Blog meant for 19 Feb 2018 Monday
Dear friends,
Markets fell on Friday. Nifty fell by 93 points and closed at 10452. Global cues were mixed on Friday evening as European markets were positive but US markets closed slightly negative.
We have to see how Asian markets open tomorrow and our markets will move based on Asian markets.
The analysis for Short term as per technical analysis is as follows:
Nifty is in Don’t Buy zone.
The indications for individual stocks are –
SELL – RELIANCE INDUSTRIES
DON’T BUY – HINDALCO, ASIAN PAINT, TITAN, MARUTI, VEDANTA, M&M, HDFC BANK, SBI, ITC, YES BANK, AXIS BANK, HDFC
WAIT TO BUY – TCS
BUY – INFOSYS (since Nifty and most of the individual stocks are in Don’t Buy zone, although Infosys is showing Buy indication, it is better to ignore the Buy indication as of now)
Currently, there is no Buy indications for short term.
Only buy bluechip stocks on a monthly basis for long term.
——–
Question of the Day from a participant –
Since markets are becoming weak and falling in the last 2 weeks, can we sell our long term holdings now and buy again once markets fall to lowest level?
Answer –
This is an interesting question and a common doubt in the minds of many investors. In theory, selling high and buying low or buying low and selling high looks nice and smart. This is called timing the market.
But, in practicals, nobody can sell at highest point nor can anybody buy at lowest point.
Usually investors think that they are smart at selling at such a situation since markets look like they will fall further. They expect and want to buy the same shares at lower prices and hope to buy more quantity. However, usually what happens is as markets fall, investors wait for a further fall and at a particular point, the fall stops and then markets start rising once again and by the time we realise that the uptrend has started, it is quite late and once again we buy at a high price.
For example, let us take the example of one particular stock.
Titan Company share price had gone upto a high of Rs.938. Currently, it is Rs.803. Hence many investors may be feeling that they missed a chance to sell at a high price and it has fallen quite a lot from the high. Expecting a further fall, an investor may sell at Rs.800 and plan to buy the same shares in the future at lower price for long term. The shares may fall to Rs.750-700-650-600.
When the price continuously falls, investors become pessimistic and expect further fall. But at one particular point, the fall stops and markets start rising again. By the time the investor realises that the uptrend has started, it will be 600-650-750 and almost Rs.800.
Then the investor realises that he had unnecessarily sold at Rs.800 and he failed to buy back at a lower price and once again he is buying at around the same price of 750-800 after 2-3 years.
On the other hand, instead of timing the market or trying to buy low and sell high, if the investor had invested through SIP manner (monthly basis), he would not have sold the shares at all and would have bought at Rs.750, 700, 650, 600, 630, 660, 700, 750, 800 etc and would have accumulated lot of shares at lower price. Thereby, his average purchase cost would have been been quite low and number of shares held would have increased.
When Titan shares goes to Rs.1200 or Rs.1400 after some years, your average purchase price may be only Rs.750 and you may be holding 300 or 500 shares in your portfolio, thereby making a very good profit.
Invest every month for long term and do not sell good companies just because the price is temporarily low. The benefit of long term will be seen over many years when you invest with discipline and wait with patience.
——-
All the best!
Dr.Bharath Chandra and Rohan
Please do not comment on the blog. Any questions or clarifications can be asked by sending us an email with your registration number given to you during the Workshop. Questions without quoting registration number will not be answered.
(The above comments are only the personal views of the authors of this blog. Please do your own research before taking any investment decisions. The reader of this blog must understand and take full responsibility for the Profit or Loss made by taking actions based on the above views)
