Investment Allocation

When to use

When Joseph has a lump sum to invest and asks how to allocate it across his existing portfolio. This covers TWO sub-workflows:

1. MF evaluation — selecting which mutual funds to invest in (see section below)

2. Stock capital deployment — allocating lump sums across individual stock positions

Also distinct from:

• Stock analysis (indian-stock-analysis) — evaluating a single stock's fundamentals
• Portfolio analysis (portfolio-analysis) — analyzing what you already own

MF Evaluation Sub-Workflow

When Joseph asks about evaluating or selecting mutual funds (not deploying lump sums into stocks), use this workflow. Reference: references/mf-evaluation.md for data sources and screening criteria.

Data Sources (in order of reliability)

1. Groww.in — category comparison tables (AUM, returns, expense, ratings). URL: groww.in/mutual-funds/category/best-{category}-mutual-funds

2. INDmoney — detailed fund pages (portfolio holdings, sector allocation, risk metrics, peer comparison). URL: indmoney.com/mutual-funds/{fund-slug}

3. Morningstar India — analyst ratings, Sharpe/Sortino/drawdown. URL: morningstar.in/mutual-funds/{fund-id}

4. Value Research Online — portfolio overlap, holdings. ⚠️ Cloudflare-blocked for bot access; use web_extract as fallback.

5. Screener.in — check underlying stocks the fund holds (apply stock-level analysis on holdings)

Screening Gates

• Gate 1 (Basic): Direct plan, AUM ₹2,000–20,000 Cr, expense < 0.70%, fund manager tenure ≥ 2 years, 3Y+ track record
• Gate 2 (Performance): 3Y/5Y CAGR > category average AND > benchmark index, Sharpe > 0.8, max drawdown < -30%
• Gate 3 (Portfolio): Top 10 holdings < 40%, genuine category allocation ≥ 65% (SEBI rule), sector diversification, overlap with existing MF holdings

Output

Write research files to wiki/wealth/invest/mf/research/{fund-slug}.md with: basic info, performance table vs benchmark/category, risk metrics, portfolio holdings, sector allocation, overlap analysis, and verdict (DEEP DIVE / WATCH / PASS). Write comparison summary to wiki/wealth/invest/mf/research/{category}-mf-comparison.md.

Pitfalls

• AUM too large kills small cap alpha — funds > ₹20,000 Cr can't buy truly small names; they drift toward mid/large cap
• Expense ratio compounds — 0.3% vs 0.85% is a significant gap over 10 years; always check Direct plan expense
• Turnover = tax drag — high turnover (>100%) means frequent buying/selling; check if returns justify the tax cost
• Style drift — a "small cap" fund holding 13%+ large cap stocks is not delivering category exposure
• Value Research Cloudflare — site blocks bot access; use Groww/INDmoney as primary, try web_extract as fallback
• Check overlap with existing MFs — before adding a new fund, verify it doesn't duplicate holdings in PPFAS Flexi Cap or other existing funds

Workflow (Stock Capital Deployment)

1. Read the current state (all in parallel)

Read these files from wiki/wealth/invest/:

File	Purpose
portfolio/tracking/holdings.csv	Raw holdings (qty, cost price, asset class)
portfolio/tracking/YYYY-MM-DD-portfolio.md	Latest snapshot (values, P&L, allocation %)
portfolio/analysis/YYYY-qN/report.md	Quarterly analysis (tier classification, assessments)
portfolio/analysis/YYYY-qN/forward-strategy.md	Existing strategy (SIP allocation, trim/hold/add decisions)
research/watchlist.md	Active positions + watchlist + S-curve candidates
research/growth-candidates.md	Growth compounder screening results

2. Identify allocation targets

From the forward strategy and report, extract:

Underweight positions — holdings that are small relative to their target allocation:

• Compare current % of portfolio to strategy-defined target
• Example: ONGC at 0.8% of portfolio when strategy says "primary add candidate"

Pending trims — positions that are overallocated and should NOT receive new money:

• Example: NMDC flagged for trim from ₹26.4L → ₹14L

SIP buckets — if the forward strategy defines monthly SIP amounts (e.g., ₹50K dividends, ₹20K growth, ₹30K parking), scale proportionally for the lump sum Parking/default — arbitrage fund or liquid fund for unallocated capital

3. Check technical timing

For each stock receiving allocation, run a quick technical check using TradingView:

URL pattern: https://www.tradingview.com/symbols/NSE-{TICKER}/technicals/

Extract from the page:

• CMP vs SMA(50) and SMA(200) — is price above or below?
• MACD signal — Buy, Sell, or Neutral?
• RSI(14) — oversold (<30), overbought (>70), or neutral?
• TradingView summary gauge — overall Buy/Sell/Neutral

Decision rules (reference: wiki/wealth/invest/research/frameworks/technical-indicators-reference.md):

Technical State	Action
Price > 50 DMA > 200 DMA + MACD Buy	Deploy full amount — trend confirmed
Price < 50 DMA but MACD Buy + RSI neutral	Deploy partial (50-60%), park rest for dip
Price < 50 DMA < 200 DMA + MACD Sell	Wait — park in arbitrage/liquid, set price alert
Ex-dividend date within 1 week	Flag prominently — buy before for dividend, or wait for post-ex-date dip

4. Build the allocation table

Output format:

| Allocation | Amount | Rationale |
|-----------|--------|-----------|
| Stock A | ₹XX,XXX | Why this amount (underweight, technical signal, etc.) |
| Stock B | ₹XX,XXX | ... |
| Parking (arbitrage) | ₹XX,XXX | Default for unallocated |
| Cash (wait) | ₹XX,XXX | Why waiting (technical not ready) |

Include a "What NOT to do" section — positions that should NOT receive new money (overallocated, pending trim, redundant funds).

