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Model Portfolio FAQs

Model Portfolio Related

Model Portfolio contains a list of stocks, which qualify CAN SLIM® criteria, and are added to the list on a proper breakout from their pivots (resistance levels). While there may be many stocks which qualify for the above, we ensure that the best and the most ideal of the lot are recommended. Stocks are removed from the model portfolio when they breach our sell-rules, or when they weaken technically. Investors can consider purchasing such stocks, when they are added to the list. The additions are notified through the app and e-mail alerts. It is recommended that stocks are added, when they are within 5-7% price range from their pivot levels. Similarly, investors can remove stocks when they receive the remove alert, which are sent through the app or e-mail

Buying right solves half of your selling problems. The ideal buy range for a stock is when it is purchased within 5-7% price range from its pivot. Our research shows that buying within the 5-7% range, enables you to sit through most of the normal price corrections in a stock. Therefore, please ensure that you buy stocks only when they are recommended and are not extended more than 7% from their pivot. You should also look at the current market condition, even if the stock is available in the buy range. There is a possibility that the market direction could have changed as our recommendation, and hence it is important to keep an eye on the market trend before making any new purchase. If you like a stock in the model portfolio, but have missed buying it, either because the stock was not available within the ideal buy range or the market direction was unfavourable. Do not worry. The stock market provides ample opportunities in terms of other stocks or new entry points into your favourite stock.

Individual investors with a large portfolio, say of INR 10 lakhs, need not own more than six or seven well-selected stocks. Smaller capital investments should consider holding only three or four stocks. Once you own the required number of stocks and if a tempting opportunity comes along that you think is really great, you must buy more only by selling off your least attractive investments. The more stocks you own, the harder it is to maintain a proper track of them. Additional capital could be used to average-up existing positions, when such stocks break out of proper bases. The objective is to have one or two big winners rather than dozens of small profits.

Stocks are added to the MarketSmith India model portfolio based on fundamental and technical strength, using the CAN SLIM® methodology. While many stocks may qualify our CAN SLIM® criteria, they are added to the Model Portfolio, when they breakout from their bases (price consolidation patterns) and when they close strongly near their pivots (previous resistance levels). Stocks are removed from the model portfolio when they breach our sell rules including stop-loss hits (we follow a 8-10% stop-loss rule), and 50-DMA and 200-DMA breaks on huge volume. Stocks could also be removed on an account of profit booking (20-25% or higher). Stocks showing technical weakness, without strictly breaching the above sell rules are also considered for removals. Stocks are added and removed, based on the volatility of the market. Our research has shown that three of four stocks trend along with the general market. If the market is in a Confirmed Uptrend, the green signal remains "on" for new stock purchases. Similarly, when the market is in a Downtrend, we generally avoid adding any number of stocks to the model portfolio.

Stocks provide an advantage of investing in even with the smallest of token sizes. While we do not provide any emphasis on the size of the portfolio, per se, we recommend investors to not hold too many stocks in their portfolio. Smaller capital investments should consider holding not more than three or four stocks. Individual investors with a large portfolio, say of INR. 10 lakhs or more, need not own more than six or seven well-selected stocks.

The number of stocks in the model portfolio could range anywhere from 1 to 40. The model portfolio represents "Model" stocks, and how to enter them at their "Ideal" buy points. While it is not advised to add every single model portfolio stock to your portfolio, investors are advised to select the best of the stock ideas which appeal to them. Holding a few good ideas can generate the required returns, when purchased at proper buy points, and when strict sell-rules are followed. While the model portfolio could have a higher number of stocks, going up to 40, it is only an indicative list on screening for CAN SLIM® stocks and entering them at their ideal buy points. Please note, the model portfolio performance has beaten the benchmark; inspite of the number of stocks in the portfolio indicating the effectiveness of the CAN SLIM® growth strategy.

The Nifty 50 has been the benchmark selected to evaluate the performance of the MarketSmith India model portfolio. The model portfolio could comprise any of the micro, small, mid, or large cap stocks, which qualify our liquidity criteria, resulting in the general market to be our universe. The performance of the model portfolio has well-beaten the benchmark from inception, even after adjustments for regular trading fees, implying the effectiveness of the CAN SLIM® growth strategy. Important Note: The model portfolio is run with an objective to provide effective stock ideas to the investor, and not strictly with an objective to beat the benchmark. While we are happy to assume responsibility to track the performance of our recommendations, we believe running a model portfolio, with an objective to purely generate alpha using the CAN SLIM® methodology, could generate far superior returns.

