Groups
V40 - Large cap, midcap
V40 next - midcap and smallcap
V200 - large, mid, small allen
V40 and V40 next best company
1. company should be listed on both NSE and BSE
if some company only listed on BSE done trade in those, they have less liquidity and they can trap the traders
check large cap company
in screener check Market capitalization > 1
and check top 100 company, and check 100th company also, you will if market cap is here, means its going up or market going down ?
1.check top 100 in market cap- large cap
2.next 150 after 100 to 250 is midcap
3. after 250 is small-cap
we should trade in small cap also, so many company in small cap only
money we can earn in its leading company of its sector, doesn't matter it smallcap or large capabilities
1st preference always V40 company, we dont need to work outside that.
2nd preference V40 next
V40
1. company should be debt free company - to identify Management intention also, - it will also not insolvent also.
we need to check debt incompare mode, if debt right for the company
example TCS have 7k Cr loan, and its own Reserve its own many 97k Cr, and its profit for 1 year more then its loan
the reason of this 7k could be, temp loan company need, they dont want to break their investments.
and if company also have cash as well cash equivalent means comapny may need money, if they sudden need to expansion
risk free selection from this criteria
- management doubt clear, management intention is good
- product and service is good, that is why debt free
- bankruptcy doubt clear
- and management will also nt take away your many
2. growing sector
3. company should market leader of its sector -
reason if sector is grow the leader get benefit more
they can reach to minister, they can reach to policy maker
they can control the wholesaler
they can give discount on its product.
money will make in growing sector largest companies
4. company in business from last 15-20 years
from 2 decade market leader- 1 generation entirely change, - means company remain leader even with next generation
technology change still they changing with time, - they even delayed with multiple government also
and they even selling their product in different state also, even their are different different govt.
they know how to deal with different govt.
this shows quality of management, they are business oriented people.
they don't have ego, they are just have 1 purpose to make more money on their money
and this what we would need to have in stock market
company should be in business, not about listing
5. Brand value, reputation of company
pricing power - if in manufacturing product and server deliver, costing increase- and we have the power to increase price and sales still don't get negative impact
like we don't know the price of Colgate we use daily
example the companies don't have pricing power, like steels companies, some quality of still, whoever sale on lower price we go to that, they don't have brand value
like BMW have pricing power, but maruti, Huandai dont have.
iphone have pricing power, nokia oppo, viva dont have pricing power
Airtel have pricing have power, idea, vodaphone, BSNL dont have pricing power
6. the company should have future growth prospect for next 10-20 years, if company don't have growth prospect, still its not good for us.
like in telcom, we dont have already sim card to all of us, there is no growth in that.
we have scope in broadband, internet is not reach to everyone
scope in stock demat account
no scope in agriculture like fertilizer, seed company
tyre Consumption will be 3 times by 2030, and main beneficial are ceat and goodyear company
read different report
7. company should not be government company
like ONGC- dont have motive is earn more or higher profit all the time, they have purpose to server the nation
SBI like substitute of HDFC
they cant aggressively take steps in business
we trade in govt. company when they very cheap.
V200 - quantitative nature
- dept equity ration - less then 0.25 - 25% - means Balance-sheet is healthy, company know the how to do the business
- ROCE - > 20% -- management is capability to make the return on available funds
- Net profit - > 200cr - becz for 200cr company will pay 50-60cr for tax, so company size not very-very small
Banking and NBFC
these condition not applicable on banking sector, and NBFC companies
condition for Bank and NBFC companies
- ROE - return on equity, > 10%
- Net profit should be more then > 1000cr
V20 strategy
In the groups V40, V40 next,
- 3% of the portfolio in 1 trade
- in 1 stock max we can take 6% trade
- No stoploss
- daily chart
- a group of green candles this range should be greater than 20%
- and the movement from the lowest low till highest high
- we buy when it come again on same point to touch again. and when it will touch again to same high we will sell
we can also do averaging in V40 and V40 next,
if we get same kind of buying opportunity in same stock, we can take 1 more trade.
and 2nd trade we exit on 2nd trade exit point only, we dont wait for 1st trade over.
strategy V20 in V200
same strategy V20 in V200
we use above condition and we add 1 more condition 200 DMA
QUESTIONS
if we have trade in V200 and V40?
we choose V40.
If we have 2 or more trade in V40, which one we take?
where movement is more,
behind psychologically,
if any stock move up with strength 20%, it cant be possible without operator movement,
retail cant take to 20% up, and if price come again to same price, means Operator will take to that price again.
V20
if stop getting trade on V20 bases, its mean market is no very high point, it must go down, or correct.
or if we have so many trade on the bases of V20, and we dont have enough money means market is very down currenly.
