If you are a salaried person whose income is between 5 lakh to 15 lakh annually, you must be aware of the term tax liability. As the famous saying goes “ A penny saved is a penny earned”. Tax planning is the best way through which you can not only save tax but also increase your salaried income in an effective way.
Once you ascertain the amount of tax you have to pay, you must plan to save tax by availing of tax deduction under the provision act of Income Tax Act.
To achieve maximum tax benefits, you can choose to invest in tax saving options under several provisions of the Income Tax Act.
It could be anything from making voluntary donations, taking a home loan or asking your employer to restructure your salary.
The perfect time to plan for tax saving is earlier as much as you can, mainly at the beginning of the FY to prevent any stress or hassle while filing your INR.
Making an investment of Rs 1.5 lakh under section 80C helps you to minimize your taxable income in the best possible way. Additional deduction of Rs 50,000 can be claimed by investing in NPS under 80CCD.
On buying Medical Insurance, the maximum deduction allowed is Rs 100000 out of which Rs 50000 is for self and family and Rs 50000 for parents if they come under the senior citizen category under Section 80C.
Claim deduction up to Rs 50,000 on Home Loan Interest under section 80EE.
The income tax department deduces your tax liability based on your annual income. As per the IT act, individuals who have an income between 2.5 Lakh and 5 Lakh comes under the tax slab of 5% for an annual income. The age limit is 60 years.
Similarly, there are different income tax slabs for individuals having different incomes. For instance, a tax slab of 20% is applicable for an annual income that comes between Rs 5 Lakh and Rs 10 Lakh.
While the tax slab of 30% is applicable for the individuals whose annual earnings come above 10 Lakh. It may be noted that an additional amount is also payable for health (4%) and education (4%).
However, the government provides a full tax rebate for individuals who have an income below 5 Lakh.
The foremost way to save tax is only through investing your money into several tax saving instruments. Here, you can avail of tax up to 1.5 lakh under section 80C of the Income Tax Act.
These are government-backed savings schemes that come with a lock-in period of 15 years. The interest rate of PPC changes every quarter. However, the current interest rate of PPF is 8%.
Employee provident fund is the perfect scheme for salaried employees. Here, 12% of the basic salary and dearness allowance can be deducted by the government. This fund is then invested in numerous government-backed securities.
NSC has a minimum lock-in period of 5 years with a fixed return of 8%. The interest on NSC is often counted as Rs.1.5 lakh under 80C and is tax-deductible if no investment options are using up the limit.
A national pension scheme is backed by the government, providing retirement benefits to employees. It provides for two accounts: Tier 1 and Tier 2.
These are tax saving mutual fund schemes giving the dual benefits of tax saving along with high market-linked returns. The minimum lock-in period of the equity-linked saving scheme is 3 years.
These schemes are similar to fixed deposits but have a minimum lock-in period of 5 years. The interest earned on Tax saving fixed deposits from 7% to 9%.
This is a government-backed scheme where you can invest a maximum of Rs 1.5 lakh annually. If you are blessed with a baby girl, you can easily open an account in the name of a baby girl and earn an interest of up to 8.5%.
Senior Citizen Saving Schemes have a minimum lock-in period of 5 years and are available to those whose ages cross above 60 years. The interest rate of SCSS is higher than prevailing FD rates and is currently 8.7%.
Did you know that taking a home loan could also provide you with tax saving? As per section 80C under the Income Tax Act, paying the amount for both the principal and interest rate of your home loan will be exempt from taxation.
You can also save tax by making voluntary donations in numerous relief funds such as the PM relief fund, funds for control of drug abuse and other similar funds. All these donations are completely exempt from taxation under section 80G of the Income Tax Act.
Restructuring of salary allows employees to restructure their salary in such a way that they are eligible for tax saving allowances.
These allowances include conveyance, House Rent Allowance (HRA), medical treatment etc. You can also claim tax exemptions on Leave Travel Allowance twice in four years.
Interest paid on education loan is allowed as deduction under section 80E.
The best time to start your tax planning investment is at the beginning of the financial year. Many taxpayers deliberately delay their tax planning which results in hurried decisions. Instead, if you plan tax saving at the beginning of the year, your investment can compound and achieve long term goals.
The above methods explained are various tax-saving methods that allow people to save taxes under different sections of the IT Act.
However, it is important to note that not all tax savers are the same, hence one should select the investments that best suit their individual needs.
The liquidity, safety and returns of the tax investment should be taken into consideration. Make sure that your financial decision is not only based on the returns to be gained from the products but also depends on the different goals that you have set for yourself.
Therefore, it is important to have a clear cut objective about investments and the tax-saving scheme should be linked to the desired objectives.
The current ruling political party in India has done a fantabulous come back with a majority of seats in 2019. However, the party took certain decisions which might have hampered its political presence in the rural areas.
The decisions taken by the prevailing party such as GST bills caused a major disruption among the poor people and as a result, the party’s dominance has only stuck to the middle class and HNI sectors.
In the recent election held in 2019, the BJP tally has come down to 99 seats as compared to 119 in 2019. It was due to the negligence towards the rural sector where the party performed poorly.
The party’s stronghold place called Saurashtra having 56 assembly seats, the ruling party could manage to win only 23 seats in 2019, which is far less than 36, in 2012.
The continuous negligence of rural areas has affected the party’s political presence to a much greater extent.
To cope with the situation, the Modi government has decided to invest more in the rural economy to shed its image as pro-industrialist and anti-poor.
Keeping this in mind, numerous programs have been designed to accomplish rural requirements.
In an initiative taken by the government towards rural people, the Modi government has decided to double the farm income by 2022. The government is all set to allocate Rs 1.07 Lakh Crore for the expenditure on rural development.
Of the total amount Rs 1.07 Lakh Crore, the government has already allocated Rs 48000 Crore to MNREGA for FY 2017-18.
According to the media sources, India has nearly 4 Crore households that are unelectrified and the government took a decision to provide electricity to every single village under the Deendayal Gram Jyoti Yojana.
Also, the Pradhan Mantri Awas Yojana plans to provide shelter for the rural people of India.
If things are getting done at this pace, analysts believe that the rural income will increase in the coming years, the rural consumption of resources will get a boom which in turn would prosper the rural society.
As a result, the whole Indian business scenario will completely change. This will also impact the stock market and the trading scenario. Hence trading in such stocks provides you with outstanding stock market trading returns.
Here, we have selected some of the stocks that are likely to benefit from Modi's rural push. These stocks can act as a long term bet for investment purposes. Below are the top 5 stocks which may get benefit from the rural policies:
Mahindra and Mahindra Financial Services are India’s leading non-banking finance companies in India. The company aims at focussing on the rural and semi-urban sectors. In addition to this, the company is the largest tractor financier.
As of September 2017, the company’s AUM consisted of auto/UV (28%), tractors (17%), cars (22%), CV (12%), pre-owned cars (9% and SME (12%).
Its AUM is expected to grow at almost 17% CAGR over FY-17 to 19E to pick up the rural economy that is supported by the average monsoon from the last two years.
NCDs are forecasted to be approximately 60% of the funding mix in FY19E which will reduce the cost of funding and margin expansion by nearly 130bps.
Investing in MAMFS stocks offers you great stock trading returns.
Hero Motocorp Limited is the largest manufacturer of motorcycles in India having a market share of 53% as per the Q2FY18 domestic sales data. The company recovers half of the revenue from rural India.
In FY18, the total volume growth experienced by Hero motorcycle was 13% and two-wheeler was 11%. Moreover, the company is planning to launch its new brand new scooter to increase the market share in a particular sector.
With this aim (launching of the scooter), Hero seeks a 25bn Capex plan for over 2 years.
The government’s push to double the farm income, adolescent monsoon and the increment of urban income is the strongest points that will contribute towards the growth of the company.
Despite the company has made a late entry into the export market, it plans to do the exports in a double way in the upcoming years. Hero Corp seeks huge growth in the coming years and the stocks of the company will generate better share market trading returns.
Every citizen of India heard the name Dabur. Dabur India is one of the fast-growing FMCG companies in India that diversified its business majorly into the 4 segments: consumer care, retail, food and international business.
The company behaves like a beneficiary of rural expansion and development of existing as well as new products.
The company’s main products Dabur toothpaste and juices are the products that drive the company’s major revenues as the toothpaste are already reaching the rural areas.
To revive its rural consumption, Dabur India plans to penetrate nearly 60,000 villages.
The additional products launched by the company such as hair care, fruit drink and other ayurvedic products help Dabur to increase its volume growth.
Also, the company’s recent acquisitions in the African market in the hair care and personal segment strengthens its online presence with e-retailers which in turn will generate high profits.
Rallis India is a vast manufacturer of fertilizers, pesticides and fine chemicals. The company is an active member of the Tata Group, which aims to improve the quality and yield of the crops through the Rallis Samridh Krishi.
This is a digital initiative taken by a Tata Group that helps Indian farmers end to end Agriculture solutions.
Apart from launching the Rallis Samridh Krishi Yojana, the company is planning to launch its new products in wheat, rice, cotton and hybrid cotton segments.
By doing this, the company’s objective is to increase the market share of the Non-Pesticides Portfolio.
Rallis India also plans to increase its focus on plant growth to support the sustainability of crop yields.
The company is targeting a 20% sale’s increase from its subsidiary Metahelix.
