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The Union Budget of India is the comprehensive financial plan of the government for the fiscal year, outlining its revenue and expenditure projections. Presented annually by the Finance Minister in Parliament, it serves as a blueprint for the country's economic policies and priorities. Beyond financial allocations, the budget addresses key aspects such as taxation, borrowing, and expenditure management, shaping the socio-economic landscape of India. It reflects the government's strategies to stimulate growth, promote development, and address fiscal challenges while aiming to achieve sustainable economic progress. As a critical policy document, the Union Budget influences sectors ranging from agriculture and infrastructure to healthcare and education, impacting the lives of millions across the nation.
The Union Budget 2024-25 is set to be an important event for India, scheduled for presentation on July 23, 2024, by Finance Minister Nirmala Sitharaman. As the first budget of the re-elected government's new term, it carries significant weight and anticipation among various stakeholders, including investors, economists, and the general public.
This budget is the first financial plan of the re-elected government's new term. There is great anticipation about the government's fiscal policies and economic strategies.
Post-election, the political scenario emphasizes the importance of addressing both regional aspirations and national priorities, ensuring a balanced approach to governance and development.
Economic indicators, including robust GST collections and substantial dividends from the Reserve Bank of India (RBI), are expected to strengthen the budgetary framework. These factors provide a solid foundation for improving fiscal health and implementing growth-oriented policies.
In the last ten years, each budget has shown how the government aims to double farmers' incomes and increase money flow directly to them. Budgets have set aside more funds for agriculture, focusing on rural development and improving farming methods.
Initial indications suggest that in FY25, the government will continue focusing on consolidating finances to boost economic growth and control inflation. Meeting the fiscal deficit goal of 4.5% of GDP by FY26 is crucial, requiring careful allocation of resources to sectors such as Minimum Support Price (MSP), food, fertilizers, and LPG subsidies.
Union Budget 2024-25 is expected to align closely with the Modi government's inclusive development agenda, prioritizing initiatives such as:
The railway sector is set to receive increased funding for capital projects, continuing the government's efforts to rejuvenate infrastructure. In the Interim Budget 2024, the railway ministry secured unprecedented financial support, highlighting the government's dedication to improving railway infrastructure.
Expectations of a favorable budget, without negative tax changes, are likely to maintain a positive trend in the stock market. Sectors like FMCG, infrastructure, renewable energy, housing, and railways, which stand to gain from rural sector improvements, are anticipated to see favorable market responses after the budget is announced.
As we await Finance Minister Nirmala Sitharaman's budget speech on July 23, 2024, expectations are focused on the Union Budget reinforcing the core policies of the re-elected government, while steering clear of significant long-term expenses. Robust revenue streams from GST and RBI dividends are set to enhance fiscal flexibility, facilitating targeted investments in rural infrastructure and agriculture. The budget aims to prioritize inclusive growth and revive sectors, though it is not anticipated to introduce major reforms or extensive expenditures in this fiscal cycle. All eyes are on how the government addresses economic challenges and charts a path towards sustainable development and prosperity in India.
The decline in the Indian rupee this year has been attributed to the higher crude oil prices, the tightening policy of the US Federal Reserve, and the overall strength of the US dollar. Added to this the global uncertainty due to the geopolitical crisis caused by the war between Russia and Ukraine caused the weakening of the dollar.
The US Federal Reserve (Fed) raised interest rates by 75 basis points at its last meeting and said it would raise interest rates further by 75 basis points in November and 50 basis points in December.
Stocks plunged, Asian currencies fell, and markets went risk-off following the US Federal Reserve's announcement on Sept. 21.
Yields on dollar-denominated investments rose relative to emerging markets such as India. There is speculation that a more aggressive rate hike by the US Federal Reserve could take place, which could put further pressure on India's currency.
The Indian Rupee's value against the US Dollar works based on supply and demand. As the demand for the US dollar increases, the Indian Rupee depreciates. When a country imports more than it exports, demand for the dollar exceeds supply, causing domestic currencies such as the Indian rupee for India to depreciate against the dollar.
Supply-demand imbalances and geopolitical tensions between Russia and Ukraine led to a sharp rise in oil prices in February 2022. India’s crude basket price fell 43.8% from April 2021 to February 2022.
Foreign institutional investors (FIIs) have also sold $28.4 billion worth of equities so far this year, surpassing the $11.8 billion sold during the global financial crisis in 2008, because of which more foreign capital outflow from the domestic market The rupee has fallen 5.9% against the dollar so far this year.
The outflow of money from India will affect the rupee-dollar exchange rate and depreciate the rupee. Such a weakening would put significant pressure on the already high import prices of oil and commodities, paving the way for import inflation and higher production costs, along with higher retail inflation.
The dollar index, which tracks currencies against a basket of major currencies, is up more than 9% this year, reaching its highest level in 20 years.
The market fell for the second week in a row as the depreciation of the rupee against the dollar put pressure on the domestic market to reverse two months of positive inflows. Rate hikes by the US Federal Reserve and tightening of monetary policy by central banks around the world signaled a selloff among investors. The market started the week subdued, led by weak global markets.
Weakness in global markets finally pulled the index down over the weekend. Nifty posted his second straight day of positive closings, and his benchmark index corrected for his second week in a row, with sessions just above 17300, down 1.16% from the previous week's close.
RBI is responsible for maintaining the stability of the rupee. Whenever the rupee falls significantly, the RBI sells dollars from the forex pool to enter the market. The central bank sold $19.05 billion in the spot market in July, according to RBI data.
Another reason the rupee may come under pressure is that RBI intervention may become less aggressive, analysts say. This could help the rupee catch up with other emerging economies and protect rapidly depleting foreign exchange reserves, experts said.
The September 28-30 RBI Monetary Policy Committee meeting will be closely watched by stakeholders as the market expects repo rates to rise by 50 basis points (bps). FX reserves, down 14% from their peak, also keep the market on edge.
State Bank of India's net profit in the first quarter of the current financial year on a standalone basis has declined by 7 percent.
State Bank of India (SBI) reported a net profit of Rs 6,068.08 crore compared with Rs 6,504 crore in the same quarter last year. Due to Mark to Market (MTM) losses on its investment book, the bank's operating profit decreased by 33% to Rs 12,753 crore from Rs 18,975 crore in the April-June quarter of the previous fiscal.
The bank's interest income increased to Rs 72,676 crore from Rs 65,564 crore previously. Net interest income grew from Rs 27,638 crore in the first quarter of the previous fiscal to Rs 31,196 crore which is 12.87 percent. The net interest margin increased from 3.15 to 3.23 percent.
