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Equal weight index funds are a type of index fund that follow an alternative weighting methodology. Unlike traditional market capitalization-weighted index funds, where stocks are weighted based on their market value, equal weight index funds assign equal weight to each stock within the index. This means that every stock in the index has an equal impact on the fund's performance, regardless of its market capitalization.
In an equal weight index fund, each stock in the index is assigned the same weight, regardless of its market capitalization. This means that the fund invests an equal amount of money in each stock. For example, if an equal weight index fund tracks an index with 50 stocks, it will allocate 2% (100% / 50) of its assets to each stock.To maintain the equal weight allocation, the fund periodically rebalances its portfolio, usually on a quarterly or semi-annual basis. During rebalancing, the fund buys or sells stocks to ensure that each stock maintains its equal weight in the portfolio.
Equal weight index funds may be suitable for investors who:
Aspect Equal Weight Index Funds Market Capitalization-Weighted Index Funds Weighting Methodology Equal weight allocation to all stocks Weighted based on market capitalization Diversification Higher diversification across all stocks Concentrated exposure to larger companies Performance Potential Outperformance during smaller stock rallies Reflects market movements of larger stocks Rebalancing Frequency Periodic rebalancing to maintain equal weightage Less frequent rebalancing Transaction Costs Potentially higher due to rebalancing Lower turnover, potentially lower costs Volatility Can exhibit higher volatility Generally lower volatility Market Efficiency Potentially includes less efficient companies Reflects market efficiency Transparency and Simplicity Transparent and straightforward investment strategy Straightforward investment strategy
In today's digital age, where financial transactions are conducted online, it is crucial to safeguard your demat account from potential fraud. As a stockbroker company, we understand the importance of protecting your investments and ensuring the security of your demat account. In this blog, we will provide you with valuable insights and practical tips on how to protect your demat account from fraud. Let's dive in!
Protecting your demat account from fraud is essential for safeguarding your investments and financial well-being. By following these simple yet effective tips, you can significantly reduce the risk of falling victim to fraudulent activities. Stay vigilant, be proactive, and regularly update your knowledge about demat account security. Remember, your financial security is in your hands!
For more detailed information and personalized guidance, feel free to Contact Swastika Investmart. We are committed to providing a secure and reliable platform for your investments.
Investing in the stock market can seem complex, but there are simplified options available, like Equal Weight Index Funds. These funds aim to provide broad market exposure while offering a straightforward investment strategy. In this blog, we will explore the concept of Equal Weight Index Funds, their benefits, and how they can be an attractive investment option for individuals in the Indian stock market. We will also provide an example to illustrate how these funds work.
Equal Weight Index Funds is a type of index fund that follows an equal-weighted approach to constructing the portfolio. In traditional market-cap weighted index funds, larger companies dominate the fund's performance, as their higher market capitalization gives them more weight. However, Equal Weight Index Funds assign the same weight to each stock in the index, regardless of their size.
For example, let's say we have an Equal Weight Index Fund tracking the Nifty 50 Index, which represents the top 50 stocks on the National Stock Exchange (NSE) in India. In a market-cap weighted fund, a large company like Reliance Industries would have a significant influence due to its substantial market capitalization. But in an Equal Weight Index Fund, each stock would have an equal allocation, ensuring that smaller companies have an equal say in the fund's performance.
Example of Equal Weight Index Fund in the Indian Stock Market: Suppose an investor decides to invest in an Equal Weight Index Fund tracking the Nifty Next 50 Index, which represents the next 50 companies on the NSE after the Nifty 50. The fund has a total asset value of Rs. 1 crore (10 million) and consists of 50 stocks, each with an equal allocation of Rs. 2 lakhs (200,000).
After a year, the fund's performance reveals that some stocks have outperformed while others have underperformed. As a result, the fund manager decides to rebalance the portfolio. The outperforming stocks are sold, and the proceeds are used to buy more of the underperforming stocks. This ensures that the equal weight allocation is maintained.
By rebalancing, the fund manager aims to capture the potential gains from the underperforming stocks while reducing exposure to the overperforming ones. Over time, this disciplined approach can potentially lead to improved returns.
Equal Weight Index Funds provide investors with a simple and effective way to gain exposure to a broad market index while offering diversification and exposure to smaller companies.
Pre-Market trading is a session that takes place before regular market hours, allowing investors to place orders and trade stocks before the market officially opens. This session provides an opportunity for investors to react to news and events that may have occurred after the market closed the previous day. In this blog, we will discuss how Pre-Market trading works, its benefits, risks, and strategies to help you make informed decisions.
The pre-open session on the National Stock Exchange (NSE) and Bombay Stock Exchange (BSE) takes place from 9:00 AM to 9:15 AM, divided into three slots:
During the pre-open session, investors can place the following types of orders:
The exchange uses a process called equilibrium price determination to discover the opening price for a stock. This process takes into account all the buy and sell orders placed during the preopen session and determines a single price at which the maximum number of shares can be traded.
Let's look at a couple of simple examples to understand pre-market trading:
Suppose a popular Indian e-commerce company announces better-than-expected quarterly earnings after the regular market closes. This news is likely to create positive market sentiment and potentially lead to an increase in the company's stock price.
During the pre-market session, investors who hear about the positive earnings report and expect the stock price to go up may place buy orders for shares of that e-commerce company. By doing this, they can take advantage of the potential price increase and buy the stock before the regular market opens.
Let's say there is negative news from a global event that causes a sharp decline in the stock prices of technology companies listed on international markets, including the NASDAQ. This negative sentiment may also impact Indian technology stocks when the regular market opens.
In this scenario, investors who anticipate the negative impact on Indian technology stocks can place sell orders during the pre-market session. By doing so, they can protect themselves from potential losses or take advantage of the downward price movement by selling the stocks before the regular market opens.
These simplified examples illustrate how investors can make trades during the pre-market session based on news or events that may impact stock prices. By acting early, investors have the opportunity to benefit from favorable price movements or minimize potential losses.
Pre-Market trading offers investors an opportunity to react to news and events before the market officially opens, potentially providing an advantage in terms of price movements. However, it also comes with risks, such as limited liquidity and price fluctuations. By understanding how Pre-Market trading works and employing appropriate strategies, investors can make informed decisions and potentially benefit from this unique trading session.
Startup Funding is an essential part of building a successful new business. It provides the necessary capital to develop and grow the business and can help turn a great idea into a profitable and sustainable company.
Startup funding is typically used to cover expenses such as product development, marketing, hiring, and office space. Depending on the stage of the business, the amount of funding needed can vary significantly.
Startups require funding to turn their ideas into reality, attract and retain talent, market and sell their products, expand their business, cover operational costs, and compete with established players in their industry.
Funding is required by startups for several reasons:
Here are the common stages of startups and the corresponding sources of funding:
In addition to the sources of funding mentioned earlier, startups can also explore other financing options such as debt financing, lines of credit, and revenue-based financing. It's important for startups to choose the right source of funding that aligns with their growth stage and long-term goals.
Here are the steps to obtain startup funding in India:
Investors typically look for certain key factors when considering investing in startups. Here are some of the main things that investors look for:
Here are some key points on why investors invest in startups:
There are several government schemes available for startups in India in 2023. Some of the well-known schemes are listed below:
1. Startup India: The Startup India scheme was started in 2016 with the aim of encouraging innovation and entrepreneurship in the country. It provides funding, mentorship, and other resources to startups to help in the growth of their businesses.