5. Provide revised allocation if technicals are weak

If the technical check shows one or more target stocks are in bearish alignment:

• Reduce allocation to those stocks
• Increase parking/cash allocation
• Specify price levels to watch for entry (support levels from pivot table)
• Don't fight the chart — "your own framework says two confirming = a signal"

Key principles

1. Follow the existing strategy first — the forward strategy was built with full context. Don't reinvent allocation from scratch.

2. Technical timing is secondary — fundamentals determine WHAT to buy, technicals determine WHEN. Never skip a fundamentally sound position entirely because of technicals; defer it instead.

3. Underweight positions get priority — new money should flow to positions that are small relative to their target, not to positions already at target.

4. Don't add to overallocated positions — if a stock is flagged for trim, it should NOT receive new money.

5. Park unallocated capital — money waiting for better entries should be in PP Arbitrage Fund (equity taxation, ~7-8% return) or Axis Liquid Fund, not idle in savings account.

6. Flag ex-dividend dates — they affect entry timing. Buy before ex-date to capture dividend, or wait for post-ex-date dip.

7. Scale SIP proportionally — if monthly SIP is ₹1L and lump sum is ₹2L, roughly double each bucket. Adjust based on technical signals.

Barbell Strategy Framework

When Joseph asks to design or review his overall portfolio architecture (not just deploy a lump sum), use this framework. Reference: wiki/wealth/invest/barbell-strategy.md for the current live strategy.

The 5-Arm Structure (as of Sep 2026)

1. Arbitrage Fund — Emergency fund (1 year) + deployment pool. Move liquid fund money here. Earns ~7-8% with equity taxation. When opportunities arise, sell from here and deploy.

2. Dividend Arm — 5-7 high-yield stocks (Coal India, ONGC, Power Grid, etc.). Target: ₹6L/year in dividends. Reinvest for 3-4 years, then use for retirement/expenses. Capital preservation is primary.

3. Growth Arm — 5-7 mid/small cap stocks. High risk/high reward. Exit triggers: 30% drawdown, fundamental break, or management failure. "If they win, they win big. If they lose, it's ok."

4. Flexi Cap — Primarily PPFAS Flexi Cap. Core stabilizer. Review annually — switch if underperforming for 1+ year.

5. Gold/Silver — Small hedge allocation (3-5%). Non-correlated to equity.

Design Principles

• No overlap between arms — a stock in dividend arm is NOT in growth arm
• Each arm has a purpose — income, growth, hedge, deployment, stability
• Clear exit rules per arm — dividend = sell on fundamentals; growth = sell on 30% drawdown or fundamental break; flexi cap = review annually
• Arbitrage as reservoir — always have dry powder for opportunities
• No redundant international — if PPFAS already holds 11.5% US tech, don't add MON-100 (same stocks = duplicate exposure, not diversification)

When reviewing the barbell

• Check each arm's allocation % vs target
• Verify no overlap has crept in (e.g., a stock appearing in both dividend and growth arms)
• Ensure the arbitrage fund has enough for 1-year emergency
• Review PPFAS performance vs flexi cap category — trigger for switching if underperforming 1+ year

Dividend Stock Screening

When building or reviewing the dividend arm, use this methodology:

Screening Criteria

• Dividend yield > 4% (sustainable, not one-off)
• Market cap > ₹10,000 Cr (liquid, stable)
• P/E 5-20 (not a value trap)
• Debt/Equity < 1 (balance sheet strength)
• ROCE > 15% (capital efficiency)
• Consistent dividend history (3+ years of regular payments)

Data Sources for Dividend Stocks

• Screener.in pre-built screen: screener.in/screens/2093/large-cap-high-dividend-yield (no login needed)
• ET Money: etmoney.com/stocks/market-data/high-dividend-yield-stocks/36
• Smallcase: smallcase.com/lists/high-dividend-yield-stocks
• Tickertape: tickertape.in/stocks/collections/highest-dividend-paying-stocks-in-nifty-50

Capital Calculation

Target annual dividend ÷ average yield = capital needed

• Example: ₹6L/year ÷ 5.5% avg yield = ₹1.09 Cr needed
• Build across 5-7 stocks for diversification
• Factor in existing dividend stocks (avoid overlap with growth arm)

Red Flags for Dividend Stocks

• Payout ratio > 80% — unsustainable, company retaining nothing for growth
• Cyclical commodity stocks (Vedanta, NMDC) — dividend can drop 50% in bad years
• Govt disinvestment risk — PSU dividend can be irregular based on govt needs
• One-time special dividends — don't count these as recurring income

