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Top Stocks in March: It’s A Good Kind Of Madness

Deepak Shenoy5 min read
Quick Facts
What is "Top Stocks in March: It’s A Good Kind Of Madness" about?
What category is this article in?
Premium
Who wrote this article?
Deepak Shenoy, Capitalmind's research team.
When was this article published?
Published 12 April 2014.
How long does this article take to read?
5 min read
What does the "Large Caps: The Banks Have It" section say?
On a complete roll are banks. With three banks, two of them public sector, in the top list of market movers, you might be excused for thinking our banking problems are behind us. The PSU banks have of course been beaten up recently and the biggest in the form of Punjab National Bank, Bank of India and Bank of Baroda have rebounded smartly. Even the private banks likeYes bank and Indusind bank have recovered well.
What does the "MidCaps: Cement Outperforms, Industrials Bounce Back" section say?
If you asked me why certain stocks have done well, I don’t know what the answer is. Cementsees three entries in the top list, with over 40% gains.
What does the "SmallCaps: Shipping and Auto Parts" section say?
Auto for some strange reason is attracting interest. Igarashi motors and Mayur Uniquotershave done really well, and Mayur has shown consistent performance with a 6x gain in the last year or so.
What does the "Capital Mind Portfolio" section say?
Having not aggressively invested in the last few months, the CAPM portfolio shows some smart movers in the likes of Alembic Pharma and Kaveri Seeds, while Finolex Industries has given a respectable 15%. All this is in a very short time, so hold your horses before jumping in.
What does the "Disclaimer" section say?
Nothing in this newsletter is financial advice and should not be construed as such. Please do not take trading decisions based solely on the matter above; if you do, it is entirely at your own risk without any liability to Capital Mind. This is educational or informational matter only, and is provided as an opinion.

This is a post for Capital Mind Premium members.

It’s been a rip roaring month for the markets. While there is one day left in the month of March from a trading standpoint, Deepak is off for a holiday to Goa and therefore this month-end post comes to you over the weekend.

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Markets are starting to see some euphoria, with the Modi factor trumping all others. That feeling has left all the bad news behind. That there are defaults, that industrial growth has slumped, that inflation is still a concern; none of this matters. The great new government will fix everything, and at this moment you have to just shut up and ride the momentum.

At Capital Mind we are forced to admit two things:

  • We were wrong in thinking the market would retrace the gains.

  • We have no idea why the market has gone up. (Modi is just an excuse)

We’ve been long but the “feeling” was always that the market would reverse. But we’ve been tweeting that the market won’t go down without a sucker rally, and we now believe we’re getting one. This is a good move, and like in August 2007, it’s important to participate in a rally than to watch it pass you by.

The CAPM MA20 indicator, which talks about breadth, has reversed sharply from its intermediate down move and gone back up to the 30s. At this point the put option trade is useless. (In a form of indiscipline we didn’t actually take the trade, waiting for the April 1 meeting to decide, after Tuesday.)

The market is not yet seriously overbought, according to this indicator. With strong momentum in favour, and an index move of nearly 10% in the month, it is indeed better to be on the long side, buying calls and buying stocks rather than looking for short opportunities.

Here’s how stocks have done in the last month.

Large Caps: The Banks Have It

On a complete roll are banks. With three banks, two of them public sector, in the top list of market movers, you might be excused for thinking our banking problems are behind us. The PSU banks have of course been beaten up recently and the biggest in the form of Punjab National Bank, Bank of India and Bank of Baroda have rebounded smartly. Even the private banks likeYes bank and Indusind bank have recovered well.

IDFC surged on the back to the market belief that they would get a banking licence.

Two Adani group companies,** Adani Enterprises** and Adani Power, moved up smartly. The Adanis of Gujarat are known to be close to Narendra Modi and the warm happy feeling of a Modi “wave” has taken them up.

BEML and** Container Corp** rose too; both are majority government owned. Concor went into the CPSE ETF. BEML, despite current moves, needs to go up 6x before it makes a new high.

MidCaps: Cement Outperforms, Industrials Bounce Back

If you asked me why certain stocks have done well, I don’t know what the answer is. Cementsees three entries in the top list, with over 40% gains.

**Marksans Pharma **has been doing well since 2013, and goes up around 46% in March. All tyre companies have done well, and Ceat grew 55%.

**Ashok Leyland **did a good +46%, and so has Amtek Auto. We don’t know why - the industry results stink.

**SRF **was the highest midcap gainer at +67%.

SmallCaps: Shipping and Auto Parts

Auto for some strange reason is attracting interest. Igarashi motors and Mayur Uniquotershave done really well, and Mayur has shown consistent performance with a 6x gain in the last year or so.

The interesting play here is Mercator and Seamec, These are companies that operate or own shipping vessels and seem to have started to show a turn into profitability. These may be good to buy as the prices show strength.

Capital Mind Portfolio

Having not aggressively invested in the last few months, the CAPM portfolio shows some smart movers in the likes of **Alembic Pharma **and Kaveri Seeds, while Finolex Industries has given a respectable 15%. All this is in a very short time, so hold your horses before jumping in.

The question that arises is: Do we invest more? I think the answer’s evident in prices. Yes, we should, and we should participate in the bull run. It seems to be prudent to buy good PSU Banksand PSU infra companies.

The two sectors we like are Shipping and Gold. Shipping is interesting as it is coming out of a rut. The two companies above, **Mercator **and Seamec, are part of the tribe as is Shipping Corporation of India.

Gold may get really interesting if RBI were to reduce the restrictions on import as the rupee has appreciated sharply. At this point, the RBI can’t easily control the dollar fall by purchasing dollars as that will introduce inflation. One easy way would be to open up gold imports. Manappuramand **Muthoot **are good candidates, as is **Titan **and PC Jewellers.

Warning: This is a time when momentum is everything. Logic counts for very little. The 20% stock loss is sacrosanct.

Disclaimer

Nothing in this newsletter is financial advice and should not be construed as such. Please do not take trading decisions based solely on the matter above; if you do, it is entirely at your own risk without any liability to Capital Mind. This is educational or informational matter only, and is provided as an opinion.

Disclosure: The authors at Capital Mind have positions in the market and some of them may support or contradict the material given above, or may involve a direction derived from independent analysis.

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