2. Atal Innovation Mission: The Atal Innovation Mission was started in 2016 with the goal of encouraging innovation and entrepreneurship among young people in India. Young entrepreneurs can find funding, mentorship, and other resources from that.
3. Pradhan Mantri Mudra Yojana: Pradhan Mantri Mudra Yojana was launched in 2015 to provide funding to small and micro enterprises in the country. It offers loans of up to Rs. 10 lakhs to support the establishment and growth of businesses.
4. MSME Sambandh Portal: The Ministry of Micro, Small, and Medium Enterprises has launched an online portal called MSME Sambandh, which aims to provide easy access to information about government schemes and services for MSMEs.
5. Credit Guarantee Fund Scheme for Micro and Small Enterprises: This scheme aims to provide collateral-free credit to MSMEs by guaranteeing loans provided by banks and financial institutions.
6. National Small Industries Corporation Subsidy: The National Small Industries Corporation provides various subsidies and schemes to MSMEs, including a marketing assistance scheme, a credit support scheme, and a raw material assistance scheme.
7. Technology Upgradation Fund Scheme: This scheme provides financial assistance to MSMEs for upgrading their technology and machinery.
10. National Manufacturing Competitiveness Programme: This programme aims to enhance the competitiveness of Indian manufacturing industries by providing funding and support for various activities, such as quality improvement, technology upgradation, and marketing.
11. Digital India: The Digital India initiative aims to transform India into a digitally empowered society and knowledge economy. It provides various schemes and initiatives to promote digital literacy, e-governance, and digital infrastructure development.
These are just a few of the government schemes available for startups in India. You can visit the Startup India website or speak to a business advisor to learn more about these schemes and how to apply for them.
Government startup rules vary by country, but here are some common examples of regulations and policies that governments may implement to support and regulate startups:
Investing in the stock market can be a great way to grow your wealth and secure your financial future. But before you start investing, it's important to understand the different types of investors in the stock market. Knowing the different types of investors can help you make better investment decisions and achieve your financial goals.
Retail investors are individual investors who invest in the stock market. These investors typically invest smaller amounts of money Retail investors may invest through online trading platforms or through a dealer with a broker.
Institutional investors are large organizations that invest in the stock market. These organizations include mutual funds, pension funds, insurance companies, pension funds etc. Institutional investors typically invest large sums of money and have professional investment managers who make investment decisions on behalf of the organization.
Hedge funds are pool funds of investors. These funds are managed by professional fund managers and they use risky management strategy for buying and selling securities. Investors who invest in hedge funds are called hedge fund investors.
Day traders are investors who buy and sell stocks within the same trading day. Day traders typically use technical analysis and charting tools to identify short-term price movements in the market. Day traders may invest through online trading platforms or through a dealer with a stock broker.
Swing traders are investors who hold onto stocks for a few days to a few weeks. Swing traders typically use a combination of technical analysis and fundamental analysis to identify stocks with short-term price momentum. Swing traders may invest through online trading platforms or through a dealer with a stockbroker.
Index fund investors are investors who invest in index funds. Index funds are mutual funds or exchange-traded funds (ETFs) that track a specific market index, such as the S&P 500. Index fund investors typically invest in index funds to achieve diversification and to minimize their investment costs.
ESG investors are investors who invest in companies that prioritize environmental, social, and governance (ESG) factors. ESG investors typically use a combination of financial analysis and non-financial analysis to identify companies that are socially responsible and have a positive impact on the environment and society.
High Net Worth Individuals (HNIs) are individuals with a significant amount of wealth, widely defined in India investible surplus of more than Rs.5 crores. HNIs are an important segment of investors in the financial market, and their investment decisions can have a significant impact on the market. HNIs have a wide range of investment options available to them, including stocks, bonds, real estate, alternative investments, and private equity.
Domestic Institutional Investors (DIIs) are institutional investors that operate within a country's borders and are involved in investing in financial markets. DIIs include entities such as mutual funds, insurance companies, pension funds, and banks. DIIs are important players in the Indian stock market and contribute significantly to the liquidity of the market. They are subject to regulations and guidelines set by regulatory bodies such as the Securities and Exchange Board of India (SEBI). DIIs play a vital role in providing stability to the market and creating a balance in the demand and supply of securities.
Foreign Institutional Investors (FIIs) or Foreign Portfolio Investors (FPI) are institutional investors from outside a country that invest in financial markets within that country. FIIs/FPIs include hedge funds, pension funds, sovereign wealth funds, and other institutional investors. They bring in foreign capital to the domestic market, which helps in boosting liquidity and improving the overall performance of the market. FIIs/FPIs are subject to regulatory guidelines set by the regulatory authorities of the country where they are investing. They play a crucial role in the growth and development of the domestic market by bringing in foreign investment and expertise.
The first way to categorize investors is based on their investment category. There are three main categories of investors:
Equity investors buy shares in companies in the hope of earning a return on their investment through dividends or capital gains. They invest in stocks, which can be highly volatile but also have the potential for high returns over the long term.
Fixed-income investors invest in debt securities such as bonds, which provide a steady income stream in the form of interest payments. Bonds are generally considered less risky than stocks, but they also offer lower returns.
Alternative investors invest in assets that are not traditional stocks or bonds, such as real estate, commodities, or hedge funds. These investments can be highly specialized and often require a high degree of expertise to understand and evaluate. Alternative investments can offer diversification benefits and potentially higher returns, but they are also typically riskier than traditional investments.
Investors can also be grouped based on their investment style. There are three main investment styles:
Value investors look for undervalued stocks that are trading below their intrinsic value. They seek out companies with strong fundamentals and a margin of safety, and they aim to buy stocks at a discount to their true value. Value investors tend to have a long-term investment horizon and are willing to hold stocks for years or even decades.
Growth investors focus on companies that are growing quickly and have high earnings potential. They seek out companies with strong growth prospects and are willing to pay a premium for these stocks. Growth investors tend to have a shorter investment horizon than value investors and are more focused on short-term earnings growth.
Passive investors take a more hands-off approach to investing and seek to match the performance of a broad market index, such as the S&P 500. They achieve this by investing in index funds or exchange-traded funds (ETFs) that track the performance of the index. Passive investors tend to have a lower risk tolerance and a longer investment horizon than active investors.
Finally, investors can also be grouped based on their risk appetite. There are three main types of investors based on their risk tolerance:
Conservative investors prioritize capital preservation over high returns. They are willing to accept lower returns in exchange for lower risk and are more likely to invest in fixed-income securities such as bonds. Conservative investors tend to have a shorter investment horizon and are more concerned with avoiding losses than maximizing gains.
Moderate investors seek a balance between risk and return. They are willing to accept some degree of risk in exchange for the potential for higher returns, but they also prioritize capital preservation. Moderate investors tend to have a longer investment horizon than conservative investors and are more focused on building wealth over the long term.
Aggressive investors prioritize high returns over capital preservation. They are willing to take on higher levels of risk in exchange for the potential for higher returns and are more likely to invest in equities or alternative investments. Aggressive investors tend to have a longer investment horizon than moderate or conservative investors and are more focused on achieving their financial goals than on avoiding losses.
There are many different types of investors in the stock market, each with their own investment strategies and goals. Whether you are a retail investor or an institutional investor, it's important to understand the different types of investors and to choose an investment strategy that aligns with your financial goals and risk tolerance.
