Share Market.... real learning for common Investor

Let's understand Indian Stock Market, how it works with balancing of Sensex, Nifty and Share prices, with a example case study on TATA MOTORS listed shares.

On 1st December 2017, Tata Motors share was at INR 399

On 3rd April 2020, Tata Motors share was at INR 65

Today 3rd September 2021, Tata Motors share is at INR 295

Those who have bought this stock in year 2017, will have a significantly different view on this share than those who have bought it in year 2020.

And between 2017 and now, fundamentally nothing much has changed in Tata Motors to warrant this kind of volatility.

So, despite all the research and analysis, predicting stock movement can't be perfected because ultimately the price will depend on views, opinions and calls. Research and analysis will always have a time lag.

And yes Tata Motors is not any ordinary company, if this is the treatment to stock price of such a reputed company think what research analysis will you do for any other company

"It is easier to Buy & Sell than fry an Egg".  The hidden role of chance in life and in the markets, as written by Nicholas Taleb.

One may think that the stock market seems very simple but when you include randomness to the equation, everything changes. 

Bottom Line Learning: Stock Market seems very simple, but not easy. 

You could be a world class Neuro Surgeon if you spent 5 years studying Neuro Surgery. But even after 5 years studying Stock Market there's no guarantee that one will be anywhere close to be a world class trader.

Remember, Too many variables involved here (Psychology, Money Risk management, Liquid Capital, Stock in question, it's History, Management background, Product plans, market Sentiment, war /  famine / corona / pandemic etc etc...)

It's indeed a very demanding profession. One needs to put the heart & soul (read passion) behind it, to achieve something while most wannabes think it's a type of get rich quick scheme. 

Sounds simple right....... always Buy at low and sell at high.

I am still learning.... you may also learn and earn.....

Disclaimer : This is purely a knowledge sharing article, not offering or influencing any deal or transaction or investments.

CA Yogesh Birla

Director
Birla WP Management Co.
read my blogs : www.YogeshBirlaCA.Blogspot.com

Rotation and Re-balancing of Equity Investment Portfolio

If you are an investor in stock market; either thru Direct stocks, IPO applications, Mutual Funds or other mode of investments; you must consider timely rebalancing of your investment portfolio. Why rotation and rebalancing of investments is strongly advised:

• To keep your investments, according to current trends of global market

• To keep you investment secured, according to current balance sheet strength of companies

• To keep your investment with highest yield, according to best profit earning stocks

• To keep close watch on mutual fund portfolio reports

• To regularly follow asset allocation of mutual funds in equity and debt categories

• To reshuffle between mutual funds; large caps, mid caps, mix caps

• To get sectoral benefits on investments; Pharma shares, FMCG shares, Banking shares, Technology shares

• To make proper income tax planning

• To make future planning; child education, child marriage plans, buying a house etc.

Year 2020 has taught everyone about how world can change on a single click (COVID) and best learning from this is to remain well planned for non-earning days. In covid times, investors switched from Infrastructure shares to Pharma / hospital shares; from Real-estate shares to FMCG shares; from Banking shares to Digital online business shares….. and minted huge profits, just by ROTATION OF INVESTMENT PORTFOLIO. Everyone cannot be expert, but can use expert advice of investment advisors for better profit making portfolio.

Your own asset allocation (with your available savings) is most important; wherein you have to make decision matrix with best tax planning, future plans, retirement plans, living liability plans etc. You need to decide, what kind of mutual fund SIP or direct one time investment you have to make. For example during stock market crash in march 2020; most of prudent investors made one time investment in mutual funds and paid one time contribution (in addition to regular SIP). This rebalancing brought, huge profits by September 2020 and proven their right decision at right time, with proper investment advisor. Covid has ruined balance sheet of many business houses and traditional business models, wherein at the same time, has brought super profits in result oriented digital business houses. 

Rebalancing is also advisable for better Risk management, since you are investing your hard earned money, so you need to keep close watch on your allocated assets, sectors or type of investment instruments. Right entry and profitable exit policies shall be followed by all classes of investors, eg. Business investors, salary class investors, retirement plan investors etc. Author CA Yogesh Birla is a passionate investor and love to share innovative investment strategies, as knowledge sharing with friends and connects.

Written by :

CA Yogesh Birla

Director
Birla WP Management
visit us at : www.YogeshBirlaCA.Blogspot.com

Savior of Retail Investors in Stock Market…. Corona impact

Indian stock markets were following global recession signs and sudden eroding of investors wealth came as Corona pandemic. Every session of stock market became evident of falling shares, equity mutual funds, wealth management schemes and related products; what can be savior strategies:

• Investors shall understand performance of their invested stocks / mutual funds, vis-à-vis NIFTY; and justify over-performance / under-performance of their investments.

• Nifty has corrected by 35% due to Corona virus Impact, from Nifty 12,430 in January 2020 to 8,080 in April 2020; providing long term opportunity for Equity investors. Nifty (at level 12,430) was trading at PE/28 which was considered Over Valued by Historical average. Now at 8,080 Nifty PE/18, seems fairly Valued in terms of emerging Indian economy and long term Investors shall remain prepared to take entry at Current valuation levels.

• In stock market, it’s difficult to predict bottom fishing; hence STP option is recommended. Your money may remain parked in a Liquid fund. From Liquid fund every week/month Money is transferred to Equity funds. This way you get benefit of Rupee Cost Averaging and Equity exposure at every Market level uniformly over a period.

• Incase retail investors need tax savings on investments, then ULIPs are the only safe and steady return providing instruments in stock markets; rather than PMS or Mutual funds, direct entry; which is taxable in India context. After a period of 5 years, investors can earn tax free annual income from ULIPs every year by way of partial withdrawals till policy Term. Premiums paid in ULIP having benefit of income tax sec. 80-C and partial withdrawals are tax free. Maturity fund value is also tax free under income tax sec. 10. 

• Corona pandemic has shown abnormally high volatility index, and taught lessons to remain balanced investor; wherein we shall recommend investing in Balanced Fund (creator fund), composition of 65% Equity & 35% Debt allocation and Asset Allocation Fund which increases exposure to Equities in falling markets & books profits in equities in rising markets, which can secure 10% and above cagr on longer horizon. 

• Investors shall remain in touch with stock market so can switch from Equity to Debt funds, Equity to Liquid funds online. Investors can also avail option of investing 25% of total fund in 4 different fund schemes, instead of 100% in a single fund/ single scheme only. Watch shall also be kept for mutual fund charges and fund expenses, which may remain between 2.2% to 2.95% yearly on entire fund value.

by :

CA Yogesh Birla

Director
Birla WP Management
visit us at : www.YogeshBirlaCA.blogspot.com