The Top 5 Stocks That Made Money For Me During the Covid19 Season.

 

The Top 5 Stocks That Made Money For Me During the Covid19 Season.

I have been a full time trader since April 2020 trading in day and swing formats using a mix of strategies. It includes use of charts, technical indicators, price action trading etc. among others. Like many of the traders, I had also lost money in the stock market initially. But that is not the end of it. Two famous sayings helped me come back stronger and post profits.

The first one being “Before You Invest In Something, Invest In Time to Understand It”. Yes, that what we should do! It took many years for all of us to complete our education and get a job. It took me 21 years. But when I came to stock markets, I wanted profits instantly. How is it possible when you have sea lot to study about the markets first? The lock down was a blessing in disguise as I got a lot of time to learn. Google and Youtube has all the knowledge in the world from which you can learn, learn and learn. Yes, now we have that luxury to learn anything from anywhere.

The second one being “If you want to make millions in the market, come with billions”. This was a reality check for me to understand that share market is not a lottery ticket where you can buy for Rs 50/- and be the lucky one to get that Rs 1 crore. Understanding this, I started taking well researched low risk trades with small profit margins with the help of my studies.

Here, I am sharing my experience with this post on ‘The Top 5 Stocks That Made Money For Me During The Covid19 Season’. It contains the background of companies I choose to trade and invest, what were some specific price points and parameters I was tracking and how did I trade. Hope this article would help you learn atleast one thing new.

#Rank 5 : HDFC Bank  

HDFC Bank is a constituent of Nifty 50 which is the benchmark Indian Stock Market Index. It is also a Nifty 50 heavy weight with a weightage of 9.56%. It is having the second highest weightage with only Reliance above it at 14%. It is also a constituent of Sensex and Bank Nifty. HDFC Bank is India’s largest private sector bank. Their quarterly profits for quarter ending June 2020 grew almost 20% to Rs 6658 crores. Its Net Interest Income (NIM), one of the major parameters indicating a bank’s performance, grew almost 18% to Rs 15665 crores.

One of the major development with HDFC Bank is that Aditya Puri, the bank’s Managing Director since 1994 is retiring in October 2020. In July, Aditya Puri sold 95% of his stake in the bank for more than Rs 800 crores. The investors were watching this action very cautiously and there was an indecision in market about HDFC Bank trading despite the bank posting decent results. At that point of time, the succession plan for the bank was also not clear. However, on August 3,2020 Reserve Bank of India has approved the appointment of Sashidhar Jagadishan, an HDFC Bank insider as the new Managing Director on the retirement of Aditya Puri. HDFC Bank rose from its monthly low of Rs 993 after this news. However, it tested the 200 Day EMA (Exponential Moving Average) in the range of Rs 1068-1071 multiple times during the month of August but couldn’t break it. Yesterday, on August 21, the 200 Day EMA was broken and the stock soared to a high of Rs 1088.8 and closing at Rs 1085.65.

My strategy for HDFC Bank was buying on dips whenever it tested 200 EMA and came down. Most of my trades were on BTST (Buy Today Sell Tomorrow) where I could buy based on my margins and could hold for a week without hard cash payment. BTST typically gets auto-squared off after a week. Last day, I have exited all my HDFC Bank Holdings.  HDFC Bank’s 52 week high is at Rs 1305.5. Even though bank has declared dividends in the range of 400% to 1000% from 2015-19. So far, no dividend has been declared recently in the year 2020. The last declared dividends were in June 2019 ( Rs 15 per share) and August 2019 (Rs 5 per share) which were final and special dividends respectively. 

#Rank4 : ITC Limited (ITC)  

ITC is a yet another heavy weight Nifty 50 stock with a weightage of 3.62% at present. It is also a constituent of Sensex. It is an Indian MNC operating in the businesses of Cigarettes, FMCG, Agribusiness, Papers, Hotel among many others. ITC is a professionally managed company with 0% promoter shareholding. ITC sells almost 81% of Cigarettes, Bidis in Asia. Major Brands being Wills Navy Cut, Gold Flake Kings, 555. The famous brands Aashirvaad , Sunfeast , YiPPee, Candyman, Savlon, Fiama Di Wills, Vivel, Classmate notebooks all belong to ITC.

ITC’s profit for the quarter ending June 2020 was Rs 2511 crores Vs Rs 3355 crores year on year down almost 25%. It was mainly attributed to low cigarette sales. The revenue was down almost 30%. However the FMCG business showed a growth in revenue of more than 10% as  FMCG business was ‘on’ even during the lockdown.  Hotel business was most hit during the period. The revenues fell almost 94%. 

I was closely tracking ITC ever since it announced its new dividend payout ratio at 80-85% of PAT (Profit After Tax). The Ex-Dividend date for ITC was July 6,2020. The dividend declared was as high as Rs 10.15 per share at 1015%. My trading with ITC was hovering around this. I took multiple trades in ITC tracking along with Nifty. It being a heavy weight, many a times, it even guided Nifty’s movement. I was continuously doing swing trades in ITC as it moved in Rs 180-210 levels. Many times I could sell above Rs 200 levels and could again buy at lower levels as low as in 180s.