Portfolio Overlap Check

Before adding a new MF or stock, check for overlap with existing holdings:

MF vs MF Overlap

1. Pull top 10 holdings of the new fund (INDmoney or Groww)

2. Pull top 10 holdings of existing funds (PPFAS Flexi Cap, etc.)

3. If 3+ stocks appear in both, flag overlap percentage

4. If overlap > 30%, the new fund is redundant — skip it

MF vs Stock Overlap

1. Check if the MF holds stocks you already own directly

2. Example: PPFAS holds Coal India (4.91%) — if you also hold Coal India directly, your effective exposure is higher than it looks

3. This is usually fine for dividend stocks (you want the exposure), but flag it

International Overlap (PPFAS specific)

• PPFAS Flexi Cap holds ~11.5% in US tech (Alphabet 4.3%, Amazon 2.4%, Microsoft 2.2%, Meta 2.1%)
• Do NOT add MON-100 or similar Nasdaq ETFs — they hold the same stocks
• If international diversification is desired, look for global ex-US funds instead

Deep-Dive Workflow (Dividend Stocks)

When evaluating individual stocks for the dividend arm, use this workflow:

1. Pull Screener.in data

Navigate to https://www.screener.in/company/{TICKER}/consolidated/ and extract via browser_console:

• Summary stats: CMP, Market Cap, P/E, Book Value, Dividend Yield, ROCE, ROE, 52W range
• Quarterly results table (last 5 quarters for trend)
• Annual P&L (last 5-10 years)
• Balance Sheet (debt trend is critical — check deleveraging)
• Cash Flow (CFO, FCF, CFO/OP ratio)
• Dividend payout history (year-by-year payout %)
• Pros/Cons from Screener

2. Assess dividend sustainability

Key questions:

• Payout consistency: Is payout ratio stable (±10%) or erratic (50-350%)? Stable = reliable income. Erratic = cyclical/unpredictable.
• Other income ratio: If other income > 30% of net profit, earnings quality is suspect. Flag it.
• CFO vs Net Profit: If CFO consistently > net profit, cash flow supports dividends. If CFO < net profit, dividends may be funded by borrowing.
• Debt trend: Is the company deleveraging or leveraging? Deleveraging = safer dividends.
• Commodity exposure: Cyclical stocks (Vedanta, NMDC, coal) can cut dividends 50% in bad years. Factor this into yield calculations.

3. Write the analysis file

File: wiki/wealth/invest/research/tickers/{slug}/{slug}.md

Include: Summary table, business overview, quarterly results, annual P&L, balance sheet, cash flow, dividend analysis (with year-by-year payout table), pros, cons, and verdict.

4. Capital calculation

Target annual dividend ÷ average yield = capital needed

• Use sustainable yield (median payout × TTM EPS ÷ CMP), not headline yield
• Build across 5-7 stocks for diversification
• Check overlap with growth arm (no stock in both arms)

Pitfalls

1. Don't fight the chart — if all technical indicators say "Sell", don't deploy just because the amount is burning a hole. Park and wait.

2. Ex-dividend dates matter — ONGC ex-date Sep 4 means price drops by dividend amount on that date. Flag this, don't let the user miss it.

3. Coal India ₹370 dip may not come — the strategy may have a "buy below ₹370" target, but if the stock has held ₹390-400 support, adjust the target rather than waiting forever.

4. PPFAS Flexi Cap is already 58% of MF portfolio — never recommend adding more. The forward strategy explicitly says "stop fresh SIPs."

5. ICICI Direct MFs are for car EMI winding down — don't recommend new investment into those funds.

6. Boys' education is already funded — PP Flexi Cap has ₹12L each, university costs ~₹6L. No additional allocation needed.

7. TradingView daily timeframe — for investment timing (not trading), always use the "1 day" tab. Intraday signals are noise.

8. Two of three confirming = signal — don't require all 3 (DMA + MACD + volume) to deploy. But if ZERO are confirming, definitely wait.

9. Screener.in custom screens require login — can't use for MF screening without auth. Use pre-built screens (no login) or Groww/INDmoney instead.

10. Value Research Cloudflare-blocked — bot detection blocks browser access. Use web_extract as fallback, or rely on Groww/INDmoney for the same data.

11. Headline yield vs sustainable yield — a stock showing 12.5% yield may only sustain 8-9% if payout normalizes. Always calculate sustainable yield using median payout ratio, not the current year's headline number.

12. Subsidiary overlap — Hindustan Zinc is a Vedanta subsidiary. Owning both doubles promoter risk. Check corporate family tree before adding "diversified" positions.

13. PSU NBFC cash flow is negative by design — don't judge REC/PFC/IRFC by CFO like a manufacturing company. Lending companies disburse more than they collect in growth years. Judge by ROE consistency and NPA trends instead.

14. User prefers to think through strategy collaboratively — don't just present recommendations. Ask "what do you think?" and let them shape the approach. They want to own the decisions, not receive a fait accompli.