Yes, Subscribed users are notified of any additions or removals to the model portfolio through a notification from the MarketSmith India app, and an e-mail alert to the registered e-mail of the user. The app and the e-mail alerts contain information including the add/remove prices for the stock, market cap, volume, industry details, stock research, etc. Alternatively, one can refer the model portfolio section.

The Growth 50 list is algorithmically generated list of the top growth stocks in India, with strong fundamental and technical characteristics. The list gets updated on a weekly basis, and can have stocks that may or may not be available at their ideal buy points. There is a likely possibility that there could be common stocks in Growth 50 and the model portfolio.

On clicking Filter India Stocks under Idea Lists, you can see an option to Filter and sort the list of stocks. The list of stocks can be filtered by five of our proprietary ratings (Master Score, EPS Rating, Price Strength, Buyer Demand, and Group Rank) and eight other common parameters (Market Cap, Average Daily Volume, % off High, Volume % change VS. 50-DMA, Daily Price % Change, Current price, ROE%, % VS. Pivot.

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Available Filter Option:

You can refer to Current Holding in India Model Portfolio list or the Growth 50 list for our recommendations. Please note, Growth 50 is an algorithmically generated list and it gets updated once a week, every Friday.

Click the Idea Lists button on the home page, followed by the "Filter India Stocks" button under the "MarketSmith Reports" panel. Once this is completed, tap the button on the top right corner labelled either as "Filter Off" or "Filter On." This section enables you to create your custom stock screens using various criteria, including MarketSmith India's proprietary ratings and rankings. You can view stocks using the "Group Rank" button, which are great (1-20), good (21-40), fair (41-60), or poor (61-197). You can use the additional filters to customize and strengthen your list of stocks.

At MarketSmith India, we look at two criteria for the initial screening of stocks before and further examining for CAN SLIM® traits.
1. Market Capitalization of INR 600 crore or more.
2. 50-Day Average daily trading turnover of INR 1 crore or more.

CAN SLIM® methodology would gauge the breakout based on the close price and the volume of the day. Stock closing above the pivot with above average volume indicates strength and hence, we recommend stocks post market hours.

The number of stocks in the model portfolio could range anywhere from 1 to 40. The model portfolio represents "Model" stocks and how to enter them at their "Ideal" buy points. While it is not advised to add every single model portfolio stock to your portfolio, investors are advised to select the best of the stock ideas which appeal to them. Holding a few good ideas can generate the required returns, when purchased at proper buy points, and when strict sell-rules are followed. While the model portfolio could have a higher number of stocks, going up to 40, it is only an indicative list on screening for CAN SLIM® stocks and entering them at their ideal buy points. Please refer Current Holdings-Near Buy Point for actionable stocks at any given point of time.

We do not recommend stocks based on a specific time period or target price. Our model portfolio recommendations have spun as short as a few days or weeks, or it could even take few months before they generate the desired level of returns (20-25% profit booking level).
The CAN SLIM® methodology follows the below sell-rules.
1. Stop-loss at 8-10% below your purchase price.
2. Profit booking level of 20-25%.
3. Break below the stock's 50 or 200 DMA support level on high volumes
4. The only exception when we have a specific time frame is when a stock jumps more than 20% very rapidly from a proper base in under three weeks, we would like to hold stocks for a minimum of eight weeks.

At MarketSmith India, we would ideally take a new position in a stock within a range of 5% from its Pivot price. It means that the lower limit of the buy range would be the pivot price, and the upper limit is 5% over the pivot price. In case the stock price falls below this buy range, it is suggested to wait for the stock to come back into the buy range before exercising new buy orders. However, if the investor is convinced and confident about the growth story, he may as well take an aggressive entry that would help in capturing the up-move from current price to pivot. By this we mean that even if the stock falls below the buy range, after our recommendations, a good quality stock will eventually move up in the subsequent trading sessions.

CAN SLIM® is a registered trademark of O'Neil Capital Management Inc. All rights are reserved.