When it comes to saving taxes and growing your wealth at the same time, ELSS (Equity Linked Savings Scheme) stands out as a popular option. It’s one of the most beginner-friendly investment choices, especially for those new to the stock market or looking for tax-saving opportunities. In this simple guide, we’ll explain what ELSS is, how it works, its benefits, and things to keep in mind before investing.
An Equity Linked Savings Scheme (ELSS) is a type of mutual fund that invests primarily in stocks (equity) and comes with the added benefit of tax savings. By investing in ELSS, you can claim deductions of up to ₹1.5 lakh under Section 80C of the Income Tax Act. This makes ELSS a great choice for those looking to reduce their taxable income while potentially earning higher returns.
When you invest in an ELSS, your money is pooled with funds from other investors and managed by a professional fund manager. The fund manager invests this money in a diversified portfolio of stocks across different sectors, aiming to generate long-term capital growth.
Here’s a quick overview of how ELSS works:
ELSS is a great option for beginners who want to save taxes and earn potentially higher returns by investing in equities. With its short lock-in period, tax benefits, and growth potential, it stands out as one of the best tax-saving investments. However, it’s important to understand the risks involved and have a long-term perspective. Whether you’re investing through a lump sum or SIP, ELSS can be a smart addition to your financial portfolio.
Governor Shaktikanta Das announced the Monetary Policy Committee's (MPC) decision on the RBI. Here are the Key RBI MPC Highlights
“Never lose your faith in the destiny of India.”
- Governor Shaktikanta Das
1. RBI MPC raise the repo rate by 25 basis points to 6.50% on Wednesday.
2. The Governor says that while inflation is expected to moderate in FY24 it will rule above the 4% target-
The Governor of the Reserve Bank of India (RBI) has stated that although inflation is expected to decrease in financial year 24, it may still exceed the target of 4%. The International Monetary Fund (IMF) has also revised its global growth projections for the years 2022 and 2023, indicating an upward trend.
3. The Governor says the Indian economy remains resilient.-
The Reserve Bank of India (RBI) governor reported that capacity utilization increased to 74.5% in the second quarter, indicating positive growth in the private sector. Investment activity continues to show improvement, with non-food bank credit growing by 16.7% as of January 27, 2023, and robust growth in fixed investment seen in November and December. Despite a decline in merchandise exports, the indicators of fixed investment are showing signs of strength. The governor also stated that there are indications of additional capacity being created in the private sector.
4. RBI GOV says real GDP growth for FY24 is projected at 6.4%-
According to Das, the Consumer Price Index (CPI) inflation for the fiscal year 2023 is expected to be 6.5%, with the fourth quarter estimated to be at 5.7%. There is a considerable amount of uncertainty regarding the trajectory of global commodity prices. Commodity prices are likely to remain high with the easing of Covid-19 restrictions, and this could result in the pass-through of commodity prices keeping core inflation elevated. The low volatility of the Indian rupee compared to other currencies will limit the impact of imported price pressures. The average crude oil basket is projected to be $95 per barrel.
5. RBI projects retail inflation lower at 6.5% for FY23 from 6.7%; 5.3% for the next fiscal-
The Consumer Price Index (CPI) is projected to reach 5.3% in fiscal year 24. Inflation is expected to be at 5% in the first quarter, 5.4% in the second and third quarters, and 5.6% in the fourth quarter. There is concern about the persistent nature of core inflation and it is crucial to see a clear decrease in inflation. It is imperative to maintain a strong commitment to reducing CPI inflation. The monetary policy must be adjusted accordingly to ensure a sustainable reduction in inflation.
6. The RBI has reported that system liquidity remains in surplus, although it has diminished in comparison to previous levels. The central bank has stated that it will remain agile and ready to cater to the productive requirements of the economy. To ensure proper functioning, the RBI will carry out operations on both sides of the liquidity adjustment framework as necessary. In line with this, the RBI has proposed restoring the market hours of the G-Sec market to 9 am to 5 pm. additionally, the RBI has suggested expanding G-Sec lending and borrowing activities to further enhance market liquidity.
7. The current account deficit (CAD) for H1FY23 was 2.2% of GDP, and it will moderate in H2FY23.
Regulatory organizations would receive recommendations from RBI on how to safeguard against the effects of climate change, according to Das. General guidelines for accepting green deposits, Framework for disclosing financial risks associated to climate change, and advice on stress testing and climate scenario analysis would be provided.
8. RBI GOV says MPC will continue to maintain a strong vigil on inflation outlook-
The Monetary Policy Committee of the Reserve Bank of India will continue to closely monitor the inflation outlook. Inflation is expected to remain at 5.6% in the fourth quarter of the financial year 2023. Although the policy rate has increased, it still remains lower than its pre-pandemic levels. When taking inflation into consideration, the policy rate is still lower than its pre-pandemic level. In general, the overall monetary conditions continue to be supportive of the economy.
9. Other Measures to be taken by RBI-RBI proposes to allow some foreign travelers and inbound travelers in India to use UPI for merchant payments. RBI To Launch QR Code-Based Coin Vending Machines that will issue coins against debits to customer's UPI-linked accounts.
Following the Reserve Bank of India's announcement of a lesser-than-anticipated interest rate increase, Indian equities were trading higher on Wednesday. As of 10:06 a.m. IST, the S&P BSE Sensex was up 0.68% to 60,695.09, while the Nifty 50 index was up 0.72% at 17,849.85.
Indian government bond rates increased slightly on Wednesday as a result of the Reserve Bank of India (RBI) maintaining its monetary stance while raising the repo rate as anticipated. As of 11:30 IST, the benchmark 10-year yield was 7.3435 percent. Prior to the policy decision, it was trading at 7.3124% after Tuesday's closing price of 7.3102%.
Rupee prices were unchanged at 82.69 to the dollar. The RBI MPC's decision to raise the repo rate by 25 basis points had no significant effect on the currency since the markets had already priced it in.
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Those who don’t learn from history, are doomed to repeat it.
However, the financial crisis of 2008-09 is a history you would want to avoid at all costs. And that is exactly why those who are aware of the gloom, that the Infamous crisis bestowed upon us (ahem), are keeping a close eye on the ongoing turmoil, that ‘Credit Suisse’ finds itself to be in.
With $22 Billion of Revenue, $1.5 Trillion of ‘Assets under Management’ and currently operating in 50+ Countries, the Swiss Mammoth is a systematically important financial institution. And given the scales, it's a no-brainer why its collapse can herald another calamity, with multi-fold consequences, just like what happened in 2008, when 'Lehman Brothers’ an organization that was deemed ‘Too big to fail’, went under and triggered worldwide mayhem. Flashes of those times still send a chill down the spine of Economists all over the globe alike.
But before we draw the parallels between the two companies and their predicament, let us understand a few terms.
First is Credit Default Swap (CDS)-
In lehman oops.. laymen’s terms, it's an insurance instrument, in which the insuring party charges an upfront fee for the promise of reimbursing them any losses due to the default by the borrowers. Here, the borrowers are usually companies that issue Bonds. In essence, the parties agree to swap the risk of Credit default.
(https://prepnuggets.com/glossary/credit-default-swap)
The fees charged by the party assuming the risk of default is called 'Credit Default Swap Spread' or CDS Spread. Higher the risk, the higher the CDS Spread that will be charged. Conversely, the higher the spread on a particular security, the higher the chances of it defaulting on its repayment commitments.