2nd strategy
Rob Booker - knoxville Divergence
1.it will work only on V40 companies
2. daily chart
3. no stop-loss
4. 3% invested in 1 trade.
5. we change the settings of indicator
Bars back 200
RSI Period 14
Momentum Period 20
Style -
Line - blue
up-trending line connect top to top
down-trending line connect bottom to bottom
- size of the line is not important.
- all of these line are connecting 1 line and 2nd line,
- and these are the straight lines.
- starting point is not important, the end point is important
- we can average same way if we get opportunity for 2nd trade in same stock.
we can average same way if we get opportunity for 2nd trade in same stock.
the buy will happen at the end of the downtrending line
we check the indicator after market hours
we will buy next day in the morning
sell signal end of the Uptreding line
next day of the line uptrending line connect.
2nd trade example
Indicator meaning here
last 200 DMA study
14 very much weakness
and 20 MA, means recovery also started.
Financial
Market cap - if we want to buy all the share so what is the current market price for that?
no of share X current market price
if want to know value of share in past suppose year 2000, for Asian paint, first find growth percentage %
formula (market cap in year 2000)= market cap / growth percentage
if you want to check 10 year back Asian paint profit was 881 cr
and indigo paint profit right now 118 cr
if we divide 881/118 = 7.5
now indigo took 7.5 times its profit in 5 years
so in next 5 yeas indigo will be Asian paint 10 years back
if any company small in size, and they get the brand value, so in now time they will start growing
if any company small in compare to market cap, and in compare to its competitor, and company have brand value, that company will be multi-beggar
example
Britannia - 1L cr market cap
mrs bectors food
3515
104000/3500 = 30 times
and its product are same as Britannia,
and in market its have same value
product of mrs bector food - English oven, cremica
they picked as its, will no compare usually
both have same reputation, and burger king have supply of bread from mrs bector food.
so market acceptation is there
3rd example 5paisa market cap - 909
angel broking market cap - 10200
angel brocking 11times right now 909/10200 = 11
net profit of 5paise 34cr and angel brocking 890cr
and angel broking 34cr 5year ago, so 5paise will may take 5 year to grow like this
full company - market cap
Current / Market value - per share - share vaule - share price - current value
Book value - per share
Face value
Full company - equity - shareholder funds = (share capt + reserve )
(share capt + reserve )/ total number of share = book value
Face value = share capital / total number of share = Face value
Face value is initially amount
ethanol supply in India ?, and main company creating it, sugar company and its relation?
PE - pay back period ,
Means if company earning same profit so how many year it take
FD can double in 12-13 years
Compare PE and profit double time for asian paint and indigo paint
Asian paint - took 5 year to increase 50%
Indigo paint - took 5 year to double its profit
so here in indigo paint small in size, but it can double, or multi fold in short time.
another example suppose we have 2 companies in same indurstory, 1st profit 20cr and 2nd 10cr, so in which we invest 1st one, - why becz payback period is less in 1st company and it can double in 4 years only.
Pay back period - PE price earning ratio
so in india we have low PE companies mostly like Govt companies, they dont keep the profit, they don't think about growth, they earn and distribute in shareholders.
and private company run on higher PE, private company hold the profit for growth purpose.
So PE is important in PSU companies, but if you investing in private company PE is not important that much
if we trading, we dont need to consider that much, if PE is less it better, but not much worry, if we holding less then 1 year.
So example of 1 of company - in pharma, its market cap 10000cr, and its profit 220cr- pharma is down due to Russia & ukraine war.
so this pharma PE is currently 48.
10000/220 = 48
and this company profit went down due to war effect in last 2 years.
but this company, profit suppose comes again 1000cr and market cap is same 10000 so PE will become 10,
CWIP - under construction work in progress.
If share price < book value its good, and its private company
but if share price > book value its not bad
if PE is < 10 Its positive point, and its private company
but if PE > 10 its not bad
Dividend Yield% is on current price.
on & average. large cap company give divident yield% 1.x
how to invest in high dividend paying companies
How to trade in high dividend paying PSU companies ?
1. check if any company dividend yield around 7-10%
2. apply 200 DMA
3. buy when price below 20% from 200 200 DMA
example - PFC
4. if share go more below the from 20% to 30%-40% buy further for averaging.
5. sell at same point where you have 1st point selling.
