The day also coincides with the beginning of the new `Assessment Year' when you draw up the balance sheet and the profit and loss of what you did in the`previous year.' If you have made profits, it is time to give yourself a small pat. Small, because after all said and done, the profits could have come not because of any great stock-picking skills or masterly strategy on your part, but simply because you were the beneficiary of the market rising, inevitably from the throes of its bottom at 2850!.

The same is perhaps true of mutual funds, who ended up posting a 30 per cent rise in their NAVs in the last three months, which they now flaunt in a bid to attract more funds to their kitty.

But come on, surely every one has made trades where he has lost. It is just that he does not talk about it. Does not want to, because that wouldhurt his ego. On the other hand, if he tells you the story of how he made money on a particular stock, forgive him. Because he is only nursing his bruised ego. Losses are painful, but refusing to learn from mistakes could prove to be more painful in the future. That is why you must sit down in April and take stock of how you fared last year. What went well and what went wrong, and how and why.

While some are celebrating the dawn of the demat era because it will bring in more players and extend the equity culture, I am worried. Because what will spread is not equity culture, but a gambling culture. Day and internet-based trading is spreading like a virus in the US, and Indians are not too slow in catching up here. While it is tempting to buy one share of Infosys with an investment of just Rs 3,000, the temptation to play on margins is likely to be even greater. Indians are already reported to be taking potshots at the trading screens during the lunch break, trying to make a quick buck.

This is dangerous.It is akin to gambling. The real danger is that it could degenerate into something akin to an alcoholic behaviour. I have seen people, who become restless, if they cannot trade, irrespective of market conditions. You should be cautious of landing up in a vicious gambling cycle, a la Mahabharata style. And since most people end up playing the game for their life, you might as well do a few things which would ensure your financial health. And one such measure is to take care of your tax angle.

Under the Income-tax Act, the speculative gains that you make will be taxed at your marginal tax rate. On the other hand, if you make speculative losses, you need to be putting these figures in your tax return so that you can carry forward your losses.

It is quite easy to see that there may be years, when you end up making speculative loss. It is not impossible. While you gain in many trades, you could lose hugely in just one trade, when you decided to take a high risk for high return. That is quite often the stockmarket story. So if you do make loss, make sure you file your return in time, so that you can claim carry over to the next year.

If you file your return late, you are not allowed to carry forward your losses, irrespective of the fact that you do pay tax on your net speculative gains in any particular year! And there is much that you ought to check out on your own psychology. The basic drive for anyone to come to the stock markets is the need to earn a better return. But it is also often the greed to become as rich and as quickly as possible! But what you need to watch out is that your gambling instinct should not get the better of you. Stock-playing demands one to be cool, unemotional and unruffled by losses. It also demands an understanding of the game theory, the portfolio theory and name what you have. The average player is not capable of learning all these skills, busy as he is working on his job. What he tries is a potshot. The danger is, he could be repeating his potshots, winning some and losingsome, ultimately becoming the fodder to more organised players.

An intelligent investor must therefore check himself out how well he has fared the year that went by. And he must be even be more cautious that his gains could have been simply because the markets rose. He could lose all that as market moves into higher, choppier regions.

The ideal thing for the average investor is therefore to give a serious thought to investing in mutual funds. The mutual fund industry has been collecting amounts close to Rs 16,000 crore, I believe, and it is growing.

However, I would still keep my fingers crossed. Past is no guarantee for the future. If mutual funds gained in the rise from 2,850 level to 3,700 points, it was not too difficult to achieve.

But where do they go from here? The markets cannot be rising persistently until and unless the economic upturn catches up. And the fortunes of those who invest in MFs now is not as good as those who invested, say, in December 1998. This is because, the gain in pharma,info and FMCG stocks is a chapter that has gone by. Further sustained gains here can be only in measured quantum.

A scan through the Sensex would tell you that markets go up in brief spells, followed by declines which take a longer time. So even if you decide to invest in mutual funds, I suggest that you space it out and go about slowly. The Sensex could rise to the level of 4,000 first and thereafter to 4,300 - a gain of 10 per cent and further 8 per cent, over the next six months. But if market players take the index to that level in a hurry, they are being speculative without actual corporate performance to support. So the risk of fall from that level is also great.

On the other hand, as the Sensex struggles to cross the 3,800 level, the index could also fall back to 3,400 level. So while you chose to opt for mutual fund, like the typical trader, you could also phase out your investment in small doses.

And oh, yes, you should be cautious of what dividend strippers will do to unit prices, and use itto advantage. For, when in market, do watch what other market men do, if not act as they do.

The author can be reached at chella--ks@hotmail.com