Enjoyed The Rally In Private Banks?

Friday, April 26, 2013 0:12

Did you enjoy the rally in private banks? The last time when I spoke about Nifty levels, I had clearly mentioned that 5600 is going to go away as the structure of the markets had weakened and we may get to see lower levels of 5500 or even 5400. Nifty touched a low of 5477 and rebounded sharply. The markets recovered faster than it was anticipated because of the unexpected crash of commodities and the benefit it would have on the current account deficit. Even the inflation numbers came in better than expected which lead to rising expectations of more aggressive easing by RBI. Another big factor was the earnings that was due this month and there was no kidding that private banks will boast better than expected results which is always the case.

Even though I was confident of nifty breaking below 5600, my suggestion was to not go and sell in this down tick but to use it as an opportunity to go long. I had suggested to utilise the panic among naive sellers to go long in private banks. It is a known fact that if nifty has to crack, private banks/financials will be a major contributor due to it’s heavy weight on the index and being one of the only ones (except defensives) where people are sitting on good profits. There is no problem in putting money into companies at lower valuations that are growing at 25-35% year on year. People who used the dips to go long are sitting in decent profits and people who missed out in hopes to get even lower levels got greedy and made nothing. If companies growing at 25-35% and always giving above expectations results will not rally post a huge correction then what will?

The rally really caught us all in surprise as it started all of a sudden and gained momentum, but this is what always happens and can happen from any level. Instead of 5477 as a low on nifty, it could also have been 5200, but can you catch the bottom? No, you cannot catch the bottom and thus you should not attempt to also. Keep buying as you see the fall coming off and hold patiently for a good opportune time to liquidate your holdings in profits. Anyway, let’s try and understand what might happen in the future.

Where are things headed now?

Honestly speaking, a lot depends on the RBI policy. If market is factoring in a 25bps cut, then market may get what they want and since this rally has already factored that kind of cut, we may get to see a technical correction in the markets. If markets have rallied on expectations of 50bps cut, then I guess there may be a room for a bigger disappointment and correction may widen. I heard some people on TV talking about 50bps rate cuts being expected, which I really doubt will happen.

Just last monetary policy, RBI Guv was talking about limited scope for rate cuts and suddenly in next policy, a cut of 50 bps? I am not saying that there is a zero percent chance, but chances are limited that there will be such a deep cut. The last time RBI cut 50bps was last year in April and because of that RBI didn’t cut for the whole year and even said so that he won’t. If RBI cuts 50bps and says that he won’t cut now, even that will not go down well with the market.

I don’t think even gold or crude fall can bring about a 50bps cut because RBI Guv’s thinking is not on the same lines as a stock market trader that gold has fallen 20% and crude has fallen 10% for a few days, so immediately a big cut is deserved. RBI would question that what if commodities rally again by next policy? Why not cut only 25bps and wait and watch how commodities behave till next policy to decide on further cuts? Honestly, now with Crude already inched up to 103.50$ from 97$ and Gold inching to 1466$ from 1320$, I think RBI would really want to wait before getting aggressive with cuts. RBI would find more comfort in cutting 25bps at once than 50bps at once and feel disappointed by next policy, they are just so conservative. Even markets have conveniently ignored the recent upside in commodities and traders continue to chase the momentum as they feel the rally is here to continue.

Most banks have shot up like 20% from the lows, even bank nifty is up 18% or so from the recent lows and all of this happened in last 10 trading sessions with no consolidation or correction. We have seen 10 days of continuous shooting in stock prices of banks and some other rate sensitives, I think if not a deeper correction, atleast a technical correction of 3-5% is definitely warranted. If I look at daily charts of all of these bank stocks and the bank index, they are highly overbought and a correction is standing at the doorstep ringing the bell.

For Investors or Traders who are looking to book profits in short term should really think about booking out now before you see a correction and book profits in panic at lower levels. For Investors who have a longer term horizon, they can remain patient and continue to hold. By March 2014, I am looking at no less than 20% more kind of returns in private banks from current levels. However, for fresh investments, wait for some kind of 5-10% dip and only then go and buy. Don’t hurry up and buy into a rally only to be disappointed with a correction. Play safe and nice and mint money by investing your money in private sector banks!!

Let’s Talk About IT Sector

Friday, April 19, 2013 23:48
Posted in category Investment, Stocks Analysis

The story of the IT sector has been pretty much the same for the last two years. You avoid Infosys, Wipro and you go and buy TCS, HCL Tech. Now to make fresh investments into the IT sector, you need to understand this sector first. In this sector, major focus is on the quarterly earnings only where investors analyse and decide if this stock is worth holding at these valuations or not. These stocks are not too volatile and don’t move in a crazy way with the markets. Unless there is a heavy disappointment in earnings front, these stocks don’t fall too much and behave like defensives. If one has to enter into a good IT stock like HCL or TCS, one must wait for some kind of correction, not in the markets but in that particular stock itself. You may not see IT sector falling too much with the nifty because they are more like defensive stocks now. Sometimes I have also noticed that when Banks are moving up sharply taking nifty higher, IT stocks are underperforming and when nifty is falling on the weight of banks, money flows into IT sector.

I was having a look over charts of TCS and the movements of the stock is not related to nifty that much. You will notice that TCS and even HCL Tech is playing it’s own game most of the time. But what is certain, is that they have their up and down cycles and it is not a one way up move. The easiest way to form an entry into any a stock like TCS would be to look at 52 week highs and wait for something like 10-15% dip and enter the stock and patiently hold for next up move. You are not going to make a lot of money if you enter these stocks at the highs. Don’t make a mistake of waiting for a correction in Nifty to enter into the IT sector stocks like TCS/HCL Tech because it will give you a false impression that the stock is strong and is unwilling to correct despite nifty seeing a decent crack. Enter only and only if you see the stock itself falling by over 10% and be patient.

Now let us look at some of the individual names:

Infosys – Exactly two years back I had written a post about how Infosys is no longer a good investment stock and surprisingly even today, Infosys is still the same. It is a disastrous IT stock and a dead investment for investors. Any investor who is holding Infosys for last two years is still sitting in a loss. I honestly don’t understand why there is still optimism for this stock. The company has not delivered for many quarters now and the company’s guidance has consistently remained weak. This year Infosys failed to even meet up it’s already weak guidance and their next year guidance is barely 6% now. If the management themselves don’t believe that their company is on a growth trajectory, why should an investor say otherwise and invest into the stock? Do NOT invest into Infosys and if by any means you are holding Infosys for a long time now, simply get out on any decent uptick.

