HOW I SHORTLIST STOCK AND BUILD POSITIONS...

In this post, I want to share the simple process I use to pick stocks. Nothing complex, nothing over-engineered. The truth is, there’s no “holy grail” in the markets—any process can work if you understand it, manage your risk, and respect market cycles.

Markets move in cycles 3 year, 5 year, decade-long cycles. Right now, we are in a decadal cycle that began after COVID. In my view, the next 3 year cycle will kick off next year. I’ll cover this in detail in a future post, but meanwhile you can watch Ray Dalio’s classic video for a deeper perspective on YT - How the ecomomic machine works.

I have attached screenshots of 2 positions I recently entered one from the defense sector and another from healthcare. As I have mentioned before, defense, healthcare, and capital markets are my long-term decadal themes. Whenever opportunities arise, most of my money will be allocated to these 3 sectors. For example, Apollo rallied sharply after my entry, so I ll wait for consolidation or a pullback before adding more. I have started adding to VIMTALABS. Screenshots are just to show that i do what i write.

To be clear I am super bullish on India. You might not see it reflected fully on the charts today but this is the time to stay grounded and keep accumulating. The real payoff will start unfolding from next year. At this stage the number 1 priority is to not lose any capital. Even if you don’t make money in the short term preserving capital should be paramount.

These sectors are still in their nascent stages and have years of growth ahead. Along the way there will be plenty of short and medium term opportunities. At some point, I’ll also write about how sectors and stocks move in pivots, how to identify when a trend is shifting, and how charts can often give early clues aside from unexpected black swan events or surprising results/news that no one can predict.

On market cap selection, my focus remains on companies between 3k crore and 25-30k crore. I prefer not to go beyond that range. For anyone managing less than 5 crore in capital staying in this bracket maximizes the chances of growing your account at faster pace. With the right stock in the right trend even one strong move can transform your account massively in a few years.

There are two broad approaches in trading: Top Down- Start with the sector, then drill down to stocks. Bottom Up - Start with individual stocks.

I lean strongly towards the top down. I always begin with sectors showing strength and then look for the strongest stocks within them. This is often confirmed by sister stock movement when multiple names in a sector trend together, my conviction in that sector grows.

Take the defense sector as an example. Right now, it’s forming a major pivot now and will probably trend higher. The sector down 20 % from highs and its a good time to start. BDL was my 1st pick around India pak war and could not enter other stock as they just started flying and i was not getting proper risk reward. Apollo was my first pick, now which quickly moved higher. Next, I am tracking GRSE and Rosseltech, Axiscades , Astra micro. I will get out of BDL now since it doesnt fit my market cap range.

In defense, I ll discuss 3 of the strongest stocks where I’ll look to build positions and a few weaker ones that I’ll avoid. IdeaForge - it has fallen more than 50% from its all time high, and I don’t look at such stocks. I avoid stocks that have fallen 30% or more from all time high. I ll pass. DCX India, Nibe, and MTR Tech as they fall into the avoid list. On the stronger side I like Apollo, GRSE, Astra Micro, Axiscades, Rossell Tech, BDL and BEL though BDL and BEL don’t fit into my market cap range, so they are excluded.

Apollo ticks many of my boxes. It’s a recently listed stock that broke out a few weeks ago with strong volumes and a powerful bullish upthrust candle. After the breakout it consolidated with a downward move but every pullback candle was small and volumes stayed light which showed weak hands being flushed out rather than any distribution. I started accumulating during the retest of the breakout region. Normally, after a breakout a stock will stall for a while and most people start losing interest and patience. After that, Apollo shot up. I never chase a stock once it runs I simply wait for it to consolidate again. If it moves sideways or dips, I’ll study its behaviour candle ranges, volume action, expansion or contraction (All of this comes under volume spread analysis will try to cover it in future) and then decide whether to double my allocation. I did not get a chance to build more Positions. The drill is same either apollo will be my big winner or i ll cut out at cost. If it moves beyond 50-75% and if i spot and exit i ll take it then i wont wait for it to go at cost obviously.

