Smallcase manager Divam Sharma shares 3 stock ideas for Diwali Muhurat trading day

Divam Sharma, smallcase manager & Co founder, Green Portfolio, says topping up the portfolio on the auspicious Diwali Muhurat trading day gives a new positive vibe. In this interview with ETMarkets, he also shares three stock ideas. Edited excerpts:


What memories do you have of your first Diwali Muhurat trading experience?
It's always a lot of excitement and opportunities that you smell in the air. This Samvat and maybe the coming 10 years are going to be really special for Indian market investors. So it is going to be auspicious if you buy good companies any day for the next few years.

Do you make it a point to trade every Diwali? How auspicious is the occasion?
Topping up your portfolio on this auspicious day gives a new positive vibe to your portfolio and your high conviction stocks. Most of the years, on Muhurat trading, we did some token investments in our PMS and personal accounts.

What was your first Diwali pick?
It was SRF. That time, I had very little capital, but during that trading window, I was very excited, mostly glued to the business channels and hearing the experts and their conviction.

What would be your trading/investing strategy this Diwali?
We have launched a Diwali Samvat smallcase where we have put our high conviction stocks for our investors to top up.

Currently, we see lots of opportunities in the small and midcap space, particularly ethanol, 5G, and auto sectors.

We believe that this Samvat to next Samvat should be positive for Indian markets considering the positive long term outlook of large foreign institutions towards India, and high growth opportunities and business conviction.

Whether it is trading or investing, there is always an element of luck involved due to the sheer unpredictability of market behaviour and herd mentality. In this context, do you see Muhurat trading as an opportunity to bring luck in your favour?

Ultimately, in investing it is about discipline and conviction. If your conviction is not 100%, and you are not disciplined, you will tend to change your course and be un-decisive with short-term market events. Muhurat trading will not bring that change, maybe that vibe can create some impact for a few days. Ultimately, it's about looking straight and not being swayed by short ever evolving macro factors.

What would be your advice to new investors for the Muhurat trading day?
There are times when everything looks rosy and making money from markets is easy and there are times when there are lots of headwinds for the markets. As an investor, you have to keep looking at your portfolio company’s fundamentals and not change your investment style or strategy just based on some short-term market factors.

Diwali stock picks are very popular among both new and old investors on Dalal Street. Any ideas you would like to share with us?
Sterlite Tech: The company is a part of the Vedanta Group. We like the group as it is investor friendly. Most of the profits they make, either goes into growth or dividend. Our projections, based on management guidance, show immense upside potential. We take further comfort from the huge order book of Rs 11,000+ crore (FY22 revenue Rs 5,700+ crore) and immense tailwind from 5G rollout worldwide.

Dalmia Bharat Sugar: Dalmia has been one of the few companies in the sugar sector which has been able to survive cyclicality in the sugar industry, which demonstrates the efficiency and competitive advantage of the company. Now, with diversification of its portfolio to more stable and accretive segments like ethanol where there is huge government push, company profits are more predictable and which has also helped the company strengthen its balance sheet. With more capacity coming up in ethanol for the company, both the top line and bottom-line will see growth in coming years.

Mahindra CIE: It is a multi-technology auto component supplier, Mahindra group company, diversified across India, Europe and Mexico and into MHCV, tractors, two wheelers, and LCV. India revenues are continuously growing and the company has capex plans for India. The stock is available at a comfortable valuation which is a discount to its 5 years median PE multiple.

(Disclaimer: Recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of Economic Times)