So hello everyone, I hope you all are very excited because the on the blog today, the topic on which you are going to get information today is Mr. Kunal’s favorite topic and that is momentum investing. So if you want to make money from the share market by investing, then you should definitely learn momentum investing. It is Avery important topic. Read this blog till the end and if you like it, then share it. Sir, let’s start.
It Isa very important topic. And the reason for this is that the engine of my success has been momentum investing. So that’s why I want as many people as possible to use it. See, whether you do trading or not, everyone should invest.
And if you are not investing in India, then you are doing injustice with yourself. See, you hear many times, like you will meet some old people from Delhi, then they will tell you that there was a time when the land was worth billions and then this whole area was empty.
Or maybe people say this about South Mumbai. But see, when those people were there at the time of the incident, then those things were not bought from them. They did not have the courage. And the generations that come later ask why you did not buy then. So the coming generations will ask you a question. Why did you not buy the share? When this share was getting so big, what were you doing?
And then you used to read the blogs of Pushkarji. Even after that, you could not invest, so it is a curse on you. No, it is true. When ITC was 200, why did not you buy? Now it is 300, so why did not you buy? When it will be 1000, people will still say this. Absolutely. Then they will say more. So that’s why it is important that we invest. And the reason for investing in India is that our economy is growing very fast.
Now, usually people think that we do not understand how to invest. So my arguments that when you have an opinion on all your issues, whether Ukraine is right or Russia is right, you have an opinion on this too. Although you do not have any degree in international relations, you still have an opinion on it.
So when you have an opinion on all these things, then you should have an opinion about the market and about the stocks. After all, you are consumer, you are watching the market trends. And today I will tell you in this blog that if you are an ordinary person who has no knowledge of the market, then how can you do momentum investing?
We will talk about this today. But one thing I want to say here is that momentum investing is a great idea. Every person should try it and put their savings aggressively in equity. Because the next 10 to 15 years are golden and they are of India. So the time has come. And when the time comes, there was a time when the Great Depression came in thus in the 1930s.
In the US, people repented from the stock market that we will not look at the stock market. In fact, the villain of the Great Depression was also told to the stock market. People believed that the real reason for the great economic boom in Americas the stock market. So there was a whole generation who taught the children that the stock markets wrong.
But then after the 60s, there was a change there and every person started taking interest in the stock market. Today, 50% of the families in America are investing in the stock market. And we have a 4-5% difficulty. So you see, a very big time has come for us. And whenever this time comes for a society or a country, the stock markets there work very well. So a lot of money is going to be made and if you want to be a part of it, itis very easy.
And we will talk about it. Yes, please continue. So let’s talk about what is momentum investing and what is different from investing. Soothe first thing is that to invest, you have to keep your ears and eyes open. That is, if you look around you, you will get a lot of ideas. Now, I want to tell you a few things in this. First of all, see what is momentum investing? What is the difference between investing and trading?
Like if you are a trader, then many people consider investing to be trading and trading to be investing. For example, if you bought a share for intraday, it went wrong, then you kept it. After keeping it, it remained a part of your portfolio for many months and years. Now you have to take delivery of it. So see, this is not investing. Here you are confused between the two and you have to pay a big penalty for. Investing is different and trading is different.
What is the difference? See, in trading, it is not necessary that you are taking delivery of that thing. You do trading on the margin. Like you are trading in derivatives, then you have leverage. You do trading by taking advantage of leverage. When you do trading, you are very active. That is, you are looking at the rate every minute, every moment, then it is called trading.
Investing is such that, suppose you have bought a land, now you do not check its price with the property dealer every day, that what happened today, what happened tomorrow. So there is a little passivity in trading, investing and equity is a little active. This is the main difference between the two. What is called momentum investing, let’s assume it is a hybrid. That is, there is a middle ground between the two, which we call momentum investing.
The suit is not at all passive like investing. It is not that you left it, if the price comes, you will think. It is nutlike that. We are tracking the price continuously, we are reviewing it periodically and we are making decisions based on charts. Now see, there is a big misconception that I think that since I started my career, this has been my biggest failure. See, when I started, I used to invest in the long term or medium term through charts.
So many people said that you are doing useless work, there is no logic in it. If you want to invest in the long term, then you do it through fundamentals. I also started my careering fundamentals.
But see, I have proven from my experience that the most powerful return comes when you use charts for medium to long term investing. So that is called momentum investing, where you are looking for medium to long term investments through charts and keeping it for the medium-term.
What is expected from the medium term? You are 6 months, year, 2 years and if a stock runs very well, 3, 4, 5 years and the money that is made in that period is great. So momentum investing is a tremendous idea and you have to understand how it is different from trading. One more thing is important that you open two separate accounts.
