Jaipur based Signoria Creation Limited is engaged in manufacturing and marketing women’s apparel.

Listen to this interview with the promoter and get to know more about the company:

Exclusive IPO Talk with Promoter & MD of Signoria Creation Mr. Vasudev Agarwal | SMEmitra

This post pertains to current market sentiment, perhaps not totally in line with thread objectives. I hope it can be excused until I start a thread of my own.

The returns you make from the market are a function of what the general environment is like, what the business does, what the fellow shareholders do and what you do. First two you don’t control. The last you control completely and the last but one, you can to a large extent control (by keeping away from social media so that it doesn’t influence your buy/sell decisions – so you are not in businesses with a lot of people with ultra-short term views trading beta).

In times like these we get to know who your fellow shareholders are. There was no reason for a lot of stocks to have run up in the last couple of months, just as there is no reason for them to fall now. In raging bull markets, everyone’s time horizons shrink unreasonably. Good stuff 3-6 months out get priced in 1-2 months and correct in 3rd month and recover in 4th month to get back to what was discounted in first 1-2 months. This has been the story of this bull market. If things keep with trend, recovery should happen in last week of March and April before Q4 numbers start rolling in – but not before weeding out holders who have no idea what they are holding by probably falling even further.

People know macro is good (oil, deficits, gdp, rupee, us10y), economy is good, and in all likelihood Q4 numbers are going to be good. Valuations though have been very expensive since about last Sept. A lot of it got backfilled with better earnings in Q3 as macros cooled off. Still there’s talk of a crash. I think a 10-15% correction at index level and a 20-30% at individual stock level is par for the course in small/micro caps even in a trending market. (You will be surprised by the number of 20% drawdowns even in a perpetually trending stock like VBL). Individual stocks irrespective of their caliber can fall more than a index or pf simply because their tops were made at a different time than the pf and they probably ran up lot more than the pf and carry different weights w.r.t each other.

A rush to exits though means throwing the baby with the bathwater. If you never marked up the pf when it went up unreasonably, you probably don’t feel the pinch as much as someone who rejoiced and posted PnL screenshots only to watch it all evaporate in a week. This is where understanding what you own and why and what your time horizon is makes a difference.

Instead of picking yet another business to analyse, sit down and analyse yourself. Read your old trade notes. Read what your expectation for the year was, when the year began. Read what you felt like in the last drawdown (say Sept or Dec or Feb) and at what level are you at currently from there and so on.

Writing this because there doesn’t seem to be room for sanity – only extreme optimism or extreme pessimism alternating with each other.

Disc: No recent trades since buying Shaily. P/f down ~10% from top as of today, up ~13% for the year. Would be very happy to close the year with ~20% returns which was my expectation starting the year after a phenomenal 2023. Just a novice sharing my thoughts.

Thanks @Ankit_Jasuja for writing in. For companies involved in credit business it may not be apt to look at cash flows. However, Nuvama has said that they shall not increase the credit business so you might see good cash flow built up going forward. I was trying to look for annual report but that is not available as company got listed few months back. Annual report shall provide us good insights.

Dear Jarutir, very nice diversified portfolio. Good luck. Can you pleae confirm what factors triggered your exit from Bigbloc Construction…

I think the fall is mostly due to the rights issue. Many have dumped their shares at higher price to buy shares through rights issue at lower price. Let us look at the calculation as per yesterday’s price

South Indian Bank was trading at around 28.8 yesterday
South Indian Bank RE (Rights Entitlement) was selling at 5 yesterday
Suppose you have 1000 shares. You sell those 1000 shares at 28.8. You get 28000
You buy 1000 RE shares at 5. Your outflow is 5000
These RE give you the rights to purchase shares at 22.
So you apply for 1000 shares in rights issue at 22. Your outflow is 22000

Your total outflow is 22000+5000 = 27000
Your inflow is 28800. You gain 1,800. Your final gain might be less after brokerages and transaction costs.