Wipro – Wipro has been dead for a much longer time than Infosys, the disappointments just don’t end only. Several quarters have gone by and the company just continues to disappoint every time. The stock performance reflects the kind of disappointment and an investor who is holding Wipro for 3 years now would still be in losses. I just don’t see Wipro as a good investment stock, and I would advice investors to stay away from Wipro. If you are still holding Wipro for a long time, then kindly look for an opportunity and say goodbye to stocks like Wipro.

HCL Tech – For two years HCL Technologies has been my top pick in the IT sector and even today it remains so. The company is giving strong results each and every quarter and beating the analysts estimates by a mile. Due to strong earnings growth trajectory, the stock has also outperformed in the recent past and given great returns to investors. I believe that HCL Technologies is a great stock to buy and it will continue to give good returns to the investors, something that stocks like Wipro and Infosys have failed to do.

TCS – TCS is also a very good company and continues to deliver returns to it’s investors. TCS results have always been either above estimates or in line with estimates. I haven’t seen disappointments from TCS and that is pretty much why the stock has massively outperformed it’s peers like Infosys. TCS keeps making fresh all time highs and rewards its investors. There are no concerns in TCS apart from valuations. Such high valuations don’t make TCS the most attractive purchase but I can tell you that you no matter what, if TCS continues to deliver on results front, the stock will continue to move higher and higher. An investor will make money here, less money, but safely their money will continue to grow. Look for 10-15% kind of dip from the highs and only then enter into the stock, don’t enter at fresh highs and get stuck on a correction.

Mahindra Satyam – I have not tracked this stock very much, but the last few quarters I saw, they did well on the earnings front. The stock price has also reflected the kind of performance of the company and given huge returns to their investors. This stock is a bit volatile and show large movements on either sides. I think on good dips, Satyam is a great buy from long term view. An investor here has a huge comfort on valuations front and can expect good re rating on the stock in future, provided the company continues to deliver on earnings front.

Buy Yes Bank Shares

Tuesday, April 9, 2013 23:25

Yes Bank is one of those best private sector banks an investor cannot ignore. Here is a company growing at 30-35% and available at 9 times one year forward earnings. Yes Bank has a potential to create tremendous wealth for any investor over the long term and if you don’t have it in your portfolio, then considering buying it. Now let us look into the details to understand why Yes Bank is a serious buy:

Best Asset Quality: Yes Bank has the best asset quality in the entire banking space. Yes Bank literally has close to nil NPAs. Their provision coverage ratio stands at 80% which suggests that all the bad loans are absorbed well with proper provisions. They have been maintaining this kind of asset quality for years now and they have promised to continue doing it in future.

CASA Growth: Yes Bank managed to behave like a corporate wholesale funded bank till a few years back and give us 50%+ kind of earnings growth but now with economy slowing and getting cautious on lending side to maintain minimum risks and good asset quality, they have aggressively stepped up on branch expansion to get low cost deposits from the retail side to maintain high profitability. Savings rate deregulation has proved to be a game changer for a bank like Yes Bank. They are offering 7% on saving deposits which happens to be the highest in the industry and with rapid branch expansion and tons of advertising, they are grabbing savings deposits like anything. They are expanding their CASA ratio at almost 0.8-1% every quarter and will soon become at par in the league of CASA with most other banks. High CASA tells us that the bank is in a good position to absorb shocks in a dead economy than a bank that has a a lot of high cost borrowings and high leverage. In the next 3 years, we can hope to see 30% kind of CASA ratio for Yes Bank which can drive NIMs to almost 3.5%.

Cost of Funds: With rapid CASA accretion and short term borrowing rates coming under control has helped Yes Bank in lowering it’s cost of funds much faster than the yields on funds. It is because of this that Yes Bank has been improving it’s net interest margins consistently in the last few quarters. Improving NIMs allow Yes Bank to be cautious on lending side and maintain good asset quality while having nothing to compromise as far as profitability is concerned.

Fee Income: Yes Bank has been showing good non interest income as well. In future, I am expecting retail fee income and transaction income to substantially go higher as the bank continues to add almost 40,000 customers every quarter. New customers not only help in improving savings deposits but also aiding in improving the retail fee income for the bank. Consistent improvement in fee income will help the bank in maintaining strong earnings momentum going forward.

Healthy Ratios: Yes Bank has a very healthy ROE of 25% and ROA of 1.6%. CAR which tells you the potential to absorb risks in the system has inched up to a very high level of 18.5%. Tier 1 ratio of 9.5% has also held up well which suggests, we can expect a good earning next year without having to raise funds. A healthy ROE of 25% tells us that Yes Bank can dilute upto 15% equity to raise capital and yet maintain ROEs in excess of 20% with no problems.

Earnings Growth: Even in a slowing economy, Yes Bank is managing a growth rate of 30-35%. Yes Bank has also guided for a 30% PAT growth going forward in FY14. This kind of growth rate also makes Yes Bank one of the fastest growing Banks in the entire industry, or better said, fastest consistently growing bank in the industry. In just 8 years, Yes Bank is already a fourth largest private bank.

Key Feature: Yes Bank used an aggressive lending approach to boost profitability upto 2011 before getting cautious on the lending side due to screwy economy. Now even with caution on the advances front, Yes Bank still manages to deliver a strong profit growth. They simply tweaked the business model and started working aggressively on building savings deposits and improving CASA. CASA is helping in bringing their cost of funds down and also helping them build customers and boost non interest income. This helps them in maintaining 30%+ PAT growth with barely 20% loan growth. By the time saving deposits accretion slow down, the economic conditions might improve and they can start lending aggressively again. As long as Yes Bank continues to manage their risks properly, I don’t see any problem in growth potential of Yes Bank.

Earnings & Valuations: I expect Yes Bank to deliver a strong set of results in Q4 FY13 with 30%+ PAT growth. In FY14 also expectations stand at close to 30% kind of PAT growth. In terms of EPS, I am expecting an EPS of 36 for FY13 and 46 for FY14. This tells us that at the current market price of 424, Yes Bank is trading at less than 12 times FY13 earnings and slightly above 9 times FY14 earnings. In terms of book value, I am expecting 163 BV for FY13 and 200 BV for FY14. This brings us to 2.6 times FY13 book and barely 2.12 times FY14 book. If Yes Bank manages to raise funds this year, then the book value can shoot to 240 for FY14 and that brings us to barely 1.75 times.

