few weeks.

The portfolio was up around 2.2% for this year as against a decline of 4.44% for the Nifty thus meeting our full year 5% outperformance target. The aim is to outperform by 5% every year to deliver strong long term returns and I believe we are on track for that. This is an excellent product for those who are looking for steady returns with low volatility. One year returns of the portfolio are 21% much above Nifty returns of 6% for the last 12 months.

PLATINUM PLAN

The Platinum Plan is our oldest Long Term Portfolio plan performed strongly in the first quarter AND saw some of the small caps sell off this month and the portfolio was down 6.04% during the month. against a 3% decline for the Nifty. With the performance over the year and for the last one year the PLATINUM PLAN has beaten all Flexicap and Multicap schemes which are all with negative returns. We have maintained some cash to capture opportunities going forward. The since inception returns are now 445% with a CAGR of returns of over 28%. The portfolio has a good mix of largecaps and smaller midcaps which have good potential over the long run. The portfolio performance should pick up going forward. This is an ideal medium risk portfolio.

ONLY FOR TRADERS

Only for traders had an spectacular month with profits on a two lot trading basis running at Rs 216000. Most of the trades did very well and we were actually running at higher profits before a stop loss just at the end of the month. The performance of the product is running very well over the last many months. We will get 3-5 very good months in a year 3-5 average months and 3-5 not very good months. The ROI of this product is running very high at this point of time. In my view the payoffs will continue to be very high sometime in the next months when the view plays out right and we can realize full profits.

POSITIONAL TRADING CALLS

Positional Trading Calls restarted its exceptional performance after with 2 Lot profits of Rs 152000. Most calls worked out during the month. We are now exiting non working calls in small losses and enjoying full profits for the calls that work out. The good thing in trading is that a period of 2-3 months of good performance can make up for a few subdued months which this product has displayed over time. This has been one of our best products in the past. We hope to continue to do well going forward and this is an ideal trading product for those looking for lesser calls with bigger targets in a month.

WINNERS PLAN

Small and smaller sized midcaps started slow last year and built on gains. The same is likely this year. The first few months overall have seen decline in small caps but some of our stocks have done well and came back strongly over the last two weeks. There will be opportunities going forward. We booked one recommendation with strong profits during the month. Many of our recommendations have become multibaggers and we have booked profits in some of them last year. We recommended two new stocks over the last two months. The current year is one where timing entries will be important and that is what we will try to guide new investors to do. Small caps have a tendency to underperform for long periods of time and then give sudden gains. This is unlikely to change.

UNLOCK GAINS PORTFOLIO

Unlock gains got fully deployed last month and volatility hit the performance at the start of the product. It is too early to talk of performance as its just been a few weeks since we went fully invested. I will write in more detail at the end of the quarter in June. However all stocks are well placed to outperform over the next two years. Will write more on this product later.

For more details write to us at info@asksandipsabharwal.com . You can also call us up at 7303163931/022-66666931 or visit www.asksandipsabharwal.com