With Nifty showing some correction, as an investor, one needs to be ready with his list of stocks to buy. This article and video in here answers the exact question.

<This article is written from education point of view and not from giving tips, you are expected to do your own risk management before making any decisions>

I have talked about possible Nifty correction a few days back and looking at weekly candle of last week, there is a possibility of correction. Even with this correction, the long term trend remains bullish. With such a basis, one has to be ready with the list of stocks to track to get good entry. This Video talks about current analysis.

It uses our relative strength theory. If I want to beat Nifty performance, I will need to get to a list of stocks which are outperforming Nifty over a good period of time. Hence we look at 250 period SMA to shortlist. This means if we are looking at weekly charts, we are looking at stocks which have outperformed Nifty over a period of about 5 years (52 weeks in a year). If you look at performance of such stocks over last period, you see stocks performing as much as twice as good compared to Nifty.

Current stocks in shortlist

Before I talk about why this is best strategy, let me first give the list of stocks as of now –

Stock Name	Relative Strength	Relativestrength SMA
ADANIPORTS	29.73	7.53
APOLLOTYRE	17.42	5.07
ASHOKLEY	5.32	3.22
ASIANPAINT	-9.97	29.97
AUROPHARMA	-16.69	37.79
BAJFINANCE	286.41	69.81
BANKNIFTY	825.03	249.65
BEL	1.75	5.44
BEML	182.69	40.4
BHARATFIN	-11.67	35.9
BHARATFORG	18.23	34.81
BPCL	1.27	16.28
BRITANNIA	209.33	167.87
CENTURYTEX	79.34	29.87
CESC	39.46	20.24
DABUR	-2.81	5.58
EICHERMOT	1592.94	1464.98
GLENMARK	-160.45	9.22
HCLTECH	-23.64	25.82
HDFC	80.1	18.93
HDFCBANK	128.18	33.8
HEROMOTOCO	85.47	6.03
HEXAWARE	4.09	1.98
HINDPETRO	32.4	14.47
HINDUNILVR	89.46	11.42
HINDZINC	-6	4.7
IBREALEST	65.12	2.36
IGL	94.08	34.54
INDUSINDBK	108.72	54.33
IOC	-1.83	9.6
JSWSTEEL	13.62	4.53
L_TFH	26.09	2.86
LOTUSEYE	2.74	1.05
M_MFIN	37.51	5.14
POWERGRID	2.94	0.28
TCS	-101.28	16.84
TECHM	-62.14	6.76
TITAN	69.96	4.33
TORNTPHARM	-156.6	50.22
VOLTAS	54.89	14.75
YESBANK	139.69	55.39
ZEEL	-17.71	15.93

Past performance check

In first week of Jul 2016, Nifty crossed weekly cloud and started moving up. If you run this AFL Following table shows stocks came with a buy recommendation in whole month of March.-