Target Price: In a good market condition, we see Yes Bank easily inching higher to almost 3 times book. So I would look for a target of 600 and no less than that for the next 12 months. For an investor, there is a chance to make almost 50% gains in the next 12 months.  Pick up Yes Bank on dips or at current market price and patiently hold it till the next time markets do well again.

Looking at 5400-5500 as a New Base for Nifty

Wednesday, April 3, 2013 23:15
Posted in category Stock Market Analysis

A lot has changed since the last time we spoke in February. Things were looking much better back in February as we had less problems to deal with. To be honest, I am really disappointed now as I can see that there is more downside to markets. Let us first talk about things troubling the market and let me try and detail each point.

Earnings – We already knew in the past that earnings will be disappointing for a few more quarters. Anyway markets still went higher despite knowing that earnings will not improve anytime soon. If anybody tells you that people bought around Q2 FY13 expecting earnings will be great and they realised by Q3 FY13 that earnings will be bad and started selling is a liar. We are not fools to believe that someone thought that suddenly earnings will skyrocket and in 3-4 months they understood that earnings won’t skyrocket and suddenly India is a selling market. For me, what I see is earnings is just disallowing markets to go very high as without much earnings growth, it is difficult for higher valuations to sustain but I don’t see earnings being a sole reason for a crash.

RBI Policy – This is a new overhang on markets. Honestly, I don’t understand RBI governor. One one hand he is easing and on other hand he is saying that there is limited room for further easing. What is the point of cutting rates and saying he won’t cut anymore? Core inflation is down to 3.8%, if this isn’t a great time to cut more rates, then when is? You cannot control Food and Fuel inflation with monetary policy. RBI’s constant change of goal posts as core inflation or headline inflation is confusing people. Now even if we say that we had expected no better from our beloved RBI Governor, it is still a very discomforting factor that RBI refuses to cut further even after weak economic data continues to pour in.

DIIs selling and crappy Divestments – FIIs may have invested over 1 lakh crores since July 2012 but smart DIIs have sold over 70,000 crores also. DII selling so much is a disappointment. LIC has been a net seller in this market since last several months as they have to keep building cash levels for buying horrible government divestments which nobody else would even look at. As markets were rallying, that was a good time to sell and build cash levels than when markets fall. This selling pressure is one of the reasons why markets may have faced a tough time at higher levels.

Weak Economy – GDP data at 4.5% was no less than a disaster and was a huge negative surprise for markets. Another shock came from Current Account Deficit coming at unexpected 6.7%. Now a weak GDP and high CAD was factored but numbers that came were still on the extreme side, which is still a discomforting factor for markets. Why would a markets rally hard when GDP growth has crashed to all time lows?

Political Uncertainty - Thanks to our great politicians, the last thing we wanted as a gift from them was an uncertain political environment. Whoever was buying in the last 6-8 months would have not at all expected that suddenly in the start of 2013, the political environment will become so uncertain. DMK pulled out and SP eager to have early polls, BJP gearing up for next elections already and most of them are talking about early elections, preferably by year end. Now markets are not worried about elections, but the worrying factor is that if there is early elections going to be held, then reforms will stop and government will push for populist measures and the promise of maintaining fiscal deficit will also go down the drain. Which government will increase diesel rates 2 months before elections? So yet another dramatic overhang on markets and I personally feel that this is the biggest reason why the underperformance of our markets has accelerated so much lately. People have started to expect that reforms and policy actions are going to come to an end which was the main reason as to why the rally ever began, thus clinging to new highs is unlikely till uncertainty prevails.

The last time we spoke, we were looking at 5600 holding out over a longer period of time. I no longer hold that view considering how disappointing markets have behaved over the last 1.5 months. Global markets continue to move higher and yet to even begin a technical correction phase. Nifty is barely holding in the zone of 5600-5700 and has failed to cross even 5800 now, thus it is looking increasingly possible that nifty is going to break down and make a new low. There is possibility of more downside for markets and if markets begin a fresh correction now, we are bound to see lower levels.

A new low below 5600 is very much possible and we may head down to 5400-5500 levels on nifty. I am looking at a base of 5400 – 5500 for nifty and a freak low below 5400 is not ruled out, but those levels have a low chances of sustaining. In the past we have seen important levels being broken on the downside but they never sustained. We saw how 4500 had come on nifty but within matter of days we jumped.

Don’t panic in a fall and don’t keep hopes of trying to catch the bottom. Continue buying good companies as the market falls. Watch for panic below 5600 and use that as an opportunity to buy something. I continue to believe that Private Banks are going to be the best investment on dips if you have a 1-2 year horizon. They continue to deliver strong earnings momentum and thus whenever markets recover, they’ll be the first ones to rally. Stay away from midcaps and smallcaps as they have no future right now.

Are You Buying Stocks Yet?

Tuesday, February 19, 2013 20:26
Posted in category Stock Market Analysis

Ever since the markets made a peak of 6100, we’ve been grinding down with each day passing. Whether global markets are going up or not, we’ve been continuously falling. This has lead to a lot of bearish views floating in the market and it seems everyone now is thinking that the markets are going to crash. Some people are also hoping to see 5200-5400 levels soon on Nifty but trust me, I don’t see that happening at all.

The earnings may not have been great but this market never went up expecting earnings to skyrocket. Even with all of this, this market today is trading at 14 times one year forward earnings and right now is not a time when you will see FY14 downgrades coming in as we still have to deal with the fourth quarter of FY13.

Why would we go all the way back to where we were six months back? What changed in last six months and what has changed now that the markets will go back? Markets did not go up just for fun but because government delivered on it’s promises on the policy front and they’re still doing what the markets want them to do and thus rule out the old levels from your expectations. Correction is one thing and a crash is another. Markets crash when something really negative hits the market and I don’t see any such negative news floating in the market.

If the second half earnings of Q3 FY13 was a disappointment, then that is not enough to take the markets back to same levels as before. This market never went up on earnings expectations, because there were never any great expectations from earnings. If at all what is? It is the hope that earnings will improve in the future, perhaps FY14 onwards, not immediately. Earnings don’t improve overnight and market was not stupid to believe that joke and went up all the way to 6100.