Core operating profit jumped by 14.39 percent year over year, from Rs 16,873 crore in Q1 FY22 to Rs 19,302 crore in Q1 FY23, when trading income and MTM were excluded.
The bank's gross (NPA) ratio increased from 5.32 percent at June's end of the previous year to 3.91 percent today. Similar to this, net NPAs decreased from 1.7% in June 2021 to 1.02 in June 2022. Domestic NIM for Q1FY23 climbed by 8 bps YoY to 3.23 percent. While the net NPA ratio decreased by 77 bps YoY to 1.00 percent, the gross NPA ratio decreased by 141 bps YoY to 3.91 percent.
The Provision Coverage Ratio (PCR), which was 75.05 percent, increased by 719 bps YoY. A 90.14 percent PCR (Inclusive AUCA) was reported. The slippage ratio for the reviewed quarter was 1.38 percent, an improvement of 109 bps year over year. Corporate loan volume increased by 10.57%, while SME and agricultural loans also saw year-over-year increases of 10.01% and 9.82%, respectively.
Deposit increased by 8.73% to Rs. 40 lakh crore. As of June 30, the bank's CASA ratio dropped 64 basis points to 45.33 percent. Retail bank deposits are up 8.73% year over year. Credit Cost for Q1 FY23 was 0.61 percent, up 18 basis points year over year. At the end of the June quarter of 2022–23, the capital adequacy ratio (CAR) was 13.43%.
SBI added that 38% of retail asset accounts and 65% of savings bank accounts were opened online using YONO. The proportion of alternate channels in all transactions climbed from 95.1% in the first quarter of FY22 to 96.6 in the first quarter of FY23.
Due to Mark to Market (MTM) losses on its investment book, the bank's operating profit decreased by 33% to Rs 12,753 crore from Rs 18,975 crore in the April-June quarter of the previous fiscal.
The bank's Return on Asset and Return on Equity, which was 0.48 percent and 10.09 percent, respectively, suffered from the MTM hit.
Non-interest income fell significantly. The sharp reduction in SBI's non-interest income was a significant factor in the company's profit decline. In the June quarter, SBI's non-interest income was barely Rs 2,312 crore, compared to Rs 11,802 crore in the same quarter of the prior fiscal year.
Talking about the stock of SBI, the company's stock has given a return of 13 percent to the investors in YTD time. At the same time, it has given a return of 22.20 percent in the last year and has given a return of 90.02 percent to the investors in the last 5 years.
Promoter ownership of SBI was 57.57 percent as of June 2022, with no shares pledged.
Dividends of Rs 07.10 per share have been issued by SBI for the fiscal year that ended in March 2022.
SBI's share price increased by 84.45, or around 19.38 percent, during the course of the past year, from Rs 435.7 to Rs 520.1.
At 43,884.2, the S&P BSE BANKEX Index is now trading (up 0.77 percent). It increased by 3,153.0 points (up 7.74 percent) in the past year, from Rs 40,731.3 to Rs 43,884.2.
The S&P BSE SENSEX has increased 8.25% overall.
India's largest-ever 5G spectrum auction in India finished on Monday with bids totaling more than Rs 1.5 lakh crore. The auction procedure lasted seven days and 40 rounds of bidding. During the 5G spectrum auction, Reliance Jio ended up being the biggest bidder. The next-generation network is considered to be essential for new technologies like artificial intelligence and self-driving automobiles, enabling the use of advanced linked gadgets using cloud computing technologies and permitting video downloads in seconds. In addition to providing customers with fast data access, 5G has the potential to support a variety of enterprise-level applications, including more immersive augmented reality and metaverse experiences, connected vehicles, and machine-to-machine communications. Keeping this in view, By October of this year, the Indian government hopes to start rolling out 5G, which it claims can deliver data speeds around ten times faster than 4G.
In the 5G spectrum auction, Bharti Airtel, Vodafone Idea, Adani Enterprises Ltd., and Reliance Jio participated Reliance Jio bid Rs 88,078 crore For 24,740 MHz of spectrum. Airtel purchased 19,876 Mhz of spectrum For Rs 43,084 crore. Vodafone Idea Ltd paid just Rs 18,799 crore for 6228 MHz of spectrum. Adani Enterprises only invested Rs 212 crore in six circles, including Gujarat, Mumbai, Karnataka, Tamil Nadu, Rajasthan, and Andhra Pradesh, for 400 MHz in the millimeter band.
Within six years of its formal launch, Jio has established itself as the market leader with its 4G services, serving more than 400 million subscribers.- Jio has purchased low-band, mid-band, and mm Wave spectrum.- Jio will be the sole telecommunications provider using the 700Hz spectrum footprint to offer 5G internet access.- Jio has acquired 22 circles' worth of 700Hz and 800Hz bands.- Jio will pay Rs 7,877 crore every year with interest calculated at a rate of 7.2% per year for the next 20 years.
Jio Platforms, a division of RIL reported a 17.1% increase in gross revenue for FY22, totaling INR 95,804 Cr, while net profit increased by 23.6 Percent to INR 15,487 Cr. During FY22, Jio Platforms' EBITDA increased 20.9 percent to INR 39,112 Cr. Reliance Jio's June quarter profit jumped from 23.82 percent YoY to Rs 4,335 crore. The telecom operator's Q1 revenue saw a growth of 21.55 percent to Rs 21,873 crore. Jio had gained over 31 lakh, mobile subscribers, in May, taking its mobile customer count to 40.87 crores according to TRAI.Jio's extensive fiber network and home-grown technology platforms guarantee seamless internet access for both consumers and enterprises. Reliance will get benefit in the form of 5G tariff plans will likely lead to higher revenues for telecom companies
According to Reliance, the planning for 5G coverage in 1,000 of the biggest cities of India has been finished. Using a variety of services, including heat maps, 3D maps, and ray-tracing technologies, Jio said that it is now testing the implementation of its 5G services throughout India. Jio is presently testing its own 5G RAN and Core technologies that it built on its own.
India will adopt 5G gradually, especially given the possibility of price hikes and the fact that just roughly 7% of all smartphones in India are 5G-capable. During the next 20 years, India's Department of Telecommunications will receive an upfront payment of $1.6 billion. The auction record the largest earnings that will aid in bolstering the government's finances at a time when India's budget deficit, is predicted to reach 6.4 percent.