With this out of the way, let's wipe the dust off of our time machine, and travel back to 2007-08, when American Real Estate Sector was on an unprecedented boom, and Banks were churning out House Loans against Mortgage- Backed Securities, at a rapid pace. Thus, every Tom, Dick, and Harry were granted loans and bought homes, irrespective of their financial capabilities and credit history. Banks then hedged themselves by signing Credit default swaps with Institutions like AIG and..... (drumrolls please) Lehman Brothers. This activity spearheaded the ill-famed ‘Housing bubble’.
But like every other bubble that ever graced this planet, this one too, sooner or later, had to burst. And as they say, when it rains, it pours.
Due to the influx of so many houses in the market and people failing to honor their commitments, the housing sector collapsed like a bunch of legos. With piling defaults, Banks turned to the Institutions that issued Credit Default swaps, to get the payment. But those institutions weren't any Cash Printing Genie who could summon such humongous amounts at such short notice.
Subsequently, due to abnormally high default claims, they were left with no cash to honor the swaps and were looking at possible Bankruptcy. Although Institutions like Citi Banks and AIG were bailed out by the government, Lehman Brothers found themselves beyond salvation. They ultimately collapsed and declared bankruptcy on 15th September 2008. Their downfall and the aftermath of this crisis ushered an era of disastrous financial ramifications for the global economy.
Coming back to 2022, Macro-Economic factors don't instill a lot of confidence in the European Economy. With the ongoing Russia-Ukraine War, Energy prices rising by 175%, rapid depreciation of the Pound, and Europe still recovering from Covid-19's implications, it won't be an understatement to say that things are looking a bit iffy.
Further, after incurring losses in the last 5 out of 7 quarters, and laying off 500+ employees, Credit Suisse has watched 66% of its market cap getting eroded, since the beginning of 2022.
Along with that, the CDS spread on Credit Suisse's bond (which, as discussed earlier, indicates the risk on the security) stands at an all-time high of 4.4%, with the same metric for its Industrial counterparts standing at appx. 0.6%-0.8%. And with rising chances of defaults on loans due to severe economic shortcomings, investors are afraid that a fate like Lehman Brothers, might await Credit Suisse.
However, when we compare the position of Lehman Brothers at the time of bankruptcy, and Credit Suisse as of now, one might feel that the talks of Credit Suisse going down, is getting blown way out of the proportions.
Let us have a look at the factors given below.
Factor Lehman Brothers Credit Suisse Cash in Hand$19548 Mil$159752 Mil(Cash in Hand as % of assets)3.10%21.30%% of Assets in form of Securities 88.20%30.33% Leverage Ratio 24.34 Times15.9 Times
Also, Credit Suisse has a CET-1 Ratio of 13.5 % and a liquidity ratio of 191%. As one can see, it is in a significantly better position in almost all of the metrics. Further, The company is in process of raising $4 Billion from its existing investors and has onboarded a new CEO, who is faced with two impending tasks, i.e., to cut costs by $1 Billion p.a. and restructure the IB Department. Considering all of these, one can assume that the company is committed to getting back on track, as soon as possible.
But that does not undermine the gravity of the bedlam looming over it’s head. The risk is too damn high, but not all hope is lost. Whether Credit Suisse will go tumbling down or will it steer away from the danger unscathed, only time will tell. But one thing is for sure, a very cold winter awaits the Swiss Giant.
However, before departing, I'm going to leave you with an interesting trivia. The last name of the newly appointed Chairman of Credit Suisse is...wait for it...
Lehmann. Take that as you may, and I'll see you pretty soon.
Have you ever realized that while scrolling your YouTube, it starts suggesting videos of your interest or are aligned with your watch history? Did you ever realize how subtly your YouTube became so personalized and got curated as per your interests?
Well, that is an AI-based algorithm that is effortlessly working to make your YouTube feed curated as per your interest and such that you could spend hours ignoring what’s going on all around. Interestingly, YouTube is using Machine Learning algorithms (subfield of AI which is able to learn and adapt without following explicit instruction) for the last 6 years and now it is evident enough that YouTube has become an indispensable part of our daily life. Furthermore, the suggestions made by the ML model start getting better eventually as you use it and that is how the machine learning models functions i.e. by training and testing its models with the user input and optimizing the accuracy. Similar implementation can be observed on digital platforms like Instagram, Meta aka Facebook, Netflix, Google Maps, Spotify and whatnot. In fact, the most revenue generating business for Meta i.e. ads is working on ML Algos.
From a bird’s eye view, Artificial intelligence is not a standalone tech but rather an umbrella with multiple techs under it such as Machine Learning, Deep Learning, Natural Language Processing, Fuzzy Logic, etc. Furthermore, the application of all these individual techs is observed in our daily life. For instance, audio/chat bots that one must have used on a phone app like IRCTC, are built on Natural language processing or Amazon Alexa. Thankful to the Indian start-up ecosystem, wherein tech enthusiasts across the nation are solving various ground problems from, agriculture to healthcare, using AI-based tech methods to solve the problem with the least time and team possible.
Lately, the acceptance of Artificial Intelligence has increased exponentially not just as an explicit model used in capstone projects but also with its various applications in day-to-day life. Knowingly or unknowingly, the adaptation of AI has increased so much that even an infant is familiar with Amazon Alexa/Siri. Therefore, the impact of AI in conjunction with IoT has become ubiquitous in daily life. On an organizational level as well, the use of AI has increased drastically post COVID wherein companies are using it for data and behavioral analytics. Taking forward, the recent developments in AI-based applications have made them even more demanding. Tools like auto image drawing, auto background remover, and AI-based vocal splitter are recent developments that have helped save time with very accurate results.
On the contrary note, the future sentiments of AI are apprehensive as it has a threat to the unskilled and semi-skilled workforce as the 4th Industrial revolution is more AI-Centric and intended towards improvising efficiency. However considering the recent development in the applications, AI and its aligned techs have proven to be a boon than a curse and therefore future regulation from authorities might help in avoiding the adversities that come along with such advancements. Briefly, the consolidated AI-based tech has helped save time, energy, and manpower with its various day-to-day applications, therefore, making it part of the daily lifestyle with even more favorable reception in the future.
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Stock trading is the process of buying and selling shares of companies to make a profit. It might sound complicated at first, but once you understand the basics, it becomes much easier to grasp. In this blog, we'll walk you through the essentials of stock trading, the different types of stocks, how the stock market works, and the benefits of trading stocks.
A stock, also referred to as equity, represents ownership in a corporation. Owning stock entitles the stockholder to a portion of the corporation's assets and income, proportional to the number of shares they possess. These units of stock are called "shares."
In other words, in order to raise money to run their businesses, corporations issue (sell) stock. Depending on the type of shares held, the shareholder who purchases stock also purchases a portion of the corporation's assets and profits. In essence, a shareholder now owns stock in the corporation issuing the stock.
There are two main types of stocks:
Common Stock:
Example: You buy 100 shares of ABC Corporation's common stock at ₹100 per share. As a common stockholder, you get to vote on important company matters at the annual shareholder meeting. ABC Corporation announces a dividend of ₹10 per share, so you receive ₹1,000 in dividends. Additionally, if the stock price rises from ₹100 to ₹140 per share, your investment value increases from ₹10,000 to ₹14,000.
Common stock is issued by all publicly traded firms, but only a few also issue preferred stock. The preferred stock offers its owners guaranteed dividends as well as the opportunity for price growth similar to that seen with common stock. The preferred stock dividend may be higher if a company's common stock pays dividends.