Stock Name	Relative Strength	Relativestrength SMA	Buying Price	Last Price	Growth %	Relative Performance Best	Investment	Value Today
Nifty			8350	9712	16.3%	100.0%	9900	11514.83
BAJFINANCE	115.38	43.83	870	1704.9	96.0%	588.3%	100	195.97
DHFL	-2.46	2.31	215.3	419	94.6%	580.0%	100	194.61
CEATLTD	-171.75	62.33	884.95	1692	91.2%	559.1%	100	191.20
MRF	-3573.21	1901.17	34221.85	63715	86.2%	528.4%	100	186.18
HINDPETRO	29.23	4.63	237.4	427.8	80.2%	491.7%	100	180.20
TVSMOTOR	-10.47	15.33	311.75	547.9	75.7%	464.4%	100	175.75
CENTURYTEX	45.63	6.14	678.6	1182	74.2%	454.8%	100	174.18
ADANIPORTS	-36.14	1.08	220.5	384.05	74.2%	454.7%	100	174.17
DCBBANK	2.67	1.1	100.05	173.9	73.8%	452.5%	100	173.81
MARUTI	22.43	169.44	4472.05	7480	67.3%	412.4%	100	167.26
BEML	-159.7	4.99	942.15	1572	66.9%	409.9%	100	166.85
APOLLOTYRE	-17.88	4.87	156.85	258.35	64.7%	396.7%	100	164.71
MOTHERSUMI	2.06	6.91	201.53	322	59.8%	366.5%	100	159.78
IGL	108.75	0.21	778.1	1228.6	57.9%	355.0%	100	157.90
EICHERMOT	-257.01	1265.37	19781.05	29600	49.6%	304.3%	100	149.64
LOTUSEYE	1.75	0.01	23.5	34.9	48.5%	297.4%	100	148.51
VOLTAS	15.45	5.62	349.55	518	48.2%	295.4%	100	148.19
YESBANK	197.14	34.52	1179.2	1740	47.6%	291.6%	100	147.56
TITAN	19.18	5.01	417.75	611.65	46.4%	284.6%	100	146.42
BRITANNIA	-166.93	163.34	2820.6	4100	45.4%	278.1%	100	145.36
KSCL	-80.56	20.45	369.2	532	44.1%	270.3%	100	144.10
CESC	34.9	6.41	639.65	916.8	43.3%	265.6%	100	143.33
BHARATFORG	-103.35	26.4	814.3	1161.6	42.7%	261.5%	100	142.65
HDFCBANK	36.31	31.41	1246.2	1751.55	40.6%	248.6%	100	140.55
FEDERALBNK	12.35	0.03	77.3	105.95	37.1%	227.2%	100	137.06
INDUSINDBK	60.41	48.29	1195.95	1626.3	36.0%	220.6%	100	135.98
BEL	-5.86	2.66	126.14	171	35.6%	218.0%	100	135.56
GODREJIND	17.14	5.33	415.55	562	35.2%	216.1%	100	135.24
JSWSTEEL	25.85	0.2	167.52	225	34.3%	210.4%	100	134.31
PETRONET	12.36	1.33	157.07	210	33.7%	206.6%	100	133.70
CADILAHC	-12.66	7.06	365.8	479	30.9%	189.7%	100	130.95
BPCL	34.99	11.34	369.83	483.85	30.8%	189.0%	100	130.83
UPL	46.34	21.34	624.85	813	30.1%	184.6%	100	130.11
TATAELXSI	-380.76	88.87	1243.25	1606	29.2%	178.9%	100	129.18
ASHOKLEY	-14.71	3.63	80.65	102.7	27.3%	167.6%	100	127.34
IOC	55.41	0.12	324.3	412.25	27.1%	166.3%	100	127.12
KOTAKBANK	10.21	27.54	780.8	990	26.8%	164.3%	100	126.79
BANKNIFTY	515.02	95.86	18953.65	23974.45	26.5%	162.4%	100	126.49
HDFC	32.71	16.43	1364.1	1694.8	24.2%	148.6%	100	124.24
LICHSGFIN	10.37	11.67	525.45	652.1	24.1%	147.8%	100	124.10
BIOCON	51.17	1.73	276.38	340.75	23.3%	142.8%	100	123.29
AEGISCHEM	11.32	5.73	146.65	180	22.7%	139.4%	100	122.74
HINDUNILVR	5.4	30.46	941.5	1155	22.7%	139.0%	100	122.68
HINDZINC	38.39	0.11	227.5	272.9	20.0%	122.3%	100	119.96
POWERGRID	21.62	0.07	183.8	218.35	18.8%	115.2%	100	118.80
M_MFIN	27.36	6.54	351.75	415.55	18.1%	111.2%	100	118.14
TATACOMM	17.66	7.82	504.9	590.6	17.0%	104.1%	100	116.97
HEXAWARE	-29.72	10.39	218.45	253.7	16.1%	98.9%	100	116.14
HCLTECH	-119.86	35.36	752.95	871	15.7%	96.1%	100	115.68
ARVIND	-7.66	12.8	318.35	364.95	14.6%	89.7%	100	114.64