For Indian telecoms to fuel their revenue growth by delivering ultra-high speed wireless network services, the 5G spectrum is essential. 5G can provide enterprises the ability to create their own networks. In India, mobile data consumption is expected to increase by 29% and data income to increase by 67% between 2020 and 2026 as a result of the next generation of mobile broadband, despite unsubstantiated worries about radiation levels or worries about increased pricing. The technology will also enable the country's ongoing smart city initiatives and enable manufacturers to start their Industry 4.0 journey. This ought to boost the adoption of 5G in India by e-commerce, fintech, agritech, health tech, and other digital industries.
ITC Ltd’s AGM key highlight was the total FMCG portfolio’s addressable market potential of Rs. 5 lakh crore by 2030. This is the highest for any Indian FMCG company and provides a huge runway of growth for the ITC’s FMCG division.
Further, the current EBIT margins remain below its peer FMCG companies, hence, we expect significant volume growth combined with a rise in the company’s bottom line in the upcoming decade. Additionally, cigarette volumes have recovered and surpassed the pre COVID levels.
In the hotel segment, the company has launched 9 hotels recently and plans to add more properties in the coming quarters.
The paper segment is expected to gain due to the ban on plastic products and the Agri segment has a huge potential due to the current opportunity in exports and the sourcing advantages of the company.
In short, the company is firing on all cylinders, and being a cash-generating machine, it has the potential to grow both organically and inorganically.
Regarding the demerger and spinoff of hotels and the IT division, the company is open to suggestions and is constantly evaluating options to do the same. ITC Ltd. has been one of the best performers this year rising 36% compared to a negative 6% return of the Nifty 50 and has witnessed a whopping 13% return in one month.
Corporate Earnings and Macro Data will dictate the trend along with Global Cues.
It was a good week for the Indian market where it outperformed most of its global peers amid worries of global energy crises and inflation worries.
IT and Auto sector added most of the gain while the broader market also did well with a gain of more than 3.5%.
The Q2 earnings season has started with TCS' results which is a minor miss on expectations and we could see some profit booking in the IT sector as IT stocks have rallied a lot in expectation of strong earnings however any correction will be a buying opportunity.
Infosys, Wipro, and HCL tech will come out with their numbers next week therefore we are going to see lots of volatility in the market, especially in the IT sector.
Along with corporate earnings, the market has to deal with macro numbers. The government will release IIP and CPI numbers on 12th October and WPI will be announced on 14th October.
The market is expecting strong growth in industrial production but at the same time, it worries about inflation.
Global factors will also play an important role in the direction of the market.
The headline numbers of US Nonfarm payroll are slightly weak however the internals are strong. The US bond yield is above the 1.6 mark, the Dollar index is above 94 and the price of Brent crude is above $83 that may lead to any correction in the market however market is ignoring all of them for time being as momentum is very strong.
Technically, Nifty is trading near-critical resistance zone of 17950-18000 where it could again witness selling pressure but if it manages to trade above this zone then we could see a rally towards 18200/18300 levels.
On the downside, 20-DMA of 17650 is immediate and important support; below this, 17450 is a critical support level because below 17450 we could see any meaningful correction.
If we talk about the data then the market is lacking FIIs' buying but getting strong support from DIIs, HNIs, and retail investors.
Put call ratio stands at 1.3 level whereas FIIs' long exposure in index future stands at 59% that is neutral to positive. On the options front, the 18000 strike call option has the highest OI of 37lac for14-Oct expiry while the 17800 strike put has the highest OI of 32.7lac therefore 18000 is an important and psychological hurdle.
Banknifty is trading near-critical resistance zone of 3800-38300; above this, we can expect a strong short-covering rally towards 39000 otherwise there is a risk of profit booking where 20-DMA of 37500 is critical support; below this, we can expect further selling pressure towards 36500/36000 levels.
In terms of sector, the Nifty PSU banking index is looking interesting because it is trading near-critical resistance however most of the PSU banks witnessed bullish momentum in Friday's trading session and if the market remains supportive and the Nifty PSU banking index manages to cross-resistance of 2660 then PSU banks may outperform.
Tata wins back Air India that is a historical moment and this is a sigh of relief for the lenders. PSU banks mainly the Bank of Baroda will be the biggest beneficiary as it has substantial exposure to the airliner.
If we talk about the Airline stocks then competition will increase so we could have a sentimental negative impact on listed players but the opportunity of scale is high so the long-term outlook is positive for the overall industry however investors should understand the unsystematic risk of the industry or company.
Investment banking is a broad term that is described by several functions including capital market intermediation and stock trading. However, both the terms that are stated above are distinct from the functions associated with commercial banking which majorly involves the acceptance of deposits and providing loans to common people.
Unlike commercial banks, investment banks primarily focused on capital formation and price setting. These are the large financial institutions that assist all the businesses (small scale or global) with capital financing and trading both.
There are many things an investment bank does which in turn uplift the economy to a better position.
Here are a bunch of questions you need to ponder:
If a company XYZ limited, is planning to go with the merger with another company? How to find out whether it’s going to benefit your company?
Who handles the whole documentation process or figures out the new investment strategies?
The answer is Investment Banks. Investment banks are the ones that help many small and mid companies go public so that they can increase their wealth by a large percentage. Also, they assist many companies to underwrite bond offerings and are involved in stock trading and other major investments with handsome investment amounts.
The need for investment banks is extremely large. For instance, the division of banking is responsible for the formation of capital for companies, governments and other entities. Also, investment banks act as an intermediary between investors and corporations. They perform several activities such as negotiation and structuring of mergers and acquisitions and many more.
The involvement of investment banks in the meeting of sellers and investors, also add liquidity to the stock market.
The actions taken by investment banks promote business growth, which in turn boost the economy. As said earlier, investment banks help companies issue stocks for the first time in the form of an IPO, make it public and allow it to trade in the capital market. They also help companies in finding large scale investors for corporate bonds to arrange debt financing.
Investment Banking offers a variety of functions by which they play a major role in uplifting the economy. Here are some of the functions performed by these banks:
IPO launching - Launching an IPO cannot be done without the investment banks. An IPO or initial public offering is a way through which private corporations raise capital by issuing their shares to the public.
By issuing SME IPO’s, they gather public attention in which in turn help companies to not just create capital but also do build branding.
Going public is important for any company and therefore they select a wealthy investment bank based on few merits: quality of work, reputation, experience and more.
The foremost thing an investment bank does is draft a financial statement for the IPO which comes in an underwriting agreement.
Then, the next thing is that it files a financial statement with the SEC.
The investment bank now waits to take the approval of the SEC. Once the offer comes, it sets an offer price.