Our markets went up because valuation wise we were extremely cheap when we were trading at 5200. If even after all the run up, 14 times is what we trading one year forward, then it is not really expensive. A real disappointment would be if FY14 earnings downgrades happen in a large way, then the valuations will look expensive post further run up from hereon and that could lead to a good correction. We’re not really there yet.

I feel that the markets are just trading in a range and this current one is just a correction post that big run up. People who are sitting on good profits are ought to book them and people who want to put fresh money on the table, they’d like to wait for some correction before they jump, that leads to a correction. Now personally I see 5800-5850 acting as a good support in this correction. On a slightly longer term basis, I see 5600-5700 holding up well on the downside and on the upside, I’m confident of new all time highs being created in 2013. By that I mean, 6300 will be beaten!

I think one should use this dip as an opportunity to buy for long term as this market is going to reward you handsomely in long term. Imagine Nifty at 8500, 3 years from now and good individual stocks that are growing at 30% would almost double itself from current levels. Buy as the market falls and use this opportunity to build your long term portfolio if you are still sitting on cash.

Don’t worry about nifty going to the lows and with it taking down a lot of stocks, if you’re in it for long term, you’re going to make a lot of money and part of the dip is already here in front of you asking you to use it as an opportunity. Imagine someone who had bought Yes Bank at 370 and people who were worried that if a fall comes and Yes Bank would crash and they waited for 280-300 levels which they never got and missed out the rally upto 540. Now who buys at 500 today will sell it at 1000 3 years down the road and people who are waiting for 400 levels would just keep waiting forever.

Valuations are not expensive today as we’re far from being in a peak as we saw in 2010 end or a super peak of 2007 end. We are in a fair value zone or a little below that and thus buying today gives you a valuation comfort, so you won’t see much value depreciation as you may have seen in the past, had you bought around the similar nifty levels and faced a correction. Stick your neck out and go buy into the equities now!

I’m still Positive on Markets

Tuesday, December 18, 2012 9:13
Posted in category Investment

I continue to maintain my positive stance on the market and so any dip would be a buying opportunity for me. If you recall the post I wrote on October 10th, I had advised my readers to go ahead and purchase even at those levels of 5600 and any dip would be further buying opportunity rather a selling one. Traders can always book profits from time to time but they also have to quickly start buying again if they don’t want to miss out. Since that day, we have had a long time of consolidation and finally a breakout. Markets gave two opportunities to buy again when they fell below 5600 which was quickly bought into by bulls.

We’re in a similar situation now as we were 2-3 months back. We are consolidating around these levels of 5850-5950 now like we were around 5600-5700 back then. I maintain a similar view even today and suggest people to use any kind of dip to accumulate good stocks and hold for a few months. There is also a possibility that we may see some kind of correction and if that happens, count it as a blessing and purchase as much as you can because we’re going higher in time to come. The unwillingness of the markets to fall simply suggests that there is a lot of buying interest being seen and market bulls are jumping in on all kinds of dips. I’ll probably be surprised if nifty gives a closing below 5800 anytime soon.

If you ask where to put the money, I’ll still suggest to buy private sector banks on dips as I did in October. Most people would argue that private sector banks have already run up a lot and so there is not much upside left. The same people said the same thing back in October when these banks like Yes Bank, IndusInd Bank etc were sitting at all time high levels. Yet we are here, 2 months later and there has been another 15-20% upmove since then. If these stocks have gone up a lot, then these stocks should also correct? And that is all you need, a correction or a dip to buy, so buy them even today and keep accumulating as they keep falling. A short while back, we saw some 5% or more correction in Yes Bank, as well as IndusInd Bank and in a matter of days they recovered and are ready to go up further. So that clearly tells you the amount of interest in these stocks and fundamentally they are very sound. Axis Bank, ICICI Bank, ING Vysya are all good stocks you can buy as they fall. On  a side note, I do like Tata Motors, apart from the private banking space.

Just don’t ever put all your money at once at the highest possible levels and watch a correction only to panic and exit in loss. Buy slowly and try to accumulate more as the stock falls. It is not an issue if you are not able to put all your money into the markets due to lack of correction, but atleast you are going to be satisfied with positive returns. Let’s hope we don’t see any mess up from the global front or from the government and we’re on our way to higher levels in markets.

September End Update Of The Fund

Wednesday, October 24, 2012 22:43
Posted in category MayankRocks.com Fund

If you recall my last update, I had lost about 36,000 rupees in the month of August but that got me the stock around the same levels I had purchased in July and pocketed a huge profit. I guess it was about time that we had another good run. On the first day of September expiry I rolled over 2 lots at 335 even when I was supposed to do 3 lots because that is what I had in August. I guess I panicked a bit and thought I could see lower levels. Well blame the nifty which wasn’t falling as fast as Yes Bank. Then nifty started falling and Yes Bank held on to the supports near the 200 day moving average, closer to 328-330.

Then we had some nice news coming out of Europe and there was a strong case of QE3 also developing after a bad jobs data from US. I immediately picked up 2 more lots at 340. This got us an average of 4000 shares at 337.50. The first surprise moment was the Thursday night when US Fed announed QE3 and global markets shot up. Next day when we opened up, Yes Bank shot up sharply to 356. Then there was a second surprise from our government when they announced series of reforms on Friday evening. Monday was another great day, specially for banks, and Yes Bank shot up again. I used that opportunity to exit and book my profits at an average price of 368.50. Although the stock ended at 377, thankfully it did not keep going up. Going by my buy on dips strategy, on the next two days, I picked up a lot at 374 and another at 363 that were quickly sold off at 376 before expiry.

In short, yes I made a few mistakes which is by not picking the stock at 325 and ending up buying at 340. Another mistake was selling in a hurry at 368.50 when there was no hurry to do so as the overall trend of the market was still up. But then, I think the overall month was still great as I was able to pocket a small gain again before the expiry.

Now, coming back to the calculations, during the month of September, we earned (31X4000+2000X7.50)=139,000. The current status of the fund is 595,000, up 195,000 since July. This amounts to a total of 49% gains in 3 months, bringing us to an average of 16.33% per month.

Don’t Sell, Buy The Current Dip In The Markets

Wednesday, October 10, 2012 19:50
Posted in category Stock Market Analysis

Markets had a great run up recently post QE3 news and the reform drive by the government. Rupee has appreciated from the lows and so has the markets. FIIs have been pumping in money like anything into our markets which dragged the markets to a new 52 week high. After going past 5800, our markets have started to correct and today we see 5650 kind of levels in the market. A correction and consolidation period is healthy for the markets to resume a new uptrend again. I think that the markets are in for more correction, possibly upto somewhere between 5550-5600, which is another 50-100 points from hereon. Now let me address the most important question that is going on your mind:

What should I do in this market correction?

