Mayank Rocks

Recently, I’ve come across a good investment strategy which is “buy on dips”. Buy on dips is very popular technique of making money among the stock market investors. If you ever watch business channels, the technical analysts there keep on suggesting to buy stocks on dips and if you follow their words correctly, nobody can stop you from making more money than you would without their advises.

The basic idea behind buying on dips is to accumulate a certain stock you are interested in at a time when it has already fallen to a level from where there will less likely be a fall. Ofcourse the stock may still fall a bit but then it will bounce back immediately from there as the market goes up making you gains. Also by this strategy, you get a chance to get entry into a stock at a lower level thus maximizing your gains from that certain stock.

What a lot of new investors do is buy the stock when its constantly going up and then they end up buying the stock at a peak from where it falls giving them a loss and thus creates a panic in them. Often at this step they get upset and sell off that stock thinking their investment was horrible and the company has no potential at all. The common thing among every stock is they always rally up along with the market and once the correction in that stock or the market itself comes, the stocks fall down to certain extent, where it consilidates and again with the market goes up. It is at this post correction phase that you have to accumulate the stock from where the only way is up (unless the market sees an unexpected dip).

I would suggest to monitor the stock for a certain time. Have a look at the weekly and monthly graph for that stock (try money.rediff.com) and see if the stock has only rallied up or even corrected. See what the technical analysts are talking about the stock (try moneycontrol.com). And if the stock has only rallied up, then wait for a correction in the stock and then enter it.

I would say that every stock that I bought into at a peaks have only given me a loss and every company that I entered at post correction phase which is the consolidation phase has only given me profit. So I am sticking with the buy on dips strategy. Are you?

If you look at the recent market growth, you would see that the infrastructure related stocks have really been performing very well. By that I mean the stocks that are related to housing, building, cement etc. Some of the companies in these sectors are DLF, Jai Prakash Associates, Unitech, Ultratech, Punj Lloyd etc. Recently DLF, JP, Punj have been performing outstanding. I would definitely recommend buying into these stocks if you interested in making good passive income.

Also if you look with a broader prospective, Infrastructure has to do good here. India lacks infrastructure badly and so the government is giving it a lot of attention lately. A lot of infrastructure projects are getting planned or already being built and so the companies related to that are soaring high in profits. Don’t forget that this year’s budget has already given some good benefits towards infrastructure which could be a major reason of the buying spree into the infrastructure related companies recently. I still remember those two days last week when the sensex dipped 100-200 points, but my daily earnings from the stocks was still showing positive because of either Punj Lloyd or JP Associates stocks. Whether the other sectors in the market are doing good or bad, the infrastructure sector will still be doing well. Buy into these stocks for a long term and you would surely book heavy profits in the future.

I might also be looking to buy into steel related stocks as I believe they are quite related to Infrastructure also. If infrastructure projects will get into action, I’m sure that there will be a heavy demand of steel as well which could up the profits of companies like SAIL, Tata Steel etc. So I would suggest keeping eyes onto those stocks as well. As for other companies that I mentioned above, blindly invest your money onto them. They are most likely to be doing the best out in the market.

We all love to spend money and enjoy a luxury life but there are ways to fulfill these dreams. Earning a good income and spending all of it is not the right way to do it. Of course you would enjoy a rich lifestyle but the one who saves for sometime initially will enjoy more than you later and will always be in a better position than you. I am not discussing how this happens in this post, but just the three categories of people and their lifestyles.

Categories of people: -

1. Spend everything and save nothing - These people have a habit of spending everything they earn. They will spend everything to make their life luxurious right from the start. They will buy a good home, large TV, big car, costly dining at hotels etc. And after all these spending, their interest will be so high that they will not be in a state to save anything. Thus they live a life of luxury enjoying and anytime they have any money left, they will go and buy something else as this is the time to enjoy and savings and all can be done later on in life. Satisfying themselves by planning to start saving later on in life is pretty common with them. But remember that once you get into a habit of spending everything, it is very difficult to resort back. You just cannot see a lot of money in your hands, you are addicted to spending and without spending you wont feel nice at all. And thus the “will save later” story will continue on and on. Now remember, you earn nothing extra, you have no savings and thus your passive income is zero.

2. Save everything and spend nothing - These people have a habit of saving up everything of what they earn. They would just have some minimum expenses and rest of all will get saved into bank or invested into stocks. They have extra expenses once in a blue moon. Well of course they will end up having a lot of money, especially passive income from the investments and savings, much more than the category 1 as time passes, but I would ask that what is the use of earning money if you just cannot spend anything? You still live in a small home, drive a small car etc, and live a frugal life forever. I believe that saving is good but just saving and no spending is not justified. They might enjoy their life like that but I’m pretty certain that if they spend only a part of their income in improving their lifestyle, they would be happier. And I am not asking to spend everything, but spend only a part of. Let the passive income flow in and spend some of your income and reduce the saving as by this time the passive income is already generating nicely and the only way for it is up. So just spend a little bit and see how your life improves and makes you even happier.