Jyothi Laboratories Ltd is a renowned name in the homecare sector. The company is known for producing soaps and detergents for home care.
Although Jyothi laboratories is a south India based company, it has spread business in multiple sectors that would help it grow its market share in the respective categories.
The six powerful brands of Jyothi Laboratories are - Ujala (fabric whitener), Henko (fabric detergent), Exo (Dish Bar), Margo (Bath Soap), Prill (Dish wash) and Exo (Dish Bar).
These products contributed nearly 87% of revenue in FY17. Keeping this in mind, analysts have predicted that by investing in Jyothi’s laboratories, investors would generate better returns than other mid-cap stocks.
With the government’s initiative to strengthen the rural sectors, the companies stated above are doing their best towards rural growth. As a result, the stocks of these companies are likely to increase in the upcoming months.
Therefore, many analysts recommended these stocks by giving them a positive sign.
Stock’s performance has always remained uncertain. That’s the reason, analysts have to keep an eye on stock price movement. They use different tools and charts to analyze the stock’s performance in order to predict its future potential value.
The Liquor industry in India is one of the biggest alcohol industries across the globe stand behind the two major countries such as China and Russia.
The fast-growing demand for alcoholic beverages in India is majorly attributed to the huge population and young base and the consumption of alcohol by everyone & rising disposable income is strengthening the industry growth & Profits. With the vast population in India, it is one of the largest consumer markets.
Also demographically in India around 50% of its population below the age of 25 and around 65% below the age of 35. The major consumption of alcohol by volume is by the people aged between 18 and 40.
The demographic stats are expected to fuel the growth of the market over the forecast period at a rapid pace. Even the rapid urbanization of tier-II cities is further adding strength to the market growth.
Analyst forecasts that the Indian liquor market to grow at a CAGR of 7.4% during the period 2017-2030. The market is also anticipated to reach USD 39.7 billion by the end, As alcohol consumption is growing in urban areas.
Indian Made Foreign Liquor is accounted for the largest market share of 40% in 2016. Whereas the foreign liquor bottled in origin or imported alcohol shows fast growth in terms of its consumption in the last few years and which is likely to grow with a CAGR of 25% at a faster pace in the forecast period.
In India, the Southern part is accounted for the biggest market with a market share of more than 45% in terms of alcohol consumption, with a significant rise in urban areas and female alcohol consumers in that region.
North India and Western India are expected to be the new fast-growing markets with the growing number of urban cities.
According to the report, the major driver in the Indian market is the fastest-growing consumption of alcohol owing to fast urbanization in the country.
A huge population migrating towards developed cities and exposed to a variety of alcoholic beverages, including IMFL, and contributing to the market growth.
Although India is a young country, more than 55% of Indians are in the age group of 18-45. This is the target age group for the industry as potential customers.
One challenge in the Indian Liquor market is liquor licensing and sourcing.
For starting a new business and expansion, liquor licensing and sourcing is emerged as the major growth barrier for the industry, as it is the necessity to obtain mandatory licenses and regulation which is related to hours of operation and minimum age of consumption, which is different from state to state.
After the impact of Covid-19, the sales levels are showing sharp growth in this sector the sales reach the previous levels before Covid-19.
In the same manner Unlocking in the country will lead to a sharp increase in sales. Imposing extra taxes also not affected the consumption in the country.
This industry is an untouched segment in the country and is expected to grow at a faster pace. As the competition is very less with limited market players.
Whereas the consumption is increasing day by day. Even at the time of lockdown, the companies manufacture alcohol-based hand sanitizers which were in demand.
Everyone who is looking for a haven investment that will last for generations to come should be investing in an SGB. In the long run, this yellow metal can be a superior investment choice to mutual funds. This is because if the bond is held till maturity, there are no capital gain taxes levied in this investment.
The fact that it is issued by the RBI also makes this investment vehicle investment-grade i.e., relatively immune to default. Another point to note is the natural liquidity of this vehicle.
An SGB can be traded on the stock exchange as the bond will be available in Demat form. However, if an investor wants to hold the bond in physical form they can do so as well.
Another noteworthy point to mention is the fact that the bond can be used as collateral for loans. There are also indexation benefits that allow you to lower your long-term capital gains, hence bringing down your taxable income. However, these benefits are only applicable if the bond is transferred before maturity.
Speaking of Gold itself several economic indicators indicate that gold prices are going to shoot up. Some of those indicators include sticky inflation and the negative real yield on bonds.
There is generally an inverse relationship between bond yields and gold prices. Increasing trade wars is also a factor that can lead to a shoot up in the price of Gold.
The aim of issuing an SGB was to reduce the purchase of physical gold which is technically a dead investment and shift domestic savings into financial savings. This is a step towards stimulating the economy of the country. It also relieves you of the hassle of storing physical gold.
SGB is an ideal choice for someone with a long-term horizon. The reason for this is that an SGB also provides a 2.5% interest on an annual basis. The interest is taxed at the applicable tax rates.
The tenor of the bond is 8 years with a lock-in of 5 years. However, if you’re a short-term investor, Gold ETFs and mutual funds might be the right choice. Investing in Gold can also provide diversification to your portfolio.
It is also a suitable investment choice during periods of economic instability, a situation we are facing right now. For an average investor, a minimum investment of 10% of their portfolio in Gold is the ideal choice.
Here at Swastika, we don’t recommend schemes based solely on their returns. We analyze an investor's belief and constraints before investing.
We genuinely believe that a Sovereign Gold bond will reduce the risk of your portfolio. In these turbulent times managing risk has become the need of the hour. A portfolio should be combined with both risky and riskless assets.
However, most investors just invest in stocks because of their popularity. Adding an SGB to your portfolio can immensely reduce the risk and provide diversification.
However, we would like to mention that this vehicle is not entirely risk-free. There is a risk of capital loss if the market price of gold declines due to some unforeseen circumstances.
But rest assured that the investor does not lose in terms of the units of gold that have been allotted to them. Noting the fact that there is a risk, it is minimal and negligible which is why we urge you to invest in Gold today.
The popularity and the increased inflow of investment in this vehicle have not stopped. It is increasing its pace with every tranche.
The Sovereign Gold bond scheme of 2021-22 will be issued in six tranches. The first three tranches are currently closed for the subscription. Don’t delay and miss this incredible investment opportunity. Invest in SGB today.
Average is a word that we all have acquainted with. We all have learnt the topic of averages in school and the moving average is considered as an additional version of it.
As we all know, calculating averages become an integral part of our lives as it is the fundamental term used to express the central or typical value in a set of data particularly the mean, median or mode.
Now, you may be interested to know that moving averages can also be used for trading. Before we take a dig deep into moving averages and how it adds a value in the stock market trading, let's get a brief of the term.
Moving Averages are trend indicators that are widely used to predict future stock price trends. They are mostly used because of their simplicity and effectiveness.
The most common moving averages are 15-, 20-, 30-, 50-, 100- and 200- day MA.
There are mainly two types of moving averages used in trading, which are SMA (Simple moving average) and EMA (Exponential Moving Average). The SMA is calculated as: take the closing price of a security for the relevant period, add them and divide the sum by the period number.
Where in EMA, each price in the MA is given an equal weightage. Also, the calculation of EMA is more complex than SMA as it gives more weightage to the most recent price.
The moving indicator records the data based on the past price trends and hence it is known as the lagging indicator. I.e the longer the moving average time period, the greater the lag. A 200-day MA is lagging more than a 20-DMA because a 200-DMA is plotted based on the past 200 days. Whereas the latter is plotted by using the latest 20 days data.
You can easily customize the MA indicator. The shorter the MA, the more effectively its price changes.
Below we are mentioning a few points on using moving averages:
When a stock trends upwards, its moving average will act as a floor price.
When a stock trend downwards, the moving average will form a resistance with the stock price which is currently going downwards.
You can also plot two or more MAs for stock to detect crossover i.e. the point at which Moving Average intersects each other.
This brings us to the moving average convergence divergence (MACD). The MACD is calculated as the difference between a stock’s two EMAs - the 12 periods and 26 periods EMA.
Now, explaining the MACD signal line - a nine period EMA of the MACD value. When plotted over the MACD line, it acts as a trigger to buy or sell.
It is a buy signal when the MACD crosses the above signal line, it is a sell signal when it crosses the below signal line.
Price crossover is defined as a cross over above or below the Moving Average, its immediate mark a change in stock’s price trend.
Two Plotted MAs are bound to crossover at various points. A comes were the short term MA crosses above the long term MA signifies a bullish pattern.
When the short term MA crosses below the long term MA, it indicates a bearish pattern.
If the stock price counted above 200 days MA, it marks a buying trend whereas if a stock price comes below 200 days MA, it gives a sell indicator.
Moving Average Disadvantages
Moving averages are calculated based on the past trends and it shows nothing about prediction based on present trends. Hence, the results using moving averages can be random. There is a time where the markets support MA/resistance and trade signals, while at other times the results are different than what MA shows.
Another Problem is Price fluctuation.
If the price action changes frequently and it swings forth and back generates multiple trade signals, it confuses the MA.
At this point, it's good to seek another trading indicator to clarify the trend.
The same thing happens with MA crossovers when MA gets tangled up for a period of time which in turn results in multiple trading losses.
