Many people are aware of the stock market and its functioning. The people who seek stocks as an investment material always prefer to do a bit of stock market research and homework before investing their money in any trade.
When you see any business channel, a single word you often come across is Stock rating. People have many questions regarding the term stock trading such as when to buy, sell or hold a stock.
In this blog, we will highlight the fundamental yet important term share market trading and how the right knowledge of stock rating helps investors and traders to achieve their best trading decisions.
Stock ratings are used to measure the performance of a stock in a given specific time period. Analysts and numerous brokerage firms keep you aware of many stocks when they issue stock recommendations to investors and traders.
In order to provide effective stock ratings, analysts and brokerage firms go through the financial statements of various companies, talk to the management, and attend conference calls.
The stock ratings are issued once three months or quarterly.
By reading stock ratings, you may notice that the ratings include a target price that helps traders to reach its intrinsic value which in turn gives people an idea about the potentiality of a stock.
Hence by evaluating a stock’s rating, one can get a clear idea of whether you buy, sell or hold a stock.
Research Analysts give recommendations regarding stocks by evaluating their financial performance, reviewing the company’s management, and listening to the company's financial calls on their future prospects.
Sometimes, these analysts have direct access to contact the management team and the customers to get an idea about how the company is performing compared to its past performance.
To get a deep insight into a stock, research analysts also conduct surveys that help them decide which stock deserves the best rating and which does not?
Above we discussed stock ratings and how to use them for investment decisions. Here, we will discuss the five types of stock ratings:
Buy ratings gives recommendations to traders and investors to buy a specific stock which analysts expect that the price of a stock will increase in the short to mid-term.
A sell rating recommends selling a particular stock which means that the analysts expect that the price of a stock will subsequently fall from its current price.
This rating suggests that the particular stock will stick to the same price for the near term.
The hold ratings tell the traders to not buy or sell the stock but to hold it for a short term.
Hold rating is assigned to a stock where there are some uncertainties or some company’s prediction. For example company’s new service or product launch.
An underperform rating indicates that the stocks are going to perform down as compared to the market performance or set benchmark.
In such a situation, the analysts suggest you stay away from such stocks or avoid investing in stocks.
For instance, if a stock’s total return is 3% and Nifty’s return is 6%, then it underperformed the index by 3%.
An outperform stock rating tells you that the particular stock is going to perform well in the stock market and will give outstanding stock market trading returns in the future.
For example, if a stock’s total return is 12% and Dow Jones Industrial Total average return is 6%, then the stock has outperformed the index by 6%.
Stock ratings provide a lot of impact on the individual stock as it helps traders and investors to get the intrinsic value of a stock that will tell its past and future performance. Also, it gives investors an idea of whether to buy, sell or hold a particular stock.
Although stock ratings tell many things about a stock, investors can also use their own experience to predict the potential value of a stock.
Overall, stock ratings help you to make an appropriate equity trading plan to earn maximum profit.
Hence, if you strategize your move regarding a stock, you may not neglect the stock rating and stay updated with every stock rating.
A stock rating is a measure of a stock's performance in a specific period.
Stock’s rating can be categorized into five types: buy, sell, hold, underperform and outperform.
Analysts define the stock rating by researching various companies, talking to management, listening to customer’s reviews, and attending conference calls.
India stands the second rank in the production of cement in the world. It produces more than 7% of global capacity.
India is now focused on vast potential development in the infrastructure & construction sector and the cement sector is expected to get a large benefit from it. The recent initiatives, such as the development of 98 smart cities, are expected to provide a major booster to the cement industry.
With some suitable Government foreign policies, several foreign players have also invested in India in the past. Another factor that is the growth factor for this sector is the ready availability of raw materials limestone and coal for making cement.
Production of Cement in India reached 329MT in FY20 and is estimated to reach 381 MT by FY22. Whereas, the consumption stands at 327MT in FY20, which will reach 379 MT by FY22. As the country has a high quantity and quality of limestone deposits.
As per the report of CLSA, the Indian cement sector is witnessing huge improved demand. Major players reported by the company are ACC, Dalmia, and UltraTech Cement. In the second quarter of FY21.
Due to sharp recovery in rural areas and unlocking of the country demand for the industry will increase, and the cement companies also reported a sharp rebound in earnings due to rise in demands.
Which can be seen further in upcoming quarters due to unlocking of the country.
The Indian Government has approved investment schemes to help private sector companies:-
In this Union Budget 2021-22, the Government extended benefits, under Sec-80-IBA of the Income Tax Act, until March 31, 2021, to promote affordable rental housing in India.
In the Union Budget 2021-22, the government outlaid Rs. 1,18,101 Cr. for the Ministry of Road Transport and Highways.
In the Union Budget 2021-22, the National Infrastructure Pipeline (NIP) expanded to 7,400 projects from 6,835 projects.
The Union Budget allocated Rs. 13,750 Cr. and Rs. 12,294 Cr. for Urban Rejuvenation Mission: AMRUT and Smart Cities Mission and Swach Bharat Mission, and Rs. 27,500 Cr has been allotted for Pradhan Mantri Awas Yojana.
Some of the eastern States of India are likely to be the new and untapped markets for cement companies and which could contribute to their bottom line shortly. India could become the major exporter of clinker and grey cement to nations like the Middle East, Africa, and other developing parts of the world in the next 10 years.
The cement plants near the ports, like the plants in Gujarat and Visakhapatnam, have an added advantage for export and will logistically be well armed to face stiff competition. The country's cement production capacity is expected to reach 550 MT by 2025.
Due to an increase in the demand in various sectors like housing, commercial construction, and industrial construction, the cement industry is expected to reach 550-600 MTPA by 2025.
The top 5 major players in the Cement Industry in India are as follows:
Note: These figures can be varied according to the market prices.
Share Market Yes, you must have heard this word at some point or the other and along with it you must have also heard that the stock market is a speculative market or is like gambling, but along with all this, you have also heard this.
I must have heard that I have made very good profits from the stock market, but have heard very little about making profits and have heard a lot about making losses, I have heard it right, there is no lie in this, but do you listen to these things? At the time you had noticed something, who are the people who are saying these things?
In this topic, we will learn about the main mistakes due to which more than 90% of people suffer losses in the stock market.
Not only in the stock market but everywhere, our psychology has a great contribution, no matter what it is, but what is this psychology, in fact, due to which some people climb the ladder of progress in their life.
If we go, some people go through so many struggles night and day even to live their simple life, if we understand in easy language, then this psychology is our own born thinking, it is our own attitude, people's attitude. To understand the problems of seeing things, but how is this thinking formed? So the simple answer is that as we train our mind, it will give back to us the same thoughts.
So when we invest in the stock market and then what we think again and again in our mind, that becomes our psychology, as if it comes in our mind that there should be no loss, just a little profit is being made. I take it, everyone is saying buy or sell it, so I do it the same way.
This means that if you allow your mind to be affected by some other external things, then the result will be the same because if more than 90% of the people are harming outside, then you will also be harmed because of your psychology too. I am influenced by them.
Have you ever heard and seen that a business or work in which there is a possibility of more than 90% loss or spread, even after that the business is increasing day by day at a new speed, then that business shares?
Market I
It is absolutely true that most of the people suffer losses in the stock market, but it is equally true that money can also be earned from the stock market, which is about 10% of the people who are making good profits continuously, after knowing this much.
A question definitely comes that what do these 10% people do, so that they earn good profits continuously and what do these 90% people do so that they only get lost in the stock market.
Of the share market trading and investment, trading setup, trading strategy, trading tools contribute only 20%, the remaining 80% is useful for your Psychology, Discipline, Emotions, Money Management, Risk Management Objective.
So let's know those important (mistakes) reasons, due to which more than 90% of the people in the stock market have to bear the loss only:
One of the biggest, important and first mistakes made by stock market investors and traders is that people start investing money in the stock market without learning anything.
People do not understand that the job or business from which they spend their lives today. For that he has studied and worked hard for at least 12-15 years, so can't he take out few days to learn about investing to get a good return on that money?
If he wants, he can learn little by little every day. But people do not do this and they invest without knowing anything properly, and then they lose. That's why you must avoid this mistake and spend your time learning.
Never invest in anything that you don't understand - Warren Buffett
It is a simple matter that for the job you are doing today, you have first 12 years of schooling, then 4 years of college studies and then works experience, which means 18-20 years of time and giving an investment of 4-5 lakhs.
After today you are able to become worthy that 40-50 thousand, are getting the salary of 1 lakh rupees, then how can you think that you can earn from here without learning anything in the stock market. Along with this, it is also that Even after giving 18-20 years time, when you started your job or business, you were not getting the same income as you are getting today, But when you invest in the stock market, you want to earn a manifold of your investment from the very first day, you think that if you have invested 1 lakh, then I should earn 1 lakh in a month and in this process your hard work. loses his earnings.
