When To Invest in Shares Market

Investing in Shares is an art and a science. The best time to start is NOW. To understand why, please visit prashantjain.pdf
Best returns are typically on investments made in bad times!
The markets have become very volatile. The best way to invest is as follows:

1. Open an on-line Trading Account

2. Link it to your Demat and Bank Account

3. Make a list of 4 to 10 fundamentally good shares

4. Decide how much you want to invest lump-sum (NOW) and every month

5. Invest only half the lump-sum amount NOW. Keep the other half in a liquid fund where you can withdraw at will to invest whenever the markets crash. There are some liquid funds that offer as much as 9% p.a. returns.

6. To understand the rest, let us assume you wish you invest Rs 10 lakhs NOW and additionally Rs 50,000 more every month.

7. The model portfolio chosen is:

Name of the Share	Current Market Price	No of Shares to be purchased NOW	Investment
Reliance Industries	2100	60	126,000
Infosys	1700	75	127,500
Nagarjuna Fert	37	3200	118,400
JP Hydro	50	2500	125,000
		TOTAL	496,900
		Cash	503,100
		Grand Total	1,000,000

8. If you want to buy 1000 shares of JP Hydro @ Rs 50 each, don’t be in a hurry and place the order as “Buy 1000 shares of JP Hydro @ Rs 50”. Place the order as follows:

Buy 100 Shares @ Rs 50.00

Buy 200 more @ Rs 49.75

Buy 300 more @ Rs 49.50

Buy 400 more @ Rs 49.25

9. Do not worry if the share price does not fall to Rs 49.25 and you are un-able to buy all the shares. Place the order again the next day for the residual shares. In case the price drops below Rs 49.25, use the surplus cash to keep buying small lots. Make sure that you DO NOT place BUY orders for more shares that what you can pay for to take delivery as you may have to sell them at a loss in case the price closes at a lower level. You should be able to pay for and take delivery of all the shares bought.

10. Having bought the shares, place a SELL order @ 1% + Brokerage immediately. If you bought 100 shares @ Rs 50, place a sell order for 100 shares @ Rs 50.55 (assuming intra day brokerage is 0.05, profit would be Re 0.50 or 1%). Having sold the shares, place another BUY order for 100 shares @ Rs 50 and keep repeating the process. So, for every squared-up transaction, you will earn 1%.

11. In case, you are un-able to sell the shares on the same day, place the SELL order on the next trading day @ Rs 51 OR the opening price (which-ever is higher). Having sold the shares, try to buy back at Re 0.55 less. Make sure that you DO NOT place SELL orders for more shares that what you have for giving delivery as you may have to buy them back at a loss in case the price closes at a higher level. Place the sell orders in the reverse order ( Sell 100 @ 51.00, 200 @ 51.25, 300 @ 51.50 and 400 @ 51.75)

12. By constantly following these rules, you will keep on reducing the cost of acquisition of your portfolio.

13. It is very important to decide the PIVOT point everyday. You should keep buying more shares at every fall below the PIVOT point and sell them at every rise above the PIVOT point. This is slightly complicated and requires some experience.

14. Make sure that you keep pulling out some money whenever the profits are high so that you will always have money to buy more shares at lower levels when the markets crash. The maximum gain will accrue from shares purchased at the lowest level after the crash. The pull back is usually sharp and will result in handsome profits.

15. If you have a lot of shares, then you can still implement the ideas by putting your shares in the Demat Account (instead of cash in the Bank Account). For example, if you have 1000 shares of Infosys, you should sell 10 shares at every Rs 5 rise ( (sell 10 shares @ 1700, sell 10 more @ 1705, sell 10 more @ 1710, ...) and buy them back at a profit of Rs 10. For transactions squared up on the same day, intra-day commission would be less than Rs 2, so the buying orders should be placed at Rs 12 less than the sale price. For those shares which could not be bought back on the same day, brokerage for buying and selling would be less than Rs 20, so the buying orders should be placed at Rs 30 less. You would have sold all the shares only if the price goes beyond Rs 2200 - a remote possibility for the next two years.

16. Keep selling small quantities of those shares that have risen the most and use the money to purchase shares that have fallen the most. Not all shares rise when the markets are rising and not all fall when the markets are falling.

Please send an email to fitnessfundas[at]yahoo[dot]com or call on +91 40 6456 9367 to discuss and get going.

“

The courage to press on, regardless of whether we face the calm seas or rough seas, and especially
when the market storms howl around us, is the quintessential attribute of the successful investor.”

- John C. Bogle