MARICO	14.94	10.18	279.05	319.85	14.6%	89.6%	100	114.62
JUBLFOOD	-182.75	9.4	1146.75	1298	13.2%	80.9%	100	113.19
HAVELLS	32.63	16.55	406.5	459.65	13.1%	80.2%	100	113.08
COLPAL	-21.66	15.8	926.8	1045	12.8%	78.2%	100	112.75
HEROMOTOCO	171.43	6.01	3443.95	3845.9	11.7%	71.6%	100	111.67
GRASIM	86.89	10.03	964.32	1075	11.5%	70.4%	100	111.48
NIITTECH	-87.28	11.3	431.35	480	11.3%	69.1%	100	111.28
ULTRACEMCO	164.03	119.15	3531.35	3927	11.2%	68.7%	100	111.20
PAGEIND	45.03	736.2	14329.85	15911.95	11.0%	67.7%	100	111.04
SRF	-3.36	59.75	1337.35	1485	11.0%	67.7%	100	111.04
PIDILITIND	6.87	29.8	718.7	790	9.9%	60.8%	100	109.92
NIFTYMID50	331.79	1.58	4096.25	4497.9	9.8%	60.1%	100	109.81
CUMMINSIND	-126.45	15.55	817.8	896.95	9.7%	59.3%	100	109.68
ITC	9.51	2.92	248.85	271.2	9.0%	55.1%	100	108.98
GODREJCP	36.49	29.86	843.63	898.1	6.5%	39.6%	100	106.46
CIPLA	-78.02	7.2	516.4	549.7	6.4%	39.5%	100	106.45
DABUR	-15.33	8.78	285.15	303.1	6.3%	38.6%	100	106.29
ASIANPAINT	73.75	35.97	1114.15	1146	2.9%	17.5%	100	102.86
ZEEL	24.95	17.53	497.3	508.05	2.2%	13.3%	100	102.16
AMBUJACEM	19.34	1.86	260.85	263.8	1.1%	6.9%	100	101.13
UBL	-96.57	10.79	783.3	781.75	-0.2%	-1.2%	100	99.80
MCDOWELL-N	-339.9	87.98	2446.15	2418	-1.2%	-7.1%	100	98.85
CONCOR	17.84	16.24	1172.88	1153.05	-1.7%	-10.4%	100	98.31
OFSS	-284.85	41.47	3524.85	3462	-1.8%	-10.9%	100	98.22
BAJAJ-AUTO	59.49	24.21	2862.1	2790	-2.5%	-15.4%	100	97.48
NIFTYIT	-918.48	144.65	11173.4	10631.75	-4.8%	-29.7%	100	95.15
BOSCHLTD	1537.09	779.62	23907.6	22601	-5.5%	-33.5%	100	94.53
TCS	-92.62	66.62	2649.1	2492.65	-5.9%	-36.2%	100	94.09
INFY	-159.5	5.44	1060.15	986.5	-6.9%	-42.6%	100	93.05
TECHM	-75.61	16.65	434.1	401.05	-7.6%	-46.7%	100	92.39
M_M	64.81	19.26	1464.8	1350	-7.8%	-48.0%	100	92.16
MINDTREE	-147.18	33.55	501.05	455.05	-9.2%	-56.3%	100	90.82
BHARATFIN	117.09	10.79	880.65	786.15	-10.7%	-65.8%	100	89.27
APOLLOHOSP	-88.86	48.45	1379.45	1223	-11.3%	-69.5%	100	88.66
AUROPHARMA	-33.42	47.71	798.55	706.8	-11.5%	-70.4%	100	88.51
AMARAJABAT	-63.76	55.06	903.55	798	-11.7%	-71.6%	100	88.32
AXISBANK	41.1	8.88	565.05	488.1	-13.6%	-83.5%	100	86.38
TORNTPHARM	-71.9	71.95	1413.15	1215.25	-14.0%	-85.9%	100	86.00
KPIT	-25.85	1.67	132.25	110	-16.8%	-103.1%	100	83.18
STAR	-47.91	69.6	1142.6	876	-23.3%	-143.0%	100	76.67
AJANTPHARM	45.58	103.69	1608.6	1224	-23.9%	-146.6%	100	76.09
TATAMOTORS	47.45	8.7	494	375	-24.1%	-147.7%	100	75.91
SRTRANSFIN	171.77	0.27	1271.5	951.95	-25.1%	-154.1%	100	74.87
ICIL	-33.86	12.51	154.73	115.3	-25.5%	-156.2%	100	74.52
GRANULES	6.62	8.83	146.45	108.9	-25.6%	-157.2%	100	74.36
GLENMARK	-65.96	28.83	852.25	615.6	-27.8%	-170.2%	100	72.23
TATAMTRDVR	12.01	8.82	329.4	222.65	-32.4%	-198.7%	100	67.59
WOCKPHARMA	-224.62	41.67	939.05	560	-40.4%	-247.5%	100	59.63
SUNPHARMA	-95.37	35.92	770.4	448.5	-41.8%	-256.2%	100	58.22
LUPIN	-152.54	75.38	1670.15	940	-43.7%	-268.0%	100	56.28
DRREDDY	24.79	72.7	3588	2016	-43.8%	-268.6%	100	56.19
DIVISLAB	18.96	40.26	1204.65	627	-48.0%	-294.0%	100	52.05

