.png)
Investing in a company is a big decision, and it’s important to ensure that the company you’re considering is credible and trustworthy. This blog will guide you through simple steps to check the credibility of a company before you invest your hard-earned money.
Before investing, it’s crucial to understand how the company makes money. Look at what products or services they offer, who their customers are, and how they stand out from their competitors. A clear and sustainable business model is a good sign that the company is reliable.
A company’s financial health is a strong indicator of its credibility. Look at the company’s financial statements, including the balance sheet, income statement, and cash flow statement. Focus on the following:
You can find these financial statements on the company’s website, in their annual reports, or on financial news websites.
Credit rating agencies like CRISIL, ICRA, or CARE provide ratings that reflect the company’s creditworthiness. A higher credit rating indicates that the company is more likely to meet its debt obligations, which is a good sign of financial stability.
The company’s leadership plays a critical role in its success. Research the background of the CEO and other key executives. Look for:
Understanding how the company fits within its industry can give you insights into its potential for long-term success. Consider:
While past stock performance doesn’t guarantee future results, it can provide useful insights. Look at the company’s stock price trends over time. Has it been stable, or has it been volatile? Consistent performance is generally a positive sign.
Financial analysts often provide detailed reports on companies, including their strengths, weaknesses, and future prospects. Reading these reports can give you a well-rounded view of the company’s credibility and potential.
A company with frequent legal issues or regulatory violations may not be a safe investment. Look up news articles, legal filings, or regulatory actions against the company. A clean legal history is a good indicator of credibility.
Customer satisfaction can also be a measure of a company’s credibility. Look for reviews and testimonials from customers. A company with positive feedback and a strong reputation for quality and service is more likely to be trustworthy.
If the company pays dividends, check its dividend history. Consistent dividend payments, especially during tough economic times, indicate a strong and reliable company.
Good corporate governance practices ensure that a company is run in a fair, transparent, and accountable manner. Look at the company’s board structure, policies on executive compensation, and how they handle shareholder concerns. Companies with strong governance are usually more credible.
Insider trading refers to the buying or selling of a company’s stock by people within the company, like executives. Frequent insider selling might indicate that those who know the company best have concerns about its future.
Checking the credibility of a company before investing is essential to avoid potential risks. By following these simple steps—understanding the business model, reviewing financials, researching the management team, and more—you can make smart decisions and invest with confidence. Remember, a credible company is more likely to provide stable returns and long-term growth, making your investment worthwhile.
Investing in stocks is not just about growing your personal wealth; it also plays a crucial role in supporting and enhancing the broader economy. Here’s how investing in stocks contributes to economic growth and development:
When investors buy shares of a company, they provide it with the capital needed to expand its operations, develop new products, or enter new markets. This process of capital formation helps businesses grow and innovate, which can lead to increased productivity and economic growth.
Example:
As companies receive investment through the sale of stocks, they often use these funds to hire more employees, expand facilities, or increase production. This directly contributes to job creation and reduces unemployment.
Example:
Investment in stocks allows companies to fund research and development (R&D) activities. This funding supports innovation and technological advancements, which can drive economic growth and improve living standards.
Example:
Stock markets provide a platform for buying and selling shares, which enhances market liquidity. Liquidity refers to how easily assets can be bought or sold without affecting their price. High liquidity in the stock market facilitates efficient capital allocation and investment.
Example:
Investing in stocks can lead to wealth creation for individuals. When investors see their investments grow, they may have more disposable income to spend on goods and services, which boosts consumer spending and stimulates economic activity.
Example:
The potential for capital appreciation and dividends encourages people to invest rather than keep their money in savings accounts. Increased investment in stocks can lead to higher levels of savings, which provides more capital for businesses and contributes to economic stability.
Example:
Stock markets generate revenue for governments through taxes on capital gains and corporate profits. This revenue can be used for public services, infrastructure projects, and other economic development initiatives.
Example:
A well-functioning stock market attracts both domestic and international investors. Confidence in the stock market can lead to increased investment flows, which support economic stability and growth.
Example:
Stock markets can help in the distribution of wealth by providing investment opportunities to a wide range of people. This can reduce income inequality and contribute to a more balanced economic growth.
Example:
Investing in stocks is integral to the functioning of a healthy economy. It supports capital formation, job creation, innovation, and market liquidity. By encouraging savings and investment, providing government revenue, and building investor confidence, stock markets play a vital role in economic growth and stability. Understanding these contributions helps investors appreciate the broader impact of their financial decisions on the economy.
Inflation is the rise in the general level of prices of goods and services in an economy over time. It impacts the purchasing power of money — meaning ₹100 today might not buy you the same amount of goods next year. Inflation is a key factor in economic decision-making, from setting interest rates to determining wage growth.
Parle-G Biscuits: A pack of Parle-G biscuits cost ₹4 in 2000. In 2023, it cost ₹10. This increase in price is due to inflation.
Inflation is primarily measured using two indexes in India:
In India, inflation rates have fluctuated in recent years due to various factors, including the pandemic, supply chain disruptions, and global oil price volatility.
Year CPI Inflation Rate (%)
2020 6.2
2021 5.1
2022 6.7
2023 4.6 (estimated)
Demand-pull inflation occurs when aggregate demand in the economy exceeds the available supply of goods and services. This can happen due to various factors, such as:
Cost-push inflation occurs when the cost of production increases, leading businesses to raise prices to maintain profit margins. Common causes of cost-push inflation include:
Built-in inflation, also known as inflationary expectations, occurs when people anticipate future inflation and adjust their behavior accordingly. This can create a self-fulfilling prophecy, as businesses and workers may demand higher wages and prices to compensate for expected inflation.
Inflation affects various sectors in India differently:
Moderate inflation is considered beneficial for economic growth, while too much inflation can lead to instability.
Low Inflation (1-4%) Stable economy, growth, debt relief
High Inflation (5-8%) Rising costs, pressure on households
Hyperinflation Economic collapse, loss of savings value
Inflation plays a significant role in shaping India’s economy. While moderate inflation is a sign of healthy growth, high inflation can cause financial strain on consumers and businesses. By understanding how inflation works, you can make better decisions in managing your investments, savings, and loans in the Indian market.
Introduction
Beginners who want to build wealth from the stock market hesitate to take the first step towards stock market trading because the fear of losing money stops them from entering into it.
Stock Trading as the name suggests is a trading method where people are involved in the transaction of shares of different companies in the stock market.
You may feel surprised to know that investing in the stock market with limited funds actually helps you double your wealth.
Trading stocks can seem challenging, especially if you have limited funds. However, with the right strategies and tools, even small investors can maximize their potential returns. One such tool is margin trading. Margin trading allows you to borrow money from your broker to buy more stocks than you could with just your available cash. This blog will guide you on how to trade stocks with limited funds using the margin trading facility, providing you with tips and tricks to get started.
A small investment with a regular amount will give you a wide experience of trading in the stock market. You only need to take care of a few things:
An investment whether it is small or big has a specific reason to invest. Hence, many stock analysts advise you to set a goal before getting into the stock market as, without a clear objective, one can never achieve desired wealth.
Secondly, the goal of achieving outstanding returns, helps you decide the type, tenure and risk appetite. If you are a beginner, it is suggested to invest in the long run. This is because long term investment gives you ample opportunity to earn knowledge of the stock market. Also, setting a goal lowers the chances of investment errors.
Equity trading investment gives you a steady return if you invest in the stocks for the long term.
Excessive emotions can harm your investment amount. Hence it is suggested to control your emotions while doing stock trading. Positive stock trading returns make people happy, however, negative returns like losses make people unhappy and that’s why many people stop investing.
Successful investments can be done only if investors have an in-depth understanding of the stock market. You can invest and earn a potential return from the stock market only if you focus on the fundamentals of the stock market and keep a track of every stock market movement. You can do this by doing proper stock market research. Having adequate knowledge of the stock market can mitigate your stock market risks.