Example: You purchase 50 shares of XYZ Corporation's preferred stock at ₹200 per share. Unlike common stockholders, you don’t have voting rights. However, XYZ Corporation promises a fixed dividend of ₹20 per share, so you receive ₹1,000 in dividends before any dividends are paid to common stockholders. If XYZ Corporation faces financial trouble and goes bankrupt, you are more likely to get paid from the company's remaining assets than common stockholders.
The stock market is a collection of markets where stocks (shares of ownership in businesses) are bought and sold. In addition to generating and sustaining wealth for individual investors, the stock market assists businesses in raising capital to fund operations.
The two main stock exchanges in India are the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE).
Stock trading is a type of investment that puts short-term profits ahead of long-term gains. Stock trading entails buying and selling company shares in an effort to make a profit from daily price fluctuations. The short-term price changes of these equities are actively monitored by traders, who subsequently attempt to buy low and sell high.
Stock traders differ from traditional stock market investors in that they take a short-term perspective rather than a long-term one.
While buying and selling individual stocks can result in quick profits for those who time the market right, there is also a risk of suffering significant losses. Unlike the market as a whole, a single company's fortunes can rise faster but could tumble just as quickly.
If you do have the funds and are interested in learning how to trade, Swastika Investmart has made it easy for you to quickly trade stocks from your computer or Smartphone.
Many investors over the years, whether beginner or experienced, have made considerable profits by strategizing and investing in equities. The fact that some investors' success formulas didn't work at all, however, causes everyone to pause before investing in stocks or entering the stock market. There are greater chances of profiting from investments when an investor makes the right and proper judgments.
The stock market is, after all, extremely volatile. But compared to other investments, stock investing has a number of significant advantages.
A dividend is a payment made by a firm to its stockholders. In simpler terms, it is the yearly additional revenue that every company pays to investors.
Liquidity:
Diversification:
Stock trading works through exchanges. Here’s a simple process of how trading happens:
While stock trading can be profitable, it also carries risks:
Stock trading can be an excellent way to grow your wealth, but it's essential to understand the basics and the risks involved. By learning how the stock market works, the types of stocks available, and the benefits and risks, you can make smart decisions and potentially achieve your financial goals.
If you're interested in starting your stock trading journey, consider opening an account with a Swastika Investmart, which offers easy-to-use platforms for trading on both computers and smartphones. Happy trading!
Investment risks can't be avoided while one can reduce these risks to manage their portfolio. It's important to address the portfolio wisely as this will ensure the investor's financial future security.
Now the point is every investment carries some risk feature with it, but a portfolio takes a lot of risks with it that depend on the number of assets managed in the portfolio.
So to overcome the overall risks, we will discuss the strategies to reduce risks in the investment portfolio.
To get detailed information about your investment portfolio, feel free to contact us - at 0120 4400700
1. Identify Risk Tolerance Capacity
While investing the hard-earned money in the stock market, every investor has some risk-bearing capacity.
This risk tolerance capacity depends from person to person, and to determine risk factors, one can consider the age, the number of dependents, financial status etc.
Usually, people avoid such risk-taking capacity and invest more than their estimated risk to generate high returns, but this affects their portfolio when markets face downtime.
So understand your risk tolerance before investing, and this practice generates a good risk-return value that ultimately helps maintain the investment portfolio.
2. Maintain Liquidity
A financial emergency is unpredictable, i.e. it can occur anytime, so one needs to take back the investments, and it might be possible for the market facing downtime.
So to reduce this risk, try to maintain enough liquidity. Adding a few liquid assets in the portfolio lets your other investments generate long-term results.
One can keep the emergency funds aside that will equal the amount required for 3-4 months of expenses. In this way, the urgent need for cash won't affect the portfolio, and you need not compromise your long-term investments.
3. Asset Allocation
Asset allocation involves investing in different asset classes to reduce the risks involved with investment and generate high returns. Other asset classes are equity, debt, mutual funds, gold, real estate etc.
To implement an asset allocation strategy, mix investing means investing in the combination of asset classes which are inversely correlated, i.e. equity and gold, equity and debt etc.
If equity stock under performs, such gold stock balances the returns by overperforming, or vice-versa can be possible.
With this strategy, one can easily reduce the risks in the investment portfolio and secure higher revenue.
4. Diversify Investment
Once you get the combination of asset classes per your investment goals, diversify those asset classes to reduce the risks involved in investing.
This strategy helps reduce the overall risk of an investment portfolio as diversifying the investment within the same asset class divides the risks among multiple investments of that class.
For instance, you are investing in equity mutual funds and diversifying this investment among the large-cap, small-cap and mid-cap funds.
If any of the funds generate low returns, this loss is limited to that investment only because other assets are not affected.
Also Read: Portfolio Diversification: A Beginner’s Guide for Asset Allocation & More
5. Diversification across sectors
In the market, every sector is in a different phase; while a few sectors are quite risky and possess optimal returns, there are sectors which offer high returns at low risks.
So diversify your investments among multiple sectors such that if one sector is not doing well, you have an option that delivers better returns simultaneously.
For instance, The technology sector is usually in the mode of amazing growth, but this also faces downtime. At the same time, the utility sector stays consistent in terms of returns even aftermarket collapse.
6. Focus On Time in the Market
Most of the time, investors take quick decisions to buy particular stocks as their price continuously rises in the least amount of time
But without even checking the stock's past performance, investing can increase the risk. So instead of timing, the market investors should focus on the long run to stay with investments in the long term.
Because small fluctuations do not impact the portfolio much, therefore reduce the risk in the investment portfolio.
7. Invest in Index Funds
Investors should add a few index funds to their investment portfolio to reduce the risk. However, these funds are quite expensive but perform better than other funds.
Index funds produce good returns and lower expense ratios than other active funds.
Also Read: Tips and Tricks for Every New Stock Investor
8. Monitor Your Investment
Investing is not just enough. Being an investor, you always want to stay in the market for the long term, but that doesn't mean letting go of what's happening with your investments.
One should monitor the investments in a particular period. Reviewing the portfolio's performance shows the poor-performing assets and thus minimizes the risk involved.
You can track the investments for a year or every six months to help diversify the investments in the asset classes. Ultimately analyzing the performance reduces the risk in the investment portfolio.
9. Invest in Blue Chip Stocks
Investing in blue chips offers you several benefits as with the help of it, you can reduce liquidity risk to a greater extent. Hence, investors are advised to check the credit rating of debt securities to avoid any type of risks associated with it.
Although almost all blue-chip stocks involve some type of risk, investing in blue chip stocks minimizes your risks to a greater extent.
10. Monitor Regularly
We need to monitor our portfolio regularly even if you are a long-term investor. If you want to be a successful investor, you need to regularly an eye on your portfolio’s performance.
With every investment, you make some risks involved in it. To get high returns with your investments, follow all these strategies to reduce risk in the investment portfolio. This information aims to help you achieve your financial goals through continuous growth in your investments.
People invest their money in different financial instruments so as to get good returns from them. To accomplish investing goals, they seek the best investment schemes which give the best interest rates in a fixed time. If you are an investment lover, who would like to enhance your wealth, there are certain things you would need to consider.
Before starting your investment journey, the primary thing you need to do is to find out whether you have enough funds or not. As it is important to save for the future, you need to make sure that your presentation must be secure before putting any money into a financial instrument.
Emergency money would be the second important thing you need to plan for. As 99 per cent of investment instruments come with a fixed lock-in period, the money you put into these funds cannot be withdrawn until the lock-in period gets ended.
Hence, it is suggested to keep some emergency funds as they may come into use if any immediate requirement comes like medical and other expenses.