During this period Nifty gave a return of 16% while 30% of the above list gave more than double the return (32%) and half of them gave same as better performance than Nifty. More than 15% of stocks have potential of doubling your capital in 2 years time. If you add more technical analysis on these stocks for right entry, exit, to avoid poor charts, you would have easily performed twice as better than Nifty. However even if you just blindly deployed INR 100 in each of these stocks, you would have beaten Nifty by about 5%. Believe me, even successful fund managers are struggling to get this extra 5% outperformance.

 

You may say, you are not good in capturing perfect bottom, here is another comparison for stocks, Run in March 2015. This month Nifty recorded a high of 9000+ and then had a decent correction for next year or so to 6800 levels.

Stock Name	Relative Strength	Relativestrength SMA	Buying Price	Last Price	Growth %	Relative Performance Best	Investment	Value Today
Nifty			9000	9712	7.9%	100.0%	6100	6582.58
BAJFINANCE	91.35	18.74	434.19	1704.9	292.7%	3699.4%	100	392.66
AEGISCHEM	6.64	1.25	54.74	180	228.8%	2892.5%	100	328.83
PETRONET	-8.3	2.17	88.8	210	136.5%	1725.3%	100	236.49
BIOCON	-18.96	0.34	144.98	340.75	135.0%	1706.9%	100	235.03
CEATLTD	-3.45	36.58	780.65	1692	116.7%	1475.7%	100	216.74
MARUTI	288	64.02	3650.7	7480	104.9%	1325.9%	100	204.89
UPL	46.15	5.96	421.7	813	92.8%	1172.9%	100	192.79
BPCL	12.46	5.22	258.78	483.85	87.0%	1099.4%	100	186.97
BRITANNIA	397.88	87	2210.75	4100	85.5%	1080.2%	100	185.46
INDUSINDBK	117.92	34.96	913.2	1626.3	78.1%	987.1%	100	178.09
GODREJIND	-9.5	3.61	335.05	562	67.7%	856.2%	100	167.74
HAVELLS	-10.46	13.24	276.75	459.65	66.1%	835.4%	100	166.09
M_MFIN	-45.92	12.55	256.95	415.55	61.7%	780.2%	100	161.72
MARICO	16.92	5.27	199.18	319.85	60.6%	765.8%	100	160.58
ZEEL	-8.96	9.23	337.5	508.05	50.5%	638.8%	100	150.53
MOTHERSUMI	14.05	8.65	214.55	322	50.1%	633.1%	100	150.08
DHFL	45.21	2.95	280.3	419	49.5%	625.5%	100	149.48
GODREJCP	39.31	20.51	602.47	898.1	49.1%	620.3%	100	149.07
CADILAHC	17.15	5.82	321.93	479	48.8%	616.7%	100	148.79
KOTAKBANK	63.5	19.68	706.13	990	40.2%	508.2%	100	140.20
ASHOKLEY	16.83	0.53	73.8	102.7	39.2%	495.0%	100	139.16
PIDILITIND	91.23	21.79	598.9	790	31.9%	403.3%	100	131.91
GRANULES	6.6	4.1	87.85	108.9	24.0%	302.9%	100	123.96
ULTRACEMCO	221.03	82.54	3189.55	3927	23.1%	292.3%	100	123.12
HINDUNILVR	82.12	27.43	941.7	1155	22.7%	286.3%	100	122.65
AUROPHARMA	50.72	25.54	579.53	706.8	22.0%	277.6%	100	121.96
PAGEIND	1809.75	612.84	13058.65	15911.95	21.8%	276.2%	100	121.85
HDFC	119.86	19.51	1394.8	1694.8	21.5%	271.9%	100	121.51
ARVIND	16.93	15.33	310.9	364.95	17.4%	219.8%	100	117.39
NIITTECH	-21	8.8	418.45	480	14.7%	185.9%	100	114.71
TATAELXSI	379.99	18.6	1439.75	1606	11.5%	146.0%	100	111.55
DABUR	19.62	7.21	272.45	303.1	11.2%	142.2%	100	111.25
M_M	-104.1	32.34	1228.65	1350	9.9%	124.8%	100	109.88
TORNTPHARM	121.71	43.85	1138.25	1215.25	6.8%	85.5%	100	106.76
ACC	41.77	2.98	1698.65	1757.35	3.5%	43.7%	100	103.46
TATAGLOBAL	-13.64	0.26	159.3	163.4	2.6%	32.5%	100	102.57