That's why it is better to learn about investing by investing some money and time than making such a loss of lakhs of rupees. So that you can save those lakhs of rupees.
Our mindset and nature are such that we don't want to put effort into our own, instead, we want everything for free or at a discount. Why we don't understand one thing, whether it is free or discounted.
Things are found whose demand is less. What we do in such a situation is that people who give tips in the name of free in social media (Telegram, Facebook and WhatsApp) take trade in their account according to them and then what happens? damage only. Such people also give you tips on investing in the stock market, who do not know anything about the market.
Similarly, we invest in TV by watching news or tips. We do not understand one thing that all these people are sitting as advisors who show you the dream of giving 40-50% return, then it is also in their own account. take trade or not because an advisor can never give you any benefit because he does not have his money in it, he will tell you to BUY and SELL from anywhere.
Therefore, if you are not capable of analyzing the market by yourself, you do not understand the market, then it is better to choose a professional trader than to choose someone, an advisor,
How to Recognize who is a Professional Trader:
The advantage of joining a successful and professional trader is that he has complete knowledge, understanding of the market as he takes trades in his own account.
But if you take tips from an advisor, then they only have to sell services, they do not have any money of their own in the market, they do not even have any knowledge of the market, due to which only you have to suffer.
Whereas a professional trader will also give you the same advice that he will take trades in his own account and when he is taking a risk for his own money, then it is obvious that he must have some knowledge.
Avoidance is always better than cure. You must have heard this many times. This applies as much to money as it is to your health. Strong risk management is the preventive measure that can ensure that you do not face financial problems. Actually, risk management really means managing risk.
Risk reward ratio means that you have to set that if you wait to take a loss of 1500 then at least wait for a profit of 2000-3000 and you should follow this thing very strictly.
But in reality, all those who have made losses in this market, what they do is that if there is a loss, then they hold it and keep increasing their loss so that the entire risk-reward gets spoiled and their portfolio is destroyed. A big part is lost.
On the contrary, if we see profit, then we get out of the market by booking a small profit. Whereas to become a successful trader, we have to reduce the exact opposite. If we have a loss then we have to exit with a small loss and if there is a profit then trail our stop loss and book a big profit.
Working without taking into account the risk-reward ratio means that you have not analyzed your risk management, you have not seen how much loss I have to take in a single trade, according to your investment, know that you have a total capital is of 1 lakh and in my one trade, I made a loss of 10-15 thousand, 20 thousand.
Whereas what you should do is that first of all, do 1 lakh investment in at least 3 parts, it means take 3 trades of 33-33 thousand.
Now in a trade, you have to take a maximum loss of 2500-3000, due to which your risk becomes diversified. So you have set that to that will be 2500-3000 only but you can cover this loss by taking another trade.
Money management or fund management simply means that you have to understand that in which asset you have to invest how much, how much is the risk in that asset, for how long you have to invest.
One of the reasons for the loss in the stock market is that people do not decide the amount of their investment. This is also a big mistake.
Because the investment amount is not fixed, they invest most of their money in the stock market. Due to which they do not have enough money even for emergency times.
And when they need money, that's when the market is going downhill. Due to which they have to withdraw money from the market by making losses.
Never Test The Depth Of River With Both The Feet.
- Warren Buffett
Therefore, keep some of your money in fixed interest investments as well.
When it comes to money management, the first few questions you should ask yourself are:
Overtrading simply means that you do not have satisfaction, you are not disciplined, what do most of the losers do that if they took a trade, they lost it, then immediately without understanding the market, they seem to recover this loss. And without doing proper analysis of the market then take another trade in which they may have to face loss again.
The second aspect also happens that you took a trade in which you earned some profit, for example, let's say you have earned 3000 but you do not have satisfaction, you keep doing BUY and SELL throughout the day in order to earn more profit.
And what happens at the end of the day is that you end up with a total loss and have to pay brokerage, taxes separately.
Whereas what a successful trader does is that he plans his entire day that I have to work for only this much profit and so much loss.
Like if I will make a profit of 2000-5000 then my whole day's work is done or if I will lose 1500-2000 or 2500 then I do not want to trade.
Investing at the wrong time. Often people buy clothes when there is a discount or sale on clothes. But when there is a recession in the stock market i.e. sale is engaged, then because of the fear of loss, they also start selling the shares of a good company.
Whereas they should buy shares during the recession. Because even the best company's shares are available at a very good discount in the time of recession in the market.
I will tell you how to be rich. Close the door. Be fearful when others are greedy. Be greedy when others are fearful.
But people do the exact opposite of this. When the market is moving fast, then many stocks move by different percentages like 5%, 10%, 15% every day. Seeing such a boom in a day, more and more people invest in the stock market at the same time.
Due to which they get good profit in some time, but soon that profit turns into a loss. Because they would have invested by buying the shares at a very expensive price.
For this reason, they do not have money during a recession and big companies are available at very good discounts, then they are not able to buy shares. That's why when the market is very fast, then everyone is buying, don't buy shares seeing this.
Rather, after analyzing different companies, buy shares only at the time of getting good discounts.
Caution: Do not invest in any company even if there is a sale in the stock market. Rather, invest only in a good company you have found during a downturn in the market.
The biggest mistake people make in the stock market is that people do not pay attention to the company's valuation of the stocks before investing, most people hold on to the high quantity of penny stocks or low price stocks.
When they do not have any information about the business, product and services of those stocks. What happens is that their stock keeps going around the same price for a long time or going further down which will give negative result to your portfolio. With this, always pay attention to the valuation of the stocks first and whenever there is a price discount in the market, then invest only in quality and value stocks.
We all have heard one thing that "RICHER GETS RICHER" (only the rich become richer) and this is also true, but when it comes to buying shares, we invest money in quality stocks.
One thing to think about is that the company which will be doing good business right now, which will have money, which will have good value, the same company will give good return in future also but we do not keep this in mind and then our portfolio becomes negative.
Thinking that these stocks have become expensive, people left stocks like MARUTI, MRF, EICHER MOTORS, Hero MotoCorp, Bajaj Auto and are repenting today.
Doing investment is always beneficial when it is done with a proper objective, a clear financial goal with an outlook of long-term sustainability. Many often it has been observed that everyone follows the old method of investment that is purchasing physical gold or land or any other commercial property.
The simple reason behind all such instruments is that they are not volatile and secondly it has been considered as the safest way for a person who does not want to take the risk.
Luckily some other options like bank deposits, Bonds, Government Investment Schemes, and Debentures, etc are some instruments available to generate a good investment plan.it all depends on the nature of an investor whether he is ready to take the risk or just wants to go with the flow.
These kind of investors are those who wish to create wealth without taking any risk are those who always in search of riskless low volatile instruments.
A low-volatility investment is that in which an investor prefers those instruments which are low in volatility (Shares or mutual funds).
A person having low-risk capacity by nature and the one who does not wish to take any sort of risk or afraid of losing money prefer this kind of investing. It is turn out to be safer as there is no risk of market or inflation is associated with it. These investors simply enjoy a very little amount of growth in their invested sum. Though this is not enough to beat the rising inflation rate.
Though the investor is afraid of taking risks invest ample amount of sum in bank deposit, FD, Bond, & in fixed return mutual funds. The diversification of these investors is always associated with fixed return instruments. Their major objective is to generate a risk-free return only without thinking much about the appreciation of the invested corpus.
As the name suggests investment inequities are always associated with market risk. But many often the returns are far better than that of other instruments.
Equities are always termed as high-risk high return instruments, But many often whenever the market crashes it is not that all the equity stocks started falling some are there whose nature is very less volatile and can be suitable in long-term investing.
Yes, not all listed equities need to be volatile some are very less affected by market fluctuation and are steady and provides a better return. There an investor can get handsome returns and suitable growth in their portfolios.
It is not always necessary that all the less volatile stocks will provide a healthy return, it majorly depends upon the performance of the company alongside the market condition it is dependent upon.
Investors often focused on quick earning so they risk their money without knowing the nature of the stock, but before investments, it's better to understand the risk and volatility associated with it.
Our economy is still recovering from the impact of Covid-19. Our country is going through the 2nd wave of the pandemic and is still trying to overcome the losses that happened due to the serious issue of Covid-19.
Recently the GDP data arrived which shows some relief for us, But still, we are facing the serious issues of Inflation across the necessity items.
One of the major is Crude Oil/ Petroleum the prices in India are crossing the mark of Rs.100/ltr which directly affects the economy. The foremost impact is on the transportation & logistics, which somehow leads to rising in the prices of many essential items & products.