If you are going to do both, keep the trading account separate and the investing account separate, otherwise it gets mixed up in both. So, suppose you are having a loss intruding, then you will try to sell your good shares to pay for it. So make a China wall between the two and do trading in separate accounts and investing in separate accounts. Now the question is how to do momentum investing.
So see, I am telling you a very small basic concept that anyone can use very easily. See, if you look around you, you will see a lot of such ideas, you will see a lot of such trends in which tremendous momentum is made. I will give yuan example. See, there is a share, Aishwarya Motors, there Isa chart in front of you.
Now see, many of us in 2009-10, those of you who were paying attention at that time, you will remember that at one time the bullet bike was completely finished and after that it was revived. When the revival happened, you started seeing bullet bikes in front of you. You saw its aspiration value. You understood that everyone wants me to buy a bullet bike. But you know that bullet bikes are popular.
But did you see at that time which company makes it, what is its chart saying, is it visible on the chart? So we have to keep that concept in mind and walk. Like you are seeing that people are wearing jeans all around. So find out which company makes jeans. Who is producing the most denim in India? What is its chart saying?
Like I just read in the newspaper that this year there will be 35lakh marriages. So 10-15% of our country’s GDP comes from marriages. So now see, if 35lakh marriages are created, it is obvious that people will wear suits in it. So Raymond’s clothes will be sold. This is common sense. Now the questions that when you know that so many marriages are taking place and Raymond’s clothes are going to be sold, then it is waste of 2 minutes to see the chart.
If you see the chart, you will be able to recognize many times that you have caught this trend emerging at the right time. If at that time there is the same momentum on the chart and the same kind of breakout is visible on the chart, then it becomes a great money. Because these trends run for months. Now see, because I have mentioned Raymond, let’s see Raymond’s chart. It is looking fast today.
And see, I am seeing the weekly chart. So you see how in the last few weeks, it was seen to be very fast on this chart. Now the breakout came on the chart. Now see, there is no brocket science in this. You saw momentum on the chart. Resistance broke. If you invest on the resistance breaking, then you see 50% jump in the last3 months.
This is the monthly chart. So you saw that in 3 months, 50% jump in the stock. Where will you get 50% return? So see, if we go on evaluating these great trends, now see what happens many times that there are many opportunities around us, but we are not able to recognize them. So increase your view a little and you will see that you will find many opportunities.
See, now assume that there are hotel stocks. Now you know that a lot of people are interested in staying in hotels. Affordability is increasing. Everyone is staying in hotels. And if you call any hotel and find out, then no one has an empty room.
So you will see that this is a very big trend. So now what you have to do is relate it to the chart. If you see any hotel stock on the chart, which you have not seen, then you will see that there is a lot of demand If you are buying in a market where there is a big breakout, then you should buy there. If you buy there, you will see substantial returns in the future.
Many times we identify a trend, but it has no impact on the chart. For example, there is a lot of crowd at the airport. If there is a crowd at the airport, you will feel that the airline shares are growing very fast. But if you see the chart, you will think the same. This means that there is some other reason why the price action is not visible on the chart.
So, ignore that trend. But when the price action starts to be visible, you can consider it. So, you have to find those stocks where there is a major trend at work. Along with that, your charts are pointing to that direction. And you will see many such opportunities from time to time. For example, we saw that there was a generational shift on large scale.
In our country, people like to buy gold, silver, and jewelry. And they put a large part of their savings in gold. But usually, we used to buy all these things before our jewelry of our identity. There has been a shift in a generation. And now you want to go to a branded jewelry store and buy it, we saw that the shift from unorganized to organized. Now who will be its beneficiary? Its beneficiary will be companies like Titan.
If you had seen the charts at the right time, you would have seen a huge volume addition in this stock. And you would have seen that the stock has been in a massive uptrend. Now, I want to tell you one thing.
When you see long-term charts, the way to see them is different from short-term charts. In long-term charts, the trend runs for a long time. Because big funds and big institutions make big positions.
The big funds that enter a share cannot sell it the next day even if they want to. Traders see that today I bought a stock, tomorrow I will get profit and I will leave. But a mutual fund or a pension fund, when it buys a share, it buys in such a large quantity that it cannot exit it the next year even if it wants to. It is very difficult to find such a big buyer.
So, their investment is long-term. If that share is doing well, then more money comes in that fund. And when more money comes in that fund, it is obvious that that fund has to keep investing money in that share again and again. This is a self-fulfilling prophecy. If institutional money starts coming in a share, then you see that more money keeps getting invested in it and its value keeps increasing.
Because of this, the share becomes scarce. And we call this scarcity as scarcity premium. When there is a shortage of something, then its value increases naturally. You have studied this in basic economics in school and college. If there is a high demand and low supply, then the value increases. And the share is the same.
