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- Jesus answered, "The scripture says 'Man shall not live by bread alone, but by every word that proceeds from the mouth of God'."

6 Jul 2018

STOCK MARKET--Can we recognize multibagger stocks?/read and understand--

The Answer to this question would be mixed!!.. No One can Outrightly Point to a stock and label it a multibagger But there are certain Traits that Every Multibagger Stock posses through which you can identify a potential stock with Good Growth Capacity. They are

1.       The stock is Brutally Strong in its Fundamentals.
2.      They are Subdued and Not in the Main trading domain. (Ie :- It has not been in the eyes of big players)
3.      The Business Should have the potential to thrive than to survive in the industry for a minimum period of 5 years.
4.      Mostly the stocks with above quality lies Illiquid in the initial stages. ( Ie:- The traded volume is low)
5.      The Deliverable Percentage is from 85–100%.
6.      Follow the Jhunjhunwala's Priciple of “Choose right and stay tight”. Invest and forget for 5–7 years because the price may not move up always. The potential of the company must be witnessed and acknowledged by the market till then such stocks will lay flat.

But there are high precautions to be exercised before wntering into such stocks because :-

1.       Since the traded volume is low in initial stages any one can play with prices.

2.      The Price may fluctuate violently even for News with least significance relating to the company. So for any kind of Short term investment this may turn out too risky. For example :- Recently Kovai Medical one such illiquid amd fundamnetally good Company's aufitor resigned due to internal reconstruction in the audit firm. Since his retirement the stock fell from Rs.1300 to Rs. 950 falling nearly 27% for a news that will in no way has impact on company. So for short term investment you can't rely on such stocks.

3.      Not all stocks that you choose will perform will actually perform in the market. The mutual funds who are professionals even fail to beat market mid cap index from Mid cap investments. The statistics say that 44% of mid cap mutual fund schemes fail in the way mentioned above. So be very cautious if you are selecting a stock on your own.

Finally you need to be Lucky too. Selecting a safe and A stock with good performance needs no luck a careful and deligent analysis of Large and mid caps easily provide you with that. But aiming for any thing more than the average is Highly risky and rewarding too. So weigh your Risk and return estimates and plan accordingly

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