After issuing the shares, the investment bank starts an aftermath stabilization analysis and monitors the performance of shares in the public market.
The investment bank then receives a commission for its service from the organization.
Underwriting is a process where bankers sell stocks or bonds to investors so that they raise capital. For instance, a corporation takes on financial risk for a fee.
The first process of underwriting comes in when the investment bank first makes a prospectus with a price range. On seeing the price range, investors finalize a firm price.
In the next process, a book of demand is built where the prices that are already set are cleared. Finally, the funds are allocated. Here, we call it a firm’s commitment.
If a company wants to do a merger, firstly it goes to an investment bank. The investment bank. An investment bank needs to perform several things during merger and acquisition:
Investment banks help in raising funds for the merger company.
Investment banks deliver the best strategy for the merger.
These banks firstly analyze the merging company, gather all the necessary information, find out its actual value and present it to you.
Investment banks also help in minimizing the risks associated with the business. A business is associated with many risks such as business risk, investment risk, compliance risk, legal risk, operational risk and more. Investment banks here figure out all these risks, try to minimize them and find out how they will affect the bank.
Market risk is the most important factor an investment bank needs to figure out. For that, they need to keep an eye on critical factors such as credit risks. Investment banks set up a strong team whose major job is to do a risk assessment.
Research is the primary objective for any job and so is investment banks. That’s the reason investment banks do thorough stock market research such as analyzing a company’s performance, reading the financial statements, and more. Also, they always keep an eye on the stock market which in turn helps you make a profit by giving advisory services such as sales and trade.
Investment banks perform various stock market research such as fixed income research, qualitative research, equity research, macroeconomic research.
Some investment banks offer merchant banking services in several areas such as financials, legal, marketing, and managerial divisions.
Investment banks give a huge contribution to the country's economy as investment banks help companies to generate more funds. Secondly, a commercial bank primarily focuses on transactions, investment banks, on the other hand, devise a plan for efficient business ventures.
Investment banking is very important for today’s economy. These banks perform several functions which include IPO launching through which they can raise funds as well. Also, the investment banks easily manage your assets so that they will make more and make profits. We have a team of highly profound investment bankers that has helped many SME’s grow their business via IPO launching and M&A and venture capital.
Firstly Ami Organics Limited affords to its home and worldwide clients the subsequent commitments. Ami Organics Limited is devoted to efficaciously assemble your expectancies of a varied product range.
Secondly Ami Group has the aim of converting affordable cash into speciality chemical substances for Agrochemicals, Cosmetics, and Polymers.
At last Ami Organics Limited employs professional and devoted employees those who run the centres supported via way of means of superior and modern equipment.
They have extended to offer New Chemical Entity (NCE) in addition to huge-scale shipping of pharmaceutical intermediates. Fine and strong point chemical substances that meet ISO requirements. In order to set up the role with inside the international market.
Proceeds from the fresh issue could be used toward compensation of resolving debt and investment capital necessities.
The IPO of Ami Organics accommodates the fresh issue of equity stocks really well worth Rs 200 crore and an offer for sale of as much as 6,059,600 equity stocks via way of means of present shareholders.
The enterprise has decreased its fresh issue size to Rs 200 crore from Rs 300 crore after elevating Rs 100 crore in a pre-IPO placement. The price band has been set at Rs 603-610 percentage for the general public issue. At the upper end of the price band, the initial percentage sale is anticipated to fetch Rs 569.63 crore.
Earlier Ami Organics had filed initial papers with SEBI in 2018 and had acquired the regulator's nod to release the general public issue. However, it did not float the IPO. This is the enterprise's second try to issue the public offer.
Half of the issue size has been reserved for qualified institutional investors, 35 per cent for retail investors and the last 15 per cent for non-institutional investors.
Ami Organics IPO details Subscription Dates1 – 3 September 2021Price BandINR603 – 610 per share Fresh issueINR200 crore Offer For Sale6,059,600 shares (INR365.39 – 369.64 crore)Total IPO sizeINR565.39 – 569.64 crore Minimum bid (lot size)24 shares Face Value INR10 per share Retail Allocation35%Listing On NSE, BSE
The company had consistent revenue growth in the last 3 years. Revenues of the company have grown at a CAGR of 12% from Rs 239 cr to Rs 342 cr over the period of FY19 to FY21 while we saw much better improvement profits as it grew from Rs 25 cr to Rs 53 Cr at a CAGR of 29%. The profit margins have grown continuously over the years.
The Indian API market is estimated to witness a growth rate of over 9.5% while the Indian pharmaceutical market has increased by 7.4% and reached around $19 billion in FY17 and is expected to reach nearly $29 billion in FY22 on the back of Increasing Incidences of Chronic Diseases. IPO is priced at a PE of 35x on the EPS of Rs. 17.14 which is lower as compared to its peers average. We saw that a few recent IPOs have not performed well in the last couple of months as the market is being choppy. Thus we assign a "Subscribe" rating to the IPO for Mid to Long Term Investors. To invest in Ami Organics Limited IPO, open your demat account and start your investment journey.
We have seen a lot of companies listing on the stock exchange as they have got a lot of benefits by doing so.
Getting listed on the stock exchange stimulates liquidity thereby providing shareholders with an opportunity to realize the value of investments.
Also, listed companies get more exposure than unlisted companies. This is because the companies which are listed on the stock exchange give investors a choice to buy/sell the securities at a given time.
Likewise, the companies which are likely to get listed on the stock exchange get bountiful benefits.
Before discussing the advantages of listing on the Stock Exchange, let's go with the term Stock Exchange.
Stock Exchange is a place where securities such as stocks, bonds, commodities are traded. The stock exchange is a platform where financial instrument participants such as buyers and sellers come together and perform transactions (i.e. buying and selling of securities) during the business days.
In other words, the stock exchange is an organization or association where the stocks are traded. Therefore, if a company needs to trade in the stock market it should be listed on either of the exchanges i.e. National Stock Exchange (NSE) and Bombay Stock Exchange (BSE).
The exchange facilitates the issuance and redemption of financial instruments which makes it important for the investors.
A listed company is the one whose shares are publicly traded on the stock exchange. Such companies need to confirm the listing requirements of that exchange strictly. This consists of a minimum earning level and the number of shares listed.
Companies that are listed on a stock exchange take out an SME IPO or Initial Public Offering by which they sell shares to the public and in return they raise a whopping amount which in turn helps them to grow business to a new level.
Here, the prices of the shares are based on the supply and demand of the share. The Bombay Stock Exchange or BSE India currently lists more than 600 companies.