One of the best investment strategies to mitigate the risks is diversification. It allows investors to divide the investment amount into different investment categories along with their risks. Diversification of the money into different stocks will help you balance your portfolio as if one stock underperforms, the other performs well.
Margin trading provides you with a way to purchase stocks that you can’t afford. Here, you need to borrow some amount of money from the stockbroker. In margin trading, the margin is being paid in both cash and in shares.
It is a prominent feature in stock trading as it allows investors to take larger portions and uplift their returns to another level. Here, the stockbroker plays a pivotal role as it funds your margin trading transactions.
In other words:
Margin trading involves borrowing money from your broker to purchase stocks. Here's how it works:
Set a Clear Goal
Before you begin margin trading, set a clear financial goal. Ask yourself why you want to use margin trading. Are you looking to increase your returns over a short period, or are you investing for long-term growth? Having a goal helps you stay focused and make smart decisions.
Educate Yourself
Understanding the basics of margin trading is crucial. Learn about the following:
Start Small
Begin with a small amount that you can afford to lose. Margin trading amplifies both gains and losses, so it's important to start cautiously. This way, you can learn and make mistakes without significant financial impact.
Select a brokerage firm that offers favorable margin trading terms. Look for brokers with:
By choosing Swastika Investmart, you can benefit from low costs and exceptional resources, setting you on the path to successful margin trading.
Control Your Emotions
The stock market can be unpredictable, and prices can fluctuate significantly. Stay calm and avoid letting emotions drive your investment decisions. Stick to your strategy and remain focused on your long-term goals.
Monitor Your Investments
Regularly review your investment portfolio to ensure it aligns with your goals. Keep track of the performance of your stocks and make adjustments if necessary. However, avoid checking your portfolio too frequently, as short-term fluctuations can be misleading.
Be Aware of Risks
Margin trading comes with significant risks. Here are a few to keep in mind:
Best Practices for Margin Trading
The first and foremost step towards margin trading is to place a request to the stockbroker so that it can open a margin trading facility account. After opening the margin trading facility account, the stockbroker maintains a minimum balance which is called minimum margin.
Before getting started into a trade, investors are required to deposit a fixed per cent of the whole traded amount and the rest of the amount will be funded by the stockbroker.
Please note that the interest rate is charged by the stock broker.
The margin can be settled later when all the positions are squared off.
In margin trading, the profit can be counted only if you earn a profit that is higher than the margin, otherwise, you will suffer from a huge loss.
The amount of money cannot act as a limitation for investing in the stock market. A strong goal with the right decision can help you achieve great wealth. You are only required to Open Demat Account with a reputed brokerage firm like Swastika and you are ready to go. With Swastika’s Demat account, you can start an investment journey with a little money.
Welcome! Today, we’re going to explore the world of bonds, a key component of the financial markets. Bonds are essentially loans made by investors to borrowers, usually corporations or governments. In return, the borrower agrees to pay interest over a specified period and repay the principal at maturity. Let's break down the different types of bonds you might encounter.
Government bonds are issued by a national government and are considered one of the safest investments since they are backed by the government's credit. In India, these are known as Government Securities (G-Secs).
Corporate bonds are issued by companies to raise capital. They typically offer higher interest rates than government bonds to compensate for the increased risk.
Municipal bonds are issued by local government bodies, such as states or municipalities, to finance public projects like schools or infrastructure. These bonds often provide tax advantages to investors.
Zero-coupon bonds do not pay periodic interest. Instead, they are issued at a discount to their face value and mature at par. The difference between the purchase price and the face value represents the investor's return.
Convertible bonds offer the option to convert the bond into a predetermined number of the company's equity shares. This feature provides potential upside if the company's stock performs well.
These bonds are designed to protect investors from inflation. The principal and interest payments are adjusted based on inflation rates, ensuring that the purchasing power of the investment is maintained.
Foreign bonds are issued in a country by a non-domestic entity and are denominated in the currency of the country where they are issued.
Bonds are a versatile investment option, offering something for every type of investor, from the risk-averse to those seeking higher returns. Whether you’re interested in the safety of government bonds or the potential growth from corporate and convertible bonds, understanding the different types of bonds can help you make more updated investment decisions.
Welcome! Today, we’re going to delve into the concept of contingent liabilities—a key aspect of financial reporting that often confuses many. Contingent liabilities are potential obligations that may arise depending on the outcome of uncertain future events. Let’s break down what they are, why they matter, and how they are reported.
Contingent liabilities are potential financial obligations that depend on the occurrence of uncertain future events. They are not guaranteed to occur but represent possible future liabilities that could affect a company’s financial position.
Contingent liabilities are an important aspect of financial reporting that help stakeholders understand potential future obligations. Proper disclosure and assessment of these liabilities provide valuable insights into a company’s financial position and risk exposure. Always stay updated about how contingent liabilities are reported and their potential impact on financial statements.
Have you ever thought of getting benefits from a fall in the value of an asset in the portfolio?
Sounds interesting, right.
Well, the answer is Yes.
You can take advantage of the assets whose values are decreasing day by day.
The term is known as tax-loss harvesting. Investors often use tax-loss harvesting to improve stock trading returns.
As honest citizens, paying taxes should be our responsibility so as to ensure the country’s security, progress and well-being.
Actually, no one wants to pay a huge amount of their earnings as income tax. Those, who come under the category of high income, have to pay a huge percentage of tax. For instance, the total tax liability of a salaried person could be around 30% which makes a huge impact on their finances.
Tax-Loss harvesting is the way through which you can increase post-tax returns on investment. With this method, you can maximize wealth aggregation especially at the beginning of the portfolio.
To get a brief of tax-loss harvesting and how it helps you minimize your long term capital gains, you need to know how long term capital gain is taxed.
Long term capital gains on equities are re-introduced by the late finance minister Mr Arun Jaitley in 2018.
As per the provision of the financial budget of 2018, any long term gain made from equity investment above 1 Lakh per year is taxable at 10%.
Here, the long term capital gains are the return you make by selling equity investment held for more than 12 months.
If you are a newbie into the stock market or mutual fund, your yearly gain may not necessarily cross the amount of Rs 1 Lakh.
But if you continuously invest and gain share market trading returns, in the long run, you will be in the situation to cross the threshold after some time.
Let’s understand it with an example:
If you invest Rs 5000 per month in equity funds with an average return of 12%, you will easily achieve taxable gains in the span of 2 years.
Here, we present a table where you can see the SIP amount and capital gains with annualized returns of 12 per cent in different periods.
SIP AmountAfter 24 MonthsAfter 36 MonthsAfter 48 MonthsAfter 60 Months5,00015,32535,39665,0761,05,5188,00024,52056,6341,04,1221,68,82912,00036,78084,9511,56,1832,53,24315,00045,9451,06,1891,95,2293,16,55430,00091,9492,12,3783,90,4586,33,108
Hence, people who have large equity portfolios will have huge gains. If you want to pay no tax or less tax, make sure these gains should not exceed the tax-free limit. That’s where tax-loss harvesting comes into play.
Tax-loss harvesting is a way of selling a part of your mutual fund units in order to book long term capital gains and start reinvesting the same amount in the same mutual fund.
Still not understand? Let’s take another example:
Example 1
Let’s assume you have invested Rs 6,00,000 in an equity mutual fund on 21 August 2021 and on 31 August, the value of the investment becomes Rs 6,90,000.
Now, if you redeem the investment, your gain will be Rs 90,000 and hence your tax liability will be zero. As the tax has to be paid only if gains exceed the limit of Rs 1 Lakh.
Now, if you reinvest the entire amount i.e. Rs 6,90,000 after redeeming in the same mutual fund, it will be counted as a fresh investment along with the date of investment.
If the investment value increases up to Rs 7,50,000 post 1 year. When you redeem the investment amount, your gain will be Rs 60,000 which is less than Rs 1 Lakh.