But with the advancement in technologies now we are shifting towards the easiest way of transportation which can work with the help of electricity in the most efficient manner.
The Indian market will soon see a new turnaround in this segment as the market will grow up to USD 47 billion by the end of 2026.
These vehicles are more cost-efficient, will have zero pollution and are more in demand in the USA and other countries. Everyone is looking at Electronic Vehicles as the future and which is soon going to happen.
Even the Government of India has announced a PLI scheme of Rs.57000 Cr for the manufacturing of auto parts which will boost it further.
Here is a list of some important auto-ancillary companies which are benefited:
The company manufactures lead-acid storage batteries from 2.5 ampere-hours to 20,600 ampere-hours. The company manufactures automotive batteries, industrial batteries, and submarine batteries.
The company is one of the largest manufacturers of lead-acid batteries for both industrial and automotive applications in the Indian battery industry.
This company is engaged in manufacturing and selling Tapered Leaf, Parabolic Springs, and Lift Axles. It was the first company to introduce parabolic springs in India.
The company is a leading supplier of lighting systems in an automobile which includes Head & Tail Lamps, Sundry and Auxiliary Lamps & other accessories for two and four wheeler, Buses & trucks, Tractors, and earthmovers.
They are engaged in the manufacturing of auto components which includes auto electrical parts & their relative accessories.
This company is a glass manufacturing company in India which is manufactured laminated windshield, antenna printed back lite, solar control glass, Glass antennas, etc. It also manufactures floating glass-like reflective glass.
The company offers a wide range of ride control products and also enjoys a monopoly position in the market.
The company manufacture completes seating & interior components for the automobile. This includes Two & Four wheeler seating, Mould Carpets, Mainframe for a two-wheeler, & Railways Seats.
The company engaged in the manufacturing of automotive wiring, Harnesses, Mirror for passenger vehicles. Mother-son Sumi is also a leading supplier of plastic components & modules in the industry.
Furthermore, companies which are engaged in Tire manufacturing, Power Generation, and supplying will be beneficial. Moreover, the EV segment will bring a positive change in the automobile segment.
Note: Details shared here are only for educational purposes.
ETFs have been on the investor’s radar for the past 10 years as many investors find it easy to purchase several tradable assets such as shares, debt securities, bonds and derivatives.
Since most ETFs are registered with SEBI (Security and Exchange Board of India), people feel more secure to trade in an ETF.
ETF has received global attention from FIIs and retail investors around the world because it has become an appealing option for investors with limited knowledge in the stock market.
Here we will understand a brief about ETFs and how did they receive attention in India?
An exchange-traded fund is a form of mutual funds that trades like a common stock on a stock exchange. These funds keep an eye on stock indices.
When someone buys units of an ETF, he/she purchases a share of the funds that provide the return and yield of its parent index, i.e stock market indices.
It’s a common myth among people that ETFs can outperform or beat the index. This is not the case. Instead, ETFs are dependent on the index performance.
You can say that ETF strongly follows the stock exchange and hence they fluctuate throughout the day just like stocks.
Like mutual funds, an ETF also possesses units that can be bought and sold through a registered yet trusted broker of a stock exchange.
The units of an ETF are listed on a stock market and thence its NAV varies according to the stock market movements.
In India, ETFs are gaining huge popularity as the top AMC and top hedge funds have failed to outperform the stock market benchmark. Hence, investors are now finding passive ETFs is a better option for investors.
If we talk about advantage, then ETFs are cost-effective as the ETF administrative charges are 0.2% or less than it while other actively managed funds charge up to 1% fee.
As mentioned earlier, an ETF shares the features of both shares and mutual funds because they are traded on a stock exchange like other stocks. Hence, they can be bought and sold according to the needs during the trading period.
The price of an ETF heavily depends on the cost of the underlying asset that is present in a pool of resources. Hence, if the price of an asset goes up or down, the share price of an ETF rises in direct proportion or vice versa.
ETFs also give dividends to their customers. However, the amount of dividend a shareholder receives depends on the performance and asset management of the concerned ETF company.
ETFs can be managed both actively and passively according to the company norms. Actively managed
ETFs are managed by the portfolio managers who are the experts in the market and therefore they can better understand the market condition and mitigate the risks associated with the funds.
While passively managed ETFs follow a specific market indices trend and only invest in the companies that perform better and is listed on the charts.
Investing in ETFs gives you several benefits rather than opting for mutual funds or shares of a company.
Here are the benefits of investing in ETFs:
Buying shares of a company allows you to receive the limited benefit subjecting the higher risk. While investing in an ETF helps you to keep your money diversified across different sectors of a company which in turn effectively mitigate your risk.
If one asset fails to deliver the best result in an ETF, it can be recovered by the growth of other assets.
Another advantage of investing in an ETF over a mutual fund is the minimized expenses. Mutual funds charge different fees on different things such as entry or exit load, management fee, maintenance charges etc. This increase the total cost associated with the mutual fund and hence the expense ratio of mutual funds is greater than that of ETFs.
The value of a mutual fund depends on the performance of NAV and it can be bought and sold after the stock market closes.
In the case of ETF, any changes in the value of the ETF can be easily monitored and it can be bought and sold throughout the market timings.
ETFs are more tax-friendly than mutual funds. Although both the funds are subjected to capital gain tax and dividend tax, the fee charged on ETFs is less than mutual funds.
Since ETFs are passively managed, they are less riskier than mutual funds. This is because an ETF only invests in best-performing companies which are listed in a particular stock exchange, while mutual funds assess all the businesses with great potential.
This keeps mutual funds at a higher risk as new companies have a high chance of incurring a loss.
Equity ETFs:
Equity ETFs invest in equity investment.
Gold ETFs:
Gold ETFs mainly deal in commodity exchanges because these funds have physical gold assets. Hence, if someone buys units and share these funds, the company makes the investor owner of gold on paper.
Debt ETFs:
Debt ETFs consist of debt-related securities such as debentures, government securities, debentures etc.
Currency ETFs:
These funds buy currencies from different yet developed countries and receive profits from the currency fluctuations. It has to be noted that these funds are dependent on the future performance of currency that can be predicted by research analysts with specific calculations.
As ETFs are likely traded like shares, there are numerous expenses a person has to be incurred while purchasing the units.
The whole process can be done by the fund managers who charge a minimal commission fee for the transaction.
ETF companies listed on the stock exchange heavily depend on the indices and therefore the unit prices can fluctuate as per market trends. ETFs are a better option than mutual funds but they are not safer than government bonds. Any profit or loss a person incurred is completely based on stock market volatility.
As ETFs are passively managed funds, they are moderately diversified. This is because ETFs generally invest in the best-performing companies listed on a stock exchange that is not in abundance.
As of August 2020, the total ETF asset under management hits at Rs 2.07 lakh crore. Also, the value of AUM in Nifty is recording high in 2021 which is Rs 1.02 lakh crore.
According to AMFI data, it has been recorded that the domestic ETF AUM linked with debt and equity funds has grown at a rate of 65% over the last 10 years. The primary reason behind the success of ETF is the gain investors received from these funds.
Insurance acts as a contract, on which is represented by a policy, under which an individual receives financial protection against uncertain life events which causes him/her uncertain financial losses, The reimbursement of these losses are borne by an insurance company. The company collects a sum from an individual which is term as insurance premium which in return assures the person of transferring his risk of uncertainty to the insurance company.
The insurance sector in India broadly classified as:
Life insurance is defined as a contract between an insurer and a policyholder. A life insurance policy guarantees that An insurer pays a sum of money to the named beneficiaries when the insured policyholder dies, in exchange for the premium paid by him during his lifetime.
It is a pure risk cover product. The policyholder received the benefits if he dies during the period for which one is insured. It provides insurance coverage for a specified term of years with a specified premium. The premium buys protection in the event of death only. Premiums are low here because it only covers the risk of death and there is no investment component in it.
In this, the insurance contract is designed to pay a lump sum after a specific term or on death only. Normally maturities are of ten, fifteen, or twenty years and up to a certain age limit too. Some of the policies also payout in the case of critical illness.
Money-Back Insurance Policies are a type of endowment policies that covers the life and also assures the return of the sum assured as a cash payment at regular intervals. It is a kind of savings plan with the additional advantage of life cover and regular cash inflow. The rate of return on endowment policies is quite low.
It provides insurance cover for the entire life of the insured person or up to a certain age. Premium is fixed for the entire period. There are different whole life policies such as shorter premium payment periods and return of premium option. One of the primary advantages of a whole life policy is guaranteed death benefits; guaranteed cash values. The disadvantage of whole life insurance policies is premium inflexibility, and the internal rate of return in the policy may not be competitive with other savings alternatives.