Moving averages work well when the trending conditions are strong but fail in choppy or ranging conditions. The best solution is to adjust the time frame that can solve this problem temporarily. However, at some point in time, these issues frequently occur regardless of the time frame chosen for the Moving Averages.
A moving average simplifies price data that can be used by monitoring past trends. It has been observed that EMA reacts quicker to price changes than SMA.
In some cases, it gives a good response to the research while in some cases it gives the wrong signal. Moving averages with a shorter lookback period (20 days) will also give a faster response to price changes than an average with a long lookback period i.e. 200 days.
Moving averages crossovers is still a popular strategy for both entries and exits. MAs can also highlight areas of potential i.e. support or resistance.
Mutual funds have emerged as one of the popular investment options among investors. This is because investors find themselves much relaxed while investing in MFs as the money is invested in lots of different sectors so that the fear of losing money has been minimized to a certain extent.
Earlier, investors used to invest in stocks or government securities. People who knew about the stock market only invest in stocks, however, people who had no idea about stocks, preferred to invest in government securities as they found it a better yet safer investment option than stocks.
As time flies, new forms of investments have started to take place. One such investment option is Mutual funds.
A mutual fund is a company that collects money from different people and invests it in stocks, bonds or other securities. Mutual Funds are operated by experts which are also called fund managers who put the fund's assets into different sectors in an attempt to produce capital gain or income for the fund’s investors.
Investors now are taking a huge interest in mutual funds as they are less riskier than stocks. Also, they are actively managed by fund managers who are experts in managing a portfolio, fund allocation and more.
Although there are a lot of investing platforms available now, it's always good to take a sip of knowledge and market knowledge about how a mutual fund works and how to check the performance of a mutual fund company:
So, how do you measure the current performance of a mutual fund?
A study on mutual funds regarding the performance of a mutual fund reveals that the market share and the change in the market share are the most essential metrics to evaluate a company’s performance.
You might have known that the past performance of a mutual fund does not decide the future performance of the same fund. It simply means that you cannot expect a guarantee of ROI from these funds despite having a strong past record. Hence, you need to figure out the other factors that help you to assess the performance of a mutual fund company.
Firstly, you should keep track of your investments so that it will help you to make informed decisions that can lead to higher growth.
There is no need to say that the capital market is volatile which means it keeps fluctuating with the overall economic conditions. These conditions affect the overall asset allocation of the portfolio. For example, the market volatility and continuous changing economic conditions can change the allocation of 50:50 equity-debt to 60:40 equity-debt which can increase the risks of the fund.
Secondly, fund evaluation allows you to compare your investments with similar funds. Hence, a review and balancing may be required to keep the risk profile of the portfolio intact.
Here, we will share all the details about evaluating a mutual fund’s performance:
The purpose of investment should be cleared before investing money into a mutual fund. Always set your investment goals before planning any mutual fund for investment. Once you finalize a mutual fund based on an investment goal, it would be better to evaluate the performance of the fund you have selected.
It may be noted that different mutual funds come with different goals. For example, if someone wants high growth in the long term, and has a high-risk appetite, then he/she can choose equity mutual funds. Therefore, it is important to find out your financial goal first and then decide your investment.
It is difficult to check the performance of a mutual fund in isolation. Hence, it is suggested to make a small list of the best mutual funds in a particular category and compare them regularly among various funds.
Past performance of mutual funds gives no indicator of its future performance. Now, many mutual funds come with a disclaimer stating that past performance cannot provide the guarantee of a mutual fund’s performance.
Although the above statement is considered true to some extent; the past performance of data can provide you with other relevant information. For instance, the historical performance of a mutual fund allows you to map the fund managers’ performance across different market cycles.
If a fund can give higher returns than the benchmark even during the worst market conditions, you can get a realization about how fair it would be in the future.
Needless to say, a mutual fund company charges you for its services and expertise, which is further broken down into other components. The fee changes according to your plan you invest in i.e. direct and regular.
It may be noted that a fund with a higher fee always performs better than other mutual funds.
Markets are volatile and hence every fund is associated with certain risks. Every mutual fund sets its benchmark and therefore they have been always comparing the set benchmarks. Generating returns more than the set benchmark tells many things about a fund manager. I.e. the ability and strategy of a fund manager like how well he/she performed despite similar risks across several market cycles.
Everyone knows that the market is highly volatile, but that doesn’t mean that you need to evaluate your performance daily. On average, you should assess a fund every six months to a year.
Evaluating a fund over a shorter period doesn’t give you accurate information about the performance of a fund.
If all this sounds too much, it’s better for you to invest in regular funds.
The key points mentioned in the blog above will guide you to find the right mutual fund that perfectly suits your investment goals. Do remember, always analyze a fund’s performance according to your set financial goals before you open mutual fund account online.
When it comes to investing, the name of the stock market comes second to none as many investors or traders actively participate in trading and achieve profit from it.
Investors are of two types: first are those who hold equity investment for more than 1 year and show their income as LTCG or long term capital gains. The second type of investors is those who hold equity investments for more than 1 day or less than 1 year.
There are several types of investors in every financial market, each of them applies its strategy to achieve its financial goals. Hence, the ROI generated by each investor can vary from one to another.
Hence, taxation applied to people who depend on salaried income can be easily calculated. However, the taxation applied on trading income can be a bit complicated as compared to the former one.
Since the income generated from trading varies from trader to trader, taxation law cannot be applied uniformly to all the traders. Like income, the amount of tax applied can also be variable.
If you are new to the trading world, understanding taxation seems to be a difficult word for you.
Here, we will explore all the aspects of taxation that help you to understand tax on different trading styles.
Taxation in trading can be classified into four types: Long term capital gain, Short Term Capital Gain, Speculative Business Income, Non-Speculative Business Income.
All the types of taxation along with their features and benefits are mentioned below; read them carefully:
Long term capital gains are a type of tax levied by the government of India if an investment is held by a trader for a specific period. For instance, if a trader is seeking long term investment and parks its investment for 1 year or longer than it, any purchase or sales profit from the investment comes under long term capital gain tax.
If we talk about equity investment, Long term capital gains are exempted under section 10 of the Income Tax Act. In such cases, the profits are entirely tax-free. However, this is only applicable under certain conditions.
For instance, if you make any transaction via a recognized exchange and sell your equities within the country, long term capital gain taxes are exempted.
As said above, the tax implications for long term investors can be applicable under certain conditions.
If your equity investments cross the threshold of over 1 lakh in a financial year, the tax will be charged at 10%.
In short term capital gains, the duration of holding securities is less than 1 year. According to the norms, the duration of investment in short term capital gains can be held for longer than a day but shorter than a year.
The tax implications on trading income via equity, any capital gains generated by selling a stock leads to a tax deduction of a profit of 15%.
However, your short term capital gains will never be taxed at a standard 15% rate unless your total taxable income is below Rs 2.5 lakhs.
Are capital losses carry forward in long term capital gain and short term capital gains?
Since long term gains are tax-free, they do not carry forward long term capital losses.
Short term capital gains are taxable and therefore they can be carried forward for a year of 8 years from the financial year during which the losses occur.
One of the simplest ways of filing your capital gain returns is to show them as a part of your income statement. However, there are cases where your profits/losses from share trading cant come under income tax returns.
This happens to the individuals, who are traders by profession or most of their equities are held as a stock in trade; in such cases, the profits or losses from the stock trading can be counted as business income and the returns generated on it must be filed accordingly.
To distinguish between normal capital gains and capital gains as a business income, the Income Tax has set certain parameters that are explained below:
If the volume of share trading transaction of any individual exceeds Rs 2 Crore in any FY then the individuals are required to get an audit and then the audit may insist them to file this income as a business income.
Another way of differentiating capital gains and capital gains as business income is the profit threshold.
The income tax department has set a fixed profit percentage (6%) to identify income coming from equities.
If the profit percentage is below 6% of the total volume traded, then the income comes from stocks and shares can be considered as business income rather than normal capital gains.
Business income that comes under intraday equity trading is considered speculative. It is defined as the income generated through trades in which securities are bought and sold within the same day.
As the capital gain tax is taxed at a specific percentage; there are no rates for speculative business income. Instead, your speculative business income is taxed alongside your tax income according to section 43 of the Income Tax Act.
This means, if you have salaried income along with speculative business income, the tax will apply to your combined income.
Business income that comes from trading futures and options on the recognized exchanges are considered as non-speculative business income. Just like speculative business income, the income generated from F&O also added with your other income sources. As a result, the appropriate tax rate slab is applied to your overall income.
Traders are very well informed about the market condition, stock’s value, company performances, similarly they also need to be informed about the tax rate slab applied to the different trading styles.
This information is not only apt for traders as well as for newbies who are seeking investment in stocks for the very first time.
There are different types of investment stocks available in the stock market such as debt fund stocks, mid cap stocks, growth stocks and more.
Many investors invest in these stocks to get high returns with limited investments. However, there are other stocks too, that give investors regular payments against investment amounts. Such stocks are known as dividend-paying stocks.
Investing in dividend stocks is a great choice as it allows investors to meet their cash requirements as well as gives them a chance to see their stock value grow upward in the future.
Here, we will discuss everything about dividend-paying stocks and the rules you should follow while investing in them.
Before, getting started, let’s get acquainted with the term “Dividend”.
Dividends can be cash, reward or anything that a company gives to its shareholders against the shares they bought of a company.