Had you not redeemed Rs 6,90,000 and reinvested in the same mutual fund, your long term gains would have been up to Rs 1,50,000 and hence, you are required to pay 10% tax on the amount which exceeds Rs 1,00,000.
Now, you have to pay tax for the amount above Rs 1 Lakh. hence, the tax applicable would be Rs 5000 i.e (10% of 50,000).
Still, Confused? Let’s take another example:
Example 2:
Tax-loss harvesting allows you to book losses and use the loss amount to offset capital gains in another instrument in order to minimize liability.
For instance, if you invest Rs 2 Lakh in a fund on 2 August 2021 and on August 15, 2021, your investment value would is Rs 1.85 Lakhs. Hence, your long term capital loss is Rs 15,000.
Now, if you sell the investment instrument, it is obvious you are suffering from losses, but you can use the entire loss amount to offset any long term capital gain in order to bring down tax liability.
For instance, within two years, you sell a long term capital gain and book a profit of Rs 1.5 Lakh. Since the capital gain is above 1 lakh i.e Rs 50,000, you have to pay tax.
Now, you may decrease the total tax applied on Rs 50,000 by subtracting the Rs 15000 from Rs 1.5 Lakh.
Hence, your long-term capital gain will be Rs 1.5 Lakh - Rs 15,000 = Rs 1,35,000. Now you need to pay tax only at Rs 35,000 not on Rs 50,000.
This is how the tax-loss harvesting strategy works. It saves tax for many investors.
Here are three ways a person can minimize their tax liability:
Tax planning is a legal method used to minimize tax liability. This can be achieved with proper tax planning. A person can easily minimize tax by taking advantage of many things such as exemptions and deductions.
Many people compare tax avoidance with tax evasion. However, they are different t methods. Tax avoidance is a legal method that helps investors to minimize their taxes. It is the use of smart strategies to reduce a person’s tax liability.
Tax evasion is an illegal way of minimizing tax, which is also known as tax fraud. We strongly advise you to stay away from such fraudulent methods.
Tax gain and tax loss harvesting are the best ways to minimize the tax you normally pay on equity trading investments. Do remember, you have to reinvest the money as soon as you get the redemption amount in your account.
COVID 19 has increased the use of digital technologies which turned out well for the IT sector. If we talk about the pharma sector, there has been a much increase in the pharma stocks as investors focus shifted to COVID 19 related opportunities.
Till December 2020, many things have changed as many SMEs faced a huge decline in their growth. Also, top-notch companies have gone through crises that can’t be ignored.
In such a deeply problematic situation, one thing that performs exceptionally well during a financial and economic crisis in Indian Stock Markets.
The Nifty 50 index has experienced a remarkable recovery from its all-time lows in March. At the beginning of January 2021, the index had risen to 14%.
If you look at the top ten stocks that have generated outstanding stock market trading returns in 2020, it's none other than IT and Pharma companies that have emerged as the largest stocks.
In 2021, stocks of pharma companies remain on the top yet best-performing sectors in the Indian stock market.
In addition to this, the importance of pharma companies has been rising continuously as the demand for medicines, immunity boosters, and life-saving drugs take superiority to save lives.
Further, as the news of the third wave of COVID has come out, the people of India again keep their eyes on the pharma sector to save the country from the upcoming disaster.
Few companies have benefited from the vaccination drive.
Cadila Healthcare, popularly known as Zydus Cadila, is a leading pharmaceutical company headquartered in Ahmedabad.
India primarily engaged in the manufacture of generic drugs and the company is ranked 100th in the Fortune India 500 list in 2020.
Cadila Healthcare has produced the first vaccine called ZyCoV-D, built on a DNA platform.
Also, it has received a EUA (Emergency Use Authorization) from regulators. As per the sources, ZyCoV-D is considered India’s second home-grown vaccine post-Covaxin. The vaccine has come in 3 doses with a success rate of 66.6%.
In the June quarter of 2021, Cadila Healthcare witnessed a rise of 29.3% net profit Year on Year. Also, the huge demand for the vaccines made outstanding sales in the Indian market as it has witnessed a revenue increase of 14.5% year on year.
Introduction:
Cipla Limited is an Indian multinational pharmaceutical company, known for manufacturing medicines to treat depression, respiratory diseases, cardiovascular diseases, arthritis, weight control and other medicinal conditions.
Furthermore, the Drugs Controller General of India has given a go-ahead signal to import India’s Moderna’s Covid 19 vaccine.
The success rate of Moderna’s vaccine is 94.1%. It will be imported in ready to use form. As per the prescription, the vaccine can be stored for seven months, however, if a vial is opened, it can be used for a maximum of 30 days.
As of June 2021, Cipla witnessed a sharp rise of 24% in net profits Year on Year. Furthermore, the revenue also saw a massive increase of 27% year on year. The figures for profit have clearly shown that the Cipla has benefitted from the impact of the second wave of Covid-19.
Introduction:
Dr Reddy’s Laboratories is an Indian multinational pharmaceutical company. Headquartered in Hyderabad, the company is committed to providing affordable and innovative medicines for normal people.
Dr Reddy’s Laboratories entered into a partnership with the Russian Direct Investment Fund and produced a vaccine called Sputnik V. According to sources, the vaccine has marked a success rate of 91.6%.
From September 2021 onwards, the company is likely to begin the production of this vaccine. However, the company saw a slight decline in operating profits in June 2021. Profits declined 13% year on year as there was a marginal slump in the profits of Rs 5.7 billion.
Introduction:
Panacea Biotec is a pharmaceutical company and vaccine maker company registered in India. With principal offices in Delhi, Mumbai, the company got listed in 1995 as Panacea Biotec.
The company has tied with Dr Reddy’s Laboratories, Human Vaccine and Generium to produce nearly 25 million doses of Sputnik V. In other words, it acts as an intermediary between Generium and Dr Reddy’s Laboratories.
Panacea purchases the products from the company Generium prepares vaccines and distributes them to Dr Reddy for the overall supply within the country.
Even though the company manufactures vaccines, it also suffers from losses. In June 2021, the net loss observed for Panacea is $ 574 Million. Unfortunately, the revenue is still flat for the company.
Introduction:
Wockhardt Limited is a pharmaceutical and biotechnology company that manufactures biopharmaceuticals, nutrition products, formulations, active pharmaceutical ingredients and more.
Headquartered in Mumbai, the company has manufacturing plants in India, UK, Ireland, France, the US, Ireland and France.
Besides panacea, Wockhardt is the next company that is responsible for the supply of Sputnik V and Sputnik Light vaccines. The deal had taken place among three companies: i.e. Wockhardt, Enso Healthcare and Human Vaccine LLC.
Human Vaccine LLC is a subsidiary of the Russian Direct Investment Fund. Wockhardt is likely to supply nearly 600 million doses of vaccine Sputnik V and Sputnik Light Vaccines.
In the June 2021 quarter, the company received 3 patents and currently holds 766 patents. However, the company also faced a huge loss of Rs 65.8 billion for the first quarter.
The pharma stocks stated above are likely to benefit from the vaccination drives. Hence, it is essential to figure out how much time is left for the vaccination approval. Some companies already have their vaccines out in the market, while few just started their manufacturer setup.
Also, check out the companies that have completed all the clearances required by the regulators. Select those companies’ stocks whose products are being prepared or ready to release in the future. It will be a more profitable long-term plan.
Treasury bonds can turn out to be a good investment for the ones who seek stable returns or for those who are close to retirement. Are treasury bonds a good investment choice?
Investors consider several factors before applying for a bond: these factors include the type of bond, the amount the interest the bond pays, and the time duration their investment will be tied up.
Apart from these factors, there are other things also which can bear risk tolerance with a bond’s risk of default. These bonds are guaranteed by the US government.