My personal opinion is that, every long term or medium term investor should patiently hold onto their investments or trades for another month. If you are selling now after this correction, you’re making a big mistake. This correction in the markets is nothing but a buying opportunity. The markets did not go up and FIIs did not pump in the money for nothing. The sentiments towards India has improved significantly and that is why money is being pumped in. There is a lot of money waiting on the sidelines to enter the markets, someone will exit and someone else will enter. Most people are patiently waiting for a good correction to start buying again.

Just think, why is almost everyone talking about fresh highs for the market in the next 1-2 months? If almost everyone has the same view, don’t you think on any good opportunity, they are going to pump in the money? The current dip in the markets looks like a profit booking move and soon that dip also will be bought into. Unless we get really bad news from somewhere, markets are going to hold up and move higher. I won’t be surprised if nifty crosses 6000 also by Diwali time. If you want to make the most of this upmove, you ought to enter the markets in this current dip, failing to do will make you miss a lot of money making.

I continue to maintain my bullish view on private sector banks and suggest buying them on dips. They are really safe to buy and hold and manage to give great returns. Just look at Yes Bank and IndusInd Bank, how they are at all time highs and have given superb returns to investors this year. Good Luck to you all, and hope you make the most of this mini bull run.

August End Update Of The Fund

Sunday, September 23, 2012 20:24
Posted in category MayankRocks.com Fund

August was the second month of testing this new strategy and it was completely opposite to what was seen in July. As you know, I’m completely focused on the private banking sector and in that I’ve picked Yes Bank to test this strategy as I understand the stock and it’s movement really well. The private banks saw a decent correction in August because of various types of news that reflected badly on the sector. Now we all know that markets believe in first selling and later finding out if the news had anything to do with the scrip they sold off or not. They say “First Sell and then Talk” and this is exactly the opportunity we have to use in filling our pockets and that is exactly what I intend to do.

Now let us look at the news events that lead to sell off in Private Banks in August. It all started with the Coal Scam where people got worried that just like 2G, all the coal blocks will get cancelled and the loans that several companies have taken to start mining will become NPAs. Next was Finance Ministry statement which highlighted banks and their exposures to airline sector. The third one which was something actually worth looking at was Deccan Chronicle’s bankruptcy.  ICICI Bank, Axis Bank, Yes Bank have got exposures to Deccan Chronicle and the banks are trying their best to recover their debts. But was it enough for the kind of underperformance from Banks? I really doubt it. While nifty was stable in the range of 5200 – 5400, private banks came off sharply. Yes Bank tested levels of 330 in August.

I had started the August expiry series with 1000 shares at 355. For several days, the stock was stuck in the range of 355 – 370 and so when the premiums had slashed down, I moved the lot from 320 call to 340 call. I sold it at a profit of 5000 and bought a 340 call at 21 rupees which gave us a holding of 1000 shares at 361. Then suddenly the stock started falling and I picked up another 340 call at 12.50 rupees which gave us another thousand shares at 352.50. Then I bought a third lot in a 320 call at 17.50 rupees which means, I had 1000 shares at 337.50 also. Totally I ended up at 3000 @ 350. Yes Bank ended August expiry at 330 rupees. I lost about (21+12.5+7.5-5)X1000 = 36,000 rupees in the whole month of August.

The losses look big but the most interesting fact is, the stock is around the same levels from where I had purchased the first time in July and made a nice profit. So expecting the same targets in mind, I decided to roll over the shares to September at the same level it expired. Now September is yet to end and we’ll see how the strategy went in September. As far as August is concerned, we’re down by another 36,000 bucks.

The current status of the fund is 456,000, up 56,000 from the initial amount (14% gains) in two months. This gives us an average of 7% a month as of August.

July End Review of MayankRocks.com Fund

Thursday, August 2, 2012 9:36
Posted in category MayankRocks.com Fund

Before I talk about the update, I’d like to say that from September, I’m going to share my trades right when I’m executing them rather after the execution. I’m doing this on advice of one of our readers who felt that would be a much more fair to readers.

After Mid-July, I had purchased one 340 call at 22 rupees and as the stock fell below 350, I got another 340 call at 10 rupees and with further fall to 342, I got another one at 4 rupees. This averaged me about 3000 shares at 352. On the day before expiry, Yes Bank gave an absolutely fantastic set of numbers and the stock moved up to 346 on the results day and then to 354 on the day of expiry even when markets were completely flat or even slightly negative. The fund was on it’s way to make some 3000-6000 bucks till the last 30 minutes when suddenly the markets started crashing.

The last 30 minutes were so disappointing and unexpected. My strategy was to roll over the 1000 shares that I had purchased at 362 and book my profits on the other two calls. So I bought one 320 call at 34 rupees, which means 1000 shares at 354 and since only 30 minutes were left for closing, I assumed the stock to end around those levels before suddenly markets started crashing and Yes Bank ended at 346. This sudden fall not just made me lose 4-5 rupees on august call that I carry forwarded, it also ate my profits from July calls.

The correct approach would have been a sell at 346 and 2 lots of carry forward to August at that level which obviously didn’t happen. So there I lost 20,000 there and now I’m simply stuck with just 1000 shares @ 354 now. My original plan was to buy two lots for August if the stock ended anywhere below 350 as any loss trade must be carry forwarded for next month. And the funny thing is, global markets rallied the same day and the next day where I could have bought saw a gap up opening. Anyway mess up happens sometimes, that’s market for you.

The current status of the fund is 492,000, up 92,000 from the original amount in a time frame of one month.

Mid July Review Of MayankRocks.com Fund

Wednesday, July 18, 2012 16:18
Posted in category MayankRocks.com Fund

Today I am going to post my first review of the fund. As of today the fund is doing fine. As promised all the trades from the month of July will be shared. I have completed my first trade and I’ve already hopped onto the second for July expiry. I’m also going to try and reason out my trades.