Dividends can be issued in several forms such as cash payments, stocks or other forms.
A company’s dividend is decided by its board of directors and it requires the shareholders’ approval as well.
A company does not need to declare its dividend. It is a part of a company's profit that the company distributes to its shareholders.
Before investing in dividend stocks, it is important to do a stock market research and get detailed knowledge about a company and the sector in which it operates. This is because the potentiality of a dividend stock is highly dependent on the company’s fundamentals and the sector that it belongs to.
For instance, if the company operates in a volatile sector that is highly fluctuating in nature such as energy, it would affect the dividend price for sure.
Therefore, be careful before investing in these stocks. Also, don't forget to check the basic details of a company (stock value, past performance) and the risks associated with it.
Investing in the companies that give consistent dividend payout is always considered a better option. Consistent dividend payments is a sign of a strong company. This means, the company is constantly growing and has a strong background with long term stability.
Dividend incomes generated by these companies are consistent. Even if the dividend increases by a small number per year, they can give you incremented results due to compounding effects.
It is important to check the debt ratio of a company before opting for dividend stocks. If a company pays a good dividend payment despite having a high debt; then check the company details carefully.
They do so just to keep their stocks valuable. Hence, always check the debt market ratio of a company as the lower the ratio is; the more stable the company is or vice versa.
If the debt market ratio of a company hasn’t decreased with the time despite paying a high dividend, it would be ideal to not invest in such stocks as the debt impacts the value of the stocks which also affect the dividend payments in the future.
Many of you might think the stocks that offer a high dividend yield can be great stock. However, this is not so true. Sometimes, a high dividend yield is a way to mislead you.
Companies that pay a high dividend yield may be a sign of underperforming security and therefore it is of no use. Therefore, don't make decisions that completely depend on high dividend yield. While doing so, kindly check other factors too (debt market cap ratio, stock’s value, performance, future growth etc).
The payout ratio tells the company’s ability to support dividend payouts. If the ratio exceeds 1 then the company pays more dividend to its shareholders than its earnings which makes it ambiguous about the company’s asset value and long term stability.
The following steps can be used to identify the potential dividend stocks:
Step1: Check out the profit and loss of a company.
Step2: Check the earnings per share of a company i.e. whether it has grown in the 5 years or not.
Step3: Measure the growth of dividends per share in the last 5 years.
Step4: Compare if EPS growth and dividend per share growth are similar.
If EPS and Dividends per share growth are similar then the company is trustworthy, know why?
Which is a better place to invest in; dividend yield stocks or Fixed Deposits? Many investors find FDs is the better place to invest while stock market lovers give preference to good dividend yield stocks than FDs.
Although both the instruments provide better returns to investors, the difference may depend on the investors.
Dividend stocks offer three benefits to the investors:
First: Although the starting yield on the dividend is slow compared to FD’s interest, it improves with time. Also, good dividend stocks provide stable yield income in the short term.
Second: Dividend stocks provide you with long term gain. Dividend per share will also improve yield on the dividend. Another advantage is: as the share price will also improve with time which provides a double profit for the investors.
Third: There is no tax applied on dividends, which is a win-win situation for every investor.
If we talk about Fixed Deposits, then the interest rate is fixed. Also, it will never grow with time.
Dividend-paying stocks are the additional ones issued to the shareholders as a reward. Nevertheless, dividend-paying stocks provide consistent returns to their shareholders, one should not invest in such stocks without getting complete information about the company. Just because the company pays a high dividend doesn't necessarily mean it has good worth. Therefore, it would be ideal if you check the company’s annual report, earning growth, consistency of dividend payouts before investing in such stocks.
Apart from last year's lockdown journey, we all accept a better chance in the year 2021, where the whole country suffers under it, the country also faces huge economic losses and has gone through a tough time.
Even the financial markets collapsed to their highest level. But this year in 2021 we saw some good signs of recovery along with multifold returns from the markets.
Especially from newly listed companies since from January 2021, there are 18 companies got public or (SME-IPO) out of which 11 companies have given fabulous listing gains whereas 7 companies were not up to the mark and gave a negative listing from which 2 companies outperform after its negative listings.
IPO Performance: A company with an issue size of Rs 4633.38 Cr with the issue price of Rs 26 per share, has given a negative listing on listing day. The stock is listed at Rs 24.90 with a discount of -4.42 %. IRFC is trading still below its issue price with a negative return of 19.23%.
IPO Performance: A Company with an issue size of Rs 1176.00 Cr with the issue price of Rs 1490 per share, has given a positive listing on listing day. The stock listed at Rs2607.50, and closed Rs 3118.65 with a Premium of 109.31%. Indigo is trading still above its issue price with a positive return of 53.8%
IPO Performance: A Company with an issue size of Rs 1153.72 Cr with the issue price of Rs 518 per share, has given a positive listing on listing day. The stock listed at Rs 618.80 and closed 527.4 with a Premium of 1.81 %. It is trading still above its issue price with a positive return of 2.95%.
IPO Performance: A Company with an issue size of Rs 412.63 Cr with the issue price of Rs 385 per share, has given a positive listing on listing day. The stock listed at Rs 498 and closed 445.95 with a Premium of 15.83 %. It is trading still above its issue price with a positive return of 28.96%.
IPO Performance: A Company with an issue size of Rs 3800.00 Cr with the issue price of Rs 275 per share, has given a positive listing on listing day. The stock listed at Rs 281.70 and closed 268 with a discount of -1.83 %. It is trading still below its issue price with a negative return of -7.75%.
IPO Performance: A Company with an issue size of Rs 100.00 Cr with the issue price of Rs 400 per share, has given a positive listing on listing day. The stock listed at Rs 615 and closed 645 with a premium of 66.66 %. It is trading still above its issue price with a positive return of 236.48%.
IPO Performance: A Company with an issue size of Rs 819.24Cr with the issue price of Rs 94 per share, has given a positive listing on listing day. The stock listed at Rs 109 and closed 121 with a premium of 29.15 %. It is trading still above its issue price with a positive return of 27.45%.
IPO Performance: A Company with an issue size of Rs 625.24Cr with the issue price of Rs 627 per share, has given a positive listing on listing day. The stock listed at Rs 900 and closed 812.25 with a premium of 29.55 %. It is trading still above its issue price with a positive return of 14.67%.
IPO Performance: A Company with an issue size of Rs 596.41Cr with the issue price of Rs 575 per share, has given a positive listing on listing day. The stock listed at Rs 1050 and closed at 1082.50 with a premium of 88.22 %. It is trading still above its issue price with a positive return of 60.1%.
IPO Performance: A Company with an issue size of Rs 510 Cr with the issue price of Rs 187 per share, has given a positive listing on listing day. The stock listed at Rs 212 and closed 208 with a premium of 11.39%. It is trading still above its issue price with a positive return of 5.61%.
IPO Performance: A Company with an issue size of Rs 760 Cr with the issue price of Rs 555 per share, has given a negative listing on listing day. The stock listed at Rs 520 and closed 526 with a discount of -5.24%. Now the stock trading above its issue price with a positive return of 23.28%.
IPO Performance: A Company with an issue size of Rs 823.70 Cr with the issue price of Rs 1490 per share, has given a negative listing on listing day. The stock listed at Rs 1359 and closed 1435 with a discount of -3.83 %. It is trading still below its issue price with a negative return of -8.1%.
IPO Performance: A Company with an issue size of Rs 600Cr with the issue price of Rs 130 per share, has given a positive listing on listing day. The stock listed at Rs 155 and closed 164 with a premium of 26.62 %. It is trading still above its issue price with a positive return of 71.85%.
IPO Performance: A Company with an issue size of Rs 1175Cr with the issue price of Rs 87 per share, has given a negative listing on listing day. The stock listed at Rs 73.95 and closed 75.20 with a discount of -13.45 %. It is trading still below its issue price with a negative return of -33.22%.
IPO Performance: A Company with an issue size of Rs 582.91Cr with the issue price of Rs 1101 per share, has given a positive listing on listing day. The stock listed at Rs 1990 and closed 1592 with a premium of 43.22 %. It is trading still above its issue price with a positive return of 62.46%.
IPO Performance: A Company with an issue size of Rs 582.34Cr with the issue price of Rs 305 per share, has given a negative listing on listing day. The stock listed at Rs 292 and closed 277.80 with a discount of -9.45 %. It is trading still below its issue price with a negative return of -19.33%.
IPO Performance: A Company with an issue size of Rs 452.87 Cr with the issue price of Rs 500 per share, has given a negative listing on listing day. The stock listed at Rs 489 and closed 587 with a Premium of 18.08%. Now the stock trading above its issue price with a positive return of 21.56%.
IPO Performance: A Company with an issue size of Rs 2500 Cr with the issue price of Rs 486 per share, has given a negative listing on listing day. The stock listed at Rs 436 and closed 465.25 with a discount of-4.7%. Now the stock trading above its issue price with a positive return of 24.62%.
