SANDIP SABHARWAL

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MONTHLY UPDATE APRIL 2023

The month of April was a good one for the Indian Markets where the Nifty went up by 4% and the Midcap Indices went up by 5.86% . As I had written last month post the US Banking Crisis there was no significant negative and markets were ignoring a lot of positives for the Indian Economy and its growth prospects. Some part of that has got captured this month. Overall things still look encouraging

April as always is the month when the full year results start coming out and that normally creates volatility around sectors and companies that do well and those which do not do well and stocks adjust to the guidance of the managements for the following year. Such volatility is normal and should not bother investors. The only aspect to look at is how the long term direction is and factors supporting the companies are long term or short term and the same for adverse factors. During this period many companies will report very strong results but then the best part might be over for them. On the other hand some will report poor numbers but the worst could be over. Thirdly there will be many (a majority) where the same factors continue into the new year. Its important to recognize these and build that into your current portfolio and future action on the portfolio.

It is important for investors trying to invest themselves to distinguish between static information i.e. reported results and dynamic information i.e. outlook. It’s the outlook that drives stock prices.

It was good that the RBI and MPC took the decision not to increase rates this month. Inflation dynamics are very different in India and in the West. In India inflation is not demand driven but largely supply driven. The Wholesale Price Index is at multiyear lows at just around 1.5% and has more components that Monetary Policy can actually impact.

As I sit to write today many companies from the technology and financial sectors have reported results with some from other sectors. Most Mid Tier companies are still to report results and those will come out over the next 2 weeks for a majority of companies and by May end for all the companies. As I had been expecting the technology sector is seeing the impact of the banking issues and slowdown in the US Economy and uncertainty in decisions making. This could become worse over the next two quarter and then give opportunities to buy. The banking sector is in an extraordinary position today in India and that will be reflected in how stocks perform. Most large banks have reported good results and will continue to do well. Auto companies are yet to report but given the fact that interest rates seem to have peaked we should see them do better over the next year. Reliance results were fine. Some consumer stocks have reported results and the results reflect slowing consumer demand but many have indicated better times ahead and might give opportunities.

Overall the interest rate cycle in India seems to have peaked without interest rates going to extremely restrictive levels. This is good for growth and acceleration of growth over the current year. Concerns are the global headwinds which will impact export oriented sectors. We have seen a decent come back in Government bonds as well as the rupee and this is positive for the equity markets. From the flows perspective retail investors continue to have faith in the equity story and Mutual Funds got big net flows in March. Foreign selling in India has also ebbed and turned positive. I expect foreign funds will turn aggressively positive sometime in the current year and investors who invest prior to that will reap the benefits.

Volatility always remains in the equity markets but overall I remain bullish. The Nifty PE has also come down to around 17X one year forward earnings down from nearly 22X of last year as markets have consolidated and also corrected. Monsoons and its impact will be keenly watched. Earlier there were predictions of a very warm Summer. As I write temperatures in most parts of the country are below or at historical temperatures. So predicting the weather makes no sense. There are significant opportunities to buy into companies at good valuations which are likely to do well over the next 1-2 years.

ASKSANDIPSABHARWAL.COM PLAN PERFORMANCES

Overall it was a good month for our products across the board right from long term investing to short term investing to trading. Our trading plans had an exceptional month withs strong profit bookings. Our endeavour will be to continue to do well in the long term.

LONG TERM INVESTMENT PRODUCTS

TARGET MIDCAP PORTFOLIO

Target Midcap Portfolio had a good month with a majority of our stocks doing well and a few which had seen a sharp run up consolidating and correcting. The portfolio was up this month as against the Midcap Index which rallied . Our value with growth approach continues to work well. The strong performance helped us to further improve out performance over the Midcap Indices as well as all peer group Mutual Fund and PMS Products. The CAGR since inception continues to be a huge 48% which is a sharp outperformance over the benchmark indices. Last one year returns are 21% Vs flat for the Midcap Index and negative returns from most Midcap Mutual Fund and PMS Products. Our value with growth approach continues to build value for investors. Since inception returns are 229.5% with a CAGR of 48%.