US Treasury bonds are also a type of fixed income type that help investors to get guaranteed returns.
Fixed income refers to those investment securities that pay a fixed sum of interest or dividend payments till their maturity date. Government and fixed income bonds are considered as one of the safest fixed income instruments in the world.
A bond is a debt security issued by an investor to a borrower. Here, the investors are: governments and organizations where they raise funds by issuing bonds and borrowers are the ones who purchase these securities and in turn achieve a significant amount of interest from the government.
It may be noted that the government pays you the principal amount on the date of maturity.
If you want to diversify your portfolio with the purpose of equity, you need to consider bonds as an asset class. Just like the equity trading market where investing comes with profits and loss, investing in bonds also has its good or bad.
Here are some of the pros and cons:
Before taking a deep dive into bonds, let’s take a look at the terminologies:
The amount of bond will be worth only at its maturity. It is the reference amount that the issuer issues while calculating the interest payments. For instance, if someone purchased a bond worth $1K, that becomes the face value of that bond.
The rate of interest issuers will pay on the face value of the bond. A coupon rate of 5% will mean the bondholder will receive 5% every year on the $1K invested.
Dates on which the bond issuer will pay interest. The coupon date can be monthly, quarterly, annually.
The date at which the bond will mature and the bond issuer will return the face value of the bond.
An expense ratio is an annual fee a fund charges to cover its expenses. For instance, if an ETF has an expense ratio of 1%, it means the fund uses 1% of the assets to cover the expenses.
Bonds are classified through their credit ratings of which the highest quality of bonds are classified as investment grade.
Under this category, bonds are issued by the US government and stable blue-chip companies. Different bonds are available and therefore it is up to you which bond you want to invest in. Bonds that have poor credit ratings have a higher risk of default.
High rated bonds are rated as AAA while D means default. Bonds that come with a longer maturity date usually have a higher rate of interest. This is because such bonds have bondholders to default risk that can be extended for a longer period.
Agencies like S&P, Moody’s, and CRISIL have the authority to give credit ratings to bonds.
US government bonds are generally issued by the federal government for a specific duration. These bonds are considered as less defaulter and therefore they carry the lowest rate of default. The bonds that the US Treasury issues are known as T-bills or treasury bills.
Treasury bills are a type of government bond at which the maturities start from a few days to 52 weeks. These short term government bonds are sold at a discount from their face value.
These bonds have a tenor of 20 or 30 years as these bonds pay interest every six months.
Government securities are issued with maturities of two, three, five, seven and ten hours.
There are securities that are issued with maturities of five, 10 and 30 years. These securities pay interest every six months. The only difference from the bonds is that the issuer adjusts the principal of such securities based on the Consumer Price Index (Consumer Price Index).
FRNs are issued for a two years term and pay interest to their shareholders on a quarterly basis. The interest rates rise and fall which is based on discount rates for 13-week Treasury bills.
These are low-risk savings products that not only earn interest but also protect you from inflation fluctuations.
These are savings products that pay interest based on current market rates until 30 years or you cash them.
ETFs are the easiest way to invest US treasuries and corporate bonds as these are very lost cost securities than other securities. These types of investments are made under the Liberalized Remittance Scheme of the RBI.
Below is a list of some ETFs of different tenors that you can consider for investing in US Treasuries.
This ETF tracks treasury bonds with short term maturities ranging from 1-3 years. The fund carries an expense ratio of 0.15%. It has total assets worth $19.5 2B and a dividend yield of 0.46%.
The fund offers exposure which has a tenure of three to 10 years. The fund has the lowest expense ratio at 0.05%. This ETF has assets worth $7.62B under management.
This ETF records an index that offers exposure to US treasuries having a maturity of 10 years and more. It carries minimal credit risk but a significant amount of risk associated with it. The fund has an expense ratio of 0.06% and has an AUM of $3.56.
Bonds can be considered as the safest yet most trusted investment security irrespective of age. This is because bonds can provide income, safety, and help to minimize the risk in an investment portfolio.
Stock trading can be very profitable, especially if you stick with it for a long time. To be successful, it's important to understand things like a company's financial health and its real value.
Trading has been around for a long time, starting with the barter system where people traded goods directly with each other. This old form of trading laid the groundwork for the modern stock market.
The stock market is a place where people buy and sell shares of companies. These shares represent part ownership in the business. The first modern stock exchange started in Amsterdam in 1602, where people traded shares of the Dutch East India Company.
Derivatives, which are contracts based on the value of an asset, were first traded in 1607 by a single company. Dividends, or profits shared with stockholders, were given out a few years later. Amsterdam was also the birthplace of futures and options trading.
Today, more and more people are getting interested in the stock market, even those who don’t have much experience. Many see trading as a good way to grow their wealth.
Staying consistently profitable in trading is the goal of every trader, but the journey isn’t always smooth. However, by following some proven strategies, you can increase your chances of staying in the green. Here are ten tried and tested trading strategies to help you stay in profit, explained in simple language.
The foundation of successful trading is having a clear goal and a solid plan. Before you even make your first trade, know what you want to achieve.
A stop-loss order is a tool that automatically sells your stock if it drops to a certain price, preventing further losses.
Diversification means spreading your investments across different assets or sectors to reduce risk.
Trend trading is a strategy where you make decisions based on the direction of the market.
Risk management involves controlling the amount of money you expose to potential loss on any given trade.
Emotions like fear and greed can cloud your judgment and lead to poor trading decisions.
Markets are constantly changing, so it’s important to review your trading strategy regularly.
Support and resistance levels are key concepts in technical analysis that can help you make better trading decisions.
Technical indicators like moving averages, Relative Strength Index (RSI), and MACD can provide insights into market trends and potential entry and exit points.
The financial markets are influenced by various factors, including economic data, geopolitical events, and market sentiment. Staying informed helps you anticipate potential changes.
Trading for profit requires discipline, knowledge, and the right strategies. By setting clear goals, managing risk, following trends, and staying updated, you can increase your chances of consistent profitability. Remember, no strategy guarantees success, but these ten tried and tested methods can significantly enhance your trading outcomes.
Investment is something that gives you outstanding returns if done properly. If you have excessive funds lying in your bank account, save them wisely. You might have heard the above statement from every stock analyst who manages your wealth profile. This is because money is always measured in terms of time.
The time value of money states that the amount of money you have in present is worth more than that the same amount of money you will have in the future. Instead of letting your money sit idle, it would be much better if you park your surplus fund with liquid ETFs.
Liquid ETFs or Liquid Exchange Traded Funds are the mutual funds whose units are traded on the stock exchange. Unlike normal ETFs, the investment in liquid ETFs generally happens in overnight securities such as Repo or Reverse Repo securities, landing obligations and collateralized borrowings.
The primary motive of liquid ETF is to provide an income filled with low risk, at the same time gives a high liquidity level.
Investors who park their funds in liquid ETFs can earn significant returns on idle funds while at the same time remaining liquid to benefit from lucrative investment opportunities.
Liquid ETFs are only suited for large retail investors, portfolio management service (PMS) providers. Futures and Options (F&O) brokers and institutions invest directly in equities, HNI (High Net-worth Individuals).
These are several liquid ETF funds that are readily available to trade. These liquid funds can be traded immediately.
Equity market investors and traders have a habit of making continuous profits from transactions. However, sometimes they even face a loss but these are part of daily work.
The investors who have a tremendous amount of money, always find a better alternative so that they can increase their profit to a greater extent. One such alternative is liquid ETFs. Investing in ETFs enables investors to earn extra profit from excessive funds.
NSE and BSE are the funds that are available for trading where buyers and sellers quickly perform the transactions during the stock market hours on any stock trading days.
ETFs are gaining a lot of popularity these days as many investors consider liquid ETFs as the best instrument that can do wonders with their money.
However, if you are deprived of several benefits of investing in liquid ETFs or exchange-traded funds, this blog will help you out.