3. Spend some and save some - Probably the best category out there. Here people save and spend both. You are spending a part of income on enjoying the life and saving a part of income to enjoy even more in the future. Since money is getting invested into the stocks, passive income will flow into the pockets, so tomorrow is bright for sure and even today is not dull at all. You don’t lose the habit of spending and you also have the habit of saving. This way we can enjoy life forever, once a good passive income flows, we can get richer than the one who always spent everything, we can even buy everything they have and still have savings increased as the passive income would flow till your savings stay invested and which always will. They will be less rich than the category 2, but the life prosperity would definitely be higher.

I will discuss more on savings and importance of savings in upcoming posts. Stay tuned =)

It is very common that people who have habits of paying through debit cards often spend more than those who use cash. Now let me share a small example with you that will prove this. Let us assume that you plan to go for shopping because you need a pair of jeans but you plan to spend no more than 1000 rupees. But instead of taking cash, you take your debit card with you. And while shopping you find an attractive shirt that costs 1000 or maybe 500 and you feel like buying it. You know that your account has around 20,000 rupees savings, so you think that spending 1500 or 2000 would not be much of a big deal and you finally end up buying that shirt. You did not buy that shirt because you needed it but just because you felt attracted to it and you had money to buy it aswell. Would you be able to buy it if you had only 1000 as cash in your wallet? But only because you had a card that holds 20,000 bucks, you satisfied yourself by claiming that you are spending only 1500 or 2000 out of the 20,000 in your account which is merely 10% or less of what you have. This is a common satisfaction one gives to themselves in such situations. Some even satisfy themselves by saying that next time they will not shop or will shop less to compensate for the extra they want to spend today.

Well, this is not entirely true for everyone as a lot of people have self control, but then it is definitely valid for those who have no self control. And many times these items attract us even when we are determined to not spend anymore than what we have planned. And it is evident that if you used cash, then you would not be able to spend anything extra simply because you cannot. I have personally seen people doing this and so I know how debit cards actually lure you to spend more. I still remember the evening I was walking inside the mall and my friend asked me to come into a clothes showroom. I rejected the idea with the reason that why should we go in when we don’t have to buy anything. So he said that he knows that we won’t buy anything but just wanted to go and look at the new clothes that were present in the store. We went in and he actually ended up purchasing two shirts because he liked it so much. I tried to stop but he was too attracted towards them. And guess what? He used his card as mode of payment and the reason he gave was that recently money was transferred into his account, so he was okay with the spending. He didn’t have enough cash to buy, but only because of debit card he spent over 2000 bucks on shopping even when there was no intention of purchasing.

The only solution to control this extra spending is either make it a habit of spending only through cash whether you keep the card with you or not or just don’t keep the card at all. Leave the card at home when you go for shopping, so even if you want, you cannot spend anything extra than what the cash in your wallet can buy you. Just think that if my friend had no card in his wallet, no matter how much he wanted to buy, could he? Remember that when you keep a debit card in your wallet, you are actually carrying all the money in that account in your wallet, the only difference is that all the money in that account is being masked over by an electronic card.

Most of us did not expect the market to fall so low on the budget day, well at least I did not.  Investors have lost 2.54 lakh crores today as the market tumbled 870 sensex points. I had thought that the market would do very well, only because of the certain sectors that were supposed to get good benefits like the infrastructure or the banking sector. Although infrastructure did get a boost in the budget but the banking sector did not. Infact there was a heavy loss in the banking sector today. The 6.8% fiscal deficit could be an important reason of the sell out at the market as that figure seems quite high. There were also no measures stated to improve the deficit figure which could also be a reason for the loss seen today. Even though the budget was not so bad that it would see such a huge loss in the market since there were very high expectations from the market. I would also blame Pranab Mukherjee for his lack of presentation skills. If only the budget was presented in a better manner, the losses could be quite less. As if you don’t explain and just say one line, the non market experts could actually take the statement in a different manner than it is meant. Majority of the investors’ aren’t market experts who can analyse things and make a decision.

I was monitoring the budget and the market simultaneously and as I noticed a fall in the market, sensex being around -150, I sold the shares I had bought a few days ago since it looked certain that the market is going to see a sharp fall today. I believe that the market will continue to fall for a few more days before it stablises itself and so prepare for more losses, incase you still have shares invested. We can even see the market below 13,000 in the coming days. Although it’s been clear that the market will bounce back very soon, but for now the sell out is expected to continue for a few more days. I have planned to invest again as soon as the market becomes stable which could be next week. If you had bought any share in recent days and there is not much loss till today, then sell out tomorrow and wait for the market to stablise and then invest the money again, you could end up making more profit then.

