GOOD TIME TO BUY ??

It’s been a while since my last post.

Link to last post - https://share.gvine.app/py3Sm1JkdBNvG98D8

Around six months ago, I had written a post titled “I am a bull with my hand on the door” a reflection of where I stood mentally in the market back then. I was preparing for an exit. The market was overheated. I laid out a clear set of rules to manage my exit when and how I would cut my positions and I am glad to say I stuck to most of them.

There were a few trades I couldn’t exit as planned. Emotions got the better of me and I did end up paying a few extra percentage points for that. But it was a disciplined exit that saved me from the downward spiral that followed.

I won’t dive into every detail of what I did and how I feel that would be hindsight bias and of little use now.

Now I want to explain what I am doing currently. I have never shared my positions here but I’ll be doing that this time to show that I follow whatever I write here. I’ll attach them in the chat below. I have picked 3 stocks to show here. I want to build more positions in them, and I’ll share when and how I do it.

Out of all the rules I follow, there are 2 that I follow religiously :

Whenever the market is decisively below the 50 DMA, I stop taking new trades and manage only the existing ones. I also exit if any of them start violating my levels.

Whenever the market falls below the 200 DMA, I start cutting aggressively and begin raising a lot of cash, protecting profits wherever possible.

If the market has fallen 15–20%, I start looking for new opportunities. That’s the very boring phase most people lose interest in the market during this time. But that’s exactly when new leaders for the next bull market emerge.

What I don’t do: I don’t look for stocks that have a "name bias" and have fallen 50% or more, thinking I am getting a cheap entry, or i dont average out any of my positions. I don’t do that. That’s only justifiable if you are a long-term investor, already holding from lower levels and have faith in the company and its vision. I don’t allocate fresh money just because something has fallen 40–50%.

What I do: There is a Nifty Total Market Index that consists of 750 stocks. Whenever the broader market (like Nifty 500) falls more than 15–20%, I start going through these stocks every weekend. It’s a purely visual approach and no scanners, no software.

I start shortlisting stocks based on my criteria. The criteria include:

Stocks that have not fallen more than 15–20% from their all-time highs or 52-week highs, Stage 2 structures , Relative outperformance with respect to Nifty, Volume spread analysis and few other checklist items.

Out of those 750, around 80–90 made the cut as potential candidates. Then I look for sister stock movement or sectoral movement.

The sectors I’ve identified are:

Seeds & Fertilizers, Chemicals, Hospitality Services, Finance, Banks, Metal (not there atm might set up).

From these 80 names, I have built positions in 10–12 of them. I keep updating the list every week since this is a very early stage, and new sectors or groups may emerge.

After a bull market, very rarely do the previous cycle’s leaders set up again. There are usually new sectors and new groups that take leadership and become the drivers of the next bull cycle. It’s entirely possible that some of the groups I’ have identified may fail and new ones may emerge. I’ll manage my positions accordingly.

Some of my holding are : KSCL, SRF , Bajaj Finance, Chola Holdings , Chambal Fertilizer, Narayana Hrudayalaya, Kotak Bank and a few others that doesnt belong to any groups. I will make a separate post on how and why i picked these stocks.

This time around, I wanted to pick half the stocks that carry less burden of ownership for example, the Bajaj twins, SRF, KSCL. These have not delivered returns to investors for many years and are now starting to move.

Now, just because I have identified these stocks doesn’t mean I’ll build positions aggressively. I never do that no matter how much that stock appeals to me. I use only 25% of my capital initially and then observe how that portfolio behaves over a few weeks especially how volatile it is compared to market movements. This gives me a fair idea of these pockets are exhibiting strength or not wrt to broader market.

The market gives plenty of time to build positions, and I am never in a rush. Before the tariff news, I had 40% of my capital invested in the market. Post that, I had to cut out 2 stock SARDAEN and REDDINGTON as they violated my levels. I never lose more than 6-7% on my trade. I never buy the full quantity when we are in a bear market. I accumulate gradually. So even if the trade goes wrong, I don't lose money on 100% of that stocks intended position.

Next week, I plan to increase allocation by another 20% taking total exposure to 60%. I’ll do so within my current 9-stock portfolio. If any new setup emerges, I’ll take a call accordingly. The stocks I mentioned above held up well during the tariff volatility that gives me comfort.

We are still far from the kind of market where I would allocate 100% of my capital. The upleg we’re seeing is still within a bear market. And counter rallies in bear markets can be very vicious. Right now, we are at the mercy of Mr. Donald Trump’s mood swings.

Let things settle.

I feel we’ll remain in a range for a while in a 15% range we will keep doing up and down and then a clear trending market may emerge next year. If I have identified these leaders correctly, they’ll give massive upside moves even within this range.

Don’t fall into FOMO seeing current market moves on the upside. The market will offer many opportunities to build positions. Let short-term players fight it out on an hourly or daily basis. Don’t make the mistake of jumping into small- or mid-cap names that have already fallen 40–50%, thinking they are cheap. Cheap often gets cheaper in stock markets.

Many of these stocks may never reclaim their lifetime highs for years to come.

If you have to commit new money, do it in pockets that are showing strength. Money always attracts more money.

If we get our stocks right here, there is an opportunity for massive returns over the next 3 years.