पिछले सप्ताह कीमती धातुओं मे ऊपरी स्तरों से बिकवाली का दबाव रहा। अप्रैल के महीने के अंत तक आर्थिक आंकड़ों में मजबूती रही जिसके कारण कीमती धातुओं मे दबाव बना। अमेरिकी जीडीपी 2021 की पहली तिमाही में 6.4% तिमाही-दर-तिमाही बढ़ी है और पिछले सप्ताह भर में 553,000 प्रारंभिक बेरोजगार दावे दर्ज किए गए, जो पिछले सप्ताह से कम है। सप्ताह के शुरुवात में अमेरिकी राष्ट्रपति जो बिडेन द्वारा प्रस्तावित 1.8 ट्रिलियन डॉलर का प्रोत्साहन योजना पर निवेशकों की नज़र है। जापान में, मार्च में औद्योगिक उत्पादन में महीने दर महीने 2.2% की बढ़ोतरी हुई और टोक्यो कोर कंज्यूमर प्राइस इंडेक्स में अप्रैल में सालाना आधार पर 0.2% की बढ़ोतरी हुई है। चीन ने शनिवार से शुरू होने वाले एक सप्ताह के अवकाश के आगे वृद्धि दर धीमी दर्ज की है। शुक्रवार को जारी चीनी आंकड़ों के अनुसार अप्रैल के लिए विनिर्माण क्रय प्रबंधक सूचकांक (पीएमआई) घट कर 51.1 पर पहुंच गया और गैर-विनिर्माण पीएमआई घट कर 54.9 पर रहा। जबकि अप्रैल के लिए कैक्सिन मैन्युफैक्चरिंग पीएमआई मे बढ़त दर्ज की गई है। चीन और जापान मे सप्ताह में शुरुवाती अवकाश होने से कीमती धातुए सिमित दायरे मे रह सकती है।
इस सप्ताह प्रमुख अर्थव्यवस्थाओं से जारी होने वाले आंकड़े जिनमे, सोमवार को अमेरिकी मैन्युफैक्चरिंग पीएमआई, बुधवार को एडीपी नॉन फार्म एम्प्लॉयमेंट चेंज और सर्विस पीएमआई, गुरुवार को अनम्पलॉयमेंट क्लेम्स तथा शुक्रवार को पैरोल के आंकड़े प्रमुख है।
इस सप्ताह सोने और चाँदी में तेज़ी रहने की सम्भावना है। इसमें 46300 रुपये पर समर्थन और 47200 रुपये पर प्रतिरोध है। चाँदी में 68000 रुपये पर सपोर्ट और 70000 रुपये पर प्रतिरोध है।
The stock market offers various trading platforms for investors to trade in the stocks without any hassle. This is the place where individuals invest their funds for the long term. However, there are other traders too, who enter these markets with the purpose of making small quick profits by trading for minutes or hours.
These traders are known as scalpers, who believe in making immediate profits rather than waiting for the long term.
Before getting a dig deep into this, let’s understand how scalping can be used to collect huge profits through small trading techniques.
If you have heard the name scalping, you would be wondering what these scalpers are and how they achieve profits from the deal.
Scalping is a short term trading strategy used to achieve profit from the volumes of trade placed, rather than focus on maximizing capital gains on each trade.
These are short trading styles predominantly used in intraday trading. Scalpers trade frequently and in small trading sessions.
The name scalping got famous due to the traders who adopt such styles - they quickly enter and exit from the market by making small profits from a large number of trades, throughout the day trading.
A scalp trader usually follows a strict exit policy as one huge loss could eliminate all the profits made throughout the day. Therefore this trading style requires discipline, stamina and decisiveness.
If one possesses these qualities with the right strategy, he/she can become a successful scalp trader.
Scalp traders often enjoy the trading style that it requires. However, to achieve successful deals, you are required to execute numerous technical trading techniques to identify profit opportunities in the market.
Before answering the question, how does scalping work, lets understand the trading mechanism of scalping.
Scalp trading is a short term trading style that includes buying and selling of assets multiple times to book profit. Trading multiple times allows a trader to earn from the price difference.
It involves buying an asset at a lower price and selling at a high or vice versa.
Scalpers mostly try to find out the highly liquid assets that are volatile in nature i.e. these assets do frequent price changes during the day trading. Do remember, for scalping, it is highly important for an asset to be liquid, only then will you book profits throughout the day or otherwise you may face huge losses.
Scalpers believe it is easier to make money through small deals because it is less risky from the market volatility perspective.
There are other traders too, who hold onto their position for some weeks or months for making a huge profit. However, scalpers believe in making multiple profit opportunities within a small span than the bigger one.
Here some principles of scalping that every trader needs to follow:
Make Small Moves:
Small moves are easier to obtain than large moves. For making a huge profit, the stock market has to be insatiable i.e. it requires a high imbalance between supply and demand. In such situations, small prices are comfortable to deal with.
Small Moves happen Frequently:
Small moves in the stock market always work the best. Even many experienced traders use small moves when they see the market is quiet for some time.
Lower exposure Limit Risks
A brief exposure in the market reduces the chances of running into an adverse condition.
Trading methods used by Scalpers
While other trading styles like position trading use fundamental analysis, scalp trading however depends on technical analysis. This is because technical analysis includes identifying the historical price movements of assets and comparing them with the current asset’s price. For this, scalpers use different charts and patterns.
The comparison of historical data with the current data helps scalpers observe patterns and predict future price movements with ease.
Scalpers use charts and patterns and observe them with a specific timeframe. In other words, they do analysis in small time frames which are the shortest of all trading styles.
An intraday trader uses five minutes or 10 minutes trading charts to make five deals a day. Scalpers, on the other hand, uses a time frame of 5 to 10 seconds to make 50 to 100 trades during the day.
Scalpers play smartly with the trading, also they use several market’s tactics to achieve a high speed of trading. Such tactics are the market’s time and sales - a record of buying, selling and cancelled transactions.
Firstly, scalpers need to minimize the usage of multiple technical indicators. Trading indicators are basically the plotted lines on the price charts that help traders to identify whether to buy or sell assets.
For a scalp trade, it would be beneficial if you invest in profitable stocks as it will help you achieve more profits throughout the day. Also, the quality number of trades in a single day makes your margin requirement and risks reduced.
Margin is the borrowed funds that brokers lend to the traders so that they can buy securities more than they afford.
As a scalp trader, it is important to master certain strategies that will give you bountiful benefits of profit booking. Traders apply multiple strategies which confuse them with which strategy should be used or which one is not?
For example; you made 10 trades and used various methods to execute them. Now you would get confused as to which strategy worked well for you? Therefore it would be ideal if you use 2 or 3 strategies and execute your trade order.
Scalping is a short term strategy that is not limited to futures alone. In fact, you can use scalping trading in forex and stocks as well.
The preferred market for scalping are:
Reducing losses is one of the most significant concerns a trader must pay attention to. A scalper trade in many traders in a single day. Some scalpers book huge profits from it where others suffer a loss. Therefore, a scalper needs to learn to cut down the losses in every losing trade to mark a good profit in scalping.
Scalping is a process where a trader uses short time frames, chart plans to book a profit throughout a day. Scalping is a difficult trading process that demands dedication, speed and discipline to execute scalp deals.
If you are an experienced trader who knows how to trade intraday and aims for short term trading, you can go for scalping trading. However, if you are not aware of intraday trading strategies and wants to invest in the long run, scalping is not your cup of tea. Choose wisely and execute your trades according to your trading styles.
Many people who are coming in the age between 20 to 30, refuse to do investment thinking that it's not the right time for investment. However, this is not so true.
In fact, the analysts say that the perfect age for investment starts at 21. There are lots of reasons behind it. Firstly, investing at an early age allows a person to save more money than a person who starts investing at 30 or 35.
When asked, these people give silly reasons, they say they do not invest much as they haven't done enough groundwork. Also, they fear investing in stocks, bonds. Some people even consider saving as equal to investing.
Saving your money can help you to set aside cash if an emergency comes. On the other hand, if you want to generate wealth for the future, investment is the key.
Investment can help you achieve your financial goals, such as house planning, retirement, education, vehicle or more. It also provides you with comfortable retirement down the years.
Also, building an investment habit makes your money grow on a compound basis, providing you with a higher gain on the invested capital.
There are two types of investment; good investment and bad investment. A good investment depends on several factors; one such factor is risk and return.
Ever wondered why some stocks offer higher value than others? The answer is the company's financial performance. A company’s share price heavily depends on its financial performance. Analysts use several ratios to determine the correct stock price. Knowing the evaluation of stock price will help you to identify which stock performs better in the long run.
Nowadays, new investors are looking for liquid assets. This is because liquidity allows them to exit at their will. See, different investments have different liquidity. Large-cap stocks and ETFs are traded daily in the exchange.
Hence, it is suggested to add both assets to your portfolio; liquid and illiquid both. Illiquid assets are not listed on the stock exchange and hence they are less volatile than liquid assets. Adding illiquid assets to your portfolio prevents you from taking any wrong decisions.
It is extremely important to know the fair value of shares as it will help you to know the actual value of an asset. Good investments are often sold at higher prices as they are high in demands. But, if you overpay for such investments, you may put yourself at a disadvantage.
To determine the fair value of a stock, investors analyze historical data, charts, and observe different patterns. They do it to compare with the current valuation.
Diversification is a simple way to turn your investment into the best investment portfolio. Diversification simply means the allocation of different assets into your portfolio. It's a necessary step to keep your investment safe as it helps you to achieve high returns and also it makes you suffer from a minimum loss if the stock market is volatile.
There are multiple investment options available in India.
