I am sure that all investors are watching the markets closely for the last one week. It is becoming weaker by the day and a decision by US Fed on December 16th to hike rates, along with the approaching year ending may well push the Nifty down to 7500 or so, where it is likely to find support. Even if it does not happen, I do not think Nifty will cross 8000 in the near future.
As I have said earlier, I have stopped my SIP in October and will look to buy MF units at appropriate times. However, even though I wanted to buy at 7800 levels of Nifty, I will now wait for a week to see how things transpire. In case you are interested to understand why I stopped SIP and how I plan to buy MF units now, you can go ahead and read the earlier posts in the blog. It may just motivate you to do the same.
Let us take a look at some data on Nifty DMA levels and returns in 2015:-
- Nifty closing value on Friday was 7781.90
- This is lower than 30, 50, 150 and 200 DMA
- YTD returns are -6.05%, 1 month is -3.20%, 6 months is -4.05%
Based on this a few things are very clear. Firstly, all your SIP investments made in this year are having returns in the negative. Yes, they can still give good returns in the future but you would have been far better off if you bought into MF selectively and not blindly go with SIP. Secondly as all DMA are more than current Nifty levels this is really a good time to buy MF units. Thirdly going by the market trends and the important events happening shortly, wait a while more to see if Nifty will go to 7600 or so.
My own plans remain the same as far as buying MF is concerned. I want to invest about 5 lacs between October 2015 and December 2016. So far I have not bought anything, my first purchases for about 1 lac will be in December or early January. I still plan to buy 4-6 times in this period and my current plans are to invest all of this money below Nifty levels of 8000.
When I look back to see what I would have invested through SIP on 7th October and November ( my SIP date was 7th), I feel quite vindicated on the approach I have taken. In fact if the GST does not pass and Q3 results are poor, there will be a case for making all the investments in the next 100 days.