Companies that are listed on the stock exchange get enough exposure, capacity to uphold control etc. Aside from such benefits, there are lots of benefits associated with the listing in the stock exchange.
One of the primary benefits of listing companies on the major stock exchange is that the listed companies have a promising profile. Also, the listed companies are recognized and visible to the public quickly if we compare them to other companies.
After getting listed on the major stock exchanges, the company has started to attract new customers in the form of shareholders and clients.
Many companies which are doing well, reach a level where they need additional capital for further expansion or growth. In such conditions, going public is the best way to overcome such financial constraints.
Companies listed on the stock exchange can increase capital by releasing more shares for investor purposes.
In addition to this, the raise could be utilized for the company’s growth and other needs.
Lenders accept listed securities as collateral for credit facilities. In addition to this, a listed company is eligible to borrow capital from the highly-rated financial institutions because the companies are rated by the lenders of capital.
Also, by listing on the stock exchange, the companies can raise extra funds from the public by issuing their shares in the new issue market. Therefore, listing a company on the stock exchange is quietly beneficial for the investors.
Another advantage of listing your company on the stock exchange is that it provides your company with adequate liquidity by providing an opportunity for shareholders to realize their investment value. Also, it authorizes shareholders to negotiate in the shares of the company thereby sharing risks.
The companies listed on the stock exchange have nothing to do with venture capitalists. In return for acquiring shares for a confidently held company, venture capitalists have to regularly uphold the company’s regulation.
Stock exchanges allow companies to maintain enough control and power as the people who get shares of a publicly traded corporation hold limited rights which can be easily accessible to the shareholders.
Going a company public means it provides visibility among HNIs and institutional investors, investing agencies. Also, the company ensures total transparency whenever the time of conducting operations is done.
Achieving higher ROI is the goal of any company. By listing a company in the stock exchange, the company expects the highest stock market trading returns which couldn't be possible by other methods. Therefore, it can be counted as one of the main advantages of stock listing.
Companies who are listed on the stock exchange maintain their transparency while dealing in the business and reporting. Transparently keeping all the things allows a company to enjoy success in a much better way. Hence such companies have better financial accountability.
Needless to say, companies listed on the top exchanges automatically come into the eye of top-notch investors and institutional investors. Such companies attract potential stock market trading investors which in turn helps them to generate more capital which can be used for the company’s growth or expansion.
Listing on the stock exchange increases the visibility of the people which in turn improves the public perception of the organization, therefore, increases the employee value.
Listing on the stock exchange comes with bountiful benefits. A company that wants to expand its growth often seeks to go public. Launching a stock trading IPO helps them to raise capital to a greater extent which in turn improves the overall efficiency of the company which is important for a company’s growth.
Other advantages include uplifting the reputation and prominence of the company.
Want to list your company on the stock exchange; connect with us!
We carries lot of business under one roof from a stock broking to investment banking. This includes IPO launching, M&A, providing business loans, company valuation services and more.
The much-awaited IPO of the largest insurance company will be coming at the end of the current financial year. This can only be done after the government finishes the process of disinvestment of at least three PSUs.
As per the economic time’s reports, three companies National Fertilizers Limited, Mishra Dhatu Nigam Limited and Rashtriya Chemical and Fertilizers Limited will get divested through a simpler method called to offer for sale or OFS before the launching of LIC IPO.
A senior finance ministry official has declared that the LIC’s IPO will hit the market in the next year, adding that other issues will be completed before all necessary applications are in place.
It may be noted that LIC had got principle approval from the cabinet committee on the economic affairs before the launching of LIC IPO.
As per the news source, it is estimated that the 10% stake sale of LIC would generate a whopping amount of Rs 1 Crore to 1.5 Crore. To launch the LIC IPO, the government has already started working towards strategic disinvestment in major companies such as Air India and BPCL.
The price band of LIC IPO is estimated at Rs 400-600 shares taking into account total capital and valuation. The paid-up capital is reported as Rs 25000 Crore while the total valuation of the IPO would be between 10 -15 Lakh Crore.
LIC policyholders who have brought over 28.9 crore policies have now got reason to be amazed. This is because the government has decided to allocate a 10% of the issue size for LIC policyholders. Also, they would receive a fair discount on the floor price.
Life Insurance Corporation Rules of 2021 said that any reservation made by the corporation in favor of its policyholders on a competitive basis on a public issue should be made in a manner similar to that applicable to a reservation on a competitive basis for employees in a public issue under any regulation made and issued by Security Exchange Board of India.
However, if any company made an allotment of equity shareholders against any reservation made in their favor should be done in consultation with the stock exchanges.
As per the IPO norms, an issuer company offers shares to its employees with a maximum discount of 10% at which the shares are offered to other categories.
Disinvestment of equity shares has recently been approved by the Union Cabinet minister.
Also, they allow merchant bankers to launch their IPOs. The lot size of LIC shares will decide the finance ministry and in conversation with the Finance minister Nirmala Sitaraman, a panel has decided that it will take full responsibility for the size share of LIC IPO.
For the upcoming LIC IPO, the government has decided to amend the LIC Act of 1956. To get the IPO launched, LIC has appointed Arijit Basu. After the amendment, the corporation is now governed by the Companies Act and SEBI Act in order to prepare its quarterly balance sheet with P&L and make public-key developments.
Even if the government offers a 10% discount to LIC policyholders, the post-issue market capitalization of LIC would go up to Rs 15 lakh Crore valuation once the valuation gets known. According to the new SEBI rule, for a 10 lakh Crore market capitalization, LIC will have to make an issue of Rs 55000 Crore (Rs 10,000 Crore plus 5% of Rs 9 lakh Crore)
Many investors think that LIC policyholders would get less bonus after launching its IPO. However, this is not so true. The sources said that LIC will find new ways to offer the same bonus.
The main concern of LIC is the pricing of the issue. If we look at the past then we get to know that two general insurance companies - General Insurance Corporation of India and New India Assurance Co Limited which were listed in 2017, are now trading at Rs 174.60 and Rs 161.
Since the GOI performed disinvestment of two major companies, it is very important for the government to meet its disinvestment target especially at the time when the government plans to make two PSB banks a privatized banks and one insurance firm.
The government’s main objective is to mop up Rs 1.75 Lakh Crore in the current fiscal from privatization. Out of this, Rs 1.75 Lakh Crore is supposed to come up from selling its share in public sector banks and other financial institutions, while Rs 75000 Crore comes as a CPSE disinvestment receipt.
Why Should Investors Look Forward to It?
