How to subscribe to an IPO without a broker

In this post I’ll explain how to subscribe to an IPO without a broker. This is one of the less known aspects of equity investments.

Steps to be followed for IPO subscription through your bank’s internet banking facility, assuming your bank has ASBA facility. Most nationalized banks have this facility. In the  below example, I’ve shown BOI screens, the navigation would vary for different banks.

Step 1: Login to your internet banking:

Step 2: Go to Requests Tab and Select ASBA IPO Request

Step 3: Select ASBA IPO Request (on side menu)

Step 4: Navigate to Bid Cum Application section

Step 5: Fill up bid form and Submit

Step 6: Wait for confirmation on allotment, if allotted the shares will reflect in our DP account after the allotment process is completed.

Hope this post helps!

To view a model portfolio of stocks, which has give 66.5% returns till date and 270% returns, excluding current year investments, click here .

You may also be interested to know  why ‘I Subscribed to HDFC AMC IPO‘.

When to and When Not to sell a stock

More than buying a Stock, selling is more tricky. A common question among most investors is : When to and when not to sell a stock.

Below are some of the reasons for selling a stock:

  1. When your target price is achieved. ( one caveat here is , the share price may go up even after you have sold (booked profit)
  2. You realised you made a bad choice and invested in a potential looser; Exit ASAP even if you made a loss.
  3. If you realise the Management isn’t being transparent and involved in book manipulation or involved in fraud etc.
  4. A better investment opportunity which would give a better return is available
  5. If the company has shown consistent underperformance for few years, shows no signs of recovery
  6. When you expect a major correction as valuations have reached multiple times above median PE.(Sell High and Buy Low)

Etc.,

Below are some of the reasons for NOT selling a stock

  1. When some random advisor says to sell the stock
  2. When there is correction in market or stock. ( don’t sell in panic)
  3. You don’t see any major movement in the share price for very long
  4. When there is no better investment opportunity
  5. If the conviction with which you brought the stock still holds good at present
  6. Try not to book profit within one year from date of purchase, as you have to pay tax on your gains.

Etc.,

The above are compilation of points based on what I’ve read, understood and some from my own experience. Feel free to share your thoughts on ‘When to and When Not to sell a stock’ in comment section, I’ll update the post accordingly.

What to do when Stock Markets Crash! ?

I’m really excited about the opportunity the current stock market crash is providing to create wealth. At present we might be in one of the biggest correction of all time. Many of us have this question: “What to do when Stock markets crash! ?” And, I’ll try to answer this in this post.

Market Trend Analysis

The longest Bull runs of recent times, which started in March 2009, seems to have come to an end (About which, I had cautioned my readers in this post , before the sell off started). As on 9th March: The Sensex & Nifty has lost 8.6% and 8.45% since their peak in Jan 2018.

Sensex historic trend analysis, since 2000:

  • Bull Run : From Feb 2003 to Jan 2008: Sensex rose from 2904 to 21206, gaining whooping 730 % in 57 months.
  • Bear Run / Crash : From Jan 2008 to Oct 2008, Sensex lost 63% (- 63 %) in 9 months.
  • Bull Run : From Oct 2008 to Jan 2018: Sensex rose from 7697 to 36443, gaining whooping 473% in 110 months.
  • Bear Run / Crash : From Jan 2018 to Oct 2018? (only time will tell)

What triggers a Market Crash ?

There are lot of parameters that will lead to market crash. But, we can never predict a crash through some data. Though, eventually “experts” will be able to attribute the crash to some cause, pointing to some charts and trends. But, if you ask me, I’d say, “Markets crash, once in a while, to make people like you and me wealthy !!”

What should a long term investor do?

The correction has just begun, it will go for few months before the trend reverses. So, be very thoughtful about what you are going to do.

Make sure to have enough cash to buy during dips. You may get opportunity to invest in your favourite company, which you were not till now, due to its premium price.

If you haven’t booked your profits yet, consider doing it, if your investments have grown in value considerably since you purchased. So that you can buy the stock at a lower price, while the markets correct.

There are few companies, which survive crash, whose share price drop are negligible or nil. If you have holding in such companies, just stay invested.

If your investments have dropped considerably during the current correction, and you believe that the company is good and the drop is due to current market situation. Don’t panic and sell off, instead just stay invested or better yet, buy more shares at dips.

Remember the Persian adage, “This too shall pass”

Time to exit equity market and book profits

As of 1st Jan 2018, most of the stocks were having extremely high valuation that’s why I though it is Time to exit equity market and book profits.Many of us do research to identify which stock to buy and at what price.

Is it really time to exit equity market and book profits ?

When you know how to value a company, and what kind of return you are expecting from your investment, decide the buy price. If the current market price(CMP) is lesser than that price, you will go ahead and buy it. If the CMP is higher than the calculated buy price, be patient and wait for the correction.

The first bull market was from Sep 2001 which ended in Jan 2008(76 months) with biggest market crash of – 63%, which started in Oct 2008 post 2008 crash.

We are in the second largest bull market which started in Oct 2008 continuing till date (110 months), BSE Sensex has quadrupled gained with whooping 443.5% increase during this period.

It is almost always impossible to catch the bottom or top of the  market, so the best thing to do is exit the market towards the top and enter the market towards the bottom of the market cycle.

The writing on the wall is clear; Inaction is our biggest enemy, it may cost us dearly. If your neighbor, who knows nothing about stocks,  is suggesting you to buys a stock, its a sign that your should think about selling your investments and sit on cash to re-invest it once the market bottoms. Recently while I was in our pediatrician’s clinic, I heard his assistant suggesting the doctor to buy Infosys shares. I also stumbled upon an article mentioning that uber/Ola drivers are seen trading on their mobiles in their spare time. Next thing I did was, started selling my equity investments.

See this post to understand All about selling long-term equity investments