A ULIP is the combination of insurance cover as well as investment opportunities in a single policy offering. Unlike other insurance policies, the insurer gets the benefits of investments in this. An insurer just needs to pay the regular premium which has been departed by the company. Some portion of the premium is used in investment instruments and the remaining is used as insurance coverage.
It offers the coverage of medical expenses borne by the insurer, which is caused by any illness. The expenses covered by the insurance company can be wholly or part of it.
It covers the insured in case of any accidents. Apart from all the medical costs for treatment, salary loss due to injury may also be covered. The compensation depends on the nature of disability caused and the extent of disability.
It is a kind of insurance product that covers the unforeseen losses that occur while traveling, either domestically or internationally.
It is a kind of Third-party insurance, which covers the people affected by motor accidents is compulsory under law. Insurance covers the cost of the vehicle and its accessories. Insurers have their schedules of coverage and premium, depending on the age and model of the vehicle.
It protects against risks to property, such as fire & theft, and some weather damage (Natural Calamities). It includes specialized forms, such as fire & burglary insurance, flood & earthquake insurance, and home insurance.
The rate of progress in AI has been very irregular and unpredictable. The global artificial intelligence market size was projected at USD 39.9 billion in 2019 and is expected to reach USD 62.3 billion in 2020, is probably to grow at a compound annual growth rate of 42.2% from 2020 to 2027 to reach USD 733.6 billion by 2027. Organizations are implementing AI for varied business applications.
The technology provides real-time data gathering, forecasting, and analysis for delivering greater insight in industry verticals, like automotive, healthcare, retail, finance, and manufacturing.
The banking, financial services and insurance industry have undergone a dynamic transformation because the industry requires improvement in areas like fraud detection, wealth management and insurance processing.
By implementing AI BFSI firms can meet strategic objectives like improving customer experience, cost and efficiency optimization, delivering personalized services and improving speed-to-market for offerings.
The manufacturing industry deals with vast quantities of knowledge due to the utilization of sensors and networks,93% of companies believes AI is going to be an essential technology so as to drive growth and innovation within the sector.
87% of manufacturers have adopted AI or planned while 83% hold that AI will make a tangible impact on manufacturing and management within the following 5 years.
Software led the synthetic intelligence market and accounted for quite a 39.0% share of the worldwide revenue in 2019, due to prudent improvements in information storage capacity, high computing power, and multiprocessing capabilities to deliver high-end AI software in dynamic end-use verticals.
Machine learning and Deep learning has led the market and accounted for quite a 39.0% share of the worldwide revenue in 2019, due to its complicated data-driven applications, including text/content or speech recognition.
As an example, in March 2018, NVIDIA Corporation announced a strategic partnership with Arm Limited to bring deep learning inference to the web of Things (IoT) and consumer electronics devices within the global marketplace.
The advertising and media segment led the market and accounted for quite a 20.0% share of the worldwide revenue in 2019. The healthcare sector is gaining a number one share supported use-cases, like robot-assisted surgery, dosage error reduction, and automatic image diagnosis. The BFSI segment includes financial analysis, risk assessment, and investment/portfolio management solicitations.
North America dominated the AI market and accounted for over 42.0% share of worldwide revenue in 2019. This is often due to the presence of leading players within the region, a strong technical adoption base, and the availability of state funding. The Asia Pacific is estimated to witness significant growth in the market for artificial intelligence.
In September 2019, IBM Watson Health signed an agreement with Guerbet, for the event of an AI software solution for cancer diagnostics and monitoring. Moreover, in January 2019, Intel Corporation announced its partnership with Alibaba Group Holding Limited (China), to co-develop AI-powered tracking technology to be deployed at the Olympic Games 2020.
Some key players operating within the AI market include Atom wise, Inc.; Life graph; Sense.ly, Inc.; Zebra Medical Vision, Inc.; Baidu, Inc, Google LLC; Intel Corporation; and Microsoft Corporation etc.
Globally there is a trend of startups growing in the market. Hence key players are taking several strategic initiatives, such as mergers and acquisitions, partnerships, and collaborations with other major companies so as to offer customized artificial intelligence solutions to fulfil the rising needs of the industries and to expand globally in order to enhance their offerings these players are acquiring startups.
Investments that are rising in research and development by leading players also will play an important role in increasing the uptake of AI technologies.
For example, the Chinese tech giant Alibaba's research institute Damo Academy has developed a diagnostic algorithm that can detect new coronavirus cases with the chest computed tomography (CT) scan. The AI model utilized in the system has been trained with the sample data from over 5,000 positive coronavirus cases.
In December 2019, Intel Corporation has completed the acquisition of Habana Labs Ltd., an Israel-based deep learning company. This acquisition is estimated to strengthen Intel Corporation’s AI portfolio and encourage its efforts within the AI silicon market.
The retail industry is expected to grow significantly: the expectation is that 80% of executives will adopt AI-powered intelligent automation. It is because of customer changing habits. Artificial intelligence technology in retail offers various benefits such as predictive merchandising, programmatic advertising, market forecasting, in-store visual monitoring & surveillance, and location-based marketing.
This is likely to boost cloud adoption. On-premises has led to gain maximum shares. Owing to less implementation expense cloud deployment is gaining traction. Eg is amazon which offers easy image recognition, chatbots, etc. so cloud deployment would be in demand in few years.
Use of machine learning, NLP and computer vision: machine learning is gaining popularity because of precision in analysis. Which the increasing application for chatbots and virtual assistant is boosting demand for NLP technology. Ml technology is required mostly in healthcare sectors computer vision is another one.
The fusion of air and cloud computing can help to grow market segments. Companies with fewer funds can rely on cloud computing for the services. For eg.veritone has use cloud computing for building it AI operating system. Startups are using fusion to expand globally.
Increasing use of AI will increase chances in the service market: three components of the market are taken into account they are: hardware, services and AI software. Hardware will grow because of semiconductor companies.
Enterprises will be enabled to increase the use of AI of network optimization to optimize their inventory by making orders that supported the estimated demand, current inventory level, and time interval.
Al can help telecom providers to create self-optimizing networks (SONs), which may provide network operators with the power to automatically optimize their network quality counting on traffic information by zone and region. Poor availability of skilled workforce and high cost of implementing AI.
A major challenge for the expansion of Al within the telecommunication industry is that the shortage of technical expertise among the workforce.
Enterprises implementing Al are required to possess sound knowledge on working with Al software platforms and periodic servicing necessities to make sure smooth operations.
“Any person who is engaged in the business of issue management either by making arrangements regarding selling, buying or subscribing to securities as manager-consultant, advisor or rendering corporate advisory services in relation to such issue management” - SEBI Merchant Bankers rules 1992
A merchant bank is a monetary organization that basically manages commercial banking needs of worldwide money, long haul credit for organizations, gives counseling services and endorsing of stock. It additionally goes about as a middle person between the issuers and definitive buyers of the securities in the essential market.
Despite the fact that the State Bank of India is the primary establishment to set up a different division for merchant Banking administrations in 1972, its services were begun in 1967 by National Grind lays Bank subsequently followed by CITI Bank in 1970.
The fundamental contrast between merchant banking and business banking is, business banking includes accepting deposits and giving credits and advances though merchant banking includes delivering of the services for a charge.
1. Helps Clients In Fundraising:
Assistance is rendered to raise loans for projects after determining the promoter’s contribution. They also help companies in raising finance by way of public deposits. Credit Syndication alludes to getting advances from a development finance institution or an organization or consortium. Merchant Banks assist corporate customers with raising syndicated loans from commercials bank.
2. Going about as the stock broker purchasing and selling securities for their clients goes under their obligations. They perform total point by point stock market research on the various securities on the lookout and aides their customers wherein to contribute for better development and benefit.
3. Helps In the Management of the Project
It incorporates preparation of Project Reports, it decides Upon the Financing Pattern, Appraising the Project regarding Its Technical Commercial and Financial Viability and It Includes Filling from Application Forms for Obtaining Funds from the institution.
4. Taking care of Companies Public Issues:
The board of issues includes the advertising of corporate securities, Value shares, preference offers and debentures by offering them to the public.
5. Helps In Managing the Portfolio of Its Clients:
The merchant banker aides the investor in issues relating to investment choices. The viable administration of Securities Tax assessment and inflation are considered while prompting on investment in different securities. Investments are done in a way that ensures maximum returns and minimum risk.
6. Advisory Services:
Merchant banker goes about as mediators among offer or and offer, arranges method of installment. The merger is a blend of at least two organizations into one organization where one endures and the other loses its identity. Takeover is the buy by one organization procuring controlling revenue in the share capital of another organization.
