What investors (stocks) & traders (F&O) should consider while navigating the markets
There are two types of participants in the stock market. It is important to understand the respective temperaments before we delve into what each one should consider while navigating the market:
My franchise, Nipuna Insights advises & invests as an Investor in stocks. It uses statistical methods for F&O trades in the index/stocks. So, based on my personal experience, having navigated the markets through many events of ups & downs for the recent past few years (Covid (2019-2020), Russia-Ukraine war (2022-), Inflation surge post pandemic, US-China Trade war (2019-20), Banking crisis in EU & US (2023), Fed’ quantitative tightening (2021-2023), China Economic slowdown (2023) & its impact, Trump tariffs (2025).
The statistics on the graph of Nifty show how volatile the market has been for the past 5 years. Maintaining its upward trendline with an annual IRR of ~20% pa, with SD of 5235 and the median lying at 11.7k for a range of 20k across the period, indicates that markets have not been smooth to navigate. In these circumstances, as is the characteristic of all markets, the question occurs:
“How to survive?”
Let me cover the softer behavioural aspects first and then delve into the finer objective factors, which I kept in mind over the past few years of whiplash. It has held me in good stead (touch wood) with alpha returns over the past 5 years¹.
Softer behavioural aspects
These remain the same irrespective of the type of market participant. These don’t come easily but then you have to train your mind to be objective. My learnings are as follows:
- Have immense trust in his model, irrespective of how it unfolds initially. It is your BFF.
- Consistent usage of the model across the period. Never jump from one model to the other.
- Definitely don’t invest based on market tipsters & media news. They mushroom during good times and get into hibernation when the tide is against.
- Never get too greedy and keep yourself exposed to the market when your price targets have been achieved. Realise your profits into cash and reinvest them in new opportunities.
- Never get emotionally attached to any investment. Cut your losses if your fundamental thesis of investment has been negated. It doesn’t matter. The market gives enough opportunities.
More objective factors based on my proprietary model of Investment into stocks
- My model gives the entry price and exit price. I always keep a further cushion on the entry price. I stay invested until I am near the exit price.
- Always update the model with the latest earnings to see if the fundamental thesis still holds. Irrational exuberance could be a cause of a price surge in some stocks. But never get caught in that. Capitalise by exiting when the target price has been reached rather than riding the wave.
- I double down when the price falls below my entry price, reflecting the trust in my model.
On the F&O side
I use my knowledge of statistics to take positions. I advise/taking positions in index options. Usually, my horizon is only 1 day here. Some of the objective factors I use are:
- Know that every derivative trader has a view on whether the market will go up or down during his horizon. No matter how much he advises hedging trades with sophisticated structures, the underlying is always his bias on the prediction of the trend in the market (Up or down).
- If you deal with options, try to short options. Theta (or time elapse) is one predictable factor which will ensure decay in price when you have to cover up.
- Deal with far out-of-the-money options for entry in the direction of your bias. They decay faster.
- I have noticed that markets whiplash on expiry day, especially after 1:00 pm. Try to square off before that, else you may be exposed.
- Never trade on big events day like election results, RBI monetary policy etc. The whiplash could encircle you.
- Trade only when your model gives a clear indication. You don’t need to trade every day. More importantly, you don’t need to take many trades during the day unless your model is designed as a high-frequency trade. It only increases the broker’s commissions, Securities transaction costs & eats into your gains.
- Most importantly, follow the model religiously even if it gives you losses in the initial days. If you have backtested your model diligently, the results will be in line with the backtested model over a period of time. In essence, never lose your trusted friend, i.e., the MODEL!!!
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SEBI-registered Research Analysts are not permitted to advertise past return statistics. You can contact me at the email provided if you want to know about my alpha returns.
A bit about myself
The Franchise
Nipuna Insights (Nipuna) is a franchise for creating and sharing wealth created out of investments/positions in the stock market. Managed solely by Mr. Shriram Sreenivasan.
🔗 LinkedIn Profile: Shriram Sreenivasan
🔗 LinkedIn Page: Nipuna Insights
Man Behind
Shriram is a CA and an MBA from IIM Bangalore with 20+ years of experience in the financial services domain and business world. He is a SEBI-registered Research Analyst. He was an Investment banker and Private equity fund manager before venturing into managing his family ventures and exiting out of them.
Currently, he is a Consultant to a renowned corporate group and advisor to a few startups.
Track Record and Modus Operandi
Shriram has been investing in the stock market and making returns. His investment rationale is to find undervalued mid cap stocks with huge potential using his proprietary model. Given his experience evaluating various business models in different sectors during his financial services and private equity career, he can quickly assess a business's robustness and risk points. On the F&O side, he uses high-end statistical models using Conditional Probability, Sigmoids. Index positions are taken with a horizon of 1 day.
