Do you hold these stocks? Reasons behind the market rally !!! |Vinod Srinivasan|

Summary

In this video, the presenter explains recent market movements, including a significant $9,000 crore inflow from Foreign Institutional Investors (FII) triggered by India’s increased weightage in the MSCI Index. The video also provides stock-specific advice, discussing the volatility of stocks like Suslon and UAL Finance, with recommendations to avoid short-term speculation and focus on long-term value investing. Additionally, Zomato’s recent rise is explained as a result of its inclusion in the Sensex 30 index. The presenter urges viewers to make informed, research-driven decisions and announces the launch of a new Substack newsletter for further analysis.

Takeaways

• 😀 FIIs are back in the Indian market due to an increase in India's weightage in the MSCI Index, leading to a ₹9,000 crore inflow into large-cap stocks like HDFC and Reliance.
• 😀 Zomato’s 7% rise is because of its inclusion in the Sensex 30, which prompted passive funds to buy Zomato and sell JSW Steel as part of index rebalancing.
• 😀 Passive funds, such as those following the MSCI index, are a good investment choice for those who believe in India's long-term economic growth, as they automatically adjust to changes in index compositions.
• 😀 When a company is added to major indices like Nifty50 or Sensex 30, passive funds are required to buy the stock, driving up demand and consequently, the stock price.
• 😀 Suzlon faces multiple challenges, including high debt, volatile performance, dependence on government policies, stiff competition, and high valuation (8 PE), making it a risky investment choice for long-term investors.
• 😀 If you are already holding Suzlon, the speaker advises selling it and reinvesting the money elsewhere, even if it means taking a loss.
• 😀 UAL Finance, a microfinance company, is struggling due to the overall difficulties facing the microfinance sector, including high NPAs and a lack of strong long-term value, making it an unattractive investment.
• 😀 The speaker suggests avoiding speculative, short-term trading approaches like buying stocks based on 52-week lows and hoping for a short-term price increase.
• 😀 For those interested in the finance sector, banks like South Indian Bank and Karnataka Bank, which are trading below book value, are better value picks compared to UAL Finance.
• 😀 The speaker urges viewers to focus on long-term investments based on solid fundamentals and to avoid chasing short-term trends or relying on stock tips without understanding the underlying business.

Q & A

Why did the Foreign Institutional Investors (FIIs) invest 9,000 crores in the Indian market?

The 9,000 crores inflow from FIIs was primarily due to India’s increased weight in the **Morgan Stanley Composite Index (MSCI)**. As part of this change, passive funds had to allocate more money to India, resulting in a surge in large-cap stocks like **HDFC** and **Reliance**.

What does the increase in India's weight in the MSCI index mean for the market?

India's increased weight in the MSCI index means that passive funds, which track the index, have to buy more Indian stocks to maintain the right balance in their portfolios. This led to significant inflows of money into India, particularly into large-cap stocks.

Why did the speaker caution against assuming the market's positive movement was due to political factors like Trump's statements?

The speaker clarified that the market’s positive movement was not related to political events or statements like those from Trump but was driven by the **MSCI index change** and the rebalancing of passive funds.

What is the primary investment metric the speaker uses to evaluate stocks?

The primary metric discussed by the speaker is the **Price-to-Earnings (P/E) ratio**, which is used to assess whether a stock is fairly priced based on its earnings.

Why has the speaker not been talking about **Manapuram** recently?

The speaker explained that while there is nothing wrong with **Manapuram**, they cannot discuss every company every day. Instead, the focus is on educating viewers to make independent investment decisions based on research and confidence.

What are the main challenges faced by **Suzlon** according to the speaker?

Suzlon faces challenges such as **high debt**, **volatility** in its business, dependence on government policies, and stiff competition. Additionally, the stock’s high **P/E ratio** (8) and cyclical nature in the wind energy sector raise concerns.

What would the speaker do if they owned Suzlon stock?

The speaker would likely **exit** the position, even at a loss, and redeploy the funds into a better investment. They emphasize learning from mistakes rather than holding on to underperforming stocks.

Why does the speaker suggest avoiding **UAL Finance** for investment?

The speaker advises against investing in **UAL Finance** due to its struggles in the microfinance sector, which has been facing significant challenges. The stock is not trading at a value price and is above **book value**, which makes it a less attractive investment.

What does the speaker recommend for those interested in the finance sector?

For those interested in the finance sector, the speaker suggests looking at **South Indian Bank** or **Karnataka Bank**, which are currently trading below **book value** and offer better long-term value.

What is the speaker's stance on short-term trading and speculation?

The speaker strongly discourages short-term trading and speculative behavior. They emphasize the importance of investing with a long-term mindset based on **fundamentals**, and caution against buying stocks with the sole intention of selling them for quick profits.