AJANTPHARM	227.1	56.46	1198.48	1224	2.1%	26.9%	100	102.13
COLPAL	34.69	23.27	1035.13	1045	1.0%	12.1%	100	100.95
AMBUJACEM	16.65	4.05	273.35	263.8	-3.5%	-44.2%	100	96.51
HEXAWARE	43.17	10.17	272.3	253.7	-6.8%	-86.3%	100	93.17
TCS	-88.11	101.5	2696.45	2492.65	-7.6%	-95.5%	100	92.44
BHARATFORG	285.88	32.85	1293.25	1161.6	-10.2%	-128.7%	100	89.82
APOLLOHOSP	90.9	44.84	1408.5	1223	-13.2%	-166.5%	100	86.83
STAR	117.56	43.63	1032.2	876	-15.1%	-191.3%	100	84.87
DISHTV	11.57	0.06	84.1	71.3	-15.2%	-192.4%	100	84.78
BOSCHLTD	6183.3	752.64	26706.8	22601	-15.4%	-194.3%	100	84.63
HCLTECH	99.96	40.11	1032.5	871	-15.6%	-197.7%	100	84.36
NIFTYIT	334.81	170.37	12665.5	10631.75	-16.1%	-203.0%	100	83.94
AXISBANK	93.09	8.52	616.8	488.1	-20.9%	-263.8%	100	79.13
UBL	91.66	40.57	1026.65	781.75	-23.9%	-301.5%	100	76.15
CIPLA	54.5	5.44	739.5	549.7	-25.7%	-324.4%	100	74.33
GLENMARK	8.32	21.68	833	615.6	-26.1%	-329.9%	100	73.90
DIVISLAB	-29.46	22.09	886.33	627	-29.3%	-369.8%	100	70.74
MCDOWELL-N	428.95	63.36	3861.65	2418	-37.4%	-472.6%	100	62.62
MINDTREE	93.12	25.04	735.5	455.05	-38.1%	-482.0%	100	61.87
DRREDDY	-24.04	97.34	3441.5	2016	-41.4%	-523.6%	100	58.58
KSCL	41.24	52.36	970.85	532	-45.2%	-571.4%	100	54.80
LUPIN	228.43	66.39	1838.15	940	-48.9%	-617.6%	100	51.14
IDEA	-5.2	3.86	182.1	86.45	-52.5%	-664.0%	100	47.47
SUNPHARMA	64.51	41.85	1038.75	448.5	-56.8%	-718.3%	100	43.18
WOCKPHARMA	485.62	50.9	1694.75	560	-67.0%	-846.4%	100	33.04

Nifty has given a return of about 8%. In this list of 61 stocks, 6 of them doubled, Nearly 50% of them have given twice twice as return as that of Nifty. And even if you would have blindly put INR 100 into each of these 61 stocks, you would have beaten Nifty performance by 16%

Right way of evaluating a strategy

Its very important for one to backtest your strategy or rules before deploying. On the net, you have so called experts who give no better than 60% hit ratio with about 1:2 risk:Reward. And we have seen that this is worse than putting your money into a debt instrument giving 0.8% monthly return. For details go here.

There is a lot more to equity investment and when I do my investments I always try to capture those multiplier stocks top 10% of the lists by deploying various techniques like Cloud explained here.

Next Steps

Even with a little bit of analysis, you can beat Nifty performance and also lot of seasoned fund managers. What you need is patience. Look at the market with relative performance, apply your TA and most important of them all do a proper money management. Have your stop losses upfront. Its never advisable to fall in love with your stocks, if they are not performing well, just shift out. Another important thing – do not overanalyse and what you analyse should be based on data and not based on feelings.

I want to see a huge number of people doubling their capital every year or two. And above examples have shown that about 10% or more of the stocks in these lists have that kind of potential.

Happy Investing

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