Investment Trading Setup - Growth & Wealth

✅ Investment Trading Setup – “GARP + RSI” Model
🧠 Step 1: Fundamental Filter (GARP - Growth at Reasonable Price):-

Use screeners or research reports to filter stocks with:
• Revenue Growth: > 12% CAGR (3–5 yrs)
• PAT Growth: > 15% CAGR (3–5 yrs)
• ROCE: > 15%
• Debt/Equity: < 0.5 (or < 1 for capital-intensive sectors)
• PEG Ratio: < 1.5 (Growth at a Reasonable Price)
• Institutional Holding: Rising trend over last 2–3 quarters

✅ Example sectors: Specialty Chemicals, Private Banks, IT Product, Pharma APIs, Auto Ancillaries.

I strongly advise you all to go for most mid cap and some small cap segments as major growth is expected from this 2 verticals.

📈 Step 2: Technical Entry (Monthly + Weekly RSI Confirmation)
Once fundamentals are strong, check charts:
On Monthly chart:
• RSI(14) > 60 or crossing above 60
• Price breaking out of multi-month resistance or cup & handle/base

On Weekly chart:
• RSI(14) > 55 and trending higher
• Volume > 20-week average during breakout week
🔁 Optional Add-On: Use 200 DMA and 50 DMA Golden Cross for extra confirmation.

🎯 Entry & Risk Management
• Buy Zone: After breakout on weekly chart with confirmation of RSI
• Stop Loss: Below recent swing low (weekly or monthly)
• Pyramid/Add: On every 15–20% dip if fundamentals remain intact

🏁 Exit Rules
• Major fundamental deterioration (falling ROCE, rising debt)
• Technical breakdown below 200 DMA with heavy volume
• Stock becomes significantly overvalued (e.g. P/E > 3x sector average + RSI > 80)
🧾 Example Stocks That May Fit This Model (as of mid-2025)

✅ Mid Cap Growth Stocks (₹10,000 Cr to ₹50,000 Cr Market Cap)
Suprajit EngineeringAuto AncillariesHigh ROCE, consistent profit growth, global exportsKPI Green EnergyRenewable EnergyStrong revenue CAGR, solar EPC + IPP modelKEI IndustriesCables/WiresScalable, infra theme, strong profit marginsSona BLW PrecisionEV & Auto TechEV-ready, global OEM exposureJ.B. ChemicalsPharmaConsistent earnings, margin expansion, clean balance sheetNarayana HrudayalayaHospitals/HealthcareAsset-light model, expanding RoCE, high promoter skinSansera EngineeringAuto EngineeringDiversified clientele, improving marginsPolycab IndiaWires & CablesStrong infra push, leader in B2C wire segmentTriveni TurbineEngineering/Clean TechHigh margin niche business, export growtheMudhra Ltd.IT/Digital SignatureFast growth, unique niche (cybersecurity theme)

🚀 Small Cap Growth Stocks (< ₹10,000 Cr Market Cap)
Ksolves IndiaIT Services/NicheDebt-free, high RoE, software exportsNGL Fine ChemPharma APIsHigh margins, good growth visibilityGensol EngineeringSolar EPCEV + Solar + Infra theme, fast-growingShivalik BimetalSpecialty AlloysHigh-tech materials, strong RoEHLE GlascoatSpecialty Chem/EquipLeader in glass-lined equipment, capex doneIndia PesticidesAgrochemClean books, exports-led growthGNA AxlesAuto ComponentsPickup in CV/Tractor cycle, strong balance sheetLa Opala RGConsumer DurablesHigh margins, niche player in opalwareDynacons SystemsIT Infra ServicesNiche contracts, high profitabilityZen TechnologiesDefence TechDefence theme, order book visibility

📊 Suggested Metrics You Can Track:
• Revenue CAGR (3Y): >15%
• PAT CAGR (3Y): >20%
• ROCE: >18%
• D/E Ratio: <0.5
• Promoter Holding: >50% (or rising trend)
• Cash Flows: Positive from operations

Note - I have provided you all with my best 4 setups used by big firm and I can assure you they are working for us for the past 18 years.

Check my post in the profile -
Setup provided were:-
Positional Trading Setup
Swing Trading Setup
Stock Options Buying Setup
And Investment Trading Setup above.

I wish you all the best and am sure and confident that you will reflect and ponder on how simple techniques work.

At Last, KISS - Keep it Simple and Systematic.

Happy Trading!

Faraaz T
Sr. Ex. Financial and Equity Analyst
Stockholm Securities