Stocks
Fixed Deposit
PPF (Public Provident Fund)
Index Funds
Government Securities
There is no ideal amount for investing. You can park your savings into an investment that depends on risk appetite; how much risk you are willing to take.
Investing for the long term provides you with the advantage of compounding as it will help you achieve more interest in the invested amount. This is because investing for the long term minimizes the erosion of your hard-earned money.
If you are a beginner who aims to invest at an early stage, investing in stocks may look a little bit risky, but if you do proper stock market research and take investment advice from a renowned stock broker, you could start trading while keeping your savings aside.
It is important to always make a plan before starting investing in stocks. Do a bit of research, get knowledge about stock, its fundamentals, a company’s performance. You should know, which is the right time to buy a share, book profits and minimize your losses.
Still get difficult to understand the terms of stocks, go for the best stock broker.
A right stockbroker like helps you to get the right stocks that are based on your risk appetite.
Needless to say, the stock market is dynamic in nature and therefore it is important to revisit your stock market trading strategy and modify it accordingly. This will help you learn more about the stock market like ups and downs, how to deal with the stock market when it experiences a downtrend.
Many investors prefer to buy the stocks which are most popular in the market. However, this is not the right method to select a stock. Firstly, it’s better to understand a company, its performance, market reputation before purchasing a stock.
As a beginner, the biggest mistake you can make is to overtrade in excitement. Don't be in a hurry to buy loads of stocks at a time. Instead, pick a few stocks that come under your budget, try to analyze them completely.
This will help you to gain a lot of knowledge about stock market trading such as how the market works.
After a few months of trading experience, start adding more stocks to your portfolio. This time you are more experienced than before and therefore you won't commit any mistake as you did in the past.
While trading in the stock market whether it is for the long term or short term, it's better to keep your emotions aside. It’s natural to be on high while making money and feel devastated when experiencing losses. Therefore, it is advised to stay neutral in both cases.
Don't panic even if the situation is not in your favor. Instead, try to understand the cause of losses and soon you may overcome this bad situation too. Just follow the rules that are mentioned above and see the magic.
As far as the doubling of money is concerned, penny stocks come second to none. This is because such stocks present a wide range of opportunities for new investors as well as experienced both.
And when it comes to investing in money, investors often seek mid-cap and large-cap stocks, however, the majority of them neglect penny stocks.
Penny stocks are small stocks and come under the small-cap category. If you are a regular trader or investor, you must have heard the term penny stocks. Well, these are small-cap stocks that attract minimal pricing. According to the Indian stock market trading scenario, stocks whose market capitalization is less than Rs 10, comes under penny stocks.
Due to low market capitalization, these stocks seem alluring to many investors as these shares are available at low price and investors would purchase more shares with low investment amounts.
Another important reason behind the strong hype of penny stocks is, they have a low frequency of trading, their prices are subjected to sudden and high levels of volatility.
Let’s understand penny stocks with a suitable example:
A company XYZ Limited has a share price of Rs 500 and a penny stock to be Rs 5. If an investor has a capital of Rs 10,000, they would be able to buy only 20 shares of the established company. With the same capital amount, they can purchase the penny stocks of 2000 shares.
If you are new to the stock market, then penny stocks can act as a good choice for you. This is because penny stocks enable you to learn the ins and outs of trading first hand, i.e stock market learning. Since the price of penny stocks are low, investors purchase a high volume of penny stocks with a limited capital amount. This also helps investors to minimize their losses.
Penny stocks are not traded in the share market frequently. Due to a low volume of trades, investors may find it difficult to find both buyers and sellers. However, they can overcome this limitation to a certain extent by holding the shares of penny stocks for the long term.
Penny stocks are easy to trade and therefore many investors especially newbies find it easy to trade in the stock market. Price movement of penny stocks are speculative and require very less methodical technical analysis. This makes investors the perfect choice for you if you are just making an entry into the world of the stock market.
There are multiple companies with good financials and growth potential that are being traded for pennies. By identifying these companies, investors can generate good returns and watch their investments grow.
Penny stocks can be considered as a miss or hit opportunity. Companies issuing them might grow into large organizations and give a higher yield than average returns.
Some of these stocks can turn out to be multi-bagger stocks. This means some penny stocks can generate returns of more than 100 per cent against their investment amount. And, if some penny stocks give a return ten times its investment value then it is considered a ten-bagger.
Hence, if investors could include these stocks in their portfolio, these stocks could exponentially increase their returns and have a large chance to outperform mid-cap and large-cap funds.
To find out the best penny stocks which have the potential to be multi-baggers, investors need to go through thorough stock market research.
Let’s understand it with an example:
Suppose Mr X invested Rs 10,000 in penny stocks of ABC Pvt company. Each unit cost is Rs 10. The company did well in the market as its performance rose by a huge margin and its stock value reached up to Rs 100. If Mr.X sold its 1000 shares at Rs 1,00,000. I.e (10,000/10=1000, Rs 1000*100=Rs 1,00,000) hence this stock gains ten times a return. Such stocks are considered as a ten-bagger stock.
As we said above, these stocks are cheaper than other stocks and hence you can easily do share trading and invest in them without taking any risk of losing huge amounts of your investment finances.
Therefore, if they fill a small portion of penny stocks into their portfolio, chances are investors creating room for better investment options while minimizing the risk associated with it.
As these stocks heavily depend on the market condition for the growth in their stock’s intrinsic value, they are associated with high risk.
Apart from the fundamental risks linked with the stock market, these stocks also come with other types of risks which can’t be neglected.
The companies that mostly issue penny stocks are startups. These companies freshly come into the stock market for fundraising and needless to say, there are a lot of insecurities associated with these stocks such as lack of information on the past performance, financial soundness, growth prospects of such stocks.
Therefore, it is suggested to do complete research before investing in penny stocks. Also, there are several stock market courses available on the internet. You can take a wide range of knowledge from there.
If you look at the financial history, you might have heard that penny stock scams are very common in the international stock market. One such popular method is pump and dump. Under the pump and dump method, investors with an intention of scamming, purchase a huge amount of penny stocks. Such hype attracts new investors to purchase these stocks.
Once the company realizes that they have enough buyers who have invested in their stocks, the speculator immediately reduces the value of these stocks resulting in the losses of new investors.
Apart from investing in penny stocks, investors nowadays seek out new investment options that are suited to their portfolio and risk appetite both.
Mutual funds are one of the best investment options investors are gaining interest in. Mutual funds are a professionally managed investment scheme that pools money from numerous investors and invests this money in securities such as stocks, bonds, and debts.
While penny stocks seem an attractive investment option for many investors because of their low pricing, they do carry risks like other equity shares. The price movement of such stocks heavily depends on the market condition which makes penny stocks highly risky. However, these risks can be mitigated if you do complete research about these stocks before investing.
Well, if you need the right investment advice regarding any stocks and mutual funds, you may consider Swastika as the best stock trading platform for beginners and experienced both. The stock broking company comes with user-friendly online trading platforms at affordable brokerage rates.
Women are more consistent with their SIP installments than men, showing the hallmarks of being more sound investors than men. They often have their sights fixed on their investment goals.
With a fourfold increase in the amount of money spent on the site in the last four years, and more women of all ages and backgrounds joining in, women are gaining trust in their abilities. These are the Women's perceptions of investing:
Patience: Women, suffer from a lack of self-assurance. Women are more patient and keep stocks for longer periods of time, while men prefer to trade in and out of stocks in an attempt to beat the market. According to Harvard, men do stock market trading 45 per cent more than women, resulting in a 2.65 per cent drop in trading results.
Diversification: Women are more likely than men to diversify their investment portfolio. As part of their overall financial planning, they strive to take a systematic approach to invest.
Plus:
Women are better savers, saving 9.0 per cent of their salary compared to men (8.6 per cent of salary)
Some research points to women generating better returns (+0.4%) from investment.
Minus:
Women tend to score lower on financial literacy tests consistently.
Some research points to women investing up to 40% less than men.
Women are more cautious when it comes to risk management. women constitute only 30 per cent and 38 per cent respectively for the financial priorities such as "providing for future generations" and "financial support for my dependents," respectively.
Although this varies from person to person, women are more concerned with planning for the worst For this woman were nearly 69 per cent more likely than men.
Women are also most concerned with "retirement planning" (56 per cent) and "philanthropic donations" (54 per cent) They want to know that their money is working for them and that any decisions they take are in line with our investment objectives.
Women turn down the help of financial advisors for a variety of reasons women do not turn down investment advisors solely due to bad performance; other, more nuanced variables are at play. Part of this is due to the fact that 62% of women claim they have specific investment needs and challenges:
Married women are more interested in investing than single women.
In addition, younger women are more likely than older women to invest in stocks, mutual funds, insurance, and fixed deposits.
People in their forties and fifties tend to invest in real estate.
As a result, the government, banks, and financial institutions will launch a variety of investment schemes based on age and marital status factors in order to raise more funds.
The risk/reward trade-off is a consideration, as taking more risks usually results in greater rewards. Few people will disagree with this. Investing in stocks would almost certainly yield higher long-term returns than investing in shares, and investing in bonds would almost certainly yield higher returns than placing capital in a bank account.
Women are paid less on average, do not spend as much as men do, and live longer than men - all of which have an effect on their financial situation and are ignored by the 86 per cent of investment advisors who are men. The "female investment gap," as a result of these disparities, will cost a woman more money over her lifetime than the gender pay gap.
