Buys:
BHEL, Axis Bank , VST Tillers, Mayur Uniquoters, Atul Auto, Swaraj Engines, Lumax Auto and Wim Plast
Sells:
Patels Airtemp, Tide Water
Outlook:
Midcaps valuations continued to correct last month. Economic outlook continues to be weak with the current account deficit going greater than 6% last quarter. Inflation continues to be sticky and all indicators point to a general slowdown of economy. Auto numbers came down pretty low and bank credit growth has been lower than normal as well. The outlook is currently pessimistic and that is what is making me happy. As Warren Buffet said ‘ Be fearful when others are greedy and be greedy when others are fearful’. I see this as an opportunity to pick good business at fair or below fair prices.
Thought on my holdings
Number of stocks in the current portfolio is 28. Have been reducing Patels Airtemp and would soon exit this position fully. Over the next few months, I will be consolidating the stocks in similar businesses and have the money invested in one that has better business value and growth potential for the price paid.
Most of my additions have been in mid caps. Axis bank is the only large cap I am continuing to accumulate. Axis, HDFC Bank and Yes bank are the only private banks that has decent asset quality and are well run with good growth. I have preferred Axis than HDFC bank because of the price paid. I prefer Axis bank than Yes Bank because Yes bank is new and the management does not have long track record. Also the CASA ratio of Yes bank is low and the cost of deposit is higher. Axis bank has corrected a lot and I pray that the price keep going down while I accumulate a big position. Now Yes bank is available at the same valuation like Axis bank and I may initiate position on Yes bank just to diversify the holdings.
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