ETFs are not for long term investment. They are for short term investments and provide high liquidity, these are always preferred by high profile investors. Like other stocks, these funds are also listed in stock exchanges which are traded during the day. These funds are inter-linked with intraday trading and therefore the prices of the ETF heavily depend on the intraday trades.
For instance, if the intraday rates of the underlying assets change, the ETF prices also change. ETF investors are the experienced ones, and therefore they know what they have paid and what they will receive at the selling.
With liquid ETFs, investors move money from one place to another, construct strategies around their investment and manage intraday portfolios. Investing in ETFs allows investors to successfully invest in a diversified portfolio such as stocks, bonds, commodities, derivatives.
ETFs are passively managed funds that are specially designed to offer low-risk returns and high liquidity. Investors invest in an ETF when they sell equities from their portfolio. Many stockbrokers enable investors to reinvest 100 per cent of the proceeds into an ETF that too on the same day.
The stock market follows a settlement cycle of T+2 days, i.e. ETF units will get credited to investors’ accounts on the settlement day.
ETFs offer many benefits as in this type of scheme, individual investors hold their investment until they find a better alternative to move their funds. Another advantage of ETFs is that investors can forward the funds as a pledge against cash margins if investing in derivative segments.
Many brokerage houses accept ETFs as a cash margin if they want to trade in the derivatives segment.
Liquid exchange-traded funds offer investors better portfolio management by allowing them to invest in various sectors, industries, and country categories. They provide investors easy exposure to desired stock market segments.
ETFs are now available in the major asset classes, thus making them a good investment option. Also, investors can select to trade ETFs during stock market volatility or continue to invest based on their financial plans to earn profits.
The cost of investing in ETFs is quite less than mutual funds as the lower the costs, the higher the returns. Operational costs are an integral part of the structured investment as these costs include portfolio management fees, marketing costs, administrative expenses, distribution costs and more.
Here, lowering the costs means non-involvement of fund managers which means lower expenses of the funds. ETFs have lower expenses in transfers, monthly statements. Unlike open-ended funds, brokerages do require to send regular updates to the investors.
Mutual funds have more taxes than ETFs. This is because ETFs have a lower capital gain. The rate of capital gain tax applied to ETFs is also less as compared to mutual fund investments.
Liquid ETFs have only one dividend option. The daily earned dividends get reinvested into ETFs. Some ETF funds will credit bonus to its investors account weekly or monthly. Since the stock trading returns are low, brokerages waive off brokerage fees and depository participant changes on these funds.
Mutual funds and ETFs are similar investment types. However, the difference lies in the services they provide. ETFs provide higher liquidity than mutual funds and are also convenient to tap when cash flow is needed.
The term "debenture" comes from the Latin word “debentur,” meaning "they owe." In simple terms, debentures represent a company's debt. They are one of the most popular ways for companies to raise money, along with bonds.
When a company or the government needs funds from the public, they often issue debentures. These are essentially loans that the company must repay after a certain period. In return, the company pays the debenture holder a fixed interest at regular intervals—such as quarterly, monthly, or annually.
Key Features of Debentures
Companies can issue different types of debentures based on their needs. These can be classified according to security, tenure, interest rate, redemption terms, and more.
The two main types of debentures are:
1. Convertible Debentures: Convertible debentures give investors the option to convert their debenture holdings into equity shares of the issuing company. This conversion is based on specific terms outlined at the time of issuance, such as the conversion ratio (the number of shares one debenture can be converted into) and the conversion period (the time frame during which conversion is allowed). Investors are often attracted to convertible debentures because they offer the potential for capital appreciation if the company’s stock price increases, in addition to the regular interest payments. However, because of this conversion option, the interest rate on convertible debentures is usually lower than that on non-convertible debentures.
2. Non-Convertible Debentures (NCDs): Non-convertible debentures do not offer the option to convert the debenture into equity shares. These debentures are purely debt instruments, meaning the investor is only entitled to receive fixed interest payments and the principal amount upon maturity. Because they lack the potential upside of conversion to equity, NCDs typically offer higher interest rates compared to convertible debentures. This makes them an attractive option for investors seeking steady income with less exposure to equity market risks. NCDs are often considered safer investments compared to convertible debentures, as they do not depend on the company's stock performance.
There is also a lesser-known type called Partially Convertible Debentures, where only a portion of the debenture can be converted into company shares.
Registered Debentures:
Registered debentures are recorded in the company’s register of debenture holders. This means that the company keeps a record of the name, address, and details of the debenture holder. Because these debentures are registered, the transfer of ownership is formalized through a transfer deed, and interest payments are made directly to the registered holder. The benefit of registered debentures is that they provide a secure form of ownership, as the interest and principal repayments are assured to the individual whose name is on the register. However, this also makes them less flexible compared to bearer debentures, as they cannot be as easily traded.
Bearer (Unregistered) Debentures:
Bearer debentures are not registered in the name of any individual or entity in the company's records. Instead, they are transferable simply by delivering the debenture certificate to the buyer, making them more like cash instruments. The person holding the physical debenture certificate (the bearer) is entitled to receive the interest payments and the principal amount upon maturity. Because of this, bearer debentures offer a high degree of anonymity and ease of transfer but come with increased risk, as they can be easily lost or stolen. The ease of transferability makes them a popular option for those who want flexibility in their investments, though they are less secure than registered debentures.
Redeemable Debentures:
Redeemable debentures have a specified maturity date, at which point the issuing company is obligated to repay the principal amount to the debenture holders. These debentures may offer fixed or floating interest rates and are considered safer than equity investments, as the repayment date is predetermined. Redeemable debentures provide a clear exit strategy for investors, as they know when they will receive their capital back. Companies often use redeemable debentures to finance projects with a finite timeline, aligning the repayment date with expected cash flows.
Irredeemable (Perpetual) Debentures:
Irredeemable, or perpetual, debentures do not have a fixed maturity date. Instead, they exist indefinitely and are only repayable at the company’s discretion, usually upon liquidation or under specific circumstances outlined in the debenture agreement. These debentures provide a steady stream of interest income for investors but do not offer a guaranteed return of principal at a set time, making them more suitable for investors with a long-term investment horizon. Because of their perpetual nature, the interest rates on irredeemable debentures may be higher to compensate for the lack of a defined repayment date. They are often used by companies with stable cash flows looking for long-term financing without the pressure of repayment deadlines.
Companies issue debentures mainly to raise funds for growth, research, and other business needs. They prefer debentures over equity shares for two key reasons:
1. No Ownership Dilution: Issuing debentures does not dilute the company’s ownership, unlike issuing new shares.
2. Lower Cost: Raising funds through debentures is often cheaper than raising funds through equity shares.
In some cases, companies issue secured debentures to protect investors' money.
Debentures are important for companies with steady earnings, as they can easily service the debt and offer security with their assets. Companies must manage their debt-to-equity ratio carefully to maintain financial health.
Recent developments in the debenture market have made them more attractive:
Debentures play a crucial role in corporate financing by providing companies with a way to raise funds without diluting ownership. For investors, debentures offer regular interest payments, and in the case of convertible debentures, the potential to become shareholders.
The fast-moving consumer goods or FMCG companies are the ones that manufacture the daily use products. People, no matter rich or poor, use these products on a daily basis. The products comprise toothpaste, detergents, soaps, dish wash bars, oil, shampoo and others which are widely used in daily lives.
As urbanization grows at a large pace, the sector’s growth remains strong and robust. If we look at the smaller cities, towns and villages, the usage of products has been started on a broad basis. They have started to consume branded products without thinking about the prices of a product.
For instance, they have started to use the products from the organized sectors and therefore the large conglomerates are doing their duty by fulfilling the needs of the customers. Such things add more appeal to the sector. However, the paradigm of the sector is constantly changing and evolving. In other words, the sector acts as a dynamic in nature.