Debt clearance is another important step you need to make before making an investment. If you get stuck somewhere in the debt, starting an investment might involve risks. If you have zero debt and also have emergency funds, you are all set to start your investment journey. Below are some of the investment options you can use for getting a better return on investment:
Mutual funds are popular investment options in India, offering diversified portfolios across various asset classes, which makes them relatively safer compared to the stock market. With mutual funds, your money is managed by experienced fund managers who are skilled in optimizing investment returns. A convenient way to invest in mutual funds is through a Systematic Investment Plan (SIP). SIPs allow individuals to invest a predetermined amount monthly, which is automatically deducted from their account and invested in the chosen mutual fund scheme. This method not only fosters disciplined saving habits but also aims to provide favorable returns over time.
When you invest in the stock market, as long as a firm is listed on the stock exchange, you can contribute to its capital.
A company’s equity can be acquired by purchasing its shares, and the price of those shares will change based on how well the firm is performing financially. If the company from which the equity was purchased has financial success, investors stand to gain.
Here, the important thing to ponder is that getting outstanding results is possible only if the investor is extra careful while selecting any stock.
Good stocks with prices are the safer options for beginners as they prevent them from huge losses as the market fluctuates.
India Post Office Scheme, the organization in charge of managing the nation's postal system, has made these deposit options available to investors. This investment choice was originally made available to encourage people to develop a lifelong habit of disciplined saving while also offering investment opportunities to support financial planning.
The simplicity of enrollment or application is what distinguishes these schemes as one of the best investing possibilities. By going to the nearest post office branch, you can make an investment in these savings plans.
In other words, bonds are fixed-income investment choices that serve as collateral for a loan that a shareholder makes to a governmental or corporate borrower.
The fact that the terms for fixed interest payment, loan principal, and tenure are all covered in the bond specifics makes them one of the top investment plans in India.
As a result, it guarantees both the security of your money and an additional return.
Additionally, the relationship between bond prices and the current interest rates is inverse. It implies that these prices decrease as interest rates rise.
A government-initiated investment option called the National Pension Scheme aims to protect a citizen's financial future after retirement. If you wish to save for retirement and have a low or no risk tolerance, consider NPS to be the greatest investment plan in India.
In accordance with your preferences, you may invest in government bonds, stocks, or other alternative investment opportunities under this programme.
NPS is not only among the best investment choices, but it is also the safest way to accumulate savings and investment returns for retirement. With a minimum investment of Rs. 500 and an interest rate of 8–10%, you can begin investing in the National Pension Scheme.
Public Provident Fund, a government-backed investment scheme, offers you risk-free returns, making it one of the greatest investing options. Every quarter, the government revises and pays the interest.
Although PPFs have a 15-year maturity period, you can begin partial withdrawals of your money after six years have passed.
However, you can also take out loans using your PPF balance as collateral. Since the principal amount, interest earned, and maturity amount is all eligible for tax savings, it falls under the EEE category of tax savings.
PPF is thus among the greatest possible investment solutions. You are eligible for a tax deduction for your contribution to the PPF account under Section 80C of the IT Act of 1961.
US inflation is currently at 41 year high which has made people worried about the Fed rate hikes and its aggressive move. What will be its impact on the Indian Stock Market and global markets?
So First let us discuss how does inflation works? When there is inflation usually the central bank it is the Federal Reserve of the US, raises its policy rates in order to regulate the money flow in the economy. This helps in reducing the demand and decreases the purchasing power of people which further controls the flow of money in the economy.
Now as the US economy is a want-based economy and if they decide to curb inflation rather than focus on the growth of the economy then there may be chances of economic slowdown or recession. The extra aggressiveness from the Federal Reserve may lead to an increase in the Interest rate and a decrease in demand, the impact of which may be seen within 6 to 15 months.
Now talking about the global market so there may be a quite possibility of the Market reacting negatively.
Because of rising gas, food, and rent costs, tightening household budgets, and pressure from the Federal Reserve to raise interest rates swiftly, the probability of a recession increased, driving U.S. inflation to 9.1 % in June.
The government's consumer price index climbed 9.1 percent over the previous year, the highest annual gain since 1981, with rising energy prices accounting for over half of the increase. There will be a cascading impact on China due to the US Commodity market as the consumption supply will reduce and economies may suffer. There is also a rise in gasoline prices for countries like Europe and the US.
Did you know that the last time inflation was high was November of 1981 and there was a Global recession in 2008?
Let us now discuss its impact on the Indian Markets. As far as India is concerned we know that it is a need-based economy. The key impact will be seen in commodity prices. In India currently, the Inflation rate stands at 7.01%.
The commodity prices are going down. Agro commodity prices may go down if there is more farm production which will be beneficial for the decrease in their prices.
Now, Looking at the positive picture in the past Few months FIIs selling has also reduced. However, there may be a short-term impact of 6-9 months’ time and price correction may be their US yield can go from 7.36 up to 7.89 %. This is majorly due to falling interest rates & quantitative easing.
Given that the difference in interest rates between India and the US is narrowing, India would lose some of its appeal as a destination for currency carry trade. A churn in emerging market equities due to greater returns in the US debt markets might potentially affect foreign investors' enthusiasm for investing in India, due to the outflows from Indian equities and debt markets, this might have an effect on currency markets.
In response to ongoing inflation as well as ongoing good job and pay growth, Fed policymakers have already indicated a second 75 basis-point increase in interest rates later in July. Traders had fully priced in a three-quarter percentage-point increase for this month even before the figures were revealed.
Investors in India have been investing in ETFs for the past few years. The popularity of these exchange-traded funds has increased because they are very similar to mutual funds but with lower expenses and more tax benefits, making them a great option for long-term investors.
Talk to our experts to know more about ETFs in India - 01204400700
Exchange-Traded Fund (ETF) is a type of investment that is bought and sold on stock exchanges. This is a way to make money from the movement in the market without actually owning any stocks.
ETFs are usually based on an index, such as the Nifty or Sensex. The price of an ETF changes as the value of its underlying assets change.
In this blog, we will look at different types of ETFs available in India and their uses:
These funds track a specific index, like the Nifty 50 or Sensex, and they are likely to perform in line with the index. For example, if the Sensex goes up by 10 per cent, then your fund will also go up by 10 percent.
Index Fund ETFs offer investors the opportunity to invest in large companies that trade on the stock market with minimal risks. They are suitable for long-term investors who do not mind taking only moderate returns.
The sole purpose of Gold ETF is to track the domestic physical gold prices. They are passive investment instruments which are completely dependent on gold prices and invest in gold bullion.
Gold ETFs represent units in the form of physical gold which is available in paper or dematerialized form. Let’s understand it with an example: 1 Gold ETF unit is equal to 1 Gram of gold. Gold ETFs combine the flexibility of investment and simplicity of gold investments.
Also Read - Tax on Gold Investment
Bond ETFs invest in fixed income assets such as bonds and debt instruments issued by companies or governments. Bond ETFs may be geared or ungeared and include government bond ETFs, corporate bond ETFs, municipal bond ETFs and emerging market bond ETFs among others.
Currency ETFs allow you to invest in the currencies of different countries. The value of your investment will rise or fall as the currency rates change against the US dollar.
In India, we have a currency ETF that allows us to invest in currencies other than the Indian rupee. This is a smart move for investors who want to diversify their portfolios by investing in other currencies.
A lot of investors have been asking me about the benefits of investing in ETFs. So I thought I would write down my thoughts and list out some of the benefits that investors can expect when they invest in an ETF.