According to investors, the LIC IPO will be a turning point for many as the largest life issuers company is all set to launch its IPO for the very first time. Also, LIC covers a total market share of 66% with the first-year premium of Rs 1.84 Lakh Crore. The company has 2.9 lakh employees with a network of 22.78 lakh agents.
As per the internal source, if the 22 lakh agents sell only one extra policy to the people, it will make a huge volume. Apart from it, LIC is considered the biggest institutional investor in India and has a huge investment portfolio that can generate outstanding returns in the future.
A marginal per employee business productivity improvement every year is quite more than the few sized insurance firms; according to a stock market trading expert.
Life Insurance Corporation is a top-notch insurance company that offers many insurance covers to people. The company is known for providing high term benefits to its shareholders.
Also, LIC provides maturity benefits to its shareholders which means if a policyholder completes the maturity of the policy, he/she will receive 40% of the basic sum assured added with bonus and extra bonus.
Now, the company is all set to launch its IPO which will provide many benefits to its shareholders and other investors. Don’t miss out on a chance to subscribe to the LIC IPO.
Stock market on the one hand ropes in fundamental capital required by the companies and on the other hand it allows the buyers to enjoy ownership in businesses with the potential of availing gain in dividends form which would be in accordance with the company’s future performance. Therefore, it can be referred to as the core of the economic system.
Trading on equity with the purpose of investing is buying and selling company stock shares. The shares of distinct publicly traded companies are traded via a stock exchange or over the counter markets. Trading on Equity is a kind of trade-off. The firm makes use of its financing of debt or equity to buy new assets. In turn, it makes use of its new assets to pay for or finance its debt and equity obligations.
Trading on equity is carried out on two markets viz. The primary or the main markets – whereby new issues are first offered. The secondary markets – whereby subsequent buying and selling takes place.
Many buyers who assume common stock are too unstable are fascinated by the advantages of preferred shares. Depending on the company issuing preference shares is considered to be a good option rather than taking on greater debt.
With equity investors, there are no interest obligations and relying on the classification of shares being issued dividends don’t have to be paid annually. This approves the enterprise to reap the capital of which it wishes to increase besides on the spot money outlays for interest. It additionally provides the business enterprise time to make earnings with the new assets.
Trading on Thin Equity: If the equity capital is less than the debt capital of a company.
Trading on Thick Equity: If the equity capital is more than the debt capital of a company.
ADVANTAGES
DISADVANTAGES
Trading on equity is a simple approach in which the percentage of debt contents is increased in capital structure, however equity trading is buying and selling of shares in the stock market.
Investors are fascinated to buy shares whose rate of Interest is greater than fixed interest charges due to the fact investors can earn extra quantity of income in the form of dividends and it will additionally expand the price of shares.
Leverage means power. If an organization buys assets and its buy price is paid through getting a loan, then this system of trading on equity is known as financial leverage. Business enterprises do so because they are aware that the return on investment (ROI) is greater than fixed interest charges.
The company's tries to increase its financial power by purchasing all assets with the help of long term debt in order to earn a greater amount of profits with this system.
It is a well-known fact that option holders are always in all likelihood to cash in their options when there is a rise in earnings.
For this particular reason, buying and selling on equity leads to extra earnings, there are extra possibilities that options will earn a greater return for the holder. Since trading on equity may also lead to uneven earnings, it will increase the already known price of stock options.
The managers (not owners) are more likely to use such an option. Using the concept, managers have the danger of raising the price of stock options. On the other hand, family-run commercial enterprises will exhibit greater interest in financial stability, so they would keep away from this financing technique.
Stocks of the paper industry set a new record high as most of the frontline paper stocks are currently trading up to 15 percent higher with the majority of them experiencing a 52 week high level in intraday trading on this Wednesday.
Star Papers Mills, Orient Paper & Industries, and Seshasayee Paper and Boards have rallied over 10 per cent on the Bombay stock exchange.
Whereas Astron Paper & Board Mill, Andhra Paper, JK Paper, Tamil Nadu Newsprint and Paper, Ruchira Papers and West Coast Papers were on the 8 per cent on the Bombay Stock Exchange.
Yesterday, the S&P BSE Sensex was up to 0.20 per cent at 52,965 points hitting upper circuits.
Let’s look at how the paper stocks performed individually on Wednesday.
Stock Name Highest Stock Price Recorded on Intraday Trade Percentage Change Stock Price at the Time of Writing JK Paper 237.258%226.55Seshasayee Paper & Boards222.812%211.90Emami Paper189.5020%204.70Star Paper Mills17814.5%168.35Pudumjee Paper Products46.5020%44.20Orient Paper & Industries33.3013%31.90Malu Paper Mills38.9019%39.75
For all the companies that are listed above, J&K Paper stocks stood out in gains, jumping more than 40% in the last month.
For all the companies that are listed above, J&K Paper stocks stood out in gains, jumping more than 40% in the last month.
According to a report, JK paper has booked a net profit of Rs 135.79 crore in the quarter ended in March 2021.
It is more than twice the number was recorded in the third quarter of FY 21. JK Paper’s consolidated net profit stood at Rs 65.94 Crores.
This company increased its net revenue by 20.5% to Rs. 898 Crores in the 4th from Rs 745 Crores in the preceding quarter.
According to the JK Paper, the elevated performance of its stocks results from increased production and sales volume than the previous quarter.
Although the company has yet to witness any impact of the second wave, its management team expects some sort of disturbance in the coming months.
Experts also said the demand is expected to pick up and grow by at least 11-15% in FY22 with school, colleges and office spaces likely to open and drive the demand.
Due to the outbreak of Covid 19, the paper and paper product industry is one of the worst affected industries. Closure of education institutions, work from home by offices,
Moreover, downcast demand also had a great impact on the prices of paper & paper products that further affected the revenues of the industry.
The long term demand of the paper industry always remains favourable as the demand increases by increasing literacy levels, growth in print media, higher government spending on the education sector, upgrading urban lifestyle and economic growth.
As the factors are likely to be continued for an extended period, the paper industry is likely to grow at 5-8% per annum in the coming years.
Going ahead, CRISIL expects a huge demand for printing and writing paper to grow at 1-3 per cent CAGR and reach 5.5 million tonnes by Fiscal 2025.
As the new education policy comes into effect, a slow rise in the education spend by the government (~20% higher spend) and increased expenditure on education is likely to support demand for the P & W segment, the company once said in a report.
As per the CRISIL Report, P&W paper demand will increase at a CAGR between 1-3%, hence, giving a 5.5 million tonnes mark within fiscal 2025.
