GrowthMode

Describing passive and sectoral growth investing opportunities in Indian Equities for the medium-term. Updated Monthly Quantamental Investing®.

QVGS GrowthMode

The Growth Cycle is described by the GrowthMode Indicator constructed using Fundamental, Quantitative, and Technical inputs and is computed every month for medium-term investing. The GrowthMode Indicator classifies Indices and Sectors into 2 Modes at a point in time:

Mode (Score)
Expansion (1)
Contraction (-1)

Broad-based Indices or Sectors experiencing positive underlying growth and momentum are in the Expansion mode and indicate a long position to be taken. Conversely, Indices or Stocks facing stagnation or degrowth are classified in the Contraction mode and can be exited or shorted.

The indicator can be interpreted in 2 ways.

  1. Classifying which mode of the Growth Cycle does a specific market cap fall in at a point in time to describe the state of passive investing, M-o-M.
  2. Classifying what percentage of stocks of each Sector fall into either mode of the Growth Cycle to describe the state of active investing, M-o-M and further creating a sectoral rank.
Passive Growth Outlook

Market-cap Based Indices

The QVGS GrowthMode Indicator is updated monthly. Last Updated: 31-05-2022

COMMENTARY

GrowthMode Indicator across markets caps had shifted from Expansion to Contraction in November 2021, after which markets have been range-bound & consolidating so far.

An increase in volatility along with a rising interest rate scenario may lead to deeper corrections in the coming months.

INTERPRETATION NOTES

Momentum for various market caps switches between Expansion and Contraction.

Typically, all market caps move in tandem and divergences can be played in a contrarian manner. For example, if the bulk of the market cap is in Contraction mode, the odd market cap in Expansion mode can be shorted and vice versa for a long.

The GrowMode indicator indicates momentum or a momentum-crash for passive investing.

Sectoral Growth Outlook

NSE Top 750 Stocks

The QVGS ValueScore Indicator is updated monthly. Last Updated: 31-05-2022

COMMENTARY

19 out of 21 sectors are undergoing Contraction at the end of May 2022. This is in tandem with the broad-market indices.

The Fertilizers and Pesticides still hold some steam as it stagnates but is not yet undergoing Contraction.

The only sector that is still undergoing Expansion is Paper & Jute

INTERPRETATION NOTES

The health of a specific sector can be gauged by comparing the percentage of stocks going through Expansion vs Contraction in the sector.

Expansion of more than ⅔ rd of the sector’s stocks indicates a robust growth in the sector (where a long position can be taken in the strong companies).

On the contrary, the Contraction of more than ⅔ rd of the sector’s stocks indicates degrowth in the sector.

A middling number of companies experiencing Expansion in a sector indicates stagnation of the sector.

The GrowthMode indicator provides a cross-sectional comparison of sectors for active investing.

Sector Growth Ranks

NSE Top 750 Stocks

The QVGS ValueScore Indicator is updated monthly. Last Updated: 31-05-2022

Top 5 Sectors

  1. Paper & Jute
  2. Fertilizers & Pesticides
  3. Automobile
  4. Industrial Manufacturing
  5. Power + Oil & Gas

    Bottom 5 Sectors

    1. Utilities
    2. IT
    3. Pharma
    4. Cement & Cement Products
    5. Telecom

    INTERPRETATION NOTES

    Sectors are ranked basis their GrowthMode Indicator score.

    The highest number (21) represents the highest rank.

    Portfolios

    Quantamental Portfolios driven by the Growth Cycle


    Sapien Cubit smallcase by Modulor Capital

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