So we started July on a strong note where markets were looking to climb higher. I decided to buy my all time favourite stock Yes Bank. The markets were trading close to 5200 and Yes Bank was around 342 when the stake sale thing got happened around 325 and the stock crashed to those levels. I bought about 3 lots of futures at 329.50 as I knew that there was no fundamental reason behind that fall except that someone sold a large chunk at a lower level. The markets were not falling but this stock had fallen, so it was a great time to buy. Then came some positive news from Europe and the stock climbed to 339 and got stuck there even when markets rallied almost to 5300 in nifty. Yes Bank was under performing like anything. My calculations were that Yes Bank was supposed to be around 360 when Nifty hit 5300 and not at 340 as it was quoting. I used that opportunity and added 1 lot of 320 call at 23 rupees.

In simple terms, I cautiously used the power of leveraging and had 3000 shares at 329.5 and 1000 shares at 343. As expected, even though the market remained flat at 5300, Yes Bank constantly moved up and crossed 360. Markets were having problems in moving above that 5320-5330 zone and Yes Bank also had caught up all the under performance, so I booked my profits there. One of my friend who is also good with technicals suggested me to start booking profits around those levels. I indeed missed 363-364 levels, but I got it all 4000 at 361. The call was sold at 19 rupees profit and futures at 31 rupees profit. The total gains from this trade was about 1,12,000 which is close to 28% on my base amount of 4 Lakh I had given to this trade.

There was a lot of luck involved in this trade as well. I bought it and the stocks only rallied from next day and gave me a hefty return. This kind of performance is not going to happen all the time because markets mostly remain rangebound and you cannot make a lot of money in this strategy if you find markets to be stuck in a tiny range. The current condition of the market is something like that and thus my second trade has not yet given me anything.  You might be languishing around for weeks and suddenly one week you’ll see a good jump in your gains. If you’ve done your buying at a reasonable level, you’ll eventually make money, all you need is patience and the right strategy. I will be posting another update at the end of July and share the trades that are done after Mid July.

The current status of the fund is 512,000, up 112,000 or 28% on the investment value.

MayankRocks.com Virtual Fund

Friday, July 13, 2012 19:47
Posted in category MayankRocks.com Fund

Recently, one of my blog readers suggested me an idea that I should share some of my investments or trades here. So I thought of an interesting idea about a virtual (unreal) fund that consists of a certain sum of money which I will trade or invest with and all those trades and investments done with that money will be shared upon completion of each trade. I am going to use this money to trade in Futures and Options mostly. The trades are not going to be speculative in nature but very calculative and strategised, just like investments.

So the idea is of a virtual non real fund kind of thing, I’m going to name it MayankRocks.com Fund and I’m going to allot it 4 lakh rupees. I’m going to use this 4 lakh to trade in the markets and I’ll be updating the blog once or twice every month with the trades that are executed using this fund’s money and also the current status of the fund, up or down. You can also call it like a monthly income report of MayankRocks.com Fund. I won’t be sharing all my investments or trades that I do but only the ones that I am going to do using the money allotted for this virtual fund.

I have worked hard on finding out some interesting strategies in the futures and options side and I’ll be using exactly those strategies with this money. At the end of each month, we will know how this virtual fund has been performing, that is how much percentage gains or losses the fund has registered. I would ignore the brokerages and taxes on gains from the performance of the fund to make the calculations rather simple. Just to clear some doubts, the money used in this virtual fund is mine and not of anyone else’s. The trades and the strategy used will also be mine and completely unique. Want to wish me luck? Thanks = P

Buy Good Stocks On Dips

Friday, June 8, 2012 23:43

It’s been a long while since I have written on the blog. Meanwhile for quite a lot of time markets traded in a tight range above 5200 before suddenly dipping below those important technical levels to hit 4800 or below levels again. Much of that was because of the massive depreciation in our currency which directly points to our macro concerns. My views were still the same and even today I stand by them – buy good stocks on dips. Markets are giving great opportunities for medium term investors who want to invest at lower levels and sell on rallies in the markets. We have been getting these opportunities once in every few months where an investor can make 20% or more in a couple of months time frame.

What is going on in the market today?

The markets formed a base around 4800 and kept retesting those levels again and again before finally moving up. Markets were facing some kind of resistance around 4950 -5000 levels which it finally broke out recently and is on it’s way to test 5100 next week unless we get some negative surprises. I won’t be surprised if markets actually test 5200 as well, considering we don’t get any negative news from Inflation, IIP or global front.

The markets recently have been moving up sharply largely because of the massive correction we have seen in crude oil prices and also on expectations on a rate cut from the RBI on 18th June. Crude oil price correction recently is also a reason why the rate cut expectations grew so strong among investors. This is pretty much why the leadership in this market rally has come from the banking index.

How to approach this market now?

Long term investors who have still not bought into the market, I suggest you to remain on cash and wait for another correction in the markets. Don’t worry, the markets are not going to run away to new highs. Most of the problems we’re facing today in this world will remain even after this rally ends and thus I believe that markets could go and visit lower levels. You should try to look into entering on dips whenever that opportunity comes.

What’s the threat to this market rally?

Market is going to closely watch the news events that are lined up next week. We have Inflation numbers on Tuesday, IIP numbers on Thursday, Greece elections on Sunday and RBI policy on Monday. If Greece election results are not favourable, markets globally could see further slide. Markets are also largely expecting a rate cut and if that does not happen, our markets will surely drop back to where we were before the rally started. Market wants to see RBI shifting it’s focus on growth than being adamant on inflation and thus if the RBI does not deliver, markets will take it on the chin.

Where to buy if market comes down?

Stick to good quality stocks only when entering the market. If you’re a medium term investor, you want to make sure that you enter those stocks that are likely to go up in medium term along with the market. Don’t buy stocks that have no chance of participating in the medium term rallies. For me, my best bets remain in the private banking names like Yes Bank, Axis Bank, ICICI Bank etc. These stocks are of utmost quality and they participate very well in market rallies, in fact they heavily outperform nifty on upsides. For example, in the recent January rally, Yes Bank went up 60% from it’s lows and from the most recent May correction, it is already up 15-16%. So yeah, private banks remain my top picks even today. You can also look into purchasing some of the auto stocks like Tata Motors that have corrected a lot recently.

Stay away from stocks that are quoting on high valuations because they are going to give you limited returns. For example, while Yes Bank rallied 60%, HDFC Bank rallied only 30% from it’s lows in January. Both are great stocks but Yes Bank’s valuations were way cheap than HDFC Bank and so it gave more returns. So whichever sector you enter, look for the quality factor first and then compare the valuations and enter the high quality cheap valuation stock for maximising your gains. Make sure you stay away from Infrastructure, Power and Real Estate kind of stocks unless you like risking your money in uncertainties.