Majority of women who invest make their own choices, which is inspiring. Despite the fact that many of them consult their families or partners about their financial choices, they make the final decisions on their own. What's more encouraging is that women between the ages of 18 and 25 have emerged as our most self-reliant group, with roughly 60% of women in this age group saying they make the final investment decision.
Investing in stocks can be considered a quite challenging task. This is because a lot of information investors need to gather before starting investing in the stock market. Maybe building a portfolio or the selection of the right stock, share market trading is not as easy as it seems to be.
Selection of the right stock with the right amount can often turn out to be a successful deal as it allows investors to earn a huge profit in the long run. Buying and selling of stocks are equally important as buying, selling of the stocks at the appropriate time can be equally rewarding which in turn make investors earn maximum returns from it.
Investment in the stock market is a sensitive task as investing in the wrong stock can lead to huge losses which may take years to break even.
Do remember that the stock market is full of volatility, uncertainty. Therefore, one should be clear about all the aspects of a stock market. The stock market is not for the people who fear the ups and downs of the stock market. It is for those who have patience and can take risks in the long term.
There is massive information available in the market. Anyone who wants to invest in the stock market, can study stock and decide between buying and selling.
It is extremely important to identify the change in volume of the stock. If you notice any sudden fluctuation in stock’s volume and its price, then it should be on your radar.
If you identify any stock price’s movement such as an upward or downward trend, you need to clearly monitor the stock’s fluctuations and observe the pattern. However, it is also said that don’t go with the first day rise in the stock price as the first-day rise may be a fluke.
It is important to identify the trend first. Many analysts take an aggressive approach by monitoring the stocks if there is an increase in the stock price for 2 consecutive days.
In case, where you are sure of stock performance like IRCTC, then you can consider a sharp dig as a stock trading opportunity. Besides, considering delivery-based volume, you should consider a minimum of 5 days average volume.
Also, you can do one thing, you should filter out stocks that are thinly traded i.e traded volume for comparison purposes less than 5 lakhs.
Analysts said that it would be feasible to invest in such stocks that you may gain interest in. This is because investing in such stocks will help you to get better-informed decisions.
Also, industry-specific stocks will make you more interested and therefore you know all the information associated with the stocks which in turn makes it easy for you to identify the fundamentals of a stock.
Hence, it is advisable to invest in stocks that you are familiar with.
Circuit stocks are the ones that are hitting upper or lower circuits frequently. Research analysts believe that circuit stocks should be avoided as much as you can.
It is a misconception that you will earn a huge profit in upper circuit stocks. A majority of small investors made huge mistakes by putting their money in the upper circuit stocks. If you want to extract money from such stocks, then you should be a seasoned trader and know how to play in the stock market.
You may observe the stocks with a huge number of buyers. Such stocks may have only buyers or sellers. This doesn't mean that the stocks have a huge demand. It might be an operator driven stock. Therefore, it is advisable to avoid such stocks.
Before picking any stock, it is important to go through the valuation and price of the stock. If the company is trading at PE multiples of less than 20, then the stocks are considered as an undervalued stock and hence a good buy.
On the flip side, a company trading at PE multiples of more than 20, then it is considered overvalued and hence good to sell.
Mainly companies survive by selling their products and services in the market. If the sales or margin of the company are increasing at a good pace, then there is a good potential rise in the price of a stock in future. It is suggested to always look for the margins of the company. Don’t forget to compare the cost of goods sold and other expenses for the increase in sales.
Nowadays, technical indicators have been gaining huge popularity. They are basically in the form of charts that predict the future moment of the stock based on the current stock price.
The technical indicators take into account the volume traded. The information provided by technical indicators can be quite valuable while considering buying and selling of shares.
It is good to go through the financial reports of the company before making any decision regarding stock. Financial reports enable investors to analyze the performance of a company. Besides you can also compare the stock’s profitability in the past five years. Also, look for cash pay-outs for stock investors in the form of dividends. The above points help you to decide whether to buy or sell the stocks.
Any upcoming event regarding a company can lead to several triggers in the price movements of a stock. It is important to analyze and knows the events as it helps you to determine the trend of the stock such as which stock going forward.
Therefore, buying and selling of stock can be initiated based on such events, for which you need a trusted stock broking firm with a solid track record and a dedicated team of researchers and analysts.
In the past few years, SME IPO has turned out to be the most crucial and dazzling sector of the Indian economy. This is because the employment intensity of SMEs is four times greater than the large-scale enterprise which in turn makes SME the biggest contributor to the GDP of India.
Also, the government has recognized the role and importance of SMEs in their economy. The biggest challenge faced by these enterprises is access to capital. To overcome this, numerous capital markets have recognized the need for a separate exchange for the SME sector.
Keeping this in mind, the BSE and NSE have launched their own platform for small and medium enterprises to list on BSE and NSE. Thus, BSE SME and NSE Emerge are a new source for SME IPOs and provide a listing opportunity to the SMEs with minimum compliances and cost compared to the main board.
An SME exchange is a stock trading platform for small and medium enterprises. The SME trading platform was first set up by SEBI in 2008. However, the major step has been taken by the prime minister’s task force in January 2010 on Micro, Small and Medium Enterprises, which recommended setting up of SME exchange to promote inflow of equity capital in this sector.
Before we dig deep into this, let's understand the meaning of SME IPO, its procedures and its benefits.
SME BSE is a trading platform where only SMEs trade their shares in this exchange trading platform. So, if a company wants to get listed on the exchange, they have to come out with their IPO.
The eligibility criteria for SME IPO is somewhat different from the main board of NSE, BSE. Here are the requirements for the BSE SME IPO.
SME listing not only provides benefits to the company but also benefits its investors, both existing and proposed such as providing an exit route to private equity investors as well as liquidity to the ESOP holding employees.
SME capital market allows many companies to scale up their business. As of now, the BSE SME platform of over 300 companies is listed on it and NSE Emerge has over 180 companies listed on it.
SME listing provides relaxed listing norms and minimal cost of listing as compared to the main exchange which in turn is ideal for the SMEs to raise capital and meet their growth requirement.
BSE and NSE are the platforms where companies list their securities which are also known as the mainboard. SME IPO is the main platform IPOs have been taking place for years. This is because NSE and BSE follow strict eligibility criteria that must be adhered to list on their platform.
BSE SME and NSE Emerge on the other hand, have no so strict eligibility criteria. In addition to this, other requirements for IPO listing such as the requirement of track record, reporting requirements, time frame for listing are quite easy for SME, making a listing on an SME platform quite easier.
SEBI is all set to allow startups to list on the SME platform. Also, the companies seek an opportunity to raise capital as the SME platform gives special relaxations to startups in terms of net worth and profitability. The primary reason for giving special relaxation is to provide capital raising opportunities to SMEs who cannot list on the mainboard because of the huge compliance norms.
To successfully list on SME platform, one should have a demat account with the top stock broker like Swastika who offers promising IPO services to its clients.
There are numerous small firms that seek capital growth. Since they have limited options to raise capital, providing an SME platform for them would be a positive step for the investors who seek growth for their company. With proper relaxation, the SME platform would come out as a primary option for startups to raise capital.
If you are a beginner who has just started stock market trading, chances are there you have come with the same confusion. How many stocks should you own in your portfolio in order to make a desired level of diversification?
Well, investing in stock and curating a portfolio that meets your financial requirements is not as easy a task as it seems to be. The correct number of stocks to hold on your portfolio heavily depends on personal factors such as market condition, time horizon and risk appetite and your tendency for reading market news and keeping up to date on your stock holdings.
When it comes to holding the ideal number of stocks in your portfolio, diversification is the main thing that you should focus on. A systematic diversification in your portfolio minimizes investment risks and can increase your chances of yielding huge returns. Also, experts said that diversification is the best way to invest assets in a variety of assets across different sectors.
Let’s discuss the approach at the value of diversification that helps you to identify long term and short term goals that lead to different investment options. The below points will help you to reach a satisfactory conclusion.
For any investor, it would be ideal to maintain a stock that captures 5-6% of the entire portfolio, said Seth Klarman, a successful investor. As said above, the exact number of stocks in your portfolio is a personal choice based on your knowledge skills, risk appetite and time horizon.
Financial experts mostly said that 20 to 30 stocks are an ideal range for any portfolio. Generally speaking, many sources say 20 to 30 stocks is an ideal range for most portfolios. It’s important to maintain a balance between investing in a diverse range of assets and ensuring that you have the time and resources to manage these investments.
As there is no exact answer to this question, many experts believe that somewhere between 20 to 30 stocks are necessary to create a strong portfolio.
Diversification enables you to capitalize on potential growth in one area without losing out too much if another plunges since not all of your money is concentrated in that field.
Diversification plays an important role in creating a portfolio. This is because diversifying your money in multiple sectors ensures your money stays safe. If one or few stocks fell down, the other industries from different sectors can compensate for the losses that occurred from the former stocks.
In the beginning, you can start with stocks, bonds and mutual funds. As long as you get experience further in diversification, you can increase investments which can vary by sector, company size, geographic location and more.
