Ravi Speaks:
Updated on 31.07.2022
The inclination toward Share Market
I remember in 1985-86 when there was a boom in the Indian Share market; I had simply (to know the basics of the market) invested a very negligible amount in speculative trading. I was a Medical Representative in Ludhiana and a new ”Stock-Exchange” had opened there during the mid-eighties in the city’s heart near Ghanta-Ghar.
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Nurturing your investments.
How did I get allured with a small investment in the Share market? |
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| Long- and short-term approaches. |
One of my colleagues had voluntarily resigned from the medical rep job and started as a Share Broker in Ludhiana-Stock Exchange. I saw so many people from the pharma normally going there in the Share market after they finished their fieldwork. This was possible only for two or three of the senior Reps who had become the broker there to earn their livelihood. While I went to my senior colleague’s office with another colleague- on my expressing the desire to invest in it-I came to know that some shares were purchased from the trading during the day in my name. This transaction was simply a sudden purchase made of 100 shares of one of the promising companies in the auto sector. I never knew that this sort of trading done in my name was known as “speculative trading”. I came to know that this purchase, if sold the next day with the raised rates, would surely fetch me some additional money. So, according to my confirmation with the stockbroker, those shares were sold the next very day. With this, I earned a good amount in thousands and became thrilled that my first deal had fetched me a profit. This small gain was sufficient for me to get involved further in speculative trading. Within a few weeks, I realized that some of the purchased shares from the open market had gone down significantly and gave me a big dip in my investment in this sort of trading. I still remember I had a few shares that did not gain any improvement and I had to burn those share papers finally after a few years. One such was that of 100 shares of Bassi-Solvex-which I had purchased for a high double-digit figure and waited for its rate to get over my basic purchase rate. Way and finally somewhere after a couple of years more when there was a sudden crash in the market in 1987, I suddenly realized that I also lost a reasonable amount in this market. I decided I would not be playing the speculative way anymore. All I did afterward was a cautious observation kept on the stocks’ movement and whatever I invested during that period was only on the new equities entering the market with a face value of Rs. 10 /share.
How You Feel While Trading for yourself:
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| Your thought process while trading. |
“Looking at the markets, you would think people would be ecstatic-but they are not.” Once you have invested in the trading-your earnestness to gain bigger profit increases even further and your feeling goes strictly as per the market forecast for the shares in which you have invested. The market responds contrary to your forecast, except in certain cases. That is why even if you had gained some profit in a short period in the speculative market-you would not feel ecstatic but very apprehensive. Finally, if the gain in the rates is observed-your tendency for further involvement increases naturally and there is no stoppage to it. So, in simpler terms-“It is a kind of joyless prosperity,”-where you have this assurance that you have the substantial possession with you and actually you would not like to take out or sell any share but yes you might go on adding further to substantiate your ‘share kitty.
Market Scenario evolved as of now:
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| Market scenario evolved. |
After the 1987 debacle in the share market-I had stopped taking part in the trade transactions for some time and the only little investment I had, was in the newly floated equity shares of the prominent companies-where the allocation of shares to all was not there. Those days, looking at the increasing awareness of the market, the involvement of the people had increased. Because of this, the new IPOs would get oversubscribed manifold, and then the allocation used to be in the proportionate ratio. Now there is a lot of change in the market scenario after, say, around three decades. The increasing dominance of mutual funds and insurance companies in stock market activity, and the declining role of individual investors as direct market participants in the new setup are evolving. I remember those days before the ‘87 crash, the direct participation was up to the tune of almost 25% of the total business done and now after so many decades, it has gone down by almost 5% as per the reports published.
Present Index despite the COVID-19:
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| COVID’s impact on markets. |
Following is the exact Index position of the Indian market as of the date (3rd Sep’2021): –
Index Price
SENSEX 57338.21
NIFTY BANK 36574.30
The same price for Sensex exactly one year back was 37500 at the beginning of September 2020. This was the reflection of COVID making things pretty bad and the business coming almost to a standstill. India is supposed to have entered the most delicate phase concerning Corona Virus and Sensex & Nifty have already rallied by leaps and bounds from the lows of the earlier year when the pandemic impact was more pronounced. This way we have been bold and strong to rally back despite the adverse situations faced during the COVID second wave mainly. If we compare the crash of 87 and later of 2008, the drastic dip of COVID in earlier phases has been more or less comparable with those low indices of the crash, however, the strong will of the people and their businesses have a greater extent made them rally back into the reckoning.
People invested in the low phases of COVID-
19:
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| Lockdown lure. |
The major companies which were dominating the table had also seen their lowest ebb during the COVID phase in the middle of 2020 and a situation had come when the rates had almost dipped to astonishing lows. This was the occasion for the mature players to invest and invest heavily. Some people have doubled their investments within this one year after really purchasing the potential shares during their lowest ebb phase. Companies with their rates standing at 500 have gone to 1750 plus as of date. The so-called blue chips which had a bad low quoting earlier have recovered by doubling their rates as on date within just one year. When the rates get doubled and tripled in no time at the market, one feels as if something fishy has been happening in the transactional business of the trading market. The market has been playing like a casino and people who play cautiously in it at such effervescent times feel that their game of investing in a long-term investment plan is very difficult.
Have a smart ‘watch’ when the market is
effervescent:
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| Smart investment thinking. |
When such a situation comes, it is better to have a smartwatch on the market, and immediately after it cools down a bit, the consistency is reflected in the market. I feel one should start only then. Otherwise, also those who had purchased shares at the time of their being in the bad shape during that crash phase situation of COVID must sit pretty and would not like to invest now other than circulating their already invested capital.
For good savings, take calculated risk in the
trade market:
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| Know more and then invest. |
In my earlier article where the investment for the saving into Mutual Funds and share market was emphasized-that was mainly mentioned with the view of earning almost nothing from the normal FD investments or such Government instruments-which yield a very negligible return. Therefore, one must be smart enough and ready to take certain calculated risks by investing in the stock market-looking at high returns in minimum time directly or indirectly through professional advice or even through mutual funds.
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