How To Read a Forex Chart

Friday, May 25, 2012 21:38
Posted in category Stock Market Analysis

While doing forex trading various points should be kept in mind. First thing is to learn the basic skill in the forex like reading the forex chart is very important. If any one tries to practice an actual forex trading system then for him it is very important to have this vital skill. Then it will be easier for him to practice the actual forex trading.

Before learning how to read the forex chart it is very important to first revise the basics of a forex trading. Forex chart is directly related with the basics of forex trading. Currency pair is coated like EURUSD currency pair. In this pair EUR is the base currency and the USD is the terms currency. In any case the USD will not be the first. Suppose the chart is showing the current price of EURUSD fluctuating around 1.2155. In this condition it means 1 EURO will buy around 1.2155 US dollars. The amount of base currency is the actual trade size. If any one wants to buy 100000 EURUSD that means that person is buying 100000 EUIROs.

Important points to consider reading a forex chart

1. If anyone buys the currency pair that means he or she is looking for the chart of that currency pair to go up in order to make profit on that trade. This means that the buyer of the currency pair wants to strengthen the base currency against the terms currency. On the other side if that person wants to sell the currency pair then you will look the chart for the currency pair to go down in order to make profit. In this case the trader wants the base currency to weaken against the terms currency. It is very simple process.

2. The time frame which is displayed is very important for any trader. You must have to keep a constant check over it. In many trading system there are multiple time frames in order to determine the entry of a trade. You must look at the correct time frames for your proper analysis. One of the best ways is to set your charts with the correct time frames. There must be an indicator for the system you are trading and also it can be saved and reused.

3. Usually the BID price is displayed on the forex chart rather than ask price. Every trader must know this fact that price is always coated with an ask (offer) or bid price. On many platforms when trader is placing the stop orders then he has to select either ‘’stop if offered’’ or ‘’stop if bid’’. If the trader wants to buy then he must buy above a certain price in case of price rise and in the case of sell he must wait for the price to fall below a certain price.

4. You must know about the time zone which is shown on the bottom of forex charts. Usually the particular time zone is set to forex provider’s charts. It may be GMT, New York Times or it may be some different time zones. You must have a world clock over your computer set so that you can convert the different time zone. You must have to convert the announced time to your local time and the chart time. By this way you will do the forex trading in a convenient way.

This article is written by Mr. Mayank Gupta who blogs at NineMillionDollars.com where you can find articles on best mutual funds and best gold etf.

Buy On Every Dip In The Markets

Sunday, February 26, 2012 12:22
Posted in category Stock Market Analysis

So what is going on with the market right now?

Well just as I have been suggesting that markets have run up quite a bit and needs to catch some breath. As upside gets limited in the immediate term, people tend to start profit booking. The slightest of negative will get people to start profit booking. The markets are likely to correct a bit more and consolidate before resuming uptrend. The biggest fear right now is Brent Crude rally which is definitely going to dampen investor sentiments and could trigger further correction in the markets. The markets have not fallen too much because global cues and positive US data every week has been holding their markets and even Asian markets have been holding steady.

So what should an investor do now?

If you’re thinking about booking profits, then please don’t. If you’re an investor you have to ride this rally because you probably won’t see those low levels that you did last year anytime soon unless something monstrous happens and I doubt it. Unless you’re trading you don’t book profit but continue to hold your investments with a long term view. Even though I agree markets might correct more, I would not advice to book profits for investors because I know that most investors have a mindset of buying really low in markets and you might not get that, so don’t risk being left out of the market rally. For example, 90% of the people I know or talk to regarding markets bought nothing around 4500-4700 levels even though my suggestions were to use every dip as a buying opportunity from and below 4700 levels. Today a lot of them feel like they have missed the rally and are again unwilling to buy feeling that stocks are too costly now. Some are still waiting for new lows to be formed by market which I really doubt it.

Buy on every dip

Right now, I continue to remain firm with my decision that investors should buy on every dip we see in the markets. The mood of the market is quite bullish because a lot of DIIs and retail people got left out in the last rally that they will try to enter markets at every dipping level. One should use this opportunity and get into high quality names on each dip market gives and hold tightly till the next bull market. Don’t try to buy your way in the market on the upside, the rallies are extremely sharp and before you could realise that you have to buy, markets will be very high.

Just make a list of few good quality stocks, divide your money into 3 parts for each of those stocks and buy on each dip in those stocks. Considering investing into private banking names on dips as I believe that banking sector should be one of the market leaders in the next bull market.

What Kind of Investment Strategy to Implement Now?

Thursday, February 2, 2012 11:24

Surprisingly, the entire correction of that day was countered by an equivalent size of rally and then the markets continued to move upwards in excess of 5200. So what should an investor do at this stage? Some investors who missed buying into the last fall are worried that they might miss a bull market and are in a hurry to buy into the markets. Some investors are profit booking into this rally with hopes to buy again lower. I’d say that both of these strategies today are ruled out from my side. There is no bull market coming anytime soon and the same way, no bear market coming anytime soon unless Europe dies.

I don’t advice to buy into the current market nor sell into the current market. Markets are being very unpredictable today and you don’t know where the markets can go, so sellers beware and buyers beware too, any strategy can go wrong. You don’t want to buy into the markets only to see a correction and you don’t want to sell only to see markets continue to move upwards. Plus if you sell and markets correct, you might feel lucky but you really don’t know till where the correction can take markets and how sharp a rebound from lower levels be. Thus there is a possibility that you might not be able to buy into the markets completely post correction. The markets are very volatile and it will be difficult to catch and time the market at this point of time.

For buyers, I’d tell you that wait for a correction into the markets before you try to enter. The correction will and has to come one day. You will need to wait for some more time before there is a buying in the market. You can safely put money into the market after the next correction and go long with the next bull market targets. We’ve entered the stage where soon positives will weigh more than negatives and thus the next buying opportunity should probably be where you buy and forget with a long term view. I understand that there are a lot of people who are getting impatient today to buy into the markets, I suggest being more patient, the market will surely give you another opportunity : P

Use Dips to Buy into the Market

Monday, January 30, 2012 18:29

I have been maintaining my view that the market has gone up too quickly too fast and thus I would not rule out a nice correction. Today, one of such correction was seen across the markets where largecaps as well as midcaps fell sharply. I don’t think that this is the end of the correction and we could probably see further correction in the markets. But don’t mistake this correction as a beginning of the bear market but it is merely a correction. Treat this as a correction into a crazy rallied market and nothing else. We will enter back into the bear market phase ONLY if you find some big issue popping up in Europe or USA and their markets collapse otherwise most of the macro problems are done with. The market already knows that the fiscal deficit is ballooning or industry is slowing down and so if markets had to test new lows, it would have done by now.

