Restrictions on Govt Servants

#1
In FR/SR book I have read
1. A govt servant can do Investment but not Speculation
2. Group C employee can invest upto Rs. 25,000. For investing more amount they have to inform their Head office. (A govt emp said to me that we do not need inform this to Head Office, as it will be shown in income tax filings)

What is the difference between Investment and Speculation? What is counted in Investment and what is counted in Speculation?

Can Govt Servants do Short Selling, Trade in Futures and Options, Day-trading?

Any other kind of restrictions on Govt employees regarding Stock Market?

Experienced Govt Employees also if any please share their wisdom. Please don't make any guess. If any hyperlink(website link) or any other reference like book name, gazette, SEBI guidelines etc you know,please share.

Every detail will help.
 

suri112000

Well-Known Member
#2
Investment constitutes buy and hold in equities. It should have a holding period of atleast 1 year perspective.

Whereas speculation is whatever you do other than investment. Trading in futures or options or short selling or trading/investing in equities for a period of less than 1 year are all covered under speculation.

Another striking difference is leverage. If you trade or invest on leverage it is a speculative activity. If you are an investor, your risk of going into debt is zero because the worst scenario is your investment becomes zero and you bear no additional responsibility to incur further losses. Whereas if you are a speculator, there is a possibility of loosing your entire capital and some more in case market gaps down significantly contrary to your position.

Speculation is considered as a business as it involves full time activity.

Govt servants are prohibited to do speculative activity as it amounts to a business. No govt servant should undertake any other business activity while he is serving as it distracts servant's attention and deprive him of serving with full commitment and dedication.

So, if you are a government servant it is better to avoid trading altogether for your health and organisation health.

As ST suggested, it is better to embrace SIP route through mutual funds to comply with service conditions. You can make a descent income with SIP with all mental peace.

How to do SIP .... ST has mentioned in one of his posts.
 

suri112000

Well-Known Member
#3
Let me discuss one way of doing a SIP.

Now, nifty is hovering around 7726.

In worst case scenario, Nifty can see 0 value.

That is the range of Nifty is 0 to 7726.

Divide the range into 5 parts. ie 7726/5 = 1545

If your investable amount is Rs.1 lakh, divide it into 5 parts.

Invest your first part in a MF straight away now. Keep remaining amount in bank.

If market raises by 1545 points ie 9271, then exit your first part and book profit.

Instead if market collapses by 1545 points, release 2nd part of your FD and invest in a MF. If market raises by 1545 points, exit it with profit.

Likewise....continue the magic of working of market for one or two decades or until you retire.

Important clue :- Nifty has not crashed more than 70% from its highest peak since its inception. If you are serious with numbers, you can make out your own way of making investments.
 
#4
Let me discuss one way of doing a SIP.

Now, nifty is hovering around 7726.

In worst case scenario, Nifty can see 0 value.

That is the range of Nifty is 0 to 7726.

Divide the range into 5 parts. ie 7726/5 = 1545

If your investable amount is Rs.1 lakh, divide it into 5 parts.

Invest your first part in a MF straight away now. Keep remaining amount in bank.

If market raises by 1545 points ie 9271, then exit your first part and book profit.

Instead if market collapses by 1545 points, release 2nd part of your FD and invest in a MF. If market raises by 1545 points, exit it with profit.

Likewise....continue the magic of working of market for one or two decades or until you retire.

Important clue :- Nifty has not crashed more than 70% from its highest peak since its inception. If you are serious with numbers, you can make out your own way of making investments.
:clapping::clapping::clap:
Sir we want more details on this point.:)
 

suri112000

Well-Known Member
#5
If you can manage to buy ‘anytime after‘ a substantial correction, you will be very rich. Over time stocks make new highs, I don’t think it should be difficult to start.


Historically, markets have crashed by not more than 70%. This is our statistical edge.

First step is to wait until markets correct by 20% from its peak.
Once that happens, you start investing.

This we can do even with NSE stocks also.

For example, some of the stocks constituting Nifty 50 are down by about 50-60%. Isnot it right time to start a SIP.

When these stocks bounce, sell part of them and keep remaining in your portfolio for life. Its another way to build your long term portfolio systematically.
 

copypasteaee

Humbled by Markets
#6
speculation is doing intraday cash/ equity transactions ( as per Income tax india definition). there is no other definition available for this. Investment is buying and holding equity stocks for more than one day and you will be filling your return as Short term capital gains. Now about your other query on FnO, you can not do FnO as it falls in Business income. As per employees conduct regulation of most of Govt.Departments, a Govt servant can not do a Business (may be to avoid a channel being used to receive gratification and thus reduce corruption). I hope my reply shall help.
 

copypasteaee

Humbled by Markets
#7
If you can manage to buy ‘anytime after‘ a substantial correction, you will be very rich. Over time stocks make new highs, I don’t think it should be difficult to start.


Historically, markets have crashed by not more than 70%. This is our statistical edge.

First step is to wait until markets correct by 20% from its peak.
Once that happens, you start investing.

This we can do even with NSE stocks also.

For example, some of the stocks constituting Nifty 50 are down by about 50-60%. Isnot it right time to start a SIP.

When these stocks bounce, sell part of them and keep remaining in your portfolio for life. Its another way to build your long term portfolio systematically.
Nifty is most manipulated index, when a stock under-performs they simply throw it out of index. Many people had started SIP in PNB and boom they kicked PNB out of Nifty. You will get many examples like satyam, relinfra and many more. Dont generalize things please.
 

suri112000

Well-Known Member
#8
Nifty is most manipulated index, when a stock under-performs they simply throw it out of index. Many people had started SIP in PNB and boom they kicked PNB out of Nifty. You will get many examples like satyam, relinfra and many more. Dont generalize things please.
It seems you are confused with the term SIP I have used in the context. My way of doing SIP is entirely different from what is used in common parlance.

All I want is a quote in Nifty then I start SIP. I donot care if they get out of Nifty after I start SIP.

PNB, Rel Infra, Satyam, JP Asso, Unitech have not failed to give return through my route.

I start with 1 qty and gradually increase it to 100 when the scrip hits zero. Secondly I select stocks which are low priced. Portfolio is well diversified.

There is no room for loosing the shirt.
 

copypasteaee

Humbled by Markets
#9
It seems you are confused with the term SIP I have used in the context. My way of doing SIP is entirely different from what is used in common parlance.

All I want is a quote in Nifty then I start SIP. I donot care if they get out of Nifty after I start SIP.

PNB, Rel Infra, Satyam, JP Asso, Unitech have not failed to give return through my route.

I start with 1 qty and gradually increase it to 100 when the scrip hits zero. Secondly I select stocks which are low priced. Portfolio is well diversified.

There is no room for loosing the shirt.
then better start a thread and guide people. maintain your trade diary in your thread so that every body in forum could get benefit.
 

suri112000

Well-Known Member
#10
then better start a thread and guide people. maintain your trade diary in your thread so that every body in forum could get benefit.
There is no need of doing that. I thought there is no wrong in sharing a method which I have been following for years. There is no guarantee of replicating the success path following my guidance as I am already holding a sizable portfolio at much cheaper rates. My equity holding is a tiny fraction of my actual net worth. I am doing what is comfortable to me. People will have different comfort levels as per their net worth, risk appetite and goals. Its upto the members to devise their own investing plan.

I am not a SEBI registered advisor to advice and or guide people on equity/derivative products. I refrain from doing what is not allowed as per forum rules.
 

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