The role of merchant banker is quite vast. Where commercial bank offers general banking facilities like opening a bank account, lending money to people, merchant banking, however, offers a wide spectrum of financial services to multinational corporations and high net worth clients. Also, merchant bank provides financial services like fundraising for SMEs to scale their business to an upper level. The availability of merchant banks in India is less than commercial banks, despite they are in equal demand as commercial banks.
A stock broker is an intermediary who enables buying and selling of stocks and securities in a stock exchange on behalf of financial institutions and firms. Needless to say, all the stocks are traded through major stock exchanges. However, an investor cannot directly trade in stock exchanges.
To successfully carry the transaction of stocks trading, you are required with an intermediary who helps you in purchasing and selling the stocks in a much better way. This intermediary can be a person or a company that is authorized to do the transaction of stocks on your behalf. Such a company or person is known as a stock broker in India.
A stock broker in India can be anything a stockbroking firm or an independent firm; known for providing stockbroking services for the customers.
In general, a stock broker is the one who performs a service for the investor. The main job of a stockbroker is to buy and sell stocks for a client. Also, a stock broker helps their customers to get a detailed insight into a stock that helps investors to make informed decisions about the investment.
Before we step into the importance of stock broker, let’s figure out how to choose the best online stock broker:
Selecting the right online stock broker is an extremely crucial decision you will make as an investor. This is because a perfect stock broker not only helps investors to determine the stocks but also guides them to pick the best stocks which are capable enough to generate better returns for them.
If you are a newbie who wants to invest in stock market trading, it is suggested to pick the best online stock broker, as with the help of it, you can handle all the stock market operations at a fingertips. Although there are different types of broker available online, choosing the best one is still a challenging task.
1. Comprehend your Basics
Understanding needs while investing in the stock market is the foremost point. That’s why opt for a stock broker who clearly understands what you expect from stock trading.
Many online stock brokers charge high brokerage charges which may not satisfy new investors. Hence, it is suggested to go through the stockbroker who provides excellent stock trading services at affordable brokerage charges.
2. Stock Market Pricing
It is important to check the pricing of a stock broker before deciding to move further. Try to find out the AMC annual maintenance charges. These charges vary from broker to broker. Some of the stock brokers charge a very high amount while there are some stock brokers, who charge quite low brokerage charges.
3. Range of Trading Segments
Different investors have different priorities in trading financial products such as Equity, commodities, IPOs, FDs and more. Go for the stock broker who has different financial products.
4. Fund Transfer Process
Select a stock broker which comes with 3 in 1 Demat account as the stock broker provides seamless fund transfer services which allow investors to trade with ease. Conversely, if you open demat account with a non-bank stock broker, then you will need to transfer money every time you start trading.
5. The Expertise of Research Team
While selecting a stock broker, it would be ideal to check the research team provided by the stock broker first. This is because the research reports generated by the stock broker help investors in picking the best stocks that would give them high returns.
In share trading, margin trading refers to the process where individual investors buy more stocks than they can afford. Also known as intraday trading, margin trading allows all the transaction of stocks (buying and selling) in a single day.
Now Intraday’s stock brokers are well capitalized. Here, stock broker lends capital to the traders who want to leverage their positions. A margin amount is to be paid by traders after which they are allowed to take positions in the stock market. Generally, the margin amount is 50%.
Mostly, a broker deals in all types of securities. The stock brokers suggests the best deals to its clients such as when to buy or sell a stock. Majorly suggest the stocks on the basis of advisory, and research reports suggested by them.
A stock broker receives orders from multiple traders and places those orders on a stock exchange. Once the order is successfully placed, trades will get to know about it. However, this is the case with full-service stock broker of India, online brokers facilitate trades with trading platforms where traders can place their orders on their own.
All the orders are automatically visible in your Demat account once they are successfully placed and executed.
Full-service stock brokers charge commissions in the form of brokerage for the services they provide to traders. This charge is some percentage of the trader they provide to clients. Discount brokers charge a flat commission which is pre-decided on every executed order.
Now, many of you have acknowledged the fact that how share trading can play a valuable role in your life. Yes, you heard it right. Investing in online share trading gives you bundles of opportunities to invest in different types of stocks.
Once you gain appropriate knowledge about stock trading, you can easily perform transactions with such an ease and book a significant amount of profit. In case you need any help, you can easily connect with an online stock broker, during the initial days. Once you become a thorough expert in buying and selling shares then you can try to do it on your own.
Here are 5 steps through which you can buy shares online:
PAN Card
For the Demat account opening process, you must require the important document as proof i.e PAN Card. PAN stands for permanent account number; a primary requirement for entering any financial transaction across any country. It is a valid ID proof that is issued by the government of India.
Depository Participants
NSDL (National Securities Depository Limited) and CSDL (Central Security Depositories Limited) are the primary depository participants of India that helps you to store the shares you hold. They provide you with a unique account pertaining to the same.
Many people often get confused with the term Demat and Trading account. Demat Account shows the number of shares you hold. Trading account, on the other hand, allows you to buy and sell shares that you currently have.
Picking the right Stock Broker
If you are a beginner then it is suggested to consult a full-service trusted broker. This is because the full-service broker gives you guidance on the day to day aspects of share trading. These stock brokers are SEBI (Security and Exchange Board of India) certified and given license to act as a broker. In other words, a broker is an intermediary between an independent stock broking firm and share trader.
Ways to Perform Buying and Selling of Shares
This is how you perform in buying and selling shares. For instance, you have bought shares of Rs 890 with the assistance of a broker, the broker will ensure you regarding the purchase order or stop order. Also, they help you to execute the stop order if you want to stop the transactions during the day.
How Best Stock Broker in India regulated?
Stock brokers in India are regulated under the Securities and Exchange Board of India Act 1992, Securities Contract Regulations Act, 1956, and also the Securities and Exchange Board of India (Stockbrokers and sub-brokers Regulations), 1992.
In addition to this, stock brokers are also regulated under other regulations and bylaws that SEBI may issue from time to time.
Important Note:
Every stockbroker in India needs to be a member of stock exchanges and also requires to be registered with SEBI. Stockbrokers display their registration details on their websites and even on official documents. To get any inquiry about registration, one can also visit the SEBI website and find details of registered stockbrokers.
Now you all know about a stock broker and how they are regulated, let's take a quick tour of the types of stock brokers.
Based on the types of service provided, there are majorly two types of stockbrokers - full-service stockbrokers and a discount stockbroker.
Full-service stockbrokers offer full trading services along with a wide range of add-ons to their clients. They are traditional brokers who provide advisory services, research reports and relationship managers aside from assisting you in buying and selling shares. Furthermore, Stock Broker also provides a variety of services including IPO, mutual fund, insurance, loans etc.
Many investors preferred to take services from full-service brokers. The foremost reason is that stock brokers are established players as they have opened their branches all over the country. Therefore, it becomes easier for the clients to use these branches for services and advice.
Discount stockbrokers, on the other hand, do not provide any advisory services and research facilities. They have come into existence because of the easy accessibility and usage of the internet. These top stock broker in India, provide an online trading platform for their clients. And hence, discount brokers charge flat brokerage charges which is mostly a flat fee.
In the world of digitization, all brokerages have started to provide online stock trading services to their clients where users can log in to the stock trading account with a username and password for the execution of trades.
Online stock broking services are faster than traditional service as transactions can occur with the internet.
Also, online stockbroking services provide stockbrokers with a facility to connect with the clients through emails, chatbox and provide real-time updates.
After getting a lot of information regarding stockbrokers, it is also essential to take a quick glance at a sub broker.
A sub-broker is appointed by brokers who act on the behalf of a trading member or stockbroker for helping investors in the dealing of financial securities through trading members. A sub-broker is a person or agent who is not a member of the stock exchange. Sub brokers don't have direct permission to deal in securities. Firstly they need to register with SEBI to trade in financial securities.
All the parties involved in trading services whether it is clients authorized persons or stock brokers, all are governed by SEBI. This states that all the transactions, liabilities involved in share trading must maintain clarity and transparency.
Here is a list of rights and responsibilities of the top stock broker in India:
A stock broker shall maintain full integrity, fairness and promptitude in the conduct of all the business.
A stock broker shall act with care, diligence and due skill in the conduct of all his business.
A stock broker shall not indulge in deceptive schemes, fraudulent transactions or spread rumors in order to distort market equilibrium or making any personal gains.
A stock broker shall not create a false market either single or in concert with others. Also, stock brokers shall not indulge in any act detrimental to investors interest that leads to interference with the fair or smooth functioning of the market.
A stock broker shall not involve himself in excessive speculative business in the market beyond reasonable business not commensurate with his financial soundness.
