#Mining Precious Gems
Screening methodologies for profitable stocks in the
Indian stock market
Author: Vinod Sreedharan
About the author
I am a ful -time stock market investor and trader who is very passionate
about stock markets and equities. The whole human psychology and
behavioural aspects of economics that drive the ups and downs of stock
and market movements real y inspires me.
I believe that to have a sustained success in the stock market irrespective
of any methodology, o
ne n
eeds to b
uild a
p
ersona t hat t hrives o
n r
elentless
and constant learning. In other words, you have got to be a humble and
lifelong learner. This, perhaps, is the only ‘ open secret’ that comes across
as consistent among al the great and wise investors who ever walked
planet Earth.
Beyond this, in my experience, there does not seem to be any perfect
recipe that works al the time in selecting winning stocks. We see many
articles, books, posts that claim to teach the so cal ed “ Secrets” of stock
picking. But once a secret is let out, it no longer remains a secret!! The
market is a quick evolving ‘creature’ that aggressively adapts itself to
negate the advantages of possessing these so cal ed arguably eternal
‘secrets’.
For these reasons, I find the best hedge (or edge) an average regular
investor could have is to build a disciplined, unbiased, objective and
focussed approach to selecting stocks. An approach that can be adapted,
modified and tweaked to accommodate various factors. One that would
adapt nimbly t o changes t hat k
eep occuring on m
acros o
r politico-economic
circumstances that affects markets. One that adapts to proactive and
reactive market dynamics.
To that end - this book is an ode to learning, an ode to using screeners a
s
one way to inculcate disciplined stock market picking. A strategy that is
customisable, adaptable, amenable to feedback. This k
ind o
f m
ethodology,
keeps us - the investors - grounded, a
gile a
nd a
lways l earning, e
ven a
s w
e
see results and/or reap profits from our picking.
Remember this - “ there are real y no failures, there is only feedback” . So,
stay positive, humble and keep learning. Focus on the process and the
personality, the persistence and the passion - results we desire wil fol ow
in due course. When a process (vs fluke) drives the outcomes for most
part, we give lady luck the best chance to play on our side.
Happy investing!
Thank you - Vinod Sreedharan
< vinod.sreedharan.author@gmail.com >
Gratitude
Dedicated to life changing personality traits - “ Passion, Persistence,
Purpose, Positivity” and the wil to be a relentless, humble, sincere lifelong
reader and learner!
Table of Contents
1. Introduction
2. Screener.in
3. The Fundamentals
4. Customizing screener.in
5. The Screens
6. Conclusion
Introduction
This book is an effort to encourage and highlight the use of screeners to
have a “bottom-up” approach for effective and o
ptimized s
tock s
election. It
aims to help the readers build a screener based stock selection amidst al
the choices of listed stocks in the Indian stock market. Further, the core
emphasis wil be on using screener.in and significant methodologies and
using screener.in
The ‘Why’ for Screeners
Screening the market for prospective stocks is by far the most disciplined,
dis-passionate and effective way to find good stock investment ideas.
Typical y, we look at stocks based on what we see and hear - analyst
reports, social media and other ‘tips and recommendations’, television and
media news, periodicals and broadcasts, friends and relatives’ favourite
lists et al. No matter which method is engaged in lining up the stocks of
interest to us, screening gives us a dispassionate, objective, relatively
less-biased option to verify, round up, enlist and cross-check stocks of
interest.
Screening for stocks is also a direct by-product being very correlated and
in-line with the age of computers and technology. Today, algorithms can
quickly run on the background and provide enriched data as a response t o
‘smart’ querying.
However good one is at reading financial reports, annual reports, business
journals, analyst stories and thereby deciphering and interpreting business
prospects, screening helps you sense and dig into smart opportunities in a
much rapid, disciplined, objective, relaxed method.
Thus, screeners are immensely valuable once you learn, roundup and
practice the ‘criteria set’ that matters to your investing methodology and
investing persona. More information on the prospective ‘criteria set’ and
more on an ‘investing persona’ wil come up in further chapters going
ahead.
The ‘What’ for Screeners
If you are asking or just thinking aloud - “What are screeners(?)”, let’s do
some de-mystification.
Screeners are essential y smart stock querying tools. The way screeners
work is pretty simple and straightforward. Through a screener, we ask the
system to search through a database and identify stocks that match a set
of specified criteria. The criteria is a set of ‘popular’ or standard stock
fundamental (and/or technical) characteristic(s) that we find appealing or
al uring. The characteristic could be based on a numerical or logical
comparison (ie. greater than, lesser than equal to, <this> AND <that>,
<this> OR <that> etc). A col ection of this criteria characteristic as a set is
cal ed a ‘screen’.
The results of such a screen would be the specific list of stocks t hat m
atch
and fit the specified criteria. The result could be a smal number if the
criteria s
et i s v
ery n
iche a
nd/or e
xtreme / strict. In the s
ame v
ein, i t c
ould be
a large number if the criteria set is relaxed, very basic or generic.
In summary, we put in a criteria set into the screener utility to query the
stock market to get us a list of stocks that fit nicely and that match into t he
specified criteria characteristic set.
The ‘Who’ & ‘When’ for Screeners
● Who exactly are
screeners for?
● What kind of users or stock market participants are screeners meant
for?
● What level of expertise is needed to use them?
● When does anyone use them?
These must be the next set of curious queries that need answers, aren’t
they! Wel , here goes…
Screeners are meant real y for everyone and anyone interested in stocks
and the stock market in any form and timeframe. The screening paradigm
is very purposeful in helping a below average performing stock market
participant to prospectively improve their odds of better and superior
potential return yield. If used wel , based on practice, feedback and
adapting - the screeners can help raise our game and avoid being gul ible
to al s
orts o
f s
tock m
arket ‘ wisdom generalities’, w
hich are p
retty u
nhelpful,
sub-optimal and impractical in real world investing.