ROCE > 30%, its great company, they will make lifetime high very soon
means this company able to make profit 30% even its size is big enough
so we will trade that have 20% and above ROCE
difference in b/w ROCE and ROE
ROCE- return on capital employee include borrowed money also. - we check in all
ROE - it will not includes borrowed money in it - we check in NBFC and banking
promoter holding - meaning ?
we should check strong hand vs weak hand
strong hand - promtors, FII, DII, HNI
weak hands - retail holder
weak hands - public - HNI
Infosis example
promoters - 13
FII - 31
DII - 18
HNI - 22
Weak hand - 10%
Pledged % its pledging of promtors holding
avoid the company that have 10% and more Pledging %
In Result
we do not compare last querter result we compare last year same quarter result
In above example if we compare last quarter result that will less, but if we compare last year same quarter it was more then.
OPM% - compare with old
In results company can make fool by below 2 things
Other income - they can fool full in that
Tax - tax company pays in adv. sometime, and sometime they ignore and pay in next quarter, so that will effect the Net profit.
so company play with above 2 to manipulate the result.
In actually sales is down in above example Operating profit is down, and other income added additionally and they did not pay income tax wholly.
so they tried to create sentiments here in above example
company or operator can manipulate the sentiments and results for their benefit.
Fixed assets
Deprecation
CWIP
Operating Expenses
and Capital Expenses
Operating Expenses for past - like salary paid to employee, Internet bill paid, purchased raw material
Capital Expenses like - computer purchase, AC purchase, furniture purchase, that we use over period of time
so Operating Expenses show in Expenses
Capital expenditure will show in Balance sheet - Fixed assets
Capital expenditure 2 part - Fixed assets and CWIP
Fixed assets - those Expenses that operational like car purchase we start using
CWIP - building under construction, actually not in use currently, once its complete it will go to Fixed assets.
If you see good track record you can see by its increasing order sales and Net profit.
Imp in Balance-sheet
less borrowing
Reserve increasing
Fixed assets increasing
CWIP increasing or available
Concalls
MA strategy
200 black
50 - Red
20 - green
- daily candlestick chart
- no stop-loss
- We will use in V40
- we buy when on top black, then red, and then green, and in the end closing price
- we will check this after end of the day.
- we will sell when price on top, then green then red then black.
Average
- If stock goes 10% further down from our buying price then we average 1 time,
- and we sell 10% trade averaged one once it reach again to its buying 1st trade buying price.
- and in case price again goes further down for 10% we buy further again.
Note if you have 2 option take new trade or average, so give preference to averaging.
Reverse Head & shoulder pattern
1.we use in V40 and V40 next
2.no stop-loss
3. we use daily candle chart
4. 1 trade 3%, averaging 3%.
5. in reverse head & shoulder it could be more then 1 shoulder on either side.
6. neckline should be at 180 degree only, becz that will make sure its same operator that is operating it.
7. we will use Regular chart, not log chart
7. the reverse head-and shoulder patter should not be at lifetime high.
why we want to see this patter ?
becz its same Operator, and he can take price up and down either side.
8. we buy from the left shoulder price, and target will be find as below:
we check depth of the head, to check price range
and in below example will be our target
buying chart
we do averaging whenever it comes 10% below the buying price.
and this pattern is not at lifetime high.
Cup and handle pattern
without left smolder is cup and handle pattern
its almost similar to head - shoulder pattern.
in this pattern there could be more then 2 handles
1.we use in V40 and V40 next
2.no stop-loss
3. we use daily candle chart
4. 1 trade 3%, averaging 3%.
5. it could be more then 1 handle on right side., it could be complex pattern
and complex pattern are much more reliable.
if we have choose to take 2 chart pattern where normal patter and complex pattern so we choose complex one
6. neckline should be at 180 degree only, becz that will make sure its same operator that is operating it.
7. we will use Regular chart, not log chart
8. we buy from the left handle price, and target will be find as below:
we check depth of the cup, to check price range
9.it should close above the resistant and that candle should be grenn color - breakout. closing above the resistant with green candle.
10. breakout confirmation - closing above highest level of breakout candle, and this should also be green candle
11. so we buy on breakout
and we dont consider if any patter on lifetime high and no breakout.
which Strategy is best or we should use ?
we need to check in V40 stocks, and some averaging one we are getting that we take 1st.
our portfolio in 3 part
- we already have the stocks that we already learned and we applied our Strategy, and we know the target price also.
- we have other stocks that may be in gain or loss, the stocks where our Strategy may not applying, book the profit. and reinvest on the basis of learned Strategies.
- our strategies nt applied, and we are in loss, so wait for the come to buying price, and apply your learned Strategies.
do we need to check charts on daily basis ?.
when we have money then we check or we have salary date may be then we should check.
if we have opportunity buy on the basis of that, and as we know the target also, so put GTT order for that after buying.
if we have opportunity in V40, and we have V200 or V40 next stock that not reached target, can we switch to that ?
yes
how operator sector-wise rotate ?
they keep selling in higher sector and they start putting money in lower sector
3 times in a year strategy
1. the stock price should come down more then 60-70% from lifetime high
2. we must understand the reason of fall. we should know the business
3 part in reason:
- i. sales is down. becz of this net profit is down, becz of this share price is down.