Enrolment of students is set to increase faster, ranging between 0.5% to 1% in the coming years.
As per the experts’ estimation, the demand for paper stocks is all set by 11-15% on a y-o-y basis in FY 23. The primary factor behind the rise of paper stocks is the possibility of reopening of schools, colleges, offices etc.
Consumers will have to pay a tad more for buying anything from branded garments to fast-moving consumer goods (FMCG) bought through e-commerce.
The corrugated box industry expects to increase a sharp cost in a short period and raw materials supply disruptions.
Here, the rise in prices is the main issue. On the other hand, paper mills say they do not have the material.
A paper manufacturing company once said in a letter to its customer, the firm was forced to raise prices after the paper pulp prices increased 70-100% in the last 3 months.
Paper prices, particularly kraft paper, have increased by the two factors; one is supply-side problems and the other is the availability of containers and ships.
Kraft paper mills say the prices of domestic and imported waste paper is rising due to supply misery as a result of Covid led lockdowns and international logistics disruptions.
China had been importing waste paper from all over the world before the ban. For instance, it includes all waste paper generated in the US, Europe and other developed nations. The waste paper was recycled to manufacture paper.
Given the ban on wastes, Chinese paper mills were unable to get the main raw materials and they began to import the kraft paper from India. Kraft paper is recycled paper and Chinese mills use it as a fibre source to manufacture paper.
Companies are also facing issues regarding the availability and prices of waste paper. As the educational institutes closed due to the Covid 19 pandemic, the usage of notebooks and exercise books also declined. This has further increased the demand for paper used for writing and printing dropping.
All these things waste paper supplies. Also, China has set up new units in the US and south-east Asia to convert the waste paper into pulp and send them home.
This has resulted in the domestic industry facing problems in sourcing waste paper and recycling it.
As far as the long term is concerned, the demand for the Indian paper industry needs to be increased. Some of the important factors include economic growth, literacy rates, spending on education etc. In addition to this, print media’s growth to a new level is also something that investors need to consider. If these factors do not hamper the growth of the paper industry, the Indian paper industry is likely to expand rapidly over the next few years.
Since the year’s beginning; the stock market’s performance has done exceptionally well with Sensex breaching the 53,000 points mark again.
Here are 8 large-cap funds that have given outstanding stock market trading returns since January 2021.
All of these funds are not rated by some of the leading agencies that conduct research, hence they are not suggested to invest. Before taking a dig deep into large-cap funds; let’s understand the large-cap funds in detail:
Large-cap funds are a part of equity trading; are equity schemes that heavily invest in large-cap companies. These funds constitute at least 80% of their total assets in equity related instruments in large-cap companies.
As per the SEBI, the best 100 companies, having a full market capitalization are categorized as large-cap companies.
Large-cap companies have a competitive edge in their respective sectors. Also, they have a sustainable market share which makes them large-cap companies. The companies that come under large-cap companies have steady cash flows, strong balance sheets that makes them strong enough to handle difficult situations.
These companies are traded more frequently and as a result, they are more liquid than other companies.
The factors stated above make large-cap companies less volatile than other companies and more capable of withstanding stock market downturns.
Hence, by investing in large-cap funds, investors will save themselves from the jeopardy of selecting independent stocks while benefiting from a diversified portfolio that consists of top Indian companies.
Generally, large-cap funds constitute the base of at least 50% of equity’s portfolio.
As per the stock market research agency, the fund Franklin India Bluechip Fund has given an outstanding return of 23.40%, since the beginning of the year. This is only for mutual funds that come in the large-cap fund. Although the company Franklin India Bluechip fund invests in a variety of companies, they're majorly invested in large-cap companies.
The long term returns from this fund are 13.44% on an annualized return for 3 years and 11.2% on an annualized basis for 5 years. The SIP of Franklin India Bluechip Fund starts with a small amount of Rs 1000 every month.
As per the research report from top analysts, the fund comes under the second position among large-cap stocks as they give high returns since the beginning of the year. The fund gave a return of 20.87% from 1 January to 14 July 2021. This fund invests in large-cap blue-chip companies.
SIP of Tata Large Cap Fund starts with Rs 150 per month. The Tata large Cap Fund is not that big company under the management is less than Rs 1000 Crore.
The three-year return of Tata large Cap Fund is 12.6%, while the five-year returns are 11.91%. As per the sources, Tata large Cap Fund has invested in major stocks like ICICI, HDFC etc.
Since January 2021, the stock has been able to generate returns of 19.38%, and that’s the reason the fund has been ranked as No.3 in stock rating for the year to date returns in the large-cap category.
The fund is very small and newly launched, hence it is not possible to analyze the long term returns. The AUM of this fund is Rs 123 Crores. Since the company has holdings in stocks such as ICICI Bank, Reliance Industries and Infosys.
The minimum investment amount of the fund Mahindra Manulife is Rs 1000 every month.
Like the above companies, Nippon India Large Cap Fund invests in the major listed companies in the business. The fund is ranked fourth in terms of the returns it gave to the investors up to date. Surprisingly, the fund allows investors to start a SIP of Rs 100, and the minimum amount required to invest is Rs 100.
On an annualized return, the three-year return of the fund is almost 13.5%, which is in line with how the markets have performed the previous year.
We wish to emphasize the fact that the Sensex at Rs 53,000 points is at a new record and any large scale exposure to large-cap equity mutual funds can consume wealth. Therefore, it’s more important to invest, if you select the SIP mode of this fund.
The fund gave 18.21% with the year to date which makes this fund come in the large-cap fund. This large-cap fund gives exposure to stocks like ICICI, HDFC Bank, Infosys. Many investors don't suggest going for the fund as if the stock market goes up or down, it will highly affect the fund’s growth rate.
The fund heavily invests in large-cap companies as the fund has good quality management, strong fundamentals, growth potential and a proven track record. The strategy is maintained at the ICICI Prudential Bluechip Fund so as to ensure portfolio diversification and minimize concentration risks.
It adopts a buy and holds strategy for investing while selecting the bottom-up approach for the selection of stock.
The fund also takes huge exposure to high conviction scripts in order to generate outstanding returns in a short period of time.
The scheme mainly invests in large-cap stocks that have a good brand entity and market sectors in their respective segments. This is because the funds may also invest up to 20% of their portfolio in equities than other funds.
The fund follows a combination of investing and growth with a mix of top-down approach and bottom-up approach for the selection of stocks across different sectors.
IDFC funds invest in large-cap companies with an opportunistic allocation to small and mid-cap companies not exceeding 20% of the fund portfolio. The objective is to generate consistent returns with low volatility.
