“In the Short run, the market is voting machine, but in the long run it is a weighing machine.’’    

Value investing is an investment tactic where stocks are selected which appear to trade for less than their intrinsic, or book values. Value investors actively seek out the stocks they believe the market has undervalued. Investors who use this strategy think the market overreacts to good and bad news, resulting in stock price movements which do not correspond to a company's long-term fundamentals. This overreaction gives the value investor an opportunity to profit buy stocks at a deflated price.

Fast Facts
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• Value investing came from a concept by Columbia Business School professors Benjamin Graham and David Dodd in 1934.
• Warren Buffet is perhaps the most well-known value investor.
• Studies have consistently found that value stocks outperform growth stocks and the market as a whole, over long time horizons.

Undervalued stocks are thought to come about through investor irrationality. Value investors hope to profit from this sort of irrationality by investing in companies which may have any combination or one of the following:
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• Below average price-to-book ratios
• Lower than average price-to-earnings (P/E) ratios
• Higher than average dividend yields

After a review, we as a value investor decided to purchase shares if the comparative value is attractive enough.

Considering all these factors, we have prepared this Neuron where we have picked stocks which are below their Intrinsic Value i.e. undervalued stocks, and ultimately we have followed 3 basic rules of value investing, where we have picked stocks which are below industry average price-to-book value (P/B) ratios, lower than average price-to-earnings (P/E) ratios and higher than average dividend yields.

Be the Beneficiary of ‘The Budget Revolution’

The Indian economy is in the middle of a plunge, some of the challenges on the list are sluggish demand, increasing unemployment and rising retail inflation and hence the expectation with Budget 2020 is quite high. The Budget is expected to be more focused on sectors such as Consumer Durables & FMCG, Real Estate, Banking & Finance and Agriculture among others.

Since rise in the cost of living has compelled everyone to streamline their finances and curb expenses and, hence, everyone is looking forward to the prospect of saving more taxes. In addition to increase in exemption limit of personal tax rates, we expect an increase in deduction limit of housing loan interest and enhanced exemption limit in respect of employer’s contribution to the NPS. Moreover, there are chances that period of eight years for deduction for interest on education loan may be increased.

Budget 2020 is expected to focus on agriculture as well as rural non- farming sector including warehousing, waste management and supply chain management. Certain policies to raise farm income are also predicted. A boost to Real Estate and Infrastructure will have a strong multiplier effect across the broader economy and increase the demand for construction material. The government even announced on Dec 31, 2019 the plan of investing 100 Lakh Cr as a part of National Infrastructure Pipeline. GST rates on consumer durables & FMCG might be revised and lowered.

Steps may be taken to boost the credit growth in the economy along with proper support to NBFCs and HFCs. The Financial Resolution and Deposit Insurance (FRDI) Bill could be reconsidered for resolution of troubled financial institutions.

Budget 2020 is likely to focus on India’s most aspiring electricity distribution reform scheme. A maximum amount of around 1 trillion may be allocated to the scheme, which is focused at reducing electricity losses, eliminating tariff gaps and installing prepaid smart meters across 250 million households.

The Budget comes with lot of exposure for different industries which are expected to perform well in a near term. Hence, we have captured that exposure and identified stocks under the specified industries which are expected to surge with the surging Industries and ultimately get benefited through the Budget 2020.

Capital Requirement: 200K

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