Diversification: One of the biggest benefits of buying an ETF is diversification. You get exposure to a basket of stocks and bonds, which helps reduce risk. If one company goes down, it's possible that another may go up.
No Need to Monitor Individual Stocks: If you buy an ETF, you don't need to keep monitoring individual stocks or bonds every day or week because the fund manager does all that for you! You just need to check once in a while if there are any changes in the holdings or fees charged by your fund manager.
Lower Management Fees: The management fees charged by mutual funds are typically much higher than those charged by ETFs, making them more cost-effective for investors with smaller portfolios who are looking for diversification without taking too much risk or volatility.
Exchange Traded Funds (ETFs) are a great way to invest in stocks, commodities and bonds without having to buy the underlying asset. It's a passive investment vehicle that tracks the performance of an index or commodity.
Intraday trading, also known as day trading, involves buying and selling financial instruments within the same trading day. The goal is to capitalize on small price movements in the market. While it can be profitable, intraday trading requires a solid strategy and a disciplined approach to succeed. In this guide, we’ll explore some tried-and-tested intraday trading strategies in simple language to help you navigate this fast-paced world.
Before diving into strategies, it’s crucial to understand what intraday trading entails. Unlike long-term investing, where you hold assets for months or years, intraday trading involves making quick decisions and closing all positions before the market closes. The objective is to make profits from small price fluctuations within the day.
Here are some of the most popular and successful intraday trading strategies:
Scalping is one of the most common intraday trading strategies. The idea is to make multiple trades throughout the day, each aiming to gain a small profit. Traders who scalp look for small price changes and capitalize on them repeatedly.
Momentum trading involves riding the wave of a stock that is showing a strong upward or downward trend. The strategy is based on the belief that a stock that is moving strongly in one direction will continue to do so for a period.
Breakout trading focuses on identifying key levels where the price of an asset is likely to break out of a range. This could be a resistance level (a price ceiling where the stock struggles to rise above) or a support level (a price floor where the stock struggles to fall below).
Reversal trading, also known as counter-trend trading, involves identifying points where a current trend is likely to reverse. This strategy is more challenging as it requires you to predict when a trend is about to change direction.
This strategy involves trading stocks that have a significant price gap between the previous day’s closing price and the current day’s opening price. The idea is to capitalize on the momentum that often follows these gaps.
Intraday trading can be highly rewarding, but it requires a deep understanding of market dynamics, disciplined execution of strategies, and constant learning. By employing these successful intraday trading strategies and following the tips provided, you can increase your chances of making consistent profits. Remember, patience and practice are key to becoming a successful intraday trader.
Happy trading!
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Many people see the stock market as a great way to make quick money. While it’s possible to earn Rs 1,000 daily, it can be challenging, especially for beginners. Often, people struggle because they don’t fully understand how the market works.
The stock market can change rapidly, and making money requires more than just luck. You need to do your research, have a plan, and sometimes get advice from experts. While trading might seem like gambling, it can be a reliable way to make money if done right.
So, how can you earn Rs 1,000 per day from the stock market? Here are some simple strategies to help you get started.
Instead of trying to make a big profit from one trade, focus on making small profits from several trades throughout the day. Expecting a big return from just one trade is unrealistic. By spreading your trades across different stocks, you increase your chances of making a profit.
The key is to take advantage of small gains. If you see a small profit, take it rather than waiting for a bigger one that may never come.
High-volume stocks are those that are bought and sold a lot during the day. These stocks are easier to trade because there’s always someone willing to buy or sell. This is important for intraday trading, where you need to close your trades by the end of the day.
Do some research and make a list of 8-10 high-volume stocks to trade. This will help you make better decisions and increase your chances of hitting your daily profit goal.
Stocks that are in the news often move up or down quickly, creating opportunities to make money. News about new products, earnings reports, or economic changes can cause a stock’s price to change significantly.
Keep an eye on current events and focus on trading stocks that are making headlines. The extra attention these stocks get can help you achieve your Rs 1,000 per day target.
A stop-loss order is a tool that helps you limit your losses. It automatically sells a stock if its price drops to a certain level, protecting you from losing too much money. Setting a stop-loss helps you avoid holding onto a losing trade for too long.
By using stop-loss orders, you can protect your profits and stay on track to reach your daily earnings goal.
Trading costs like brokerage fees and taxes can reduce your profits. To maximize your earnings, try to keep these costs as low as possible. Choose a brokerage that charges low fees and be aware of other expenses that come with each trade.
By minimizing your trading costs, you’ll keep more of your profits and make it easier to earn Rs 1,000 each day.
If you're new to trading, it's wise to start with a small amount of money. This way, you can learn without risking too much. As you gain experience and confidence, you can gradually increase the amount you invest. This cautious approach helps you avoid significant losses early on and builds your skills over time.
Understanding technical analysis can give you an edge in trading. It involves studying price charts and using indicators to predict future stock movements. Basic tools like moving averages, support and resistance levels, and trend lines can help you make more updated trading decisions. Even a basic understanding of these concepts can improve your trading strategy.
The stock market can be emotional, with prices going up and down quickly. To succeed, you need to stay disciplined and not let emotions like fear or greed drive your decisions. Stick to your plan, take profits when they come, and don’t chase losses. Emotional control is crucial to consistent success in the stock market.
Before you start trading with real money, consider practicing with a paper trading account. This allows you to simulate trading in real-time with virtual money. It’s a great way to test your strategies and get comfortable with the trading platform without any financial risk. Once you’re confident in your approach, you can start trading with real money.
The stock market is influenced by many factors, including economic data, global events, and industry trends. Keeping yourself updated with the latest news and market trends can help you anticipate movements and make better trading decisions. Subscribe to financial news channels, follow market experts on social media, and regularly read financial newspapers or websites.
Being part of a trading community can provide valuable insights and support. You can learn from the experiences of other traders, get tips, and even discuss your strategies. Online forums, social media groups, or local meetups can be great places to connect with fellow traders and stay motivated.
While it’s important to make multiple trades to achieve your daily profit goal, be careful not to overtrade. Overtrading can lead to higher costs and increased stress, which might reduce your overall profitability. Focus on quality trades rather than quantity, and make sure each trade aligns with your strategy.
Earning Rs 1,000 per day from the stock market is achievable with patience, discipline, and a well-thought-out strategy. Start small, learn the basics, and gradually refine your approach as you gain experience. Keep an eye on market trends, stay updated, and remember that consistency is key. With these strategies, you can build a steady income stream from the stock market over time.
Multi-asset funds are usually meant for those investors who are risk averse. They don't have much experience in the stock market, but want to earn good stock trading returns on their investments.
These funds invest in stocks, bonds and other fixed income instruments. The percentage of each depends on the fund manager's market analysis. They can keep the same equity exposure or increase it if they think the market is going up.
This makes multi asset funds less volatile than pure equity funds, as they also invest in fixed income instruments which provide stability to the portfolio. Multi asset funds have lower returns than pure equity funds, but higher than debt funds.
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A multi-asset fund is a type of mutual fund that invests in a variety of asset classes.
While most funds invest only in stocks (equity funds), or in bonds (debt funds), or in a combination of stocks and bonds (balanced funds), multi-asset funds take this concept to the next level and invest in other asset classes as well.
These asset classes include real estate, gold, commodities, and international stock exchanges.
The allocation between these asset classes depends on the underlying objective of the fund.