- ii. sales is okay(business is okey) net profit came down, sentiment is down, and stock price came down.
- in paint company happening this business is fine, due to raw material cost net profit is down.
- iii. sales was okay, net profit is okay, only share price is down. becz of just sentiments.
4. the reason of fall should not exist now.
example in paint stocks due to inflate material cost was high, but as inflation is getting down or bettor, crud price coming down, and dollar price also coming down.
5. there should be a proven track record of performace in the past.
6.there should be an improvement in last quarterly result.
7.there should be a good future prospect of the product and service of company.
8. after meeting above six condition. stock price should be down by 50% or more.
9. if there is 100% gain in 1st year we will sell.
10. if there is no 100% gain with 1st year, then we will sell life-time high.
11. if are not bless
category 1 example
motilal oswal
check revenue was down at that time, sales was decrease at that time
business of motilal oswal - stock broker, mutual fund, PMS(portfolio management system)
all midcap and smallcap stocks rallied from 2014-18,
so mutual fund company tried to improve their performance, then start adding small cap and mid cap stocks to show better Performance of the fund.
But sebi rule came in 2018, regarding to mutual fund holder its not good, its cheating with investor,
so sebi asked if a large cap mutual fund holding small cap, mid cap share, they need to sell that, and due to that a correction happened.
and in 2018, Arun Jaitley also put 1 rule as well.
on short term gain - tax increased from 10 to 15%
and long term cap gain was 0, that increased to 10%
so motilal oswal sales went down due to sell off in market.
but after that 1-2 years, whoever want to selloff, and market also normalized,
so that reason dont remain now.
and they have proven track record in past
that is also don, and if we see chart, at 2020-oct it was still 64% down.
category 2
JP power
JP power was down 99.9%
in p&l statement
sales was continuously increasing, sales was good
issue was in Net profit, positive profit went to negative
operating profit was positive , so issue was not in OPM
and if you see issue was created in 2018, interest cost is greater than OPM cost
and why it happen with JP, in 2014, their was theme, every house shoudl have electricity so power company tried to take power plant whatever the way possible or on loan. but these power plant was on coal, and coal supply in hand of govt.
but at that time coal scam happened, coal license got cancelled, and due to that it was unable to start power plant operation, and power plant operation was got delayed
same thing in right now in vodaphone
so what was happen in next in JP,
when they had lot of debt, they start sell their assets, to and they sell off almost 50% assets in 2-3 years
and they reduce the loan withing sales rumit debt to equity ratio below 1%, and it became profit making company
so matched all condition, its profit making resolving issue for fall, and seen few querter result and it was still down 98%, so after that it was up 100% within 1 year
category 3
equitas merged in equitas bank
its lifetime high was 196, low was 36
check financial
in 2018, NBFC company giving loan to people on risk, and due to loss, it was trouble for investment people also in that company, so what RBI down, they giving small-finance bank license to those NBFC companies, ujjiven, suydev samll-finance bank, au small finance bank,
so as per RBI given small Finance license to them, they would require to show bad debt also.
but in pandemic also there revenue did not went down, and price was still went down by 50%
from 67 to it went 37, so there was sentiment reasons.
this small-finance bank given loan to the labour class, like watchman, migrated people there, so in pandemic, sentiment was changed, those people went home, so it was not sure if they pay the loan, or if they will return, so due to that sentiment share price was went down. and there intrest rate was always high, as per normal other banks
F & O
1. Call Option (CE) – Profit When Price Rises
-
You buy a Call Option (CE) when you expect the stock/index to go UP.
-
If the stock price goes above the strike price + premium paid, you make a profit.
Example:
✅ You buy Nifty 20,000 CE for ₹100 (Premium).
✅ If Nifty moves to 20,500, the option price may rise to ₹600.
✅ Profit = (600 - 100) × lot size.
✅ If Nifty stays below 20,000, you lose only the ₹100 premium.
📉 2. Put Option (PE) – Profit When Price Falls
-
You buy a Put Option (PE) when you expect the stock/index to go DOWN.
-
If the stock price falls below the strike price - premium paid, you make a profit.
Example:
✅ You buy Nifty 20,000 PE for ₹80 (Premium).
✅ If Nifty drops to 19,500, the option price may rise to ₹600.
✅ Profit = (600 - 80) × lot size.
✅ If Nifty stays above 20,000, you lose only the ₹80 premium.
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