Hi Mayank, your article on buying alok industries is bang on target. My onlu concern is thet desptite such goog results and reduction planns on D/E ratio ,what is with this resistance at 29 which just doesn’t seem to break despite such good spurts in volume,etc.? I’ve been holding at 25.18 for a target of 32-34 from 15/12/10. I was even planning to exit the counter at 27 or so as nothing is happening. Please advise. Thanx.- Praveen

If you have the time to manage that many number of stocks, then there is no problem in diversifying. Just make sure every single one of the company you’re putting even a penny deserves it fundamentally. You need to track quarterly results of every company and make sure they’re doing okay. Check what brokers are talking about them, you can also ask me if any question and I’ll do a check on it. That way I’ll also come across more companies and increase my coverage on stocks. Stocks are down is not much of a problem, thats the condition of market and with midcaps and smallcaps, they have all crashed. If you get more money, keep buying more and sit tight for next bull run to begin, you’ll jump to profits then. If you’re very active, yes you can keep selling on profits and wait for declines to re buy. But don’t buy in a hurry, wait for crashes to buy. Once you buy in a crash, your downside is limited and upside is way high.. You need to track quarterly results of every company and make sure they’re doing okay. Check what brokers are talking about them, you can also ask me if any question and I’ll do a check on it. That way I’ll also come across more companies and increase my coverage on stocks. Stocks are down is not much of a problem, thats the condition of market and with midcaps and smallcaps, they have all crashed. If you get more money, keep buying more and sit tight for next bull run to begin, you’ll jump to profits then. If you’re very active, yes you can keep selling on profits and wait for declines to re buy. But don’t buy in a hurry, wait for crashes to buy. Once you buy in a crash, your downside is limited and upside is way high.

Thanks for the tips mayank. I think Hitachi Home is a very good option to go in at current levels. All these AC cos report good results in Mar-Sep qrtrs. Others include Whirlpool and Voltas. Symphony has already had it’s run. What do you feel? 

hI mAYANK. All looks well with Surya except for the fact that promoters have pledged too much of their holding. Doesn’t give a positive buy sign 

Thanks Mayank, recently i bought 300 shares of Southern Petrochemicals industries corporation ltd at 27.5. Can u tell me about its future prospects?Wether my decision is right?If yes,Then for how much time i should hold.Pls provide me the details like as you gave for Alok Industries. As based on that recommendation I have bought Alok Industries.Hope that will give better gains. Thank u very much 

SPIC – That is an interesting stock you mentioned there. It looks like a turn around story to me, the company has emerged from heavy losses to profits. In Q4, company posted net profits of 80 cr as against loss of 32 cr, excluding the one time gain of 32 cr, profits come to about 48cr or so for Q4 FY11. That is still very interesting. Revenues have also jumped from 94 cr to 870 cr. This change in revenues and profits is because of commencement of Urea plant which management says is stable now. So all those extra revenues you see from Q3 FY11 is coming from Urea. Q4 could be the trigger in the stock that took it up from 16 to 29 and then profit booking has stabilised the stock around 24-25. Right now it is only one quarter story, so we need to wait and see how FY12 pans out. As far as it looks like, company will remain in profits if urea plant functions properly like Q4. If company does post similar or better growth than Q4 FY11 in FY12, then this stock will show a huge run up and could be a potential multibagger. Im adding the stock to my watch list and we’ll see how first quarter of FY12 pans out, then we’ll get a clear picture on how things are panning out for the company. For you, it is definitely worth the HOLD for now.

A small cap company where promotor holding was 11% and now it has been brought to 8%. Looks fishy to me that promotor is lowering the stake when stock is trading at a valuation of 1.8. I wouldn’t be surprised if operators are playing games here. There are some known operators already who play games in stocks like KS oils, Karuturi Global etc. See Karuturi, dragged 17% today. So I would seriously suggest to avoid operator stocks : ) Go for quality mid caps at this stage.

Alok has been on a downtrend as most of the other stocks in broader markets. Alok is a pure accumulate from a long term view. Don’t risk taking a 3 month view on this kind of market. Nobody has a clue what is going to happen. So I cannot say where Alok can go in 3 months, but in 12-15months this stock should do really well. I suggest holding Alok for 2 years and this is a potential multibagger, could become several times from current price.

That is quite a lot. If you hold so many companies, then you have to do a lot of tracking. I mean tracking 70 companies every quarter is quite tough And choices sometimes can go wrong. I’d say 10-15 good companies is much more than enough to hold and easy to keep track of.

Good company selections buy wrong prices/quantity. You bought SPIC on its peak. Should have bought at current levels actually. Anyways you’re only option is to accumulate SPIC on the downside and average down the buying price. Always start accumulating slowly and avoid buying a stock thats going crazy on rally. SPIC moved from 15 – 36, so risky to buy then by getting carried away by upsides. SPIC is good around 25 or below and can be bought. Buy on every significant declines to average down buying price. 

As far as Alok is considered, buying price is okay, not very high, not very low. But now Alok at 16 is putting a huge opportunity to buy and average down your price. Use the same technique in Alok, buy and average down the price and accumulate slowly on every significant declines. Even I have some personal holding in Alok, I have been buying at all lower levels at each significant falls, but Im buying with smaller quantities, so it is easier to average down the buy price for me. With these midcaps/smallcaps on a free fall market, always use this stragegy, buy less each time and use the buy on every decline strategy. Decline as in every 5-7% fall, put some little quantity.

These stocks crash very easily on a free fall market. So can never predict bottoms, so to use full opportunity of all lower levels to maximise gains in long term, you buy small quantities at each levels, just like SIP strategy but instead of time frame, you use stock price levels.

On the side note, Both are good companies will make you money in the long run. Do something for the buying price, they’re high, bring it down and you’ll make sure to make much more money than now in long run. Increase time frame in Alok Industries to two years atleast.