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Saturday, June 24, 2017

HOW TRAVELLING IN MUMBAI LOCAL TRAINS PROVIDED ME AN ADDITIONAL TOOL TO MAKE MONEY IN INDIAN STOCK MARKET FASTER.


Image result for pic of mumbai local trains overtaking each otherImage result for pic of mumbai local trains
Dear friends I felt it necessary to share my experience with you all on Indian Stock Market.
Image result for nse bseNSE

After retiring from a 33 years of devoted service in Private Sector manufacturing Companies of repute and even holding very senior positions I could not save much for my old age as I used my limited money for buying good house and making trips to around 20 countries which I wanted to visit with family before becoming old.

I started my Accounting professional practice knowing well that it takes 2~3 years to start getting professional work as one starts from ZERO experience of Practice. But in 2014 all of sudden it just struck to my mind that why not to give a try to Indian Stock Markets as I being good at subject Financial management and also teaching as faculty with ICSI added further to my desire. I started studying day and night the financials of Companies listed with Indian stock exchanges. So I started with a portfolio of 2M only. I did not resort to day to day trading. My investments started giving good annual returns of around 1.2M.

I happened to stay for a couple of months at Mumbai with my son and there while travelling thru Mumbai Local trains I found the concept of Slow train which stops at every station and Fast which stops only at specific stations and reaches its destination much faster and one could change with the same cost of ticket during travel at any station if one gets chance.

One fine morning it struck to my mind that why not to apply this concept in Portfolio Management. So I started switching over from slow moving stocks to faster moving stocks (but not high beta stocks as they are risky) and believe me it worked wonders. This strategy of stepping out of slow and jumping to faster stocks financially secured my old age to a larger extent. Over the last three years handling portfolios (Mine own as well as of clients) I learnt a great deal from Indian Stock markets and the mentality and working of day to day brokers. I share my experience which readers who invest in Shares may find useful while playing with Indian Stock Markets.
1. Never invest just on the basis of tip even coming from close friend. Even established Stock markets pundits are hands in glove with promoters for price fluctuation of any share. Do your home work well before investing in any company. Study the business model and future potential of its products and services. Do financial analysis of audited results and check out the Contingent Liabilities/Related Party transactions/Asset revaluation reserve/ and impact on future earnings.
2.Avoid highly indebted companies and also higher Trading on Equity.
3.Study well the background of Promoters specially if they have been involved in any Money laundering case or debarred from trading by SEBI etc.
4.Do not get emotionally attached to any share. Get rid off in case you find stagnancy in top line and decrease in margins.
5.Go for companies having good free cash.(Free cash means cash from operations before Depreciation and then add or subtract net effect of change in working capital).If it is positive then risk is low. Avoid companies with very high PE ratio as compared to its Peer and Industry.
6.Keep a track of new start ups as many start ups are disruptive in nature which can kill any company faster.
7.Indian Stock market is in between BERMUDA Triangle as it gets affected by USA Markets-Asian Markets before start of the session and then in the afternoon by European markets.
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8.Last trading session of the week and last Thursday of the month are very important as there are wide fluctuations in stock prices on these days.
9.Be careful about stocks listed on BSE as many of them are penny stocks and played on day to day basis by brokers in control of Promoters.
10.Never become panic in any downfall unless the news is very adverse.
11.Do not play in F & O and daily trading unless you are having expertise.
12.Moment you gain a good return then come out of the stock and book profit even if you have to pay Short term Capital gains Tax.
13.When ever any company goes for Share face value split say from 10 to 1 and also goes for bonus issue then come out before record date as the price at that time is generally maximum. After such action price of such share generally goes down.
14.In companies where Indian government also holds a big chunk and you find price suddenly going down or not moving up then buy such share as brokers keep it low in case of disinvestment of its holding by Goverment.(Brokers come to know in advance of such action of the govt.)
15.Companies where holding of mutual funds are there then come out before redemption of mutual funds are due. Many mutual funds are to distribute dividends say around X-Mas in Dec and they try to jack up share prices of these companies prior that. Come out in time as moment they start selling the price nose dives.
16.Be careful in newly started Non banking finance companies. Loan book may look attractive but in such companies at later stages NPAs become a big problem.
17. Remain away from investing in companies where Govt. Political Interference can be there any time due to public interest.
18.Many Promoters in Indian Companies have been doing grey market sales and now after implementation of GST you may find sudden increase in their revenues and bottom lines. Go for such companies which are especially in FMCG sectors.
19.Always keep some floating cash ready to take advantage of temporary fall in markets.
20.Last but not the least set aside sufficient funds in safe investments like Banks FDs/Post office/LIC Schemes (like PMVVY for senior citizens with 8% p.a.fixed return for ten years-Scheme is open for one year from May 2017 to May 2018 for Sr.Citizens only) to secure yourself/and also take your health insurance cover.


CA Rakesh kumar Singhal



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