The more children you are responsible for, the harder it is to keep close tabs on them. So too with stocks. If your market assets are allocated among 50 or more stocks, it is difficult to get a feel of each one. In addition, there is a tendency to concentrate on stocks which are doing well and put aside your concern about the laggards, figuring they will come to life later. What happens is that you let the good stocks subsidise for the bad ones.

The proper way to look at your stocks is to make believe that each position is the only one you have. If it's acting fine,ride with it. But if it's lagging badly and acting poorly, lighten up on that position even if the sell stop isn't hit. Move the proceeds into a new stocks with greater promise.

To be specific, if the capital of an investor is small, I'd diversify in no more than six to seven stocks, but as you move up the ladder into seven digits or higher portfolios, 15 to 20 stocks are the most that I'd invest in at any point of time. Also use approximate same amounts when constructing your portfolio. Don't do like some investors who think in terms of the number of shares they can purchase. They buy 1,000 shares of any amount, whether it's a Rs 25 or Rs 125 stock.

If an investor was investing Rs 2,50,000 in 10 stocks, each position must be approximately Rs. 25,000 in value. Common sense must be applied while constructing a portfolio, Don't put all your eggs in one basket. But don't go to the other extreme of using too many baskets.

Also the next step an investor must follow is to distribute the buying into differentgroups. Select the groups which have bottomed out and choose the best stocks within the group. This is to take care of a reversal in any one group. If one group suddenly reverses, your portfolio will still do well. If an investor follows a few simple rules, there is no reason why he cannot make money year after year in the markets.

More and more sectors have been bottoming out suggesting that the bull run is likely to continue for a while.Today I will take a technical tour of the speciality chemical sector. The sector is divided into two groups: Speciality chemicals-large and speciality chemicals -medium and small. Majority of the stocks in the large group have bottomed out while medium and small stocks have been lagging behind.

Foseco India

Foseco India bottomed out in early 1999 and closed above its 30 WMA and its earlier intermediate top. The relative strength line for the stock also moved above its zero line in January 1999, suggesting that the stock is outperforming the indices. Recently,the stock broke out with a rise in volume out of the symmetrical triangle and has been zooming up.

The minor trend of the stock has turned down and traders can also pick up the stock for short-term gains at current levels. Higher levels in the stock will be seen soon and investors must hold on to their long positions. The stock is one of the leaders in this sector and more long positions by investors can be added in the next intermediate decline. The stock is poised to cross its strong resistance of 340 soon.

Jayant Agro

Jayant Agro recently moved above its earlier intermediate top of 75 with a rise in volume and has gone into a major uptrend. The surge in the stock with a rise in volume is bullish and investors must hold on to their long positions. More positions can be added when the stock pulls back towards its strong support of 75 or during the next intermediate downtrend. As majority of the stocks in this sector have bottomed out, higher levels will be seen in the stock soon. Hold on to thelong positions.

Nalco Chemicals

Nalco Chemicals made a new high as the stock moved past its earlier major tops between 550 and 600. The relative strength line for the stock is bullish and long positions must be held on. The stock is now closer to its all time high of 800 and this level will be the next resistance level for the stock. The trading volume of the stock is low and hence the jobbing spreads are higher. Investors may book partial profits near its earlier all-time high of 800 while they can continue to hold on to the rest.

Savita Chemicals

Savita Chemicals also moved past its earlier intermediate top and its 30 WMA recently and is in a confirmed uptrend. The relative strength line for the stock has moved above its zero line suggesting that the stock is outperforming the indices. Hold on to the long positions in the stock and more positions can be added when the stock pulls back towards its strong support of 56. The next strong resistance to the stock are at 71 and 75 and afterthe stock crosses these levels, higher momentum will be seen in the stock.

Transpek Ind

Transpek Inds moved past its 30 WMA and its earlier intermediate top in the last fortnight and is also in a confirmed major uptrend. The breakout above its earlier intermediate top took place with a rise in volume and this is a bullish sign. Hold on to the long positions, while more long positions can be added if the stock pulls back towards the support of 52.95. The next strong resistance to the stock is between 70 and 110.