Here are the factors to consider while opting for the ideal number of stocks in the portfolio:
1. Risk tolerance
This is one of the best risk tolerance factors one needs to be accounted for. Once you know your own risk appetite, you can easily select an industry, stocks and sector. Let’s understand with a suitable example. If the stock of one company under performs, the impact on your overall portfolio is negligible.
2. Return Expectation
It should be noted that as the number of stocks in your portfolio increases, the overall returns on your portfolio decreases. This is because some stocks in the stock market outperform the other stocks while many stocks give average returns. So, the higher returns of a few potential stocks might down due to the performance of weak stocks, which in turn heavily impacts the overall portfolio.
Hence, for better returns, it is advisable to lower the number of stocks and diversify so that you can concentrate on specific companies in which you have confidence in them.
3. Research Capability and Bandwidth
Before making a portfolio, it is important to do a stock market research and quality of information as it helps you to make a successful portfolio. Also, it helps to know how many stocks you should buy.
There is a number of aspects you need to figure for your research:
(i) The company’s fundamentals
Before selecting any stock, it is suggested to analyze the fundamentals of a stock. This is because knowing the fundamentals of a stock will provide you with detailed insight into a company. This will help you to opt for a company that will give you maximum returns in the future.
The fundamentals of the accompanying include earnings, profitability, cash flow statements, annual reports, the performance of a stock and operating margins. Picking a stock is just like marrying a company. You need to be 100 per cent confident in the growth proposition of a company. The higher the operating margin, the higher will be the efficiency of a company.
(ii) Capital Structure
The capital structure of a company is another important parameter as it provides stability and liquidity so that the company’s dependence on long term debt is low.
(iii) Management:
Management is a major performance indicator of the company and a stock performs well only if management is focused and growth-oriented. Hence, it is advisable to research management which is of utmost importance.
4. The time horizon of investment
Many investors think that stocks give them overnight returns. However, this is not the case. If you create a healthy stock portfolio, then it would be better if you should not depend on overnight returns. Do remember that equity is a long term investment and most people use the buy and hold strategy for the same.
The ideal stocks one should have in its portfolio should be between 15 to 25. Also, it depends on everyone’s investment strategy. The investment strategy also suggests how many stocks you should own in a portfolio.
Whether you want a concentrated portfolio of high dividend-yielding blue-chip stocks or if you are investing in small-cap stocks or put a large number of stocks to minimize the overall risk of investment. The choice is completely yours.
Redington is a leading distributor of technology & communication products and provider of services and solutions across 37 emerging markets, Redington will get a positive push government is preparing to unveil another incentive to drive local manufacturing of IT products including tablets, laptops and servers, three sources closely involved in the drafting of the plan told Reuters.
The new performance-linked incentive (PLI) scheme, which offers cash-back to manufacturers for exports, will have a budget of up to 70 billion rupees ($964.5 million) over five years. It's expected to be launched by the end of February.
REDINGTON INDIA -
Indian economy fundamentally relies upon two areas, agriculture and manufacturing. While the first has generally stayed unorganized since the start, the last also has not been so till now. The MSME area has gradually come into the spotlight, with expanded concentration from the public authority and other government organizations, corporate bodies and banks.
Strategy based changes; interests in the area; globalization and India's powerful monetary development have started up a few inactive business openings for this area.
MSME represents Micro, Small, and Medium Enterprises. As per the Micro, Small, and Medium Enterprises Development (MSMED) Act in 2006, the ventures are arranged into two divisions.
In the modified definition, both the manufacturing and the service sector are grouped together.
Micro:
Manufacturing and Service Industries – Investment ought to be under 1 Crore and Turnover ought to be under 5 Crore.
Small:
Manufacturing and Service Industries – Investment ought to be more than 1 Crore and under 10 Crore. Though, Turnover ought to be more than 5 Crore and under 50 Crore.
Medium:
Manufacturing and Service Industries – Investment ought to be more prominent than 10 Crore and under 20 Crore. Though, Turnover ought to be more than 50 Crore and under 100 Crore.
1. Collateral Free Loans
Collateral free loans for organizations has been arranged including MSMEs and emergency credit line to organizations/MSMEs from banks and NBFCs up to 20 per cent of whole extraordinary credit.
2. Equity imbuement of Rs. 50,000 crores for MSMEs via a Fund of Funds
The Government has additionally declared the proposed foundation of a Fund of Funds is proposed to be set up with a corpus of Rs. 10,000 crores and will be worked through a 'Mother Fund' and a couple of daughter funds, through which it expects to use Rs. 50,000 crores of assets. That will straightforwardly put resources into MSMEs and urge them to list on the Indian stock trades.
3. Interest subvention
An interest subvention will be reached out to every one of those brief payees who are making normal installments for a year. Has likewise been declared under Mudra Scheme's Shishu Cover whereby a 2 per cent interest to aid will be permitted on credits up to INR 50,000.
4. Postponement of registration and completion date of real estate projects under RERA
During the underlying days of the lockdown, the Ministry of Finance had assigned the COVID-19 pandemic as a power Majeure occasion under RERA and consequently extended the project completion cutoff times by a time of a half-year.
5. Rs 20 crore subordinated debt for MSMEs
MSMEs ministry has introduced the Credit Guarantee Scheme for Subordinate Debt (CGSSD) which is called 'Distressed Assets Fund–Subordinate Debt for MSMEs'
(i) Promoters of MSMEs will be given credit equivalent to 15% of their stake (e+d) or Rs. 75 lakhs, whichever is lower.
(ii) A moratorium of 7 years on principal payment while maximum extreme tenure for repayment will be 10 years.
(iii) 90% assurance cover for this subordinate debt will be given under the plan/trust and 10% would come from the concerned advertisers.
6. Directions to Public Sector Undertakings to make timely payments
Bearings have been given by the Cabinet Secretary, Expenditure Secretary and Secretary, MSME to all PSUs to take care of remarkable obligations to MSMEs within the time span of 45 days.
7. Extension of the due date for ITR for FY’19-20 to November 30, 2020
As declared by the public authority in a question and answer session, the due date for all income tax returns (ITR) for FY 2019-20 has been stretched out from July 31, 2020, and October 31, 2020, to November 30, 2020, and for the tax audit from September 30, 2020, to October 31 2020
8. ECLG scheme
The ECLG Scheme would apply to all advances authorized or made accessible to MSMEs between 23 May 2020 and 31 October 2020 and the Government has as of now put a general cap of Rs. 3 lakh crores for all credits dispensed under the ECLG Scheme.
9. Measures identifying with the Insolvency and Bankruptcy Code
This alteration will probably profit MSMEs that are under monetary misery because of the financial emergency brought about by COVID-19. The Government on 24 March 2020 expanded the base edge for default from Rs.1 lakh to Rs.1 crore to start the corporate insolvency resolution process under the Insolvency and Bankruptcy Code, 2016 (IBC).
10. Import protection
In a line towards confident India or backing make in India and will likewise assist MSMEs with extending their business. For this, worldwide tenders have been refused in Government acquirement tenders up to INR 200 crore because Indian MSMEs and different organizations have regularly confronted unjustifiable rivalry from foreign organizations.
ब्रेंट कच्चे तेल की कीमतें 65 डॉलर प्रति बैरल के ऊपर पहुंच गई है लेकिन 68 डॉलर के महत्वपूर्ण प्रतिरोध स्तरों पर है। इस सप्ताह गुरुवार को, पेट्रोलियम निर्यातक देशों और सहयोगियों (ओपेक) की बैठक पर निवेशको की नज़र रहेगी जिसके पहले अन्य बाज़ारो पर दबाव देखा गया है।
कच्चे तेल की कीमतों मे लगातार सुधार होने के कारण, ओपेक और सहयोगी देशो के निर्णय पर बाज़ारों की निगाहें होगी। अधिक आपूर्ति होने से सऊदी अरब ने पिछली बैठक मे अतिरिक्त उत्पादन कटौती पर समझौता किया था। जबकि अन्य तेल निर्यातक देशो ने आपूर्ति को स्थिर रखने पर जोर दिया था। वही रूस उत्पादन मे वृद्धि के पक्ष मे रहा है।
अमेरिकी प्रान्त टेक्सास और आसपास के क्षेत्रों में पिछले सप्ताह की ठंड के कारण 40 लाख बैरल प्रति दिन कच्चे तेल की आपूर्ति बाधित हुई है। जिससे कच्चे तेल की कीमतों में मजबूती है और इस महीने मे ब्रेंट तथा अमेरिकी कच्चे तेल मे 20 प्रतिशत की बढ़त दर्ज की गई है। वैश्विक तेल स्टॉक मे लगातार कमी दर्ज की गई है लेकिन, मौसम के कारण बाधित होने वाले कच्चे तेल उत्पादन में लाखों बैरल की कमी धीरे-धीरे पूरी हो रही है। बांड बाजार टूटने से डॉलर मे तेज़ी होने की सम्भावना है और ऐसा होने पर कच्चे तेल की आपूर्ति बढ़ सकती है।
इस सप्ताह कच्चे तेल की कीमतों मे अस्थिरता रहने की सम्भावना है।घरेलु वायदा कच्चे तेल के भाव मे 4700 रुपय पर प्रतिरोध और 4200 रुपय पर सपोर्ट है। ब्रेंट वायदा कच्चे तेल मे 67 डॉलर पर प्रतिरोध तथा 62 डॉलर पर सपोर्ट है।
Trust Our Expert Picks
for Your Investments!