The people who had gone by my suggestions and bought in the last rally can continue to hold their investments with a long term view and those who were hoping that markets will hit 4200 on nifty or even below and did not buy into last decline, they can re enter the markets in a staggered way as market begins to fall more. There is no hurry to enter the markets immediately, you can wait for some more correction into the markets and then enter, whenever it happens. This correction could be a very interesting opportunity for those who had missed the rally. This could be it, your opportunity to buy and forget with a target of next bull run, whichever month or year that happens.

Make sure that you don’t buy high valuation stocks but focus on good quality cheap valuation stocks as those are the ones that will lead the next bull market and not the ones that never corrected. Most private banks fall in that category and they could be your single best buying opportunities in the markets. So my strategy now from wait and watch is soon going to go back to buy on dips. Let’s wait and see where the market goes and depending on the reason of market fall, we can reassess the situation in the next couple of days or weeks. I would keep you guys updated.

Is The Bear Market Over?

Thursday, January 26, 2012 10:03
Posted in category Stock Market Analysis

So are we in a situation that we can safely assume that bear market is over? Well perhaps yes. The markets have gone up too fast too soon and it is too late now to be expecting to see new lows anymore. If the nifty was around 4700 – 4800 levels, we could expect to see 4400-4500 levels again but now we’re closing in on 5200 levels and thus I rule out any possibilities of new lows unless we see a big world financial crisis like we have seen in the past but we’re not Roubini and thus we cannot predict such things.

Now even if we do see some correction in the markets, it is going to be take us to old support levels and breaking that would need a lot of bad news and that we don’t have. Global markets were not correcting much and only our markets was constantly testing new lows and all that is over with the latest RBI’s policy where he cut CRR. So from the macro front, we have entered the phase where most of the macro bad news is priced in and the positive news are starting to outweigh the negatives. Imagine if the budget is some what okay and then RBI starts to cut rates, will markets be testing new lows or preparing for some kind of upside?

So there is a chance that the markets might have made their lows and is done with it. I wouldn’t rule out some correction in the markets but we’re at a stage now that every other person will jump into the markets on the next correction. I can very confidently tell you that there are a lot of people who are waiting with cash to jump into the markets, all it will take is a correction that will have people going crazy to buy. Why I feel a correction is due because US markets are also trading at a very high level and haven’t corrected in a long time. Our markets have gone up too sharp too fast and profit booking can take place at any time.

What are your views? Do you think that bear market is over? Please comment.

Yes Bank Q3 FY12 Results

Wednesday, January 25, 2012 19:02
Posted in category Results Analysis

Yes Bank reported a very strong set of results in Q3 FY12 but it was pretty much expected. There hasn’t been a quarter where Yes Bank hasn’t reported a strong and better than expected numbers, atleast since I’ve started monitoring the stock and picked it as my top pick in the entire stock market space.

The following are key figures from Q3 FY12 results : - 

  • Net Profits up 33% to 254 cr yoy.
  • Net Interest Income up 32% to 427.6 cr yoy.
  • Savings account deposits surged 99% yoy and 40% qoq due to it’s high savings deposit rates.
  • CASA has moved up 46% qoq to 5913 cr which has moved the CASA ratio up 1 .6% to 12.6% now.
  • Advances were up 15% and deposits were up 19% this quarter.
  • Net NPAs were at super low 0.04% and gross NPAs were also very low at 0.20%.
  • Yes Bank’s current basic EPS moved up to 25.82 and book value to 129.5

The above are clearly are very strong set of numbers, whether you talk about profits or income or just pick any figure out of there and it is really good. The bank maintains it’s NPAs at such a meager levels which is also best in the industry.

What I like the most about these numbers is the saving deposit increase which doubled in a year and went up 40% in a quarter. I am hoping to see much more rise in their saving deposits in the next few quarters because even today most of the banks are yet to touch their saving deposit rates and thus banks like Yes Bank that are offering 7% rate are going to see rapid rise in savings deposits. CASA has always been the main issue of Yes Bank and now that is seeing a substantial rise. If CASA improves every quarter, it is going to be easy for Yes Bank to continue to maintain such high profit growth as CASA is always going to improve their margins.

I expect Yes Bank to report an EPS of very close to 28 for full year FY12, unlike the expectations of various brokerages that say it is going to be around 26-27. Currently the stock is trading at 327 so this brings us to the current valuation of  11.8 as per FY12 EPS. If we look at book value, we expect to see a book value of around 138 for FY12 that means it is trading at close to 2.4 times the book. If someone is looking to enter Yes Bank, then wait for next correction in the markets and enter the stock.

Systematic Investment Plan

Wednesday, January 18, 2012 8:43
Posted in category Investment

Systematic Investment Plans are very popular in India and I have never talked about it in particular. So let us take a look towards that in detail.

What is Systematic Investment Plan

A systematic investment plan or SIP is one of the ways of investment where you invest your money in a regular or say monthly basis. Whether you invest regularly into mutual funds or directly into equities, I’d coin them both in a similar fashion. Since SIP is mostly regarded to investing into mutual funds, I’m going to focus it that way.

The whole idea of systematic investment plan or SIP is that you are going to set aside a certain sum of money each and every month to invest them in buying units of a mutual fund. You invest your money regardless of what the price of the fund is at that given point of time. Indians like this form of investment because it helps them save money on a regular basis and also helps them in building a form of investment that would give sustained returns over a period of time. All you need to do is to have an account with a broker that offers mutual funds, like HDFC or ICICI or Axis etc.

Benefits of Systematic Investment Plan

- The most important benefit of setting up a systematic investment plan is to develop a regular saving habit and discipline. Most people cannot develop the savings discipline unless forced upon and this SIP method will act like an automation force taking away part of your money each and every month. You will treat it like a burden or a loan where you have to give money regardless of how you like it. This helps you save money as well as have a good investment portfolio.

- If you do not have the knowledge of the markets and cannot time it well, investing in systematic investment plan way helps you buy into the market in all phases of time, a falling or a rising market, thus you get a good average price without taking the pain of trying to time the market.