10 Mother Stocks for your fearless SIP Investing !!! - YouTube

You might have heard about the Systematic Investment Plan and generally, we do this discussion more around mutual funds. But, if you directly invest in stocks

then how can you make a SIP, on which category of stocks you must do SIP and what are the types of SIP. We will do all this discussion in today's video.

Friends, my name is Vivek Bajaj and I'm in the share market for a long time, I understand what is going on in the market. Whenever we talk about direct stocks, we always think can we manage them?

Because direct investment can be risky too especially when I invest in mid-cap, small-cap then their prices can crash too and you feel worried too.

So, there are advantages as well as disadvantages of one time investments. In the previous few videos, you get 4 big opportunities in your lifetime.

where if you invest 1 one time in the market, you can make huge money. And that opportunities come when the market crashes.

And at that time as you have the money you go all-in the market and invest money. But friends this is not practically possible, and this is not capable for everyone.

For those who are in the market for a long time, for them, it's relatively easier. But for a common man to invest the whole money in a single time is a very difficult exercise.

In fact, common man, whenever he invests, if the price falls down then investment increases more and if the price falls again then it increases more. This means averaging in loss is normal.

Right or wrong? This discussion we will do later on. But today, I am going to tell you that if you have to do SIP in direct stocks then there is a separate category of companies where SIP will be rewarding and peaceful.

Peaceful is necessary because we all are investing in the market for peace. We don't want such an environment that we are worried about the money in which we have invested.

So, if you have to do peaceful investing using SIP then this discussion is very much necessary for you. There is a category of stocks in the market which I call mother stocks.

Mother because those stocks have many kids and I feel that if you make a proper SIP plan in these mother stocks then in long term you will not face loss in the market.

Plus you could generate a better return. It is quite a subjective word though I have used it. But for every person, some returns could be better and for some other people, it could be poor.

So, according to me better returns mean that if India is doing a GDP growth of 7% and inflation is approximately 6%, then we should expect a 13% minimum return.

And if we are investing in equity as well then we should get more than a 13% return. So approximately equity risk is 2-3% which means you should expect a 15% minimum from the equity market.

And the more risk you take the more your return expectations will increase. Risk means investing in those stocks which can give very much return, then it's a risk.

So, when we have to make a model using a systematic investment then our risk-adjusted return should be moderate such that our money is not used and we get a 15-16% return.

So, in this video, I am going to give you that formula, hack. So watch it till the last, and this mother stocks, what is it concept I am going to explain you that.

See, there are many companies in India that have it;s own business and apart from that it has small companies whose business is there too and are doing well too.

Let me tell you names of 10 stocks that can be very much relevant for you whom I call mother companies, and probably you get more companies in this character which you can call as mother companies.

So, the 10 companies on which I am discussing is, HDFC, Naukri, ICICI Bank, Kotak Bank, State Bank, Reliance, Bajaj Finserv, Grasim, ITC & Larsen & Toubro.

You might have understood that these 10 companies are big and they have small companies which are doing well too. Now let us see what are the children's companies? I have made a list here.

HDFC which is a big name is housing finance in which asset management's 52% stake, HDFC life's 50% stake, 19% stake of HDFC Bank.

HDB Financial Services'S 100% subsidiary almost and HDFC securities almost 100% subsidiary. This means that when these small companies will grow their value will come in HDFC.

Remember one thing, there is a concept called holding company discounting which means that these companies, the mother company doesn't have a business on it's own but it hold stakes in the remaining companies.

So, that concept means that there is no business of the company then why should I invest in that company? But all these companies have it's own business which is growing and no harm in investing in them.

Second, InfoEdge is a unique company. Naukri is a website and a profitable cash-flow generating business. Apart from that InfoEdge is a micro Venture capital that invests in multiple startups.

2-3 big startups that were listed and InfoEdge got its value, Zomato, PolicyBazar, etc. And there are many startups where it is investing and if you believe in startup investing and believe that in the coming 10 years.

Startups will grow in India, which I believe in strongly. So, InfoEdge is such a system that gives you a good opportunity in investing in them. Third, ICICI Bank. Why so?

Because it is a great bank on its own, adapting technology has done very well. Apart from that ICICI bank has a stake in ICICI Securities, ICICI Lombard, ICICI Prudential Life.

As it will get value like ICICI securities got listed or any company that will get listed in future then the value will unlock whose benefit will be reflected in this company. After that Kotak,

Kotak Bank has so many companies, Kotak Mahindra Prime, Kotak Securities, Kotak Life Insurance, Kotak General Insurance, Kotak Mutual Fund, Kotak Mahindra Capital &Kotak Investment Advisors.

Now you imagine as each companies value will unlock this company can be a big entity on its own and from a banking point of view, it is assumed that Kotak Bank viz-a-viz other banking service providers.

After that there is State Bank of India, the more I say about it will be less. It has SBI Cards, SBI Life, Capital, General Insurance, SBI Fund Management.

Now many a times it is so that amongst these many companies are on a verge of listing and some have already been listed like SBI Cards, and SBI Fund Management will be listed.

So, it is like as it will listed, value will be unlocked and value will be seen in it. Reliance, we all know that it is no more an oil company. It has become an eco system on its own.

in which there are so many enitites whose value is being reflected in reliance, the big names like Reliance retail in which 85% stake is with Reliance. Reliance Jio Infocom's 67% stake.

