We had a fabulous return last year with a lot of volatility. Market is sitting at all-time high at the start of 2017 – 18 financial year. Is there still a room to go up another 15% – 20% from here on?

Well, we don’t know what returns 2017 -18 financial year will give to its investors. But looking at the stock market from our insight it looks expensive and stretched. But that doesn’t stop market not to proceed ahead another 20%. If you are a value investor, the biggest drawback of implying this strategy is that you will exit from the market first.

This financial year we will only follow one portfolio of 5 – 7 stocks and rebalance them every quarter. Our investment priority is to minimise any capital impairment. Our tools help us to find stocks which are trading in their expected valuation zone and also guide us on how much to invest in each stock at certain time. These tools are not to be taken as investment advice from us. Because, you still need to do your research and find your conviction in the investment story.

We are starting this financial year with Rs 1,262,749.80 cash. From the past year we only found Indiabulls Housing finance stock to continue to invest with this financial year.

Indiabulls Housing Finance

There are many housing finance companies in India but we found only two businesses worth investing. The other one is Gruh Finance. Indiabulls Housing Finance is purely selected on the basis of its lower valuations. Imagine two bakeries A and B started with Rs 100 each on your street. Last financial year ‘A’ bakery reported profits of Rs 30 and ‘B’ bakery reported Rs 26. Both the bakeries are for sale in the market and the asking price for ‘A’ bakery is Rs 1357 and for the bakery ‘B’ Rs 362!

Paying Rs 1000 extra for Rs 4 extra profits does not make sense to us. Gruh Finance is ‘A’ bakery and Indiabulls Housing ‘B’.

In the coming 10 years we see a lot of demand for housing finance products and services. We do not expect smooth ride but for long term investors Indiabulls Housing could change into multibagger. We are allocating 20% of our portfolio for investment.

Hindustan Zinc

The second stock that our tool is pointing towards is Hind Zinc. The market is expecting 25% growth in its 2018 earnings. To us this means market is expecting zinc price to climb further 25% this financial year. However, our tool is also mentioning not to invest more than 40% of your individual stock allocation behind this company.

Our conviction level in this story is low and is pure speculation on zinc market price. We are allocating 8% of our capital on this story and will keep close eye on zinc.




ONGC is the third and the last stock so far trading within our valuation zone. Our risk management strategy is also pointing not to invest more than 55% of individual stock allocation with ONGC.

Our personal conviction levels are low in metal and oil sector. The reason is, underlying profits of these businesses completely depend on the commodity price. If oil and gas prices rise in the market, so will the stock price and vice versa.

We are allocating 11% of our portfolio capital with ONGC at this stage.

We are happy to keep almost 60% of our portfolio in cash in the first month of this financial year. You will get monthly updates of this portfolio on our blog. What stocks you are looking to buy in today’s market?