Now, no new shares of Titan are coming in the market. All the free float shares available are the same. But now, new money is chasing it. Because you see that in mutual funds, retail money is coming in large quantities. Now, where will this money go? It will go in these shares. And when it is invested in these, then its value increases naturally.
So, we have to look at those shares where there is a big shift. And the charts are supportive. For example, I will tell you an old story. There was a share in a time. The share is still there. But there was a break out in it in a time. The name of the share is Hindustan Unilever. Now, everyone is familiar with the lever.
And nothing happened in the lever for years. You see, I have drawn a line. And this is around 286, 300.We are looking at the long-term chart. And see this, from 2001 to around 1999 to 2010.That is, the lever could not cross the 300 mark for 11 years. And people used to think that this is an FMCG company. It is so big.
Everyone has discovered intuit is so researched. What will happen in this? Now, you will not use two Lifebuoy soap suddenly. But you see, scarcity premium. That is, when big institutions invest in India, they invest in the whole country. They have to invest money in the whole country. And for that, the proxy of India’s consumer demand is Hulks, when the money started coming in HUL, you saw that the prices kept increasing.
All the quantities are with big institutions. In the past, HUL used to be in retail investors or HNI portfolios. But now it is a vanishing species. So, whoever had it, as soon as the price increased, he got rid of it. See, the prices kept increasing, people kept getting out. And today, you see the price, the share of FMCG is 2600 rupees. So, this kind of big momentum is formed, when that stock is taken out by retail investors and goes into the hands of institutions.
Scarcity is formed. The price of any asset increases in the world only when it has scarcity. If it is available openly, everyone has it, the whole village has taken it, Then the chances of it increasing are reduced. Where you see, the positions are very concentrated, the prices increase there. Where you see, the share is very widespread, and distributed, it is in every person’s portfolio. The chances of it increasing are less there.
Like you saw, ESPENC fell, and people started buying ESPENC.So, as long as people kept buying, the prices of ESPENC kept decreasing. The same has happened in many shares in history. That the share falls, retail investors are buying. Where the retail investors out of reach share is happening, that is, it is not possible to buy, the prices have increased so much. There, you see, a lot of money is made.
So, the principle of momentum investing is that, we should find such shares where there is momentum. The real meaning of momentum is, speed. So, the stocks that show technical speed, we have to identify those shares. Now, you think, how will we define speed? So, see, in technical analysis, there are principles for this.
For example, see, if you put an RSI indicator on this chart, by which, every person is identified. So, if we put an RSI indicator on this chart, about which, we all know, it is a very popular indicator. So, I put RSI here. Now, I will change it again. The lines of 70 and 30 in RSI, I will change them and make a line of 50.
So, see, in technical analysis, there is a way to define momentum. So, see, this is RSI.I have put a line of 50 in it, you can consider it as a baseline. So, if there is RSI above 50, That is, there is momentum in the stock. There is momentum above 50. And you see, in this whole period, you saw, That RSI has been positive on monthly charts continuously.
For the stock, it has been above 50. This means there is momentum in it. Momentum is often more than necessary, and then correction comes. Then momentum becomes 70-80, and then you see, correction comes. And corrections also come substantially, because it is a long-term chart.
So, if you start looking at charts in this way, then you will find that if there are such shares in your portfolio, which is above 50 on the RSI monthly chart, Stock is outperforming, along with that, you see that there is a trend behind it, that is, there is a market force, Because of which it is being bought. The share is big, that is, in an institutional perspective.
See, I will tell you a small experiment. You look at the charts, and you will find that as soon as its market cap starts to exceed 1000 crores of any company, then institutional interest starts to come in it. Small companies are usually not looked at by institutions.
And the shares that are not looked at by institutions, there is less possibility of such one-way big moves coming. So, we have to focus on those shares Which have a minimum market cap threshold. That is, the stock is outside its, if you focus on those big shares, in which consumer demand is behind you, then you see, you get very good returns.
And in our market, there are all such opportunities. Now you have seen that the way the fertilizer has become fasten the shares, Recently, it has become fast in the government banks. Now see, as it is happening in front of us, we read in the news every day that India is changing. New India. And in this India, we want to make everything in India.
We want to be self-reliant. So, it is not possible that the government does nothing in the field of protection. So, we know that the focus of the government is on defense. If you read this newspaper even once, you will understand this. So, what do you have to do? Now you have to find the shares of defense, which big defense companies are there. So, you will see that India will see electronics, India will see dynamics, India will see aeronautics.