The fund is based on three pillars - buying the right sectors, buying the sector leaders, and allocation to small/mid-cap stocks.
Mutual funds are always known for better returns. Also, these investments are much less risky than other equity-related instruments.
Therefore, many investors always prefer mutual funds over other equity-related instruments. Amongst all mutual fund schemes, large-cap funds are often associated with fewer risks and also they offer a minimum amount as a SIP.
Technology has been evolving over the past decades. Among all the innovations that have recently been made such as machine learning, Bitcoin, autonomous vehicles, AI or artificial intelligence is something new that has the power to change the way of world’s working.
Today, we can see some of the greatest companies have started using chatbots to provide efficient, more accurate customer services laced with deep linking capabilities and detailed algorithms. Cloud computing is another way that has completely changed the way of storage.
Hence, investing in companies that work on AI are uncommon as you may imagine. Investing in AI stocks help individuals to foster their wealth creation and build a strong yet better strong portfolio management.
Stocks of these companies experience drastic growth these years. If investors seek trading in these stocks, they would earn significant benefits in the long term.
Today many Indian startups include AI packed solutions in numerous sectors such as education, financial sectors, health etc. to attenuate social issues people are facing these days.
If you are thinking about investing in AI stocks, you may be able to make a significant amount of profit in the long run.
Here, we mention some of the companies that are primarily focused on AI businesses in India. Also, these companies are holding excellent business and technical fundamentals, have little debt and are offering better investment returns.
Artificial Intelligence or AI is the simulation of human intelligence processes in robots that are trained enough to ponder and behave exactly like humans. AI itself has the potential to add US $ 977 billion or 15% of India's present GDP.
The combination of technology, skill and data enables intelligent systems propelling AI investments to new heights.
1. Tata Elxsi
Over the last two decades, Tata Elxsi has been accelerating technology-based advancements. It enables a wide spectrum of breakthroughs powered by AI along with analytics including self-driving cars and video analytics solutions.
Tata Elxsi Artificial Intelligence Centre of Excellence addresses the increasing demand for intelligent systems.
Tata Elxsi allows its customers to use cloud-based integrated data analytics frameworks that feature patent-pending technology to get actionable insights and outstanding returns.
If we talk about the performance of Tata Elxsi In the last three years, then the stock returned 174.89%, while Nifty IT provided investors 106.55% returns.
In the fiscal year ending 31 March 2021, the company spent less than 1% of its operating revenues.
2 . Bosch
Bosch centre for AI started in 2017, where cutting edge AI technology is used in Bosch products and services that leads to new innovative solutions.
Bosch created the technological groundwork for AI that has a huge impact in the real world. Its research produces differentiation in six areas with a focus mainly on core AI technology.
If we talk about the performance of Bosch, then you will be surprised to know that only 1.08% of trading sessions had intraday drops of more than 5%.
The stock earned a negative return of -15.94% over a three year period, compared to 44.16% for the NIfty 100 Index.
3. Zensar Technologies
Zensar technologies go to market strategy is now pivoting away from digital and towards disruptive. The company’s R&D department has filed for 100 patents in the last few years. Now, the company’s entire focus is on AI technologies.
Zensar announced the initial set of platforms including IT, supply chain, marketing, sales, HR, projects and programs that help customers to create value.
In the past three years, stock provided a 15.63% return as compared to Nifty IT that returned 106.55% returns to the investors.
4. Persistent Systems
Persistent made machine learning and AI dreams into reality with solutions that help at every stage of AI and machine learning development.
With a methodology that prioritizes scale model development, use case, architecture, and operationalise models across the country, our solutions ensure that you realize successful outcomes from AI and machine learning investments.
The annual sales growth of Persistent is 16.16% that surpassed the company’s three-year CAGR of 10.75%.
In the last three years, the stock gave returns of 208.41% which is more than Nifty IT which was 106.55%.
5. Oracle Financials
Oracle helps you in implementing AI in your company and IT processes.
Oracle Cloud Application and platform and Oracle Autonomous database, you can speed up the automation, reduce human errors and achieve powerful business insights. If we talk about the performance, then the company gave intraday gains which are more than 5%.
6. Cyient
Cyient is an Indian multinational conglomerate primarily focused on manufacturing, engineering, data analytics and network and operations. Cyient’s primary objective is to achieve business objectives first than new tools and technologies.
It uses AI for secondary purposes, as AI detects changes in the real environment and updates maps in real-time.
Proper navigations help vehicles to take appropriate actions so that they can successfully avoid collisions.
As said earlier, Cyient focuses on business in attaining their goals.
If we talk about its stock performance, then the stock gave returns 24.4% over a three year period while Nifty IT gave a whooping return of 106.55% to the investors.
7. Saksoft
Saksoft mainly focuses on getting transformations through efficiency, productivity, enhanced customer decisions and service innovations by increasing the combination of AI and automation.
Saksoft gives a boost to digital transformation and applies intelligent automation to solve major business problems with the assistance of modern technology like IoT, AI, machine learning and automation.
Saksoft gave a return of 118.06%, while Nifty IT provided investors with a 106.55% return for more than three years.
Artificial intelligence has reached almost every sector. It can be easily seen around you through various devices. Smart TV, cellphone, smart home technology are some of the devices that can be surrounded in your home.
This technology is changing the way of living such as working out, running a business, connecting with others and more.
This year people are more interested in energy stocks, high tech stocks such as AI. That’s the reason, such stocks are demandable as they will see outstanding returns in the future.
The pandemic of 2020 has completely changed the outlook of everyone’s life. Stuck to the confines of their homes, many people have tried to find some solace in other activities to avoid boredom.
As the government from every country continues to grapple with the economic and health activities, a different scenario of the stock market has come out.
After the significant drop of 45% across major stock indices in the stock market, the market witnessed a speedy recovery after 3-4 months. All thanks to the retail investors who did an outstanding job by maintaining the liquidity in the stock market.
These things have put a major impact on global thematic funds. As per the research report of Morning star; the assets under management in thematic investment grew nearly three times from 75 billion dollars to around 195 billion dollars worldwide.
Let’s understand what is a thematic investment, how does it work and what are the benefits of investing in thematic investment:
Thematic investments are open-ended equity schemes that are directly linked to distinct yet predetermined investment themes. The themes are mostly linked to the major trends which are emerging in the world at large.
With thematic investment, investors park their money so that they can become a part of various investment themes which impact the world.
Thematic investment enables you to invest in long term trends or themes in an attempