SANDIP SABHARWAL

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MONTHLY UPDATE JUNE 2022

The month of June was the third consecutive down month for the markets. The Nifty declined by and the Midcap Indices underperformed with a decline of . The familiar concerns continued with inflation being the biggest bugbear combined with extremely rigid crude oil prices. The Russia Ukrain conflict doesn’t seem to be ending anytime soon and Global Central bankers have turned more hawkish.

We are entering a crucial month for the stock markets as the results season will start amidst mixed data flow from companies. Consumer demand seems to be moderating in many segments while the reopening trades continue to see strong spends. The inflation impact is more on the Business to Consumer segments rather than Business to Business at this stage. The results season as such becomes very important. The tough part as usually this quarter will be to evaluate the performances in the context of the Delta wave in the first quarter of the last financial year.

One good part is that ex of crude oil all other commodities seem to be clearly topping out and some have also seen deep corrections driven both by slowing economy concerns as well as central bank actions. The imposition of export duty on Steel also has led to a nearly 25% in decline in steel prices from the top. Copper prices are also down more than 20% and Aluminium is more near 52 week lows. While this will hit commodity stock earnings substantially negatively it benefits three industries specifically.

Automobile companies benefit due to this, they had been suffering over the last two years due to continuously increasing input costs, chip shortages and various shutdowns related to the pandemic. All of this seems to be getting behind now. The small negative is the impact of higher interest rates on demand which will need to be tracked. However overall stocks are underowned and hold potential.

Capital Good companies that have strong orderbooks and operate on a fixed price basis have suffered similarly. The investment cycle has started now and should last atleast three years. Here again input costs coming down will boost margins significantly. There are some companies focussed on railways businesses which could do very well

Reopening trades like Hotels, eating out, multiplexes have everything going for them now. People might be cutting down on other expenses but not on these. I believe these stocks will do very well over 2-3 years.

The best thing for equity markets will be that central banks gain credibility in their inflation fight and inflation peaks out and starts moving down. That will provide better opportunities to invest.

Indian Markets despite higher valuations have been very resilient due to the continued flow of PF and SIP money into the markets. This is good in a way that people don’t see deep losses however ultimately we need to remember that markets are a slave of earnings and if the economy slows down and earnings come under pressure higher valuations will be unsustainable. Indian Markets also trade at nearly 110% of GDP largely due to rapid gains in loss making company valuations or those with very low earnings. This is also a risk we cannot ignore.

The good part for India is that our inflation issues are less intense than that of most western economies as our overshoot over the top end of the target range of 2-6 percent is much lesser than for most other economies. The second part is the extremely strong balance sheets of most Indian banks and NBFC’s which will help boost growth whenever corporates decide to invest and consumers decide to consume more.

There are two scenarios that can play out in my view

1. Markets retest the current bottoms near 15200 Nifty and then consolidate for some time before moving up
2. Markets break the recent lows move down another 5-10% and then provide excellent buying opportunities.

Both these scenarios have equal probability as macro news flow is so rapid and intense. We need to see how this plays out.

However I will leave you with an interesting data point.

The markets have now been down three months at a stretch. In the last 20 years markets have never been down 4 months at a stretch. Lets see if this time it will be different.

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 June was an excellent one for us across the board. Our long term plans outperformed hugely, trading plans made big money and power alpha stocks bounced back. 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

Power Alpha stocks came back this month with some profits after a significant lull. 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 had a tough year till May. 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. As markets bottom over the next few weeks we should see good opportunities.

TARGET MIDCAP PORTFOLIO

The TARGET MIDCAP PORTFOLIO had an excellent month in the context of what happened in the overall markets. We outperformed again and with this build up our outperformance over the indices, all midcap mutual fund scheme as well as all PMS Products. The magnitude of our performance over other products is now huge. The portfolio was down 1.3% during the month while the Midcap Index cracked by 6.5% thus outperforming the Midcap Index hugely. The portfolio now up 12% 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 28.5% over a 12 month period as against a decline of 5.6% for the Midcap Index and a flat Nifty. Average Mutual Fund scheme have a negative return of 3% in this period. The performance of this plan has been much beyond my expectations. The portfolio is now up 155% 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 2.3% while the Nifty declined 4.8% 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 is flat for this month while Nifty is down 9%, 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 18% much above Nifty returns of .37% for the last 12 months. We have beaten all PMS/Largecap funds by a huge margin.

PLATINUM PLAN

The Platinum Plan is our oldest Long Term Portfolio plan performed strongly in the first quarter but had a tough second quarter while outperforming the Nifty as small cap holdings underperformed. The portfolio was down 2.93%% during the month against a 4.8 % 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 432% 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 111000. Most of the trades did very well e 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 with returns for the first half absolute at 40%. The low risk strategy is playing well and such high returns in a bear market are tough and very satisfactory.

POSITIONAL TRADING CALLS

Positional Trading Calls continued its exceptional performance after with 2 Lot profits of Rs 116000. 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. The ROI of this plan is running above 40% absolute for this year already.

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 couple of months since we went fully invested. The portfolio is down around 10% since inception which is somewhat better than the Midcap Index. However all stocks are well placed to outperform over the next two years. Will write more on this product later. It’s a fixed term two year product which should do well during this time period.

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