Despite all the difficulties faced by this sector, the FMCG sector has maintained its performance which indicates a strong and subtle future. This indicates that the sector still falls under the category of "believe to be" and investors find it as an attractive option for investors’ portfolios.
The sector is so dynamic that it has been called out as Rampant as the companies need to shift their branding, positioning, strategies within a short period of time. For instance, as the customer focus shifted towards the entry of Patanjali in Ayurveda and Organic products, the growth of the sector has been affected in a negative way.
Keeping this in mind, top companies such as Dabur and Hindustan Unilever have changed their plans and they subsequently started to move towards herbal products.
Due to the constant demand for regular use of products, investors start to believe that the FMCG sector is a steady performer in the stock market; however, the growth of the sector is still slow.
The data of Statistica states that the FMCG sector in India has shot four times to $110 billion (8.15 lakh Crore) which was less than Rs 2 lakh crore in 2011.
By 2025, it is estimated that the FMCG sector will grow at the rate of 15% on an annual basis, increasing the volume to $220 billion (Rs 16.30 lakh Crores). With the entry of top-notch e-commerce companies such as Amazon, Flipkart, the sector is likely to bounce back in the coming years.
Nowadays, the government of India also started encouraging the sector thus making a healthy and wealthy future. The government also declared several incentives to support the FMCG industry. Also, GOI has allowed 100% Foreign Direct Investment or FDI in order to receive growth.
The government minWhen it comes to building a well-rounded investment portfolio, including FMCG (Fast-Moving Consumer Goods) stocks is often a wise decision. FMCG companies produce goods that are in constant demand, such as food, beverages, household items, and personal care products. These goods are essential for daily life, making FMCG stocks a valuable part of any investment strategy.
In this blog, we’ll explore why FMCG stocks are important and how they can benefit your portfolio.
One of the biggest reasons to invest in FMCG stocks is the consistent demand for their products. People need to buy daily essentials like toothpaste, soap, cooking oil, and snacks, no matter what the economic situation is. This makes FMCG companies less sensitive to economic downturns, providing stability to their stock prices.
For instance, during tough times like a recession or pandemic, when other sectors might struggle, FMCG companies continue to sell their products because people can’t do without basic necessities. This reliability helps protect your portfolio from severe market volatility.
FMCG stocks are often referred to as "defensive" stocks. This means they tend to perform well even when the overall stock market is declining. In times of economic uncertainty or crisis, investors often move towards defensive stocks like FMCG because these companies have a steady revenue stream.
For example, while luxury goods or entertainment industries may suffer during a slowdown, people still buy groceries and household items. As a result, FMCG companies maintain their earnings and dividends, providing a cushion to your portfolio in uncertain times.
FMCG companies are known for their strong brands. Think about some of the biggest names like Nestlé, Unilever, Procter & Gamble, or ITC. These companies have built brands that consumers trust and prefer. This brand loyalty translates into consistent sales and long-term customer relationships, which in turn lead to steady revenue for the company.
As an investor, strong brands mean that the companies are likely to stay profitable, making their stocks a reliable addition to your portfolio.
FMCG companies are known for providing regular dividends to their shareholders. Since they generate steady cash flows, many FMCG companies reward investors with a portion of their profits through dividends. For investors, receiving regular dividends is an excellent way to generate passive income while also benefiting from the potential appreciation of the stock price over time.
Dividends also provide protection during market downturns, as they offer a consistent income stream even if the stock price drops temporarily.
FMCG stocks are generally less volatile compared to stocks in other sectors like technology, real estate, or energy. This lower volatility means that while you may not see huge spikes in stock prices, you also avoid significant drops. As a result, FMCG stocks are ideal for conservative investors who are looking for stable, long-term growth with limited risk.
The FMCG sector is experiencing significant growth in emerging markets like India, China, and Southeast Asia. Rising incomes, increasing urbanization, and changing lifestyles are driving demand for branded consumer goods in these regions. FMCG companies with a presence in these markets are positioned for growth, which can lead to higher stock prices in the future.
For example, in India, the demand for packaged food, beverages, and personal care products has increased as more people move to cities and adopt modern lifestyles. Investing in FMCG stocks gives you the opportunity to benefit from this growth trend.
Having FMCG stocks in your portfolio adds diversification. Diversification helps reduce risk by spreading your investments across different sectors. While sectors like technology, finance, or energy can be highly cyclical and impacted by economic conditions, FMCG stocks offer a level of protection because they perform well even during downturns.
By holding a mix of stocks from different sectors, including FMCG, you can balance your portfolio and reduce the risk of losing money when specific sectors underperform.
FMCG companies have the ability to pass on rising costs to consumers through price increases, making them a good hedge against inflation. When inflation occurs, the prices of raw materials, labor, and transportation rise. However, FMCG companies can adjust the prices of their products accordingly, maintaining their profit margins and protecting their stock prices.
For example, if the cost of raw materials like sugar or packaging goes up, a company like Nestlé may increase the price of its chocolates or coffee products. This ensures that their profit margins are maintained, even during inflationary periods.
Hindustan Unilever is the largest FMCG company in the country with a market capitalization of 6 lakhs. It is a listed company that is headquartered in London, UK. British conglomerate. Its products include Dove, Lifebuoy, Lux, Hamam, Lyril, Rexona, Surf Excel, Comfort, Sunsilk, Fair and Lovely, Lakme, Vaseline, Lipton, Brooke Bond, Pepsodent and others.
Incorporated on 24 August 1910, ITC was later named as Indian Tobacco Company. Headquartered in Kolkata, the company is diversified across multiple industries such as FMCG, hotels, packaging, agribusiness, and cigarettes. The famous brands like Nescafe, Gold flake, Classmate Notebooks and Wills Navy Cut.
Nestle was incorporated in March 1959, in Vevey Switzerland and operates in India. It brags a market cap of over Rs 1.7 lakh Crore. The company mainly produces dairy products that manufacture top brands such as Maggi, Kit-Kat, Milo, Milkmaid, Barone and Nestea.
Dabur is also known as Daactor Burman is a Ghaziabad based FMCG company that primarily manufactures healthcare-related products including Dabur honey, Chyawanprash, Dabur Hajmola and more.
The consumer product company is best known for manufacturing liquid detergents, soaps, Cinthol, Godrej No.1, Godrej Shikakai, colourants Godrej powder hair dye, Coloursoft, and Ezee liquid detergents.
Headquartered in Mumbai, the company has a market cap of more than 90,000 crores. Other listed companies include Marico, Gamble Hygiene, Jubilant FoodWorks, Britannia Industries, Emami, Tata Consumer Products amongst others.
If you want to buy a solid, strong yet steady portfolio, you should buy and hold FMCG shares for a longer period of time. Not only do these stocks offer attractive returns but also provide a decent dividend.
Here are reasons; why should you own them:
FMCG companies release new products at fixed intervals as the stock market is highly competitive. A company does not always fully depend on older products to remain in the game. Keeping this in mind, major FMCG companies have shifted towards ayurvedic and herbal products across the board. The company continues to launch new products to ensure market shares for them.
FMCG companies find India is a huge market with 1.3 billion people, which is more than 15% of the total population. Needless to say, the per cent is quite more and as per the research, a large part of the population comes from rural and suburban areas.
As long as the government gives a thumbs up to these sectors, FMCG is likely to grow at a rapid speed. One of the prime reasons is that the sector offers lucrative returns to its shareholders.
FMCG companies believe in innovation and hence the companies grab and get higher market returns. Nevertheless, the companies who fail to upgrade with time, often get the last seats in a row. Innovation of FMCG sectors is based on the following factors: research, consumer behavior, market demands.
The competition of FMCG companies is rising day by day which means there is a limited scope of extracting higher margins in indubitable products. As the product rates go beyond the standards, it is a huge possibility that the users may shift to the same products of different companies.