This is your monthly chart of Bells; you will see what kind of a great move came. There was a breakout on the chart. It went from 40 to 103.So, this kind of a big action was seen on this chart. And it is not difficult to identify this. Look at RSI below. RSI came out above 50. Breakout on price. Momentum became strong.
So, if you look at the charts like this, keeping an overall trend in mind, keeping in mind, if you evaluate the charts, you will find that every time you will see some kind of a theme, story. And you can identify this yourself.
So, look around you. What new trend are you seeing? Like I give you an example. In today’s time, the beer drinking population in the country is increasing rapidly. The beer market is increasing. I have recently heard that beer is now available in department stores. So, look at this change. And there is a young population. People consume very easily.
Now, see the effect of this. It will not affect beer companies. So, let’s see the chart. Look, this is the UBL chart in front of you. Look, what a great RSI came out above 50. You saw what kind of momentum was created. There was a breakout on the chart. And this trend, I don’t think it is possible to reverse tithe beer popularity is increasing.
So, see this. You are continuously sharing. And you will find many such trends. New trends will keep coming. There will be a time when drone companies will become very fast. Sometimes EV companies will become fast.
If you see any other trend, and if you invest it carefully, then money is made. Look, one thing I will tell you again. What happens many times is that the trend you have spotted, it does not reflect in the chart.
For example, like now, Nowadays, people order food from outside So, there was a list of companies like Zomato People thought that we use Zomato So, why not buy its stock but, see, the chart should be supportive If the chart is continuously down trending If the stock is below RSI 50Then how will we buy? It will also have a time.
When the time comes, we will be investing it When it will break out and go above RSI 50But on weekly charts, right? Weekly, monthly charts. But what we are seeing now These are monthly charts So, it is very important that you take care of your time Follow your system One thing is very important
You should invest equal amount of money in every stock My experience says that have met many traders and investors Who invest a lot of money on one share And very less money on the other share
You should give equal weightage to every stock See, it is exactly like When a farmer sows seeds When he sows seeds Then you see what happens All the seeds do not germinate Many seeds fly away They cannot germinate But there are some seeds Which change in the shape of the plants, when you are investing
You have to follow the same rule You have to allocate equally to also that the tree that is made It becomes such a big fruit tree That the rest of the seeds you have sown They will be filled with the loss So, you have to invest equal money And it should be done aggressively You should invest a big part of your wealth in equity You should take care of other things You can talk to an expert Who can do your financial planning But definitely, you should pursue equity aggressively
Especially, the young people who are watching us And who want to invest in the share market But many times, they invest in the wrong way They invest in risky investments Instead of that, they invest in momentum You just told me about your financial freedom plan That is also a part of your financial freedom Please tell people about it No, see, there is a goal Which I think every investor should keep in mind When you get dividends
What is a dividend? It is the dividend on the money you have invested in the share market There was a time when people used to buy shares for dividends Today, no one even asks about the dividend We don’t even remember how much the dividend was Typically, the dividend is 1% of your investment If you have invested Rest.
100 Then, good companies get a dividend of half or 1%The income of that dividend should be such That your monthly expenses should be taken out of the dividend That means, you should invest 100 times of your monthly expenses So, what will happen with this? The dividend will keep coming The capital appreciation, i.e., the prices of good shares keep increasing
So, wealth will be created from the stock and income will be generated from the dividend The goal is a bit far, it is a difficult goal but if you have small goals, then what to do? So, have big goals in life And work hard for it And you will see, slowly you will decide That I want to make a big portfolios, I hope you understood momentum trading very well In fact, momentum investing Sir has told you two things
First, identify the trend And don’t invest only by looking at the trend Look at the chart after that Sir has taken a very good example of Zomato Don’t just see that I am a user of Zomato And I am trading its shares Because most people when they talk about their common sense Like the Pat list was released recently
So, people were very excited about PAYTM People used Pat , everyone liked the company But look, the performance should come on the chart If the chart is weak, then how will you invest on it? So, if you keep this much discipline, then you will get great shares If you don’t know about any company, then don’t invest in it or create information
So, as soon as you get a little interested in it You will understand things Many times we feel from a distance that this is a very difficult job What does the company do? You will have to read its balance sheet You will have to do its research You don’t have to do anything You have to focus on those companies that you understand
And you will see as a consumer How many such companies will be there You will understand about them will give you an example Like people like to buy things on credit Now this is a trends, you see who is the winner in this Who is taking the most credit in this Like you see, if you go to any big stores, you see that you get a representative of Bajaj Finance there
So, you know that Bajaj Finance is a consumer loan Now you see its charts, as soon as you spot any such trend And then see the chart Then you will get opportunities there You told two things One is price breakout And the other is Resift you see going above 50So, you are in it This proves the momentum Although, see, you can make it better You can put more tools in it.