A stock broker shall abide by all the provisions of the Act and the rules, regulations issued by the Government, the board and the stock exchange from time to time as may be applicable to him.
As there are no specific educational requirements for becoming a stock broker, there are certain courses that may help you leverage the benefits of a stock trading job.
The minimum qualification for becoming a stock broker is graduation with at least 2 years of experience in a stock broking firm. Many stock brokers also have a master's degree called an MBA in finance which helps them to get knowledge of mathematics, statistics, qualitative analysis and more.
Stock brokers often gain experience in stock training by working in a stock broking firm as it will help them to get a deep understanding of the regulation of the stock market, financial markets and accounting practices.
Brokers should also pass the entrance exam that is available in this field:
BSE Certifications on Central Depository
BSE Certifications on Derivative Exchange
BSE Certifications on Currency Futures
BSE Certifications on Security Market
Indian capital market is considered as one of the most organized and regulated sectors. The foremost reason for the excellent organization is SEBI. Whether you are an investor or a stock broker, you should work in stock trading according to the guidelines governed by SEBI or else you may find it in a difficult spot.
Mergers and acquisition is a common term you must have heard before. Even if you are surfing the internet, you must have heard about the news of many companies which are going through a process of mergers and acquisition. It happens when two companies decide to combine and form a stronger company. But the question is what is merger and acquisition and how does it affect the stock prices.
As there are several ways in which two companies can combine, one of the most common processes is Mergers and Acquisitions. If two companies want to combine to form a big company, there are numerous reasons behind it: increasing market share, minimizing competition, increasing geographical reach and more.
Although, there are many companies who go into the merger and acquisition process, yet they are still not recognized. This is because either these companies are not big enough to catch the fresh headlines of the news.
Today we will talk about mergers and acquisition and how does it impact stock prices:
Mergers is an act where two companies of similar sizes and structure combine to form a new company. It is important to note that mergers usually happen between the companies which are considered equal in many ways.
There are different types of mergers:
A horizontal merger refers to a business consolidation between two companies operating in the same sector and selling similar products. A horizontal merger can be done to reduce competition, make more market control and benefit from the economy from the sale.
When two companies provide different supply chain functions including product development/selling cycle for a common good service, then it is known as a vertical merger. For instance, a manufacturing company can vertically merge with a raw material provider to create a bigger company.
When two or more companies in unrelated business activities merge and create synergy to enhance value, boost performance and save cost. In simpler terms, conglomerates consist of companies that don't have much in common.
In the product extension merger, two companies operating in the same sector and having a similar target audience with the aim of creating a new company with a huge range of products.
When two companies operate in the same sector but different markets come together to form a big company with an objective of a bigger client base and the wider market.
As mergers are all about the amalgamation of two companies, Acquisitions is, however, initiated by a larger company to absorb the smaller ones. It is a process where one company purchases more than 50 per cent of another company’s shares to gain control of that company.
If a company purchases more than 50% of a target firm’s stock, then the acquirer has a full right to make decisions about the newly acquired assets without the approval of the company’s other shareholders.
The primary reason for the acquisitions of smaller companies by large companies are:
When a large company that has reached its full limit of operations, resources, logistics. Then it might start looking at young and promising companies to acquire and incorporate into its revenue stream.
In order to get benefits from new technologies, a large company acquires a young and technologically driven one to benefit from new technologies. This is a cost-efficient way to implement new technology in any organization.
When a company tries to expand its operations, it acquires a small company rather than setting up a new business. By doing so, companies can save a lot of hassle and cost associated with setting up a new business.
Every merger or acquisition marks a great impact on the stock prices of the participating companies. Here, we will highlight the effects of mergers and acquisitions:
You may notice high volatility in the stock prices of the companies who are getting involved in mergers and acquisition.
The process of merger and acquisition is quite a long term process where several things need to be taken care of before signing the merger agreement. Many traders and analysts predict the outcome of a company and assess whether the new company post-acquisition will be stronger than the previous one or not. This gives a lot of information to the investors regarding the stock market volatility.
Therefore as an investor, if you invested in the stocks of the companies that are undergoing merger and acquisition, then expect the stock prices to be volatile during the process.
Stock prices make a huge impact on the companies that are going through the process of mergers and acquisition as it depends on the wide range of factors like macroeconomic factors, market capitalization and more. Usually, when the merging companies are similar in size, profitability and achieve an advantage, experience a hike in the stock prices.
The volatility in stock prices tends to increase in its trading volume which further increases the stock market prices. Once the merger process is complete, the stock prices of the company are generally higher than the price of each underlying company.
In the case of acquisition, the stock price of the target company increases. The main reason behind this belief is that in an acquisition, the acquiring company pays a premium to acquire the target company.
Here, the investor made a belief that an acquisition takes place only when both the acquirer and acquire benefit from the deal. The acquirer agrees to make a deal if it sees potential in it and the targeted company accepts the deal if the purchased price offered is greater than its current market price.
In an acquisition, the market tends to choose favorites. In other words, investors tend to look for winners and losers in the proposed deal. Since the acquiring company is making the purchase, unless the profitability of the deal is not evident to the investors, the stock price of the acquiring company tends to get affected negatively.
Earnings per share is an important metric which is used to identify a company's earnings. It is calculated by dividing a company's profit by its common stock’s outstanding shares. This is considered to be a significant factor as it provides a brief insight into the company’s profitability.
In simple terms, EPS tells how much money a company makes for each share and is primarily used to measure the company's financial health. Increasing EPS reflects higher profitability and vice versa.
Here is how EPS is calculated:
EPS = Net Income - Preferred Dividends / End-of-period common shares outstanding
For instance, a company ABC Ltd has a net income of Rs 12 lakh and announces 2 lakh as preferred dividends and has 5 lakh common shares outstanding (weighted average).
Hence the EPS of the company ABC ltd as per earnings per share formula would be:
EPS = Rs (1000000 - 200000)/ 500000
= Rs 2 per share.
You may not know but the company’s balance sheet and income statement are based on EPS calculations. It is recommended to use a weighted average number of outstanding shares as the actual number of shares may vary over a period of time.
It should be noted that the dividends earned on cumulative preferred stocks and non-cumulative preferred stocks affect the EPS results differently. For example, the dividend on cumulative preferred stock for the current period is subtracted from the net income.
The EPS is considered as one of the important factors to identify a stock’s price. It is also an essential component used for calculating price to earnings P/E ratio, which measures a company’s value as a factor of its current share price relative to its EPS.
In P/E ratio, the E stands for EPS. If you divide a company’s stock price by its EPS, investors can calculate the share value in terms of how much the stock market can afford to pay for each earned Rupee.
Although there are numerous variations of earnings per share and each of them tends to signify a different aspect of the financial parameter.
Earnings per share play an important role in measuring a company’s profitability and financial standing. There are several points investors need to know about earnings per share.
As discussed above, EPS depicts the profitability of a company, which in turn suggests that the company may increase its high dividend payout ratio.
EPS helps companies to compare the performances with their respective competitors.
With EPS, investors can easily determine the company’s current and anticipated stock’s value. Also, it helps investors to analyze whether the stock price is valued according to market performance and stock market research.
Although earnings per share are known to be a potential financial tool, investors need to understand that EPS has its share of drawbacks.
Here are the limitations of earnings per share:
Stock market timings play an important role in helping investors to know about the market opening and market closing to ensure easy yet fast transactions. Also, it helps investors to take advantage of stock movements in the market and hence it becomes easier for them to make easy money.
It is important to know that the stock market opening time and stock market closing time vary for different countries in different time zones. Indian stock markets enable investors to trade only during a fixed timing of the day.
There are two major exchanges in the country namely Bombay stock exchange and National Stock Exchange in which the investors can trade through. Now, we will cover the stock market opening and stock marketing closing timings of the leading indices in India BSE and NSE.
The pre-opening timings start from 9.00 am and end at 9.15 am. The session is also known as order entry session. Here, investors can buy or sell any securities during this time.
The session is classified into three sub-sessions.
9.00 am - 9.08 am - This session is also known as order entry sessions where orders for any transactions can be placed. In other words, you can easily place the orders for transactions of any stock. Moreover, you can also modify or cancel orders during the time.
9.08 am - 9.12 am - The segment is used for price determination of security as it is used to calculate the opening price of the regular session. Also, this session is used for matching orders as it is done by corresponding demand and supply prices to ensure accurate transactions among investors who want to purchase or sell a security.
Price matching orders help investors in determining the price at which security is transacted during the Indian stock market timings.
9.12 am - 9.15 am - This session is used as a transition period between the pre-opening session and normal Indian share market timings. Also, no such transactions can be placed during this time.
