Markets still consolidating

Blog meant for 22 June 2017 Thursday

Dear friends,

Weakness in global markets continued today as Nifty closed 20 points down. the global cues are slightly mixed. All the European markets have closed in negative territory whereas the US markets are marginally positive as of now.

As per 30 days moving average, Nifty is still in Hold zone. However, if the weakness continues then, it could enter Sell zone.
The indications for short term for individual stocks are as follows:

THE HOLDS ARE – HDFC BANK, MARUTI, HDFC, DIVISLAB, Titan, ITC, Reliance, Asian Paint, ACC

Wait to Sell – M&M 

Wait to Buy – SBI, L&T

Sell – Axis Bank

Don’t Buy –  LUPIN, BHEL, ONGC, Infosys, TCS, YES Bank

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Question of the Day

Question – Suppose I purchase a share on different dates. For example – Asian Paint
1) 10 shares @ Rs.1100  2) 10 shares @ Rs.1050 3) 10 shares @ Rs.1150

When I instruct my broker to sell some shares, I want the shares I bought at lowest price to be sold first but my broker says that that whichever shares were bought first will be sold first. Please clarify.

Answer –

In practice, the FIFO (First In First Out) principle is used by brokers and for tax computation purposes too.

For example, if you bought 10 shares of Asian Paints at Rs.1130 on 10 June 2017 and you bought 10 more shares of Asian Paints at Rs.1100 on 18 June 2017, when you give the order to sell 10 shares, the first lot of 10 shares bought at Rs.1130 on 10 June will be sold first.

There is no option for us to say that we want one particular lot of shares to be sold. They simply use the FIFO method.

So, always keep this in mind even for tax purposes. Suppose, you bought 10 shares of Company A on 12 June 2016 at Rs.900 per shares and bought another 10 shares on 25 Jan 2017 at Rs.1000/- per share, and if you sell 10 shares on 10 June 2017 at Rs.1000/-, since it is FIFO, your cost price is 900 for the first 10 shares and hence the profit is Rs.100 per share for which short term capital gains tax has to be paid.

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All the best!

Dr.Bharath Chandra