In summary, screeners can be used by al stock market participants
irrespective of their time in, experience of and knowledge about the stock
markets. Of course, like most things in life, the yield might vary from
person to person (or case to case) based on multiple variables at play,
many of which are in an individual’s sphere of control and are trainable
aspects.
often and regularly. They should in fact be used as the first step in a
‘bottom up’ process of evaluating the entire stock market - looking for
potential opportunities of sustainable return yield generation.
The ‘Which’ of Screeners
So which screener d
o y
ou u
se a
mong t he a
vailable o
nes ?
That’s t he next
curious question isn’t it! (?)
Here are some of the choices we have…..let’s peek in.
1) Screener.in
Website: https://www.screener.in/
Charge: Free (** Screener Gold has paid premium features)
Custom Querying: Yes! Very flexible
Fundamental/Technical: Pure Fundamental
Pre-set Screens: Available
2) Trendlyne
Website: https://trendlyne.com/stock-screeners/
Charge: Basic is Free / Paid for Advanced/Expert features
Custom Querying: Yes! Very flexible
Fundamental/Technical: Fundamental / Technical (Techno-Funda possible)
Pre-set Screens: Available
3) Equitymaster Stock Screener
Website: https://www.equitymaster.com/research-it/company-info/stock-screener-india.asp
Charge: Basic is Free
Custom Querying: Limited via pre-built choices
Fundamental/Technical: Fundamental
Pre-set Screens: Available (** preferred choice in this)
4) Marketsmojo
Website: https://www.marketsmojo.com/mojo/professionalhome
Charge: Paid
5) ValueResearch
Website: https://www.valueresearchstocks.com
Charge: Paid
Custom Querying: Via pre-built choices
Fundamental/Technical: Fundamental
Pre-set Screens: Available
-------------------------------------------------------------------------------------------------------------------------------
There are a few more aside from the above a
nd t here a
re others w
hich a
re
more ‘pure’ technical screeners for querying based o
n s
tock c
hart p
atterns,
candlesticks and indicators.
While we avoid getting deep into the likeability and pros/cons o
f one v
s t he
other among these, for the purpose of this book, we wil stick to using
‘screener.in’ - the free version.
Screener.in
Thus far, we covered the [ ‘What’, ‘Why’, ‘Which’, ‘When’, ‘Who’ ] of
screeners and screening.
This section of the book is about the screener.in website/tool and its usage.
So, we have reached the ‘How’ of screeners here.
I am sure some of us are now reasonably curious (even convinced!) that
screeners are very useful and we want to go ahead and try them out. In
that, we wil use the free version of screener.in as our go-to screener for
the rest of this book.
Let us go through some of the basic steps of screener.in usage and some
of its core aspects that are useful to know Day-one.
Browsing through screener.in
1) Using your favourite browser, go to www.screener.in
2) The first thing to-do is to create a user login for ourselves. Use the
login tab on the main page for this. Then u
se t he ‘ Register f or free’ o
ption
to create a user login/password for yourself.
3) Once logged in, you get the main logged in page.
4) There is an option for issuing a ‘custom query’ at the bottom left of this
page
5) The Guide
https://www.screener.in/guides/creating-screens/
This is must-read. Spending 5-10 minutes on this article wil give you a
good overview on how to create screens at a high level.
At this time, I would recommend that you spend some time going through
this ‘creating screens’ page.
Once you complete this activity, you wil now have a clear picture of:
a) Creating/Building out a new query
b) Customisation of options in the column display
c) Saving the custom query screen
d) Setting alerts
6) In the ‘Company Search’ option on the main screener page, we can
search for any stock we are interested in. I use the example of ‘Infosys’
here to il ustrate:
The result for the company/stock searched for are:
a) A basic set of fundamental stock parameters (customisable by the
user)
b) A line chart of stock price performance (And volume) over multiple
periods that can be selected by the user
c) Pros / Cons of the company/stock under view
d) Peer Comparison in the sector
e) Quarterly Results figures
f) Annual Profit and Loss figures
g) Balance Sheet numbers
h) Cash Flows details
i) Other info - Recent Announcements, Annual Reports, Credit Ratings
One interesting piece of information can be viewed just below the Profit &
Loss section that highlights the periodic stock performance on the most
discussed and sought after fundamental parameters.
The above covers the basic usage of screener.in to screen stocks.
A few ‘advanced user’ custom configuration options that could also be
useful is discussed in a later chapter.
The Fundamentals
Screeners, much like any other data and analytics tools around, work on
the ‘ garbage in - garbage out’ paradigm. The results you g
et o
n a
ny q
uery
based s
ystem w
il m
ost l ikely be in c
ongruence w
ith
t he q
uality a
nd intent o
f
the user specified criteria-set in the query employed.
The above a
spect b
eing the f ulcrum a
nd b
ottomline -
a
n
ecessary a
spect o
f
effect screening is a sound hold on basics of “Stock Fundamentals”. In
that, knowing ‘ what i s g
ood’ a
nd h
ence w
e w
ant more o
f it, and ‘ what i s n
ot
good’ and hence we want less or none of it - is very critical to effective
screening for stocks.
One other aspect where this would prove critical is - broad based generic
queries wil lead to a huge number of results that is simply impractical and
not useful. So, essential y o
nce s
uch results a
re o
bserved, i t i s i mportant t o
further fine-tune and increase the expectation of the ‘ask’ as far as the
screener query is concerned. This wil help eliminate noise and reach the
real core set of a
s
mal n
umber of s