This is the fundamental Indian share market timing that lasts from 9.15 am to 3.30 pm. Transactions processed during this time follow a bilateral order matching system, whereas price determination is done through demand and supply. Bilateral order machine systems are highly volatile in nature and hence there are multiple market fluctuations which can be reflected at any time in security prices.
This is one of the busiest sessions as in this trading session, mostly buying and selling of shares takes place. Hence, it is also known as primary share market timings. The continuous trading session starts from 9.15 am and ends at 3.30 pm. During this period, trades continue as orders match at time priority.
There are few things, which investors need to consider while trading during the session:
The closing price of the stock is measured as the weighted average of the stock prices between 3.00 - 3.30 pm. The closing price for BSE and NSE is calculated as the weighted average of the stock for the last 30 minutes or between 3.00 pm -3.30 pm.
Post Closing Session
The stock market timing in India is marked at 3.30 pm. It is held between 3.30 pm to 04.00 pm. During this time period, you are allowed to bid for the following day’s trade. If there are enough buyers and sellers, bids placed during this period are confirmed. It should be noted that the bids placed during 3.30 pm - 4.00 pm are not affected by the opening price of the stock market. Hence, if the closing price exceeds the opening price, then bids can be cancelled by the investors.
After Market Order (AMO)
AMO in which you can place orders to buy or sell the stock for the next trading day. This is apt for investors who are unable to monitor the market during the opening and trading session.
The overall stock market timings in India can be described as follow:
S.NoNameTime1Pre-opening 9.00 am -9.15 am2Normal Session9.15 am - 3.30 pm3Closing Session3.30 pm - 4.00 pm
Needless to say, the stock market is a great place where investors can grow their wealth. Strategic trading on the stock market can help you increase your income, also well-managed trading helps you to get constant returns which can be more than your income.
Intraday trading is considered as quite riskier than other trading strategies as it involves buying and selling of stocks on the very same day. This is because, in intraday trading, a large number of stocks are bought and sold with the intention of booking profit. Here, the objective is plain and simple: to buy and sell shares within the same day. Before we begin, let's understand what exactly is Intraday trading and what are the strategies investors need to apply while intraday trading.
Needless to say, intraday trading means purchasing and selling of stocks on the very same day. However, with intraday trading, traders can short sell their shares and then buy back during the rolling settlement period. Experienced traders always recommend selecting the shares which are highly liquid.
It is important to determine the entry-level and target price before placing the buy order. It’s quite understandable for a person’s psychology to change post buying of shares. Hence, many traders may sell shares even if the price experiences high growth. As a result, they may lose the best chance of achieving gains because the price goes upward.
Stop loss is defined as an advanced order placed with the assistance of a broker to buy or sell a specific stock once it reaches a price point. It is generally used to restrict the loss or gain in a trade. This is beneficial in limiting the potential loss for investors due to downfall in a stock.
Stop-loss also works great in short selling. Investors who short sell their shares, stop loss acts a boon by minimizing the losses if the price goes up beyond their expectations.
There is a famous quote saying “ As long as greed is stronger than compassion, there will always be suffering”. Many investors suffer from greed or fear in terms of high earning. With the help of stop-loss, investors not only minimize their losses but also book their profits once the target is achieved.
Successful traders advised to include 10-12 shares in their wish-list and research all the stocks in depth. For instance, do fundamental analysis and technical analysis of stock and try to understand the trend such as the history of a stock, merger, present return and more.
Experienced professionals fail to predict the exact market movement. There are many times when all the technical indicators depict a bull market; there is still a decline. However, these factors do not provide any guarantee. If the market does not move according to your expectation, then it is important to exit your position to avoid huge losses.
Bonds are the securities that represent a kind of loan, which is to be completely defined, the loan amount, time for which the loan is taken and the rate at which it is taken, must be known. These three are known as Principal, Maturity, and Coupon respectively. They are also classified based on the issue type and its credibility.
Following are some common names.
Bonds that do not pay a coupon in their entire term are known as Zero-Coupon Bonds or simply 'Zeroes'. Such bonds are issued at a discount to their face values and are redeemed at par. Thus, the return on these bonds is not in the form of periodic payment of interest but the form of the difference between the issue price and redemption value.
Treasury Bills (T-Bills) issued by the Government of India, Commercial Papers (CPs) issued by corporates, and Certificate of Deposits (CDs) issued by banks and financial institutions are examples of short term zero-coupon bonds.
These are bonds whose coupon is not fixed, as in the case of vanilla bonds but is reset periodically concerning a defined benchmark. This could be the inflation index or inter-bank rates or call rates or some other relevant benchmark.
Resetting the coupon periodically ensures that these bonds pay interest that reflects current market rates. Due to their unique nature of constant adjustment of coupon rates, these bonds carry lower interest rate risk or 'price risk'.
Such bonds are especially useful in a rising interest rate scenario as they continuously keep tracking the interest rates prevalent in the market and adjust their coupons periodically, every 6 months.
A convertible bond or debenture is generally issued as a debt instrument with the option to investors to convert the amount invested into the equity of the issuer company later.
This security has features of both debt and equity. The issuer specifies the details of the conversion at the time of making the issue itself.
Bonds usually pay interest during the tenor and the principal is repaid as a bullet payment upon maturity. However, there is a type of bond, known as 'Amortization Bond', in which each payment carries interest and some portion of the principal as well.
Housing loans, auto loans, and consumer loans are an example of this type of bond, in which every month the borrower pays the same amount (Equated Monthly Instalment – EMI) but each month the composition of this EMI is different from the initial interest forming a larger part and later principal forming a larger part.
Callable bonds allow the issuer to redeem the bonds before their original maturity date. In other words, bonds that have an embedded call option in them are known as Callable Bonds. This feature poses a risk for investors but is beneficial for the issuers. An embedded call option gives the issuer the right to call back the bond before maturity.
When interest rates fall, the issuer would be in a position to raise the same amount of loan, at a lower interest rate. It is to the advantage of the issuer to redeem the existing high-cost bond before maturity and replace it with a new low-cost bond.
To compensate for the risk to investors, The investor in a callable bond, however, loses the opportunity to stay invested in a high coupon bond, if the call option is exercised by the issuer.
A Putable bond gives the investor the right to seek redemption from the issuer before the original maturity date. These bonds have embedded Put options in them. In this case, the risk is on the issuer, as the investor can, at any point of time give the bond back to the issuer and ask for his principal, earlier than maturity.
This would mean cash flow problems for the issuer. Investors would exercise their right to put the bond back to the issuer when interest rates start rising. They would simply ask for their money earlier than maturity and reinvest that at a higher rate.
Crude Oil is one of the most popular trading instruments among commodity traders. But before doing trade on any instrument every trader must know about the news related to that instrument, fundamental outlook, demand & supply factor, technical outlook.
Some important inventory data needs to keep in focus while analyzing crude oil inventory:
These are the important crude oil reports released in the United States among these all U.S. API Weekly Crude Oil Stock and U.S. Crude Oil Inventories are the two main important crude oil inventory reports.
API inventory report is released by the American Petroleum Institute (API) and other one U.S. Crude Oil Inventory is released by the Energy Information Administration (EIA).
API provides the information of all segments of America’s oil and natural gas industry. They have more than 600 members who produce, process and distribute most of the nation’s energy. The industry supports more than ten million U.S. jobs and is backed by a growing grassroots movement of millions of Americans.
API was established in 1919 as a Standards Setting Organization. EIA is an agency of the United States Federal Statistical System and also a part of the US energy department. The U.S. Energy Information Administration (EIA) collects, analyzes, and disseminates independent and impartial energy information to promote sound policymaking, efficient markets, and public understanding of energy and its interaction with the economy and the environment.
EIA provides a wide range of information and data products covering energy production, stocks, demand, imports, exports, and prices and prepares analyses and special reports on topics of current interest.
U.S. API Weekly Crude Oil Stock inventor is released on Tuesday Night at 02:00 AM (IST), which gives a glimpse of the movement of the crude oil for the day trading session on Wednesday before releasing US Crude Oil inventory data, whereas US crude oil inventory data is released on Wednesday night between (08:00 PM to 09:00 PM). In case of any holiday in the US are any other factors, release date and time may vary.
Other important data like U.S. Gasoline Inventories, U.S. EIA Weekly Distillates Stocks, U.S. EIA Weekly Distillates Stocks are also released at the same time with US Crude oil inventory (EIA) on Wednesday.
Gasoline is generally used as fuel in vehicles and it is made from crude oil and other petroleum products.
Oil refineries companies and blending facilities produce motor gasoline to sell it at retail fuel stations.