Stocks usually form 4 to 5 bases during a trend before going into a bigger time or price consolidation. That ll give me multiple chances to add, and I expect Apollo to give me another 2 or 3 such opportunities. My views mean nothing until the market confirms them. When I pick stocks, I don’t dive into deep fundamentals straight away. I just check a few key metrics OPM, ROE, and debt levels. Once a stock has already moved 50–75% from my entry then I study more deeply business model, management commentary, con calls, everything. From here if apollo goes to average buy price i ll simply cut and get out wont do anything in between. Until I book the money belongs to the market, so this is paper profit for me and from now on i am only gonna look for larger moves. Also I never average down, I only average up. There are various ways i build positions for eg pyramiding 33% in tranches. One time scale in, SIP. Currently i am going via SIP route with some stock where i keep buying positions as they move lower with no meaningful impact, and with other pyramiding. No said rule here, depends on how i feel about the market. With Apollo it was SIP. Next allocation in apollo is gonna be 70-30.

Capital allocation is critical. For eg If I plan to deploy 20 lakhs into defense, I’ll commit only 12 lakhs across 3 stocks now. Only after I see sector level confirmation I will put in the remaining money. I would rather pay up with confirmation than go all in early. You cannot catch a move from 0–100. The middle 20–80 range is where the real meat lies for me. So i am never bothered if i am getting an entry 20% higher, but i want market to confirm my hypotheis. Whenever I scale allocation in any stock, I follow structured methods pullbacks, technical triggers, chart patterns. I ll share these live as I act on Apollo.

I am also tracking IPO index and total of around 100 stocks that have been recently ipoed, as i build positios i ll update. I wanna get into 2-3 good ipo stocks. Perfect time.

Think of the market as a blank canvas with a tiny dot by a marker. The hardest part is to stay within that tiny speck, to do the same process over years and years with few tweaks. I often visualize worst case scenarios like I have scaled in 150% with leverage and market crashes. I stimulate my brain with these scenarios what I’ll do, how I’ll follow my risk management rules, and how I’ll keep my fat finger in check. This helps me stay calm if it happens. Stock market to me is a risk management business. Once you get that, your trajectory will change for good. I may be completely wrong here but I feel the more average you are the higher your chances of making it big in the stock market because you need to do the same boring thing over and over again. Intelligent people often have a habit of beating themselves up. Even if something is working, they’ll try to reinvent the whell outperform what’s already working. That approach may help in other fields, but in the stock market, it can be a disaster.

Many people talk to me about trading options. I have nothing against trading options, you can certainly make money. But the probablity is very low. Its the end of probablity at the end of the day. Options give dopamine hits that ruin your patience with equities. I learned this the hard way. For now I stick to index futures and take only 4–5 trades a year but try to catch full swing. Once I compartmentalize it in my mind, then I’ll look into options as an income generation tool I am focused on equities because options might make you rich, but equities make you wealthy. Wealth is the real game.

Don’t fall into the trap of believing you ll succeed in 6 months or a year. It takes at least 3 years of serious work, seeing at least 1 bullisha and 2 bearish cycle. Market is not a money printing machine. Yes the rewards can be unimaginable, but only if you put in the time, effort, and discipline. Otherwise, you’ll invite financial and mental pain. It takes years to become CA, Dr or engineer i dont know what makes people think they can genearte consistent money out of market in short period of time.

With all the pessimism that surrounds the market, you have to remain optimistic. No matter what problems we face I never lose sight of the bigger picture. Optimism is essential without it conviction becomes difficult. But being optimistic doesn’t mean going all in at every opportunity. Risk management rules still apply, and as I have explained earlier, I only deploy capital when the market confirms my opinion. Until then my opinions hold zero value. I may have strong views, but they mean nothing until the market validates them.

The Indian market is going to give so many multibaggers in the next 2 decades than any other market in the world. No matter how much my capital grows. I will never look at any other market. The only exceptions are silver, gold, or perhaps an index ETF of any other country if we go through a prolonged consolidation phase or if another market is performing exceptionally well. I truly believe in India growth story the next 2 decades are very crucial and there is an opportunity to make immense money. Make hay while the sun shines.