Jio platform in which the remaining people were joined too, It has 66% of it. So you can imagine how big an ecosystem it is and I know that the company that will be 1 trillion $ in this country will be Reliance.

So, if you invest on a regular basis here then only you will be able to capitalize this journey. After that Bajaj Finserv, it has stakes in Bajaj Finance, Bajaj General Insurance, Bajaj Life Insurance & has its own business.

which operates 138 windmills to produce green energy in Maharashtra. So it is not so it is doing a very good job but it has some business in operating level which is interesting too.

After that Grasim- Textile, Chemical, Insulators, Fertilizers, Paints. Grasim is a big name. Where does it hold? Aditya Birla Fashion, Aditya Birla Capital, Vodafone, Hindalco, Ultra Tech Cement.

So ultimately if the value will be built or will get unlocked then Grasim will be valued too. After that L&T, L&T Finance, L&T Technology, MindTree & InfoTech. So many companies are a part of L&T.

And after that ITC which is renowned that people have bought it. ITC is a cigarette company but its subsidiary ITC infotech's value will get unlocked.

And each segment of ITC belong to and when the value vice segment will be unlocked then it's benefit will be given to company.

So these were 10 companies and you might tell 2-5 companies with a similar mindset that companies have a business too and have kids too which are doing well.

Now the question is how to do SIP in them? So according to me, there are 3 ways. 1. Fixed Time-based SIP meaning invest a fixed amount on the closing price at end of every month

If you see a graph of any stock, this is a monthly chart, so if you are investing from starting to end of every month then it has appreciated only. Possible that in some there might be more.

And not much in some. But you have got a normal return from your portfolio. What does this benefit? When the market falls then it becomes a forced investment for you then you do your investment at lower levels too.

Second is when you do SIP based on the earning of that stock. This means if that stocks PE multiple, price/earnings, if it is at a high point then reduce the quanitty.

And if it is at a low point then increase the quantity. So basically do three layers of capital allocation in every stock. 1st is when you decide you will invest 100,000

second is when you deicde to invest 75,000 and third is when you decide to invest 50,000 which you will invest when the PE is very high. and 100,00 when PE is very low.

So, where will you find PE? In StockEdge, when you go to any stock and when you go to ratios in fundamentals then over there, there are valuation ratios that will help you find the PE ratio at the end of every year.

So, you see L&T, PE of 7.5 - 16:22 then 17:16 then 25:21 then 12:17 and in today's date its trailing PE is approximate 30. This means I will do SIP in L&T but I will do 50,000 because it's in the high end of PE.

When the market price falls and the earnings remain the same then PE obviously remains low. Then I will increase the quantity and make it 100,000 which is called PE-based SIP.

Before this was fixed time-based SIP and this is PE-based SIP for which you will have to track PE and you should know what's a long term PE average ratio. You will get a hint in StockEdge about the PE of this stock.

The third way is when in comparison to NIFTY what is the relative performance of this stock. Whenever any stock is performing well in comparison to NIFTY then we reduce the quantity and vice versa.

This is opposite to momentum trading where we increase when it's out performing and when it's under performing, we exit or reduce. In this case it's the opposite.

Like for example if we talk about ITC then it;s downwards. This is basically a Relative performance of ITC viz-a-viz NIFTY. How will you find out?

When you go to an indicator in trading view where there is an indicator which our friend AMIT has made it whose name is Maverick Amit Relative Indicator. This is a free one. In this we can see a graph of RS.

So, if the RS is very high then we will reduce the quantity and when the RS is low then we will increase the quantity and when RS is on average then we will do SIP on nominal quantity.

This means in ITC as it's gone through its LOW then I will invest 100,000, if it remains around average then I would have invested 75,000 and if on high point then 50,000 Logic behind this is that as stock is high, will reduce the quantity,

And as the stock is running low then I increase the quantity. So, this can be done looking at price too but somewhere or other I feel that RS is a better indicator because it captures the NIFTY movement too.

So, I feel that you can do SIP on the basis on NIFTY. Let's look a similar stock in this name - Reliance. so looking at it's graph you will understand as average is 0.1 and when it was above then we reduce the quantity.

Now it has returned back to 0.1% So, I will invest 75,000 in it. Lets see other companies too, HDFC whose RS was upwards then I kept its quantity 50000

Saying in terms of value and as it's going down, going below average then I will keep on increasing the quantity. So if you do SIP on a regular basis in these mother stocks then you could beat mutual fund SIP

because in this case, you won't have to give fees to any fund manager. This is yours only. You just have to keep disciplined. Do time-based SIP or do value-based SI, this discipline will only give a framework.

So friends I hope you liked it and if so then share with your friends. Direct equity is excellent. Direct equity doesn't mean investing in small or mid-cap stocks.

These big companies representing India will definitely do good and will generate better return and give you vis-a-vis at least FD, other products which are generating lower yield for you.

This is safe and I feel that you should start SIP in them now only such that in the coming 10-15years as these mother companies will become bigger and create more kids, you will get benefitted too.

Thank you, friends. Take care of yourself and keep on enjoying the journey of stock investing. Bye-bye.