Hence, the margins are limited and dwarf to get higher sales and revenue.
Incorporating FMCG stocks into your investment portfolio is a smart decision due to their stability, defensive nature, and steady demand. With low volatility, regular dividends, and a strong presence in emerging markets, FMCG stocks provide diversification and help protect your investments during economic downturns. By including them in your portfolio, you can achieve a good balance between risk and reward, while benefiting from long-term growth and consistent returns.
Whether you're a conservative investor or someone looking to hedge against market volatility, FMCG stocks are a solid addition to your portfolio for long-term financial security.
imizes the burden of corporate taxation on MSME to further elevate the sentiment. The GST has aided the sector, even more, boosting the sentiments for the industry.
Hindustan Unilever is the largest FMCG company in the country with a market capitalization of 6 lakhs. It is a listed company that is headquartered in London, UK. British conglomerate. Its products include Dove, Lifebuoy, Lux, Hamam, Lyril, Rexona, Surf Excel, Comfort, Sunsilk, Fair and Lovely, Lakme, Vaseline, Lipton, Brooke Bond, Pepsodent and others.
Incorporated on 24 August 1910, ITC was later named as Indian Tobacco Company. Headquartered in Kolkata, the company is diversified across multiple industries such as FMCG, hotels, packaging, agribusiness, and cigarettes. The famous brands like Nescafe, Gold flake, Classmate Notebooks and Wills Navy Cut.
Nestle was incorporated in March 1959, in Vevey Switzerland and operates in India. It brags a market cap of over Rs 1.7 lakh Crore. The company mainly produces dairy products that manufacture top brands such as Maggi, Kit-Kat, Milo, Milkmaid, Barone and Nestea.
Dabur is also known as Daactor Burman is a Ghaziabad based FMCG company that primarily manufactures healthcare-related products including Dabur honey, Chyawanprash, Dabur Hajmola and more.
The consumer product company is best known for manufacturing liquid detergents, soaps, Cinthol, Godrej No.1, Godrej Shikakai, colourants Godrej powder hair dye, Coloursoft, and Ezee liquid detergents.
Headquartered in Mumbai, the company has a market cap of more than 90,000 crores. Other listed companies include Marico, Gamble Hygiene, Jubilant FoodWorks, Britannia Industries, Emami, Tata Consumer Products amongst others.
If you want to buy a solid, strong yet steady portfolio, you should buy and hold FMCG shares for a longer period of time. Not only do these stocks offer attractive returns but also provide a decent dividend.
Here are reasons; why should you own them:
FMCG companies release new products at fixed intervals as the stock market is highly competitive. A company does not always fully depend on older products to remain in the game. Keeping this in mind, major FMCG companies have shifted towards ayurvedic and herbal products across the board. The company continues to launch new products to ensure market shares for them.
FMCG companies find India is a huge market with 1.3 billion people, which is more than 15% of the total population. Needless to say, the per cent is quite more and as per the research, a large part of the population comes from rural and suburban areas.
As long as the government gives a thumbs up to these sectors, FMCG is likely to grow at a rapid speed. One of the prime reasons is that the sector offers lucrative returns to its shareholders.
FMCG companies believe in innovation and hence the companies grab and get higher market returns. Nevertheless, the companies who fail to upgrade with time, often get the last seats in a row. Innovation of FMCG sectors is based on the following factors: research, consumer behavior, market demands.
The competition of FMCG companies is rising day by day which means there is a limited scope of extracting higher margins in indubitable products. As the product rates go beyond the standards, it is a huge possibility that the users may shift to the same products of different companies.
Hence, the margins are limited and dwarf to get higher sales and revenue.
It may be noted that the FMCG sector gives a moderate performance during bull markets, however, when the stock market goes down, the same sector gives outstanding returns.
In addition to this, the majority of FMCG companies launch new products on a constant basis and if you include them in your portfolio, chances are high that your portfolio is screened from any unfavorable market segments.
When it comes to investing, the primary thing that one should confess is that nobody is perfect. People who invest a lot often go through wins or losses. However, some of the mistakes people usually make when trading stocks are pretty common. The majority of investors make such mistakes.
The important thing to figure out is that these silly mistakes can be avoided simply through awareness.
Several figures need to be taken care of while investing in the stock market. Before that, you should clearly understand what you are investing in, take your time, and select a path that suits your financial goals and risk appetite.
It may be noted that every investor’s risk appetite is different from the others and so are financial goals. Therefore, one should plan an investment strategy to maintain its risk appetite and time constraints.
In this blog, we will discuss some of the common mistakes to avoid while investing in the stock market:
Diversification of a portfolio allows you to separate all the securities in different investment sectors i.e. asset classes such as commodity, shares, bonds, property and more.
Make sure that their portfolio should not include 10% in any of one fund. In this case, mutual funds offer a convenient way to diversify your portfolio, the fund manager of a mutual fund often invests in several stocks from different industries.
With the help of diversification, investors can spread out their investments in multiple mutual funds.
Before you start investing, it’s always good to do proper stock market research as it will help you to get good ideas about investing. You may start searching on the internet as there is a lot of information available on the internet. However, you are required to figure out the right investment advice.
Also, you need to make a decent plan. For instance, if investor x wants to invest in the securities that would give him a decent return by the time he retires. But if Y investor wants to invest in such types of instruments which can give him a good return within the span of 7 to 10 years.
As both the investors are different, so are their financial goals. Therefore they need to make a different plan.
As time passes, the portfolio should be reviewed periodically. You do not need to forget that different asset classes will vary over time with some investments going faster in values as compared to others.
Also, the world doesn't stick to one place. Economic activities change, personal circumstances change and so should the portfolio of an investor.
If you have enough knowledge about the stock market and try to attempt to time the almost futile market. You may be surprised that even experienced investors fail to time the market. Instead of timing the markets, investors should focus more on long term investment as with the passing time the volatility in the stocks also gets minimized.
Procrastination is a bad word for investors. Investors who want to achieve big share trading returns from the stock market should be active throughout their lives. In case, if an investor commits a mistake, the primary thing they need to do is to pay attention to their mistakes, closely monitor them on time and get out from the poor investment.
Many investors start their investment carriers thinking that they would make huge returns against the investment they make and surpass the market performance. Many of them believe that they invest Rs 100 into the stock market and make Rs 1000 investment overnight.
Following a herd mentality is one of the biggest mistakes investors often commit whether they are experienced or novice. A bullish stock market brings confidence to many investors; they often get influenced by the people when they see the gains others are making.
This result is investors ended up investing when the market is at its peak. Therefore it is advised to ignore the short term gains and try to focus more on long term investments.
Just check out your past performance, try to analyze the pattern a particular stock follows, learn from the mistakes and make a move. Also, it is important to not take any important decisions based on it.
Making a mistake in stock trading is very common. Intelligent investors who have a clear understanding of the stock market, also commit big mistakes sometimes.
However, the thing that makes them different from normal investors is that top-notch investors learn more from their mistakes without wasting time and make the next move carefully.
When it comes to investing, the right advice from the right people is very important. Experienced investors often take advice from prestigious stockbroking houses and include advice in their research. This, in turn, makes them more aware of making informed decisions.
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.
The term "share market" is something almost everyone has encountered at some point. However, alongside the word, many of us have also heard phrases like "the stock market is just gambling" or "it's a speculative market." These statements often overshadow the success stories of those who have made significant profits from the market. The reality is that while you may hear more about losses, the stories of those who have profited are equally true, albeit less frequently discussed.
The share market is a complex world where fortunes can be made or lost. But have you ever stopped to think about who exactly is talking about these losses? Are they experienced investors or people who dipped their toes in without sufficient knowledge? This brings us to an essential discussion about the common mistakes that over 90% of people make in the stock market, leading to losses.
