[0:00]Hello friends, welcome back. I am Vivek Singhal from TradingWithVivek.com. And today we are going to talk about how to make money by trading in large cap stocks. And what is that method, what are the steps, what is the strategy, due to which our risk can also be minimized here, because we are working in large cap. Because in large cap, volatility does not exceed a certain level, it does not happen that the stock is 70-80% down, and we can also gain from it. Because if you keep a buy and hold strategy in large cap, then money is made, but somewhere it stops at 12, 13, 14% CAGR. And if you want to earn 12, 13, 14%, then it makes sense to invest in mutual funds, give them 1% as expense ratio and you are completely free. So, if we have to generate above average returns and we want to work in large cap and still double our money in three years. So, this should be a good thing. And if the market performs well, then our money should double even before three years. So, to double the money in two to three years, three years on the higher side, there are some steps that I am going to share with you today. There is a complete step-by-step working. So first of all, let's understand what is the meaning of large cap. See, if we talk about large cap according to SEBI guidelines, then the top 100 companies whose market capitalization is the highest. That is, according to market capitalization, the top 100 largest companies are called large caps, the next 150 companies are called mid-caps, and all the companies below that are called small-caps. Now, when we talk about market capitalization, when we select companies based on market capitalization, then many such companies come up that are overvalued. For example, if we search here, we go to Screener and go to Screens in Screener, and create a new screen. And here, if we take based on market capitalization, for example, all companies with more than 100 crore, we run the query, sorted by market capitalization. So, they came from largest to smallest, and if we go down in this, we will find many companies that are at very high PE. For example, if we talk about PE ratio, then Hindustan Unilever is at 52 PE, 57 PE, and Titan is at 91 PE. Avenue Supermart is at 107 PE. So, 107, 100 PE, and Tata Steel is in a different situation, Adani Green also came in it at 100 PE. Then Jio Financial is also there. So, here you need to pay attention, like we talk about Siemens, it has a PE of 73. That it became a large cap due to overvaluation, that is not a good thing. Then there is a risk created that if its growth, on the basis of which it is commanding a high PE, is not maintained, then the stock price will come down a lot. And the steps that we are going to discuss here, then they will not be able to be applied properly. So, we should avoid overvaluation and also remain in large cap. So, for this, what we have to sort here is basically a simple method that we go to screens, we go to create new screen here, we go to net profit here, and we see on the basis of net profit. That which companies are posting more than 5000 crore rupees of net profit in a year. If we start searching for those companies, Net profit is more than 5000, run this query, then there are 60 such companies. Now, among these 60 companies, if we see that there are those very high PE companies, those 100 PE, 200 PE companies, are there any? We don't see a single company like that. If you look at the whole thing here, then the PE ratio is written here, not a single company is 100 PE. And only Hindustan Unilever and Asian Paints came at 50 PE, two companies. We go down, the third company Bharti Airtel came, and three companies are done. The rest is that's it. That is, all the companies came well, and the average median PE that came out was 15 PE. Whereas if we start looking on the basis of market valuation, then this median PE that we are currently seeing as 15, it would have looked different. Anyways, so this is one method. Now these are 60 companies, make a list of these companies. These 50 are done, then we go to the next page, then our next 10 will come. And those companies whose PE is not very high, which are undervalued, they are also covered in this, otherwise those companies would not have come here, they would have been missed because those things are not covered on the basis of market capitalization. So, in this way, we will make our own separate list, SEBI's guidelines are, top 100 companies based on market capitalization, but we will make a separate list here to safeguard ourselves, of companies whose net profit is more than 5000 crore, and those are 60 companies. Now we will work in these 60 companies, this is the first step to make your own list that we will work only in these 60 companies that we have listed here. Now, what is our second point? In this case, these 60 companies will basically be divided into two parts. Now this is the second step. The first step I told you, that these companies with net profit of more than 5000 crore should be selected. The second step is that we will bifurcate these companies into two parts, government company and non-government company. Government company, non-government company, PSU company, non-PSU company, okay. So, in the PSU companies, we will apply a different rule, and in the non-PSU companies, that is, in the private companies, we will apply a different rule.
[5:46]So, what is the rule here? The rule is that the companies which are non-PSU, that is, which are not government companies, which are non-government companies, in those companies, we will see a 20% fall from the highest ever closing price. For example, Bajaj Finance chart is open, and we apply this thing on Bajaj Finance that it should be 20% down from the highest ever closing price. So, highest ever closing price we will see where? I am not talking about highest ever price, I am talking about highest ever closing price. So in this case, this is the highest ever closing price. We take this candle here on October 13, because before that, it did not close above it, the price went but it did not close. So, from here, this stock price should come down 20%. So that is the condition. Now, for example, for 20% down, we marked from here, went 20% down, and we marked it here at 20% down now. This is 20% down now. Now when it comes down 20%, then we will buy it. So, our buying level came here on March 7. Now, we bought on March 7, and we marked our buying price here. So, this is how we will mark here that what is the buying condition. Now if we talk about government company against this, for example SBI, then in case of private company, I told that it should be 20% down from the highest ever closing. But in case of government company, it should be 30% down from the highest ever closing. So, like in PSU, SBI is a PSU company, highest ever closing was this, and from here it should be 30% down. So when it is 30% down, then we will buy this stock, like we go back and see here that 30% down our highest ever level was this, and if we start looking from here, we mark it again. This is the highest ever price, closing price, and if we see 30% down, then this is our 30% down. So we will buy it when it comes 30% down. So what was our buying level here? This is the buying level. So far I have told you three things, let's recap once. First, we made a list of companies with net profit of more than 5000 crore by going to the screener, and sorted it. Now, the second step is to divide that entire list. Divide into two parts, one is our government company, government companies, second are non-government companies. Government companies are called PSU companies, and non-PSU companies are those that are not PSU companies. Those which are non-PSU companies, non-government companies, this is the third step now, that when it comes 20% down from the highest ever closing price, then we will buy. And in case of government company, when the stock price comes 30% down from the highest closing price, then we will buy.