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As I had already shared, SIP is a method of investing a fixed sum of money regularly in a Mutual Fund Scheme. It is quite similar to regular saving scheme in a bank account like a recurring deposit. The only difference is that there are good chances of getting a better return than a bank deposit when investing in stocks.

Benefits Of SIP

• SIP offers you tax benefits which could come in handy if have to pay income tax.
• Regular Investment makes you disciplined in your savings and also leads to wealth accumulation.
• SIP comes with a locking period, so even if you wish to spend you cannot as the funds are locked and cannot be taken out.
• In SIP, invest as low as 500 or 1000 rupees. There is no need to worry if you do not earn a lot of money as you can still be a market investor with as low as 500 a month and even that would come up to be quite a good sum after a few years.
• In SIP, you invest in mutual funds where your investments are managed by market experts and professionals who have good knowledge in this field, so you have a chance to do much better than that of investing yourself alone.
• In SIP, you will be purchasing units at all phases of the market, high or low, depending on that you get the units share and so you dont need to worry about market going up or down. But just have to wait for the right time to take out your money after the scheme is over and no more deposits are being done. Thus your investments get averages out at the end and the loss is very limited which isnt the case when you invest all at once.

SIP refers to Systematic Investment Plan. SIP is a method of investing a regular amount of money every certain time period, say a month. It is an alternative to investing a large sum of money at once. SIP is a good method of investment, specially for those who do not have a large sum of money to invest at a go or even if they have but they are not able to invest all of them at the same time, due to whatever reasons. It is a good method for those who are working and earn a fixed sum of money every month. Like for example, if a person earns 20,000 rupees a month and his expenses are 10,000, then he can easily invest at least 5,000 a month. Most of the working professionals do not have a large sum of money to invest, so they can go into SIP method and can save quite a lot of money on a recurring basis and also enjoy good returns on his savings. SIP is also preferred by those people who wants a good saving but cannot resist spending money. If their money would directly deduct from the account and go into a plan that has a 3 to 5 year locking period, then there is no chance they can take out money or spend anywhere.

In SIP method, you buy share units every month/quarter based on the share value at that current time. So it balances itself at the end, since we know that the market keeps going up and down every time and your shares will be bought at a time the market is low, as well as at the time the market is high. If the market is too high at a time you want to invest, SIP is the best way to go, since if you invest a large sum at a high price and the market falls, your large sum value will go way down but in SIP, you only purchased a little bit at that high time and once the market falls, you do incur a loss but only on the small sum you invested, all the rest of the investments that will proceed in further months will be bought in a lower market value. So like I said, it averages out at the end.

But remember that SIP does not offer you a very high gain that you can get from a one time investment of a large sum but it is more sort of a very safe play and plus keeps regular disciplined savings. If you have a large sum of money to invest in the market and want a good gain on it then prefer some one time investments of large sums in different sectors of the market, specially at a time when market is going low.

You must be aware that the indian union budget is on July 6. The budget could have a good impact on the Indian market. We could see quite some rise or fall after the budget. The sectors that are most likely to get the benefit will rise up sharply. The infrastructure sector is most likely to get a boost after the budget and so the companies in this sectior would do good in the coming months. I would suggest investing into Unitech, IVRCL, DLF etc companies as they are most likely to go higher up in the coming days. They have also performed pretty well in the last 6 months, IVRCL doing the best with a whooping 321% return. So if you had invested 1 lakh in IVRCL 6 months back, you would have got back around 3 lakh 21 thousand now.That is quite a heavy return in just 6 months although we know that most of the companies have performed well, but 321% still beats most of them.  Reliance Infrastructure has also performed pretty well and that might continue to perform good now that we know infrastructure is to get some boost in our budget. I would suggest you to buy some stocks in these sector immediately to reap the benefits rather wait for the budget as it is not that useful once the stocks have already risen.

There could also be a benefit in the education and power sector. Rural and Export areas are expected to get some benefits as well. So you might want to eye on those sectors also. Some of the big players are investing into all sectors to minimise the risk, that could also serve well. Now lets sit back and hope that the budget serves in favour of us.

Hey and welcome to mayankrocks.com again!

I know it is stupid that I had to fresh start everything again, but I had no option left. I had to make necessary changes on the server for which I reloaded OS, and I had forgotten that mayankrocks.com is functioning under a different account and when I took the main account backup, there was no backup done for this blog. Due to this, I lost almost everything I had on this blog. Well now it is time to start fresh again. Hopefully I will be updating the blog regularly and wont slack. I will be looking forward to share quite a bit of information with you all. My focus would be on business, marketing, finance, investment and money related topics. All the topics are interrelated and it would be fun to write about it.