Portfolio: Momentum Monthly Changes Replace a Whopping 16 Stocks

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It’s the first Monday of the month, and it’s time to rework the Momentum portfolio. It’s not done fantastically – with only a 2.85% return since June when we started. (Read the post). Since then we had a single rejig in July, and today’s the big August Rejig.


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Remember, the idea of momentum is to buy stuff that’s going up, and that seems to have a solid chart with volume. The stocks we’ve selected go through some basic filters:

• Don’t get into stocks that don’t have enough volume (median volume of over Rs. 1 cr. per day)

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• Choose the most trending stocks on both daily and weekly charts. We don’t use a lot of indicators – just check the smoothness of the trend

• Is there enough volume that seems to have come in during the uptrend? This will help determine strength.

• Avoid smallcaps that are worth less than 1000 cr. in market cap (or keep them to a bare minimum)

We also do this once a month so we can weed out some of the underperformers. The idea is to do something like “pigs at a trough”. The animals crowd around the trough and when a stronger animal wants to get in, it will push out the weakest and take its place.

Some of the stocks we exit are not bad at all. Suprajit is a very interesting auto company, which we think will do well after the merger with Phoenix Lamps. Sundaram Fasteners has done brilliantly (and we’ve earned awesome profits from it in the past). Finolex Industries is likely to succeed in the longer term as it benefits from both PVC manufacturing and the irrigation cycle (it makes PVC pipes).

But momentum is not about “good” or “bad” stocks. It’s about price trends and strength. Price doesn’t gel with fundamentals all the time – in the short term, the market is a voting machine, and even great companies will falter. We remain true to the momentum philosophy in this portfolio, with the only restriction that we only rebalance once a month.

We have underperformed, by about 2% on the Nifty and Midcap indexes – midcaps have actually underperformed the Nifty in this time. But it’s just two months, and we look forward to an interesting time ahead. Here’s the list of transactions:


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Our Premium Long Term Portfolio is at https://capitalmind.in/capital-mind-long-term-portfolio/

Our Premium Momentum Portfolio 2.1 is at https://capitalmind.in/momentum-portfolio

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Note: This is not portfolio advice. Consider this a very risky portfolio and proceed at your own risk. At Capitalmind Premium the reason we have a portfolio is to demonstrate our commitment to our analysis, and we track it closely. It is not meant to be a recommendation for anyone in particular, primarily because we don’t know your risk profile.

Holdings: Analyst and family do own some of the positions listed above. Please assume we are biased

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