[8:41]So, we got the buying signal. In government company, when it comes 30% down, and in non-government company, when it comes 20% down, we will buy. Now the question arises when to sell? Sell when there is a 20% gain in case of private company, and when there is a 20% gain in case of government company. From the buying level, when there is a 20% gain, get out, and in government company, when there is a 20% gain, get out. The buying level is different, but for selling, we will only see 20% gain, no matter how long it takes. So, here we take both examples. In government company, it came 30% down, now we bought it, after buying, we will see when did the 20% profit come? We bought here, in how many days did we get 20% profit? We saw here, so this is a profit, 20% profit came in 30 days. Our profit came, we booked it, we got out from here. It is very simple. Now, as we took another example, of Bajaj Finance, we go back to Bajaj Finance. We marked here that when it comes 20% down, we will buy. And we have to take only 20% gain from the buying level. So, 20% gain came here, this is our 19.59% left. We leave it. We assume that when it comes 20, only then we will sell. Now our 20% gain came where? Our 20% gain came here. Now this time it has taken 190 months. That is, in five and a half months, in Bajaj Finance, we got 20% gain, and in SBI, we got gain in one month. Now suppose we have to buy again, what will we do now? To buy again, the highest ever closing price is the same, because the highest ever price did not go here. So what will be the level to buy again? At the same level when it touched here again. Now it touched again, we bought again, and again we will keep it for 20% gain. It's very simple. That is, when did the 20% gain come again? This is the 20% gain. Now this time it has taken 190 months, that is, six months and 10 days, and again we got 20% gain. So, this is a very simple method. That we will buy in case of private company, when there is a 20% fall from the highest ever closing, we will sell when there is a 20% gain. In case of government company, we will buy at 30% fall, and sell at 20% gain. In which government company? In which private company? In companies whose last one year, that is, trailing 12 months, previous four quarters, total net profit is more than 5000 crore. We made a list, got 60 companies. Now the question is, how much money should be invested in one stock? This is a very important part. In any situation, here, listen carefully, in any situation, do not invest more than 5% in one stock. That is, we should have 20 stocks. Now the question is, Vivek Bhai, out of 60 stocks, will we get 20 stocks? Of course, we will get them easily, because in large cap, these companies with more than 5000 crore also have 20% falls. And one more thing, if out of 60 companies, 20 stocks are not found, then understand that everything is so high that there will be a small correction in the market and the stock price will come down and you will get a buying opportunity. That is, if 20 stocks are not found, after investing 5%, if you have some money left in cash, then keep it in cash, because when the buying opportunity comes based on your signal, then only we will buy, otherwise we will not buy. It's very simple. Now the point is, Vivek Bhai, if there are 30 opportunities, then out of those 30, which 20 should we choose? I say don't choose 20. Invest equally in all 30, because we don't know which stock will go first and which will go later. Now the point is that when our profit is booked in a stock, suppose we invested in 30 stocks. Now our profit is booked in a stock, after booking the profit, where to invest this? So, to invest this, first look for a fresh opportunity, that is, apart from the stocks we have, are our buying conditions being met? If buying conditions are being met, then invest in that. But if buying conditions are not being met, there is no fresh opportunity, then look in existing stocks only, which existing stocks are such that less than 5% is invested in them, because there were more opportunities. And we had more stocks, so we distributed less than 5% equally. So, in whichever opportunities are there, which still meet the existing stocks, fill that in.
[13:28]So, in this way, our portfolio will remain well diversified, all the money will be invested in top companies, all the money will be invested when the stock came down. And when it goes up, we will also book profit. When the market is very fast, the opportunities will stop coming, and money will automatically start coming in cash to us. When the market comes down, we will again start investing in stock price, in stocks, because opportunities will start to be created. Now, where will the problem come in this? The problem will come in discipline. In the stock market, even after learning technicals, strategies, the human psychology is a very big challenge. And it does not happen to everyone. That's why I made a video, which I made some time ago, you watch that video carefully. Now I will search on YouTube once and show you the video, Master Class, I had made a video recently, Master Class and Vivek Singhal, you will see if you search. By Vivek Sir is also written. I don't know if he is another Vivek Sir. Yes, I know he is another Vivek Sir. So, I am not Vivek Sir, I am Vivek Bhai, Vivek Singhal is fine. Right, so this is the Master Class for Traders. This was made 5 days ago. In this, I discussed 8 points, and these 8 points are not technical skills, rather wisdom that we need in stock trading. Because if you understand these 8 points well, and if you follow the strategies that I am teaching, the new strategies that I bring from time to time, then this is a strategy related to large cap. If you apply this and bring the discipline of the 8 points in Master Class, that is, if you combine these two videos, then you will never feel risk, you will never feel fear, and you will never get cheated in the stock market in any way. You will never have a loss, profit will always happen, and you will be able to earn money continuously throughout your life. These are simple steps. I wish to share my wisdom, experience, knowledge gained, technicals, whatever I have learned in simple language, with all of you. In return, I get blessings, this family grows. You also share with friends, subscribe, get subscribed, we have to make the family big, we have to take everyone along, and we have to stay away from troubles, we have to make consistent money, we have to make it with our own money. Keep chanting, keep reading books, keep respecting elders here, keep loving youngsters, make life beautiful, take care of your body.
