Knowledge Faqs with Gaurav Jain (Knowledge Yagya- 10)

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Here are some questions asked by the viewers in the Yagya dated 14th September 2021. These questions can provide you insights on some grounds. Please read these questions for knowledge purposes only and make any investment decisions only based on your research or the advice of your financial advisor.

Q Factors for the market going upwards?
Gaurav Jain:

• The presence of domestic liquidity because of retail participation. As well as the global liquidity in the market infused by the central bank of the economies.
• Even though the GDP has not grown much in the last quarter it had grown by 20.2% which has grown from the base level.
• The IIP growth which is industrial output growth went up by 13% which is pretty good after the covid’s recent wave.
• The Service PMI was also good standing at 56.7 which is the highest in the last 1.5 years. The service industry is doing very well.
• The auto sales last year have been good the reason for that is because of covid as usage of OLA and UBER has been reduced due to several reasons like Lockdown, and other health measures.
• The Rapo Rate hardly has increased or decreased and has remained flat.
• The CPI that is usually seen by RBI is in the range which is in the 5 -7 which is manageable. The inflation is still not out of hand which is positive.
• Forex reserves are at an all-time high which is good news.
• A lot of confidence and stability is there from foreign investors in India.
• As per Naukari.com, there is 89% growth YoY in August in the job market.
• As it is seen the that there is a lot of job opportunities in IT sector. A lot of companies are hiring.
• As the market is growing. The PE of Nifty 50 had reached 41.33 on 10th March 2021 when the Nifty was at 15000 and currently, it is around 17000 but the PE is at 28. Hence the earning growth is also very good.
• Global trade also is impacted currently hence it is also a negative point to look at.

Q To secure the Capital, is it advisable to withdraw the amount invested, when the invested value gets at least doubled?
Gaurav Jain:

• Need to check how much is the equity allocation. If the equity allocation is 50% of overall net worth, and if there is a capital appreciation there should be re-balancing.
• The investment needs to be done based on asset allocation

Q  What should be stock allocation as per Large, Mid, and Small Caps in Percentage?
Gaurav Jain:

• As per the thumb rule, small and mid-cap should not be more than 50% of your portfolio even though the investor is of the aggressive type.
• 50% investment should always be in Large Cap and 50% in small and Midcap if you are an aggressive investor.
• Based on the age, goals, risk profile the investment approach should be there.

Q  View on KPIT
Gaurav Jain:

• KPIT is in an interesting area of automation in the auto sector. Especially with this electric vehicle or more and more semiconductor usage is increasing in the cars significantly here KPIT might play a good role.
• If the allocation needs to be done from the auto sector’s automation then it can be a good pick. Compare the stock with peers too.

Q  View on Debt funds in the current scenario? Is it the right time to invest?
Gaurav Jain:

• If Investing in a DEBT fund there should be a simple expectation that the returns would be like Fixed Deposit.
• If the risk-taking capability is high but wants to invest in debt funds only then it is better to opt for conservative hybrid funds.
• If the debt funds are taken then one needs to consider the credit risk too.
• The benefit of the debt fund is if that fund is kept for more than 3 years there indexation benefit is applicable. The tax impact is less.
• The debt funds are easy to manage.

Q  View on CAMS?
Gaurav Jain:

• It is currently trading on the higher side.
• The income is coming from the mutual fund industry and they are entering into the insurance business as well.
• Overall as a company, we need to understand how the CAMS and CDSL work.
• They are on the commissioned-based business. They earned commission on the transactions.
• As and when the volume increases the cost will also decrease.
• In the commission business, there can be a sharp growth in topline (revenue), but not a significant move in the bottom line (profit).

Q  View on Zomato’s impact on shutting down the grocery business?
Gaurav Jain:

• There is also news about the resignation of Gaurav Gupta, which is negative.
• The remaining investors are there so it is a good sign.
• They already have an investment in the grocery in Grofers which is about 10% stakes.
• It is a good decision to stop the non-core business that is realized.
• This negative news needs to be tracked.

Q  Is it a good strategy to invest directly in large-cap stocks and approach mid and small-cap through mutual funds to a novice but inquisitive investor as he/she learns fundamental analysis?
Gaurav Jain:

• It is a good strategy to Invest more into large-cap and mid-cap stocks investment. The small-cap and midcap investment should be done through Mutual Funds.
• The company should be easy to understand before investing.
• The information of the smallcap companies is also not available easily. Most of the Analysts don’t cover them, there are hardly any videos on it, they don’t have investor presentations, most of them don’t even do earning calls, and much more.

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