Psychology plays a crucial role in our lives, influencing everything from our daily decisions to our financial choices. This is especially true in the stock market. The same psychological traits that can help some people climb the ladder of success can cause others to struggle. Our psychology is shaped by our thoughts and attitudes, which, in turn, are formed by the way we train our minds.
When you invest in the stock market, the thoughts that dominate your mind become your psychology. For example, if you're constantly worried about losses and are quick to sell at the slightest profit, your decisions are driven by fear rather than strategy. If you let external factors like market chatter influence your decisions, you're likely to fall into the same traps as the majority of investors who face losses.
It's true that many people lose money in the stock market, but it's equally true that a small percentage consistently make profits. This begs the question: What are these 10% of successful investors doing that the other 90% are not? The answer lies in understanding that trading setups, strategies, and tools contribute only about 20% to your success. The remaining 80% depends on your psychology, discipline, emotions, money management, and risk management.
Let's explore the critical reasons why so many people suffer losses in the stock market and how you can avoid making the same mistakes.
One of the biggest mistakes that new investors make is diving into the stock market without proper education. Think about it: you spend 12-15 years studying before starting a career, yet many people are unwilling to spend even a few weeks learning about investing. This lack of knowledge often leads to poor investment decisions and, ultimately, losses.
It's important to understand that just like any other profession, investing requires education and experience. You wouldn't start a job without training, so why would you invest your hard-earned money without understanding the basics? As Warren Buffett wisely said, "Never invest in anything that you don't understand."
In today's digital age, it's easy to come across free investment tips on social media platforms like Telegram, Facebook, and WhatsApp. However, these tips often come from people who lack real market knowledge. Following these tips can lead to significant losses because you're essentially trusting someone else's opinion without understanding the reasoning behind it.
Instead of chasing free tips, consider seeking advice from a professional trader who has a proven track record. A true professional will have their own money invested in the market and will take the same risks with their trades as they advise you to take. Before following anyone's advice, always check their knowledge, trading strategy, and performance history.
You've probably heard the saying, "Prevention is better than cure." This applies to risk management in the stock market as well. Proper risk management is essential to avoid financial problems. It involves setting clear rules for how much you're willing to risk on each trade and sticking to them.
Many investors make the mistake of holding onto losing trades, hoping that the market will turn in their favor. This approach can lead to significant losses and ruin your portfolio. Instead, you should be willing to cut your losses quickly and let your profits run. A disciplined approach to risk management is key to long-term success in the stock market.
Money management, or fund management, is another critical aspect of successful investing. It involves determining how much money to invest in different assets, understanding the risks involved, and deciding on the investment horizon. Many investors make the mistake of not setting a clear investment amount and end up investing most of their money in the stock market, leaving little for emergencies.
Before making any investment, ask yourself a few important questions:
Warren Buffett once said, "Never test the depth of the river with both feet." In other words, don't invest all your money in one go. Diversify your investments and keep some funds in safer, fixed-interest assets.
Overtrading is a common mistake that many investors make. It often stems from a lack of discipline and the desire to recover losses quickly. After a losing trade, some investors immediately take another trade without proper analysis, hoping to make up for the loss. This impulsive behavior can lead to even greater losses.
Successful traders set clear goals for each day, including how much profit they want to make and how much loss they're willing to tolerate. They know when to stop trading, whether they've reached their profit target or hit their loss limit. Overtrading, on the other hand, often results in paying high transaction costs and can quickly deplete your capital.
Timing is crucial in the stock market. Many investors make the mistake of buying stocks when the market is at its peak, driven by the fear of missing out on further gains. However, this often leads to buying overpriced stocks, which can result in losses when the market corrects.
A better strategy is to invest during market downturns when stocks are available at a discount. As Warren Buffett famously said, "Be fearful when others are greedy, and be greedy when others are fearful." By buying quality stocks during a market downturn, you can position yourself for significant gains when the market recovers.
Intraday trading, also known as day trading, is a popular yet risky form of trading. It involves buying and selling financial instruments within the same trading day, with the goal of profiting from short-term price movements. While intraday trading offers the potential for quick profits, it also comes with significant risks.
According to various studies, as much as 95% of day traders lose money in the market. This high failure rate is due to several factors, including the fast-paced nature of intraday trading, the need for constant monitoring, and the emotional stress involved. Many traders enter the market without sufficient knowledge or preparation, leading to costly mistakes.
The success and failure rates of intraday traders vary widely based on factors such as market conditions, individual strategies, and trader skill levels. Here are some key findings:
Several psychological factors contribute to the high failure rate among intraday traders:
Success in the stock market doesn't come from luck or chance; it comes from knowledge, discipline, and a well-thought-out strategy. By avoiding the common mistakes mentioned above and focusing on continuous learning, proper risk management, and disciplined trading, you can increase your chances of becoming one of the few who consistently make profits in the stock market.
Remember, the stock market is a tool for wealth creation, but only if used wisely. Invest the time to learn, understand the risks, and always trade with a clear plan in mind. The journey may be challenging, but with the right approach, it can also be rewarding.
Today, we’ll dive into the concept of low volatility investment—a strategy designed to minimize risk while aiming for steady returns. Low volatility investments are less affected by market fluctuations, making them attractive to conservative investors who prioritize stability. Let’s break down what low volatility investment is, why it’s beneficial, and how it works.
Low volatility investment involves selecting assets or portfolios that exhibit less fluctuation in price compared to the broader market. These investments experience smaller price swings, providing a more stable and predictable return profile.
Low volatility investments offer a strategy for those seeking stability and reduced risk in their portfolios. By focusing on assets with lower price fluctuations, investors can enjoy more predictable returns and better capital preservation. However, it’s important to consider the trade-offs, such as potentially lower returns and inflation risk. Understanding your financial goals and risk tolerance is essential for making updated investment decisions.
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.
In India, insurance plays a crucial role in securing financial stability for individuals and families. It provides a safety net against unforeseen events, such as accidents, illnesses, and even death. With a variety of insurance options available in the market, it’s essential to understand the different types and how they can benefit you.
In this guide, we will explore the various types of insurance available in India, focusing on their importance, features, and benefits.
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 a contract between the insured (policyholder) and the insurance company, where the insurer agrees to pay a specific amount (sum assured) to the policyholder's beneficiaries upon the insured's death or after a certain period, depending on the type of policy. It acts as a financial cushion for the policyholder's family in case of unfortunate events.
Health insurance covers medical expenses incurred due to illnesses, accidents, or hospitalization. In India, rising healthcare costs make health insurance a critical part of financial planning. It offers coverage for hospitalization, pre- and post-hospitalization expenses, surgeries, and sometimes even daycare treatments.
Motor insurance is mandatory in India for all vehicles, including two-wheelers, cars, and commercial vehicles. It provides financial protection against damages to the vehicle, third-party liabilities, and accidents.
Home insurance provides financial protection to homeowners against damages or losses to their home and belongings due to fire, theft, natural calamities, or other unforeseen events. Given the increasing cost of real estate and home repairs, home insurance offers peace of mind by covering unexpected expenses.
Travel insurance covers risks associated with domestic and international travel, such as medical emergencies, trip cancellations, lost baggage, and passport loss. This insurance provides financial assistance for various travel-related contingencies, making your trips stress-free.
Personal accident insurance provides coverage in case of accidents leading to injuries, disabilities, or death. The policy offers financial compensation to the insured or their family for medical expenses, loss of income, or other financial burdens arising from the accident.
Commercial insurance offers protection for businesses against various risks such as property damage, liability, and employee-related risks. It helps companies manage financial losses due to unforeseen events.
Insurance is a vital tool for managing risks and ensuring financial security in the face of unexpected events. Whether it’s life, health, motor, or home insurance, each type of policy serves a unique purpose, offering peace of mind and financial protection. Understanding the different types of insurance available in India will help you choose the best coverage to meet your personal and professional needs.
Trust Our Expert Picks
for Your Investments!
.webp)
.png)
.png)
