Thursday was a painful reminder of the dangers of crowded trades. Alphabet declined by around 10% in U.S. evening trading after its earnings fell short of forecasts, and the company announced plans to funnel huge amounts of money into AI infrastructure. Samsung Electronics fell by almost 4% despite posting its best-ever quarter, amid a Semiconductor profit miss and a failure to provide details of shareholder returns until January. In Asia, the KOSPI index of South Korea was down 1.2% after falling as much as 3% intraday, the CSI 300 was down 1% on chip stocks and the Hang Seng TECH Index was down 2.6%, as reported by Investing.com Market.
And the Indian market was relatively stronger. The Nifty 50 gained 0.6% to be among the few Asian indexes to close in the green after the US Federal Reserve chose to leave interest rates unchanged on Wednesday. The BSE Sensex was 507 points higher at 73,753 and the Nifty gained 136 points to 22,835 by 1:00 p.m. IST. Nifty IT, PSU Bank and Realty were the top outperformers, with the Nifty FMCG rising 1.56%, Business Standard report.
Markets were not identified by Investing.com Pro Picks AI. However, the Bharat Market Outperformers strategy is an equal-weighted Indian sector portfolio of stocks, which minimizes the influence of any single position or industry.
AI driven insight” – selects 20 Indian stocks that its models predict could outperform the market in the next one month.The strategy can hold up to 20 stocks so no one position would be too important. The weights are equal, meaning no price extremes push a stock away from the average. Then the portfolio is adjusted once a month: new stocks are added, some are kept on and others are removed, without regard to any one market event.
As of now, the Indian weights in the strategy are auto components, wealth management, telecom equipment, pharmaceuticals, energy, consumer staples and utilities – with no semiconductor stocks. The strategy thus had no direct exposure to the segment as chip stocks in Asia fell under pressure and the few equity allocations had their current positions across seven sectors.
Diversification does not mean no losses and, in the case of equal weighting, there are compromises: high performers account for the same proportion of the portfolio as those that have performed less well. The set up is intended to restrain the effect of any one holding or sector.
The top two performing positions
Biggest player is Samvardhana Motherson International Ltd. (BSE: 517334), the auto-components group which is more familiar to most investors by its legacy Motherson Sumi. The stock for the model was listed on April 1 at ₹107.36. It closed at ₹159.70 yesterday, 48.8% higher from the date of listing, over a period of some seven months or so.
Motherson is exposed to the global car-cycle. As a tier-one supplier, earnings are driven by vehicle sales and per-vehicle content, including demand in European and North American markets. Slower new-vehicle production might depress performance, which is a risk different from the pressures on margins that chipmakers face from slowing supply growth.
The second-largest contributor is Anand Rathi Wealth Ltd. (NSE: ANANDRATHI), which added on June 1 at ₹1,751.20 and closed Thursday at ₹2,264.80 for a return of 29.3%. Business Standard and Markets Mojo showed it hit a record Oct. 28, though the indexes gave different levels. Its fee-based, asset-light model is tied to the expanding market for household wealth-management in India, offering the benefit of exposure to domestic financial appetites.
Three other opened positions have also gained during their respective holding period. HFCL Ltd. (NSE: HFCL), a manufacturer of optical fibre and defence electronics, has gained 13.5% from the date of its opening at ₹211.89 on July 1. Nuvama Wealth Management Ltd. (NSE: NUVAMA), opened at ₹1,652.50 on Oct. 1, is up 7.4%. In the sister mid-cap strategy, Bharat Mid-Cap Movers, Alivus Life Sciences Ltd. (NSE: ALIVUS), a maker of active pharmaceutical ingredients formerly known as Glenmark Life Sciences, has risen 23.0% from its July 1 opening at ₹1,132.36.