Nifty once again rises

Blog meant for 27 April 2018 Friday

Dear friends,

Nifty once again closed higher by 47 points and closed 10618. European markets have closed positively tonight. US markets are also trading 1.5% higher. So, global cues are quite positive and may help our markets tomorrow.

Nifty is in Hold zone for short term.

The indications for individual stocks for short term only are –

DON’T BUY – SBI, AXIS BANK, MARUTI

HOLD – TITAN, M&M, RELIANCE INDUSTRIES, TCS, ITC, YES BANK, INFOSYS, HDFC

WAIT TO SELL – ASIAN PAINT, HDFC BANK, HINDALCO

WAIT TO BUY – VEDANTA

Long term investors to invest as per their plan without any changes.

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Question of the Day

I had bought 100 shares of Axis bank at around Rs.537 per share on 10th April 2018. I had missed to read your blog to sell the shares last week. Now that Q4 results of Axis Bank has been announced as loss this quarter. Should I hold these shares for some more time? Please guide me.

Answer – 

Generally speaking, when we buy shares specifically for short term, we should sell based on the graph. Just like how we would have bought based on the Buy indication as per the graph, we should also Sell based on the Sell indication. This is why we keep writing in our blog that short term trades must be done only if we have the risk appetite and also time to monitor the stocks  and read the blog every night for a few minutes.

Since Axis Bank has declared a loss for the previous quarter, its share price is likely to fall tomorrow.

Now, that Axis Bank is in ‘Don’t buy’ zone, we have two options –

a. Sell now at a loss and take it is a lesson to be more alert once we have bought stocks for short term.

b. Continue to hold and hope that it recovers in the next 1-2 months. If market situation improves, you may reduce the loss and may even reach your purchase price. However, it could take some time and we should be ready for it. But usually what investors do is hold on to the stock which they had bought for short term and when the loss is bigger, lose patience and sell at a bigger loss.

In Stock Markets, there are two ways to benefit from a situation –

1. Either make a profit and sell or

      2. Sell to minimise loss and thereby save yourself from bigger loss

In both situations, we benefit in a particular way.

Hence, our general advice is to sell even if you incur a loss. But if you do not want to book a loss, then you should be ready for some months or even a year (sometimes) to recover your cost during which time your capital investment will be blocked.

For example, around Rs.54000 has been invested in Axis Bank. If you sell now, the loss is around Rs.5000-5500. But, if you don’t sell now and it continues to stay lower than your purchase price, then your investment of Rs.54000 is stuck for many months which could actually be used to invest in some other trade and make a profit to cover the loss incurred in the previous occasion.

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All the best!

Dr.Bharath Chandra and Rohan

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(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)