Now the question is how it affects the crude oil price so simply to understand this logic we have a case here.
Case - US crude oil inventory fell and in numbers, it is less as compared to forecast so it means the price should move upside according to US crude oil inventory data but at the same time, gasoline inventory data rose which is a ready fuel to use in-vehicle engines it means supply is more than expectation, which will cap the upside movement of the crude oil price.
You can check all these data and can keep yourself updated regularly by following the website: Investing.com under “Economic Calendar”.
The conclusion is that while analyzing US crude oil inventory data we have to analyze all other related inventory reports at the same time. If all the reports provide clear indications of demand and supply then we can decide whether we have to buy or sell. If data is mixed so it means that price will move in a range.
"A corporate action is an event carried out by a company that materially impacts its stakeholders ."
A company initiates several actions, apart from those related to its business, that has direct implications for its stakeholders. These include sharing of surplus with the shareholders in the form of a dividend, changes in the capital structure through the further issue of shares, buybacks, mergers, and acquisitions and delisting, raising debt, and others. In a company that has made a public issue of shares, the interest of the minority investors has to be protected.
Corporate benefits and actions apply to all investors who appear in the register of members, To determine this, the company announces a record date or book closure period, and investors whose names appear on the records on this date become eligible shareholders to receive notice of the relevant corporate action and benefit.
Some of them are mentioned below:
After the payment of taxes the profit remains for the shareholders, the company can do two things can retain it or distribute it among the shareholders in equal proportion, which is termed as the deceleration of dividend. A company can also declare an Interim Dividend within the year & a Final dividend by the end of the financial year. A company must distribute the dividend within 30 days after the deceleration.
It is an alternative to the cash dividend, also termed an Equity dividend. A company issues bonus shares to its existing shareholders. The entitlement to the bonus shares depends upon the existing shareholding of the investors.
A stock split is a corporate action where the face value of the existing shares is reduced in a defined ratio. Companies consider splitting their shares if prices of their shares in the secondary market are seen to be very high restricting the participation by investors. As the price per share comes down post-split, share split leads to greater liquidity in the market.
The share consolidation is the reverse of the stock split. In a share consolidation, the company changes the structure of its share capital by increasing the par value of its shares in a defined ratio and correspondingly reducing the number of shares outstanding to maintain the paid-up/subscribed capital.
Companies consider consolidating their shares if prices of their shares in the secondary market are seen to be very low affecting the perception of investors. An increase in the price per share post-consolidation leads to a better perception among the market participants about the company's prospects.
Mergers, acquisitions, and consolidations are corporate actions that result in a change in the ownership structure of the companies involved. In a merger, the acquirer buys up the shares of the target company and it is absorbed into the acquiring company and ceases to exist.
The assets and liabilities of the target company are taken over by the acquirer. In an acquisition or takeover, the acquiring company acquires all or a substantial portion of the stock of the target company. Both entities typically continue to exist after the acquisition. In a consolidation, companies combine to form a new company and the merged companies cease to exist.
Buy-back of shares can be done only out of the reserves and surplus available with the company. The shares bought back are extinguished by the company within a stipulated time frame and that leads to a reduction in its share capital.
To be eligible for a share buyback, a company should not have defaulted on its payment of interest or principal on debentures/fixed deposits/any other borrowings, the redemption of preference shares, or payment of the dividend declared.
Delisting of shares refers to the permanent removal of the shares of a company from being listed on a stock exchange. Delisting may be compulsory or voluntary. In a compulsory delisting, the shares are delisted on account of non-compliance to regulations and the clauses of the listing agreement by the company. In voluntary delisting, the company chooses to get the shares delisted and go private.
"We were not taught financial literacy in school. It takes a lot of work & time to change your thinking and to become financially literate" Robert Kiyosaki.
We all sent our children to school & colleges to learn new things which make them better as per today's scenario. But we never try to go through what they are learning; are they just mugging up with the book & notes or going through any new skills, will they be able to handle any situation which demands any special skill, in Indian we generally pamper our children while they are attending school till 12th standard and then, later on, we guide them to colleges there also we help them in every aspect, like pocket money, clothing, etc.
"A normal college graduate spent 16 years gaining skills that will help them command a higher salary; yet little or no time is spent helping them save, invest, and grow their money."
In the Indian educational system, we will find all kinds of course curriculum with lots of books and references, but we never found any sort of practical training for it as in the educational system we mainly focus on marks & grades, not on skills & talents.
One of the major things which we miss in the educational system is the knowledge of Financial Literacy, Basically, it is an ability to understand and effectively use various financial skills, including personal financial management, budgeting & investing. The lack of these skills is termed financial illiteracy.
The main benefit of financial literacy is that it empowers us to make smart financial decisions. It provides the knowledge and skills we need to manage money effectively budgeting, saving, borrowing, and investing. This means that we're better equipped to reach our financial goals and achieve financial stability.
Financial literacy is important because it equips us with the knowledge & skills we need to manage money effectively. Without it, our financial decisions and the actions we take- or don't take- lack a solid foundation for success.
In Indian families decisions regarding investments & savings are generally done by senior members of the family, who are actually following the same old pattern for the same, which is not suitable as per the current demands. This is one of the major reasons why much young age person lack starting there at the early age of their job.
Organizing financial literacy drives in colleges and schools with live practical case studies & situation analysis so that they actually learn and understand about it.
Making them understand about this will help them in the early days of the job, which actually tries to control their spent over earning habits. Organizing games & quiz contest which make them take real and practical decisions for the same.
SEBI notified the SEBI (Investment Advisers) Regulation, 2013 in January 2013 intending to regulate the activity of providing investment advisory services in various forms by independent financial advisors, distributors, banks, and other such entities. The regulations become effective from April 2013.
The relationship between the investment adviser and client is that of trust and the investment adviser while performing his role, should act in good faith in the best interests of the client. The Investment Adviser Regulations have cast upon investment advisers certain obligations and responsibilities while providing investment advisory services.
It is important that the investment adviser discloses all conflicts of interest to the client as and when they arise.
An investment adviser must not receive any remuneration from anyone except the client in respect of securities or investment products for which he has provided advice.
There must be segregation of other business activities from investment advisory activity of the investment advisor. A professional relationship must be maintained between investment advisory activity and such other activities. If a conflict of interest arises, the same shall be disclosed to the client.
The investment adviser must maintain strict confidentiality with respect to the information received from the client.
An investment advisor shall follow Know Your Client procedure as specified by SEBI from time to time.
An investment adviser must abide by the Code of Conduct as specified in the Third Schedule of the Investment Adviser Regulations.
The investment adviser must file periodic reports or information to SEBI as may be required from time to time and take prior approval from SEBI if there is a change in control of the investment adviser.
It shall be the responsibility of the Investment Adviser to ensure that its representatives and partners comply with the certification stipulated by the Investment Adviser Regulations at all times.
In India, RBI is the central bank of India which regulates all the major issues related to currency, foreign exchange reserves etc. In short, RBI is the bank responsible for securing the monetary stability in India.
The Reserve Bank of India Act, 1934 says, “An Act to constitute a Reserve Bank of India. Whereas it is expedient to constitute a Reserve Bank for India to regulate the issue of Banknotes and the keeping of reserves with a view to securing monetary stability in India and generally to operate the currency and credit system of the country to its advantage.
No one could deny the fact banks plays an important role in the economic stability. In case a bank crashes then it does not crash alone, it takes away the lifelong investment and savings of its entire account holders too.
This is not the only reason due to which corporate governance in the banking sector is needed. Corporate Governance is also needed for the bank to keep a check on money laundering, financing immoral and criminal acts and transaction of money to the terrorists.
RBI in India plays a leading role in formulating and implementing corporate governance.
It is the most important constituent of corporate governance. If the banks will not be disclosing their transactions to the RBI then they can vanish with the lifelong investments and savings of the people.
The RBI through the requirement of routine reporting of financial transactions of the bank keeps a tab on the activities being undertaken by the banks in India. Any failure to abide by the requirements set out by RBI may lead to heavy fines being imposed along with the cancellation of the license to operate as a bank.
RBI routinely performs an annual on-site inspection of the records of the banks. The main focus of the off-site surveillance is to monitor the financial health of banks between two on-site inspections, identifying banks which show financial deterioration and would be a source for supervisory concerns.
RBI has set important points, based on trigger points set by RBI, the banks have to follow. This will help to maintain a proper mechanism for there performance.
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Source: SEBI study dated January 25, 2023 on “Analysis of Profit and Loss of Individual Traders dealing in equity Futures and Options (F&O) Segment”, wherein Aggregate Level findings are based on annual Profit/Loss incurred by individual traders in equity F&O during FY 2021-22.
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