TARGET BLUECHIP PORTFOLIO

Our low volatility large cap portfolio Target Bluechip had a good month with strong outperformance. We are fully invested as we are not negative on the markets. The portfolio was up 2.4% for the month while the Nifty rallied by 4.14%. We continue to target 5% outperformance over the Nifty every year. The last one year returns are 10.4% Vs slight negative returns of -0.6% for the Nifty. Since inception returns are at over 150% with a CAGR of 25% a huge outperformance over the Nifty. From holding cash in 2022 we went fully invested during the quarter. This is an ideal product for low risk investors looking for steady returns. We have outperformed all Large Cap Mutual Fund schemes since inception.

PLATINUM PLAN

Our Multicap Platinum Plan which invests in a Mix of Small and Large Caps had a strong month of April driven by good rallies in many of our holdings which led to the portfolio being up by 1.1% during the month while the Nifty declined by 4.1%. As the small cap performance picks up we should see the portfolio perform well. We are very strongly positioned for the rest of 2023 and beyond. The one year returns are at 14% Vs negative for the Nifty and since inception returns are running at 517% with a CAGR of 27% plus. This is an ideal portfolio for Medium to High risk investors where small caps add Alpha while large caps give steady returns. This is our oldest long term product.

WINNERS PLAN

Our small cap Winners Plan did well during 2022 given the extreme volatility in the small cap segment. We have 13 recommendations running in the plan at this stage. The average return of open and closed recommendations during 2022 was 14% which is very strong given that the Nifty 100 Smallcap Index was down 14% and the 250 Index was down 4% during the year. Returns for new clients was better as we helped in the timing of entries into open positions. There is strong value in most of the open recommendations and should do well going forward. Many of the recommended stocks rallied during April. Smallcaps will always have volatility but can generate strong returns over the long term. Historically this product has been able to generate several multibaggers and we hope that we can do the same going forward.

UNLOCK GAINS PORTFOLIO

The unlock gains portfolio saw many of the stocks come back during the month . This 9 stock portfolio has potential and we hope to improve gains going forward. The focus remains on stocks from the reopening theme including hospitality, restaurants, aviation,entertainment etc. This is a fixed term plan of two years in which we expect that the full potential of the stocks of the portfolio will be realized.

SHORT TERM INVESTMENT PLAN

POWER ALPHA STOCKS

The month of April was good for Power Alpha stocks as we could do one strong and one minor profit booking. Overall due to the fact that we avoid speculative stocks we are very well positioned.

Power Alpha Stocks our flagship short term investment plan had an exceptional 2022. After the last two years where we generated nearly 70% return on average capital deployed in each of the years 2020 and 2021 this was a tougher year29 recommendations were closed last year with profit booking in 26, small loss in 2 and relatively bigger loss in one. Assuming a 2 lakh investment per recommendation the profits in 2020 were Rs 420000, in 2021 Rs 400000 and this year Rs 278000. The ROI on average capital deployed of Rs 6 lakhs was over 45% for 2022 which is huge given the context of the markets this year, even on Rs 8 Lakhs the returns are over 35%. This is an ideal product for deploying idle funds to generate ALPHA.

The beauty of this product is that if you keep your capital constant then in general over the last many years the entire capital has become free in 3-4 years.

Assumption Rs 2 Lakhs investment per recommendation

TRADING PRODUCTS

ONLY FOR TRADERS

Only For Traders our short term trading product had an excellent month with almost all calls making money and One lot trading profits at Rs 93000 and two lots at 186000. This has taken the year to date 2023 returns to very reasonable levels. We hope to sustain good performance going forward.

POSITIONAL TRADING CALLS

Positional Trading calls had a strong April and good performance for this month. During the month one lot profit was Rs 88000 and Rs 176000 for two lots trading. We believe that as things play out the way we think they should we could have some good months going forward. In a trading product we will always have 4-5 good months, 4-5 average months and 2-3 poor months every year. The challenge is to keep the poor months with less losses than the profits of the good months. In the year 2023 our attempt will be to cut down the volatility in performance of both the trading products.

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