For example, if the objective is capital protection, then the fund will have a relatively higher allocation towards debt and gold, while equity exposure will be low.
If the objective is moderate growth with modest volatility, then the allocation will be more towards equity than debt.
There are many good and valid reasons to invest in Multi-Asset Funds. These funds can be a boon for investors who have a low-risk appetite or are looking to diversify their portfolio.
Here are some benefits of investing in Multi-Asset Funds
One of the most important advantages of multi-asset funds is diversification.
Apart from diversification across sectors, they also offer diversification across asset classes such as equity, debt, real estate, gold etc.
Investing in different asset classes means diversifying your portfolio to spread out your risk. It is advisable not to put all your eggs in one basket.
Multi-asset funds offer greater flexibility as they can invest in any class or combination of asset classes depending on the market conditions and the fund manager’s outlook towards particular assets.
Such flexibility enables them to outperform over longer periods of time when compared to other single asset class investment options such as equity or debt mutual funds.
If you’re investing for the long term, managing the impact of inflation is critical to ensure that your savings retain their value over time.
By investing in multi-asset funds, you are investing in a basket of assets that have a higher return potential than a single asset class, helping you beat inflation.
Multi-asset funds also offer the flexibility to invest in different asset classes with varying risks and returns.
For example, if an investor has excess exposure to equities through their SIPs, they can invest in a multi-asset fund that has exposure to debt and other asset classes like gold.
This offers them the flexibility to customize their portfolio based on risk appetite and investment goals. Want to know more about Multi-asset Funds feel free to contact us.
A multi-asset fund is an all-weather option for an investor, as it invests across various asset classes and sectors, thereby reducing the overall risk of the portfolio. This makes multi-asset funds suitable for investors who have a moderate risk appetite.
Compounding refers to the process where the returns earned on an investment generate additional returns over time. This means that investors not only earn returns on their initial investment but also on the returns accumulated in previous periods. The longer you stay invested, the greater the compounding effect, as your returns start generating their own returns, leading to exponential growth.
Compounding returns work by reinvesting your earnings back into the principal amount. Over time, these reinvested returns increase the overall value of your investment, leading to more significant returns in the future.
Example:
Staying invested for the long term allows compounding to work its magic. The more time your investment has to grow, the higher your compounding returns will be.
Example:
Many companies offer dividend payouts to shareholders. By reinvesting these dividends instead of cashing them out, you allow the dividends to start earning returns, adding to the compounding effect.
Example:
Adding more money to your investments regularly increases the base amount on which compounding occurs. This strategy accelerates the growth of your investment over time.
Example:
Growth stocks are companies that reinvest their earnings into expanding their business rather than paying dividends. These stocks tend to appreciate faster, and if held long term, they can offer substantial compounding benefits.
Example:
Starting your investment journey as early as possible gives compounding more time to work. Even small contributions made early can grow substantially by the time you retire.
Example:
The Rule of 72 is a simple formula to estimate how long it will take for your investment to double through compounding. Divide 72 by your expected annual return to find out the approximate number of years.
Example:
Compounding is a powerful strategy for wealth creation, especially when applied over a long time frame. By starting early, reinvesting earnings, and making regular contributions, you can take full advantage of compounding returns. Whether you invest in stocks, bonds, or mutual funds, the key to maximizing compounding returns is patience, discipline, and a long-term perspective.
Intraday trading refers to the buying and selling of stocks on the same day. It is done using online trading platforms.
Intraday trading is considered riskier than investing in the regular stock market. It is important, especially for beginners, to understand the basics of such trading to avoid losses.
Let’s understand it with an example:
If you buy a stock at Rs. 500 and sell it at Rs. 550, you make an intraday profit of Rs. 50 per share (if all the shares were bought and sold).
So, Intraday Trading has its advantages and disadvantages. Intraday traders can make money when the market is volatile, but they can also lose a lot if they are not careful.
Hence, it is essential to know the factors that determine profits in intraday trading.
The concept behind Trade with the Trend is that most traders don't have time in their schedule to watch for news events, but they can watch for technical signals that can predict trends.
Traders can also watch for support and resistance levels that may be reached as a result of market movement.
Resistance and support are arguably some of the most widely discussed concepts in technical analysis.
In its most basic sense, resistance indicates a price level that is likely to act as a barrier to the price of an asset, preventing it from getting pushed in that direction.
The principle behind "Trade with the Trend" is that many traders lack the time to monitor news events but can focus on technical signals that predict market trends. Traders should also observe support and resistance levels, which are critical concepts in technical analysis.
Support and resistance levels are pivotal in determining price movements. Support refers to a price level where an asset is likely to experience buying interest, preventing its price from falling further. Conversely, resistance is a price level where selling pressure may arise, hindering the asset's price from rising beyond that point.
If buying pressure is strong at a support level, the price is likely to bounce back and move upwards. Conversely, if selling pressure is significant at a resistance level, the price may reverse and direction will change after hitting resistance.
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When you plan to trade intraday, you need to be sure that you can buy and sell large volumes of stock without affecting the price.
The only way to be sure that a sudden move in the price does not impact you is to buy or sell very small amounts of stock at a time.
Tick-size trading depends on having liquid stocks to allow even tiny transactions to be executed swiftly.
Once you have been trading for a while, you will get to know the characteristics of various stocks.
Many stock trading investors know about charts, it is important to identify stocks that are likely to be the right stock to trade.
The most vital tool in your utility belt is a strong chart pattern recognition ability.
Once you gain proficiency at reading charts, you can spot the formation of stock patterns and trade accordingly.
It is essential as an intraday trader that you are familiar with chart patterns.
By default, every stock will move in an overall trend direction.
There is a bull trend, and there is a bear trend. In other words, the market will move in one direction or another for a long time at a stretch.
As an intraday trader, you need to know these trends so that you can make good decisions regarding the buying and selling of stocks.
The best way to spot market trends is by looking at charts of stocks for which there are historical records available for a long period.
This will give you an idea about how the stock has behaved over time and how it behaves during different phases of its life cycle.
There are two kinds of intraday breakouts.
The first one is when you see a stock breaking out in the early morning hours around 9:45 am and 10 am, and then it starts moving up or down in the regular trading hours and forms a top or bottom.
The second type is when a stock closes above or below its opening price in the first few minutes of opening the market.
The first type presents good entry points for long positions, while the second gives you good entry points.
The best way to identify breakout stocks is to keep an eye on your trading platform's Top Gainers and Losers list.
Once you have shortlisted stocks, keep an eye on their daily prices, especially in the first 10 minutes after the market opens.
If you find a stock that has broken out, then place an order to buy or sell as soon as possible so that you don't miss out on the opportunity to make some money from it.
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If you are a day trader, you need to have a stock list that is extremely sensitive to news.
These stocks are best for trading because they fluctuate rapidly with new information and thus offer traders numerous trading opportunities. They also allow a trader to capture profits quickly.
There are essentially two types of Intraday traders in India.
The first one is the one who trades on fundamentals and technicals.
The second type of trader watches the news for trading opportunities.
Selecting the right stocks for intraday trading is a crucial aspect of achieving consistent success in the stock market. By focusing on factors such as liquidity, volatility, market trends, and the alignment of technical indicators, traders can improve their chances of making profitable trades. It is also important to stay updated on news, set stop-loss orders, and have a disciplined trading strategy in place. Intraday trading requires patience, risk management, and continuous learning. By applying these best practices, traders can navigate the dynamic nature of intraday trading more effectively and optimize their returns.
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