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Quant Structure of the Market (October ’17): 3 Stocks to go Long

Education Series | November 08, 2017

For the month of October’17, Quant recommended 3 Long stocks ideas- Williamson Magor, Emami Ltd and Take Solutions that went up by average 12.85%      -atul.mishra@narnolia.com

Recap of October 2017: Nifty grew by 5.59% during the month; Nifty 500 grew by 6.44% while Nifty Mid Cap grew by 8.12% while Nifty small cap grew by 12.73%.

In terms of sector, Energy, Materials, Industrials, Telecom and Utilities were biggest gainers and grew by 13.49, 9.49, 9.95, 20.14 and 8.19 percent respectively while Consumer discretionary, Consumer Staples, Heath Care, Financials and IT gained 6.35, 5.11, 5.96, 4.81 and 5.30 per cent respectively.

In terms of trend, Earning Score was better predictor of price growths in October. Stocks with Price Score (PS) above 70 (at the end of September) witnessed a median rise of 9.53% whereas median rise for stocks having Price Score (PS) below 30 (at the end of September) was 6.62%.

Stocks with Earning Score (ES) above 70 (at the end of September) rose by median of 7.67% whereas stocks with Earning Score (ES) below 30 (at the end of September) grew by median of 6.46%.

3 Long Stocks

Any stocks with high Earning Score (preferable above 70) if is trading with poor Price Score (below 40) and if for any period (say a month) positive price momentum comes then it usually signals revival in that stock price.  For the month of September 2017, Nifty was down by -1.3%, so the appropriate price momentum level for September was more than 0%. So the 3 appropriate shares to go long for October were

Stock NameSeptember ES > 70September PS <40September PM >0%
WILLIAMAGOR72.3839.137.27%
EMAMILTD71.8239.391.01%
TAKE92.6033.1111.70%


And these 3 stocks gave return in October of

Stock Name% Return in October 2017
WILLAMAGOR11.14%
EMAMILTD14.65%
TAKE12.78%

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ABOUT THE BLOGGER
Atul MishraAdvanced Market Researcheratul.mishra@narnolia.com

Atul works with an Advanced Market Research Group at Narnolia Research. His forte is quantitative research on Indian equities. He is a computer science graduate with Masters in Finance from Faculty of Management Studies, Banaras Hindu University.

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