My last trade with ITC was on day before Ex-Dividend date where I sold at Rs 207 levels. Though, the dividend was really good, as it was going to come only in September, I decided to value my capital more and go for a timely exit. Stock prices fell from Rs 208 to Rs 194 after the Ex-Dividend date as expected. At present ITC is trading at Rs 196.8. ITC’s 52 week high is Rs 266.3

#Rank 3 : Larsen & Toubro (L&T) 

A constituent of Nifty 50 and Sensex, L&T is an Indian conglomerate with business interest in Heavy Engineering, Construction, Realty, Manufacturing, Information Technology, and Financial Services among others. It is also a professionally managed company like ITC with 0% promoter shareholdings. L&T was hit significantly during the lock down that aroused out of Covid19 pandemic. For the quarter ending June 2020, their profit stood down almost 78% year on year at Rs 303 crore Vs RS 1473. However, with lock down easing and labour force getting back to work, L&T foresee a better quarter in the coming. L&T would also be one of the major beneficiary of Atmanirbhar Bharat vision which strives to make India a self-reliant nation. L&T stocks soared to Rs 1020 levels last week first time since March as Government issued the new Draft Defence Policy which curbed imports on many items creating room for local players like L&T.

 

I bought some L&T shares in June and had to wait till 3^rd week of August to exit. It was a long wait. However as L&T shares were in my holdings, I was totally tracking it and I could hedge my losses by taking some good Intraday trades whenever possible, mostly based on technical indicators and pivot tables. I also got Rs 8 per share dividend during my holding period. L&T has given a total dividend of 900% at Rs 18 per share. It was given in two packets in March and in August at Rs 10 per share and Rs 8 per share respectively. L&T’s 52 week high is at Rs 1551. I also personally feel there should be a further up move. However I have exited all my positions as my capital was locked for quite some time. I would be continuing to track and will take good intraday trades whenever possible. L&T is at present trading at Rs 994.15

#Rank 2 : State Bank of India (SBI) 

A constituent of Nifty 50 and Bank Nifty Index, SBI is one among the 7 Indian companies in the latest Fortune 500 list. Recently, SBI posted a profit of Rs 4189 crores for the quarter ending June,2020. This is almost 81% up year on year. The stake sales in SBI Life and LIC has helped them in boosting the profit. It is to be noted that the NPAs (Non-Performing Assets) also reduced to 5.44% quarter on quarter from 6.15%. This is also a good sign. SBI is currently trading at Rs 198.4. The 52 week high for SBI is Rs 351. However, SBI hasn’t declared any dividend in the recent past. The last time they declared dividend was in 2017 at 260% which was Rs 2.6 per share.

I have taken only 4 trades in SBI during this period but all were highly profitable. I could buy SBI in ranges near its 52 week low of Rs 149.45. I bought SBI more on my belief in India’s largest bank rather than on any technical indicators. SBI’s price moved up to Rs 193.1 in June as it posted one of its highest ever quarterly results with a profit of Rs 3581 crores, up 327% year on year. Recently, it closed above Rs 200 levels on August 12^th for the first time after March. At present, I do not hold any SBI shares and is evaluating my next suitable entry point. 

It is interesting to note that SBI holds around 70% stake in SBI Cards & Payment Services Limited which has now been included in the Nifty Next 50 index. Recently, SBI Cards had hit a 52 week high of Rs 836.7. SBI Cards’ IPO was launched in March at a price band of Rs 750-755. It hit a 52 week low of Rs 495/- in May and has now given a significant up move above the IPO price. SBI Life Insurance in which SBI has nearly 60% shareholding is also progressing as it is entering the coveted Nifty50 index in September.

#Rank 1 : Bharat Petroleum Corporation Limited (BPCL) 

A constituent of the Nifty 50 and also Nifty Energy Index, BPCL is also one among the 7 Indian companies in the latest Fortune 500 list. Recently, BPCL posted a stellar profit of Rs 2076 crores for the quarter ending June 2020 mostly on account of inventory gains and lower expenditure. The profit is almost 93% up from Rs 1075 crores in the same period of last financial year. They have a good dividend yield and had declared a dividend of 165% at Rs 16.5 per share for the last financial year. BPCL is currently trading at Rs 410.1 and the 52 week high is at Rs 549.

I have been trading in BPCL in both day and swing format from April. My most profitable days were in the 3^rd week of July when the share prices saw a huge jump, posting a 3 month high of Rs 481 when the news on Global Oil Majors’ interest in bidding for BPCL was streaming on media. However, the last date for submission of Expression of Interest (EOI) for the disinvestment drive was postponed to September 30,2020 for giving more time to potential bidders. The share prices have fallen significantly hence. I am still holding some shares as the Government has made it clear that they are going ahead with privatization of BPCL. I hope that the share prices will again bounce back. 

As per media reports many Global Oil giants such as Rosneft, Saudi Aramco, Exxon Mobil are interested to participate in the bid. Even though, there was a media report that Reliance is not participating in the bid, there is no official confirmation from them on the same. BP and Total were also not participating in the bid as per media reports. However, with news of Adani-Total JV seeking fuel retailing license. We have to wait and watch!

Below is my profit table. The figures are in Indian Rupees. 

1 USD = 74.93 Indian Rupees.

Disclaimer: The above article is an experience sharing. It is only for educational and informational purposes. Readers are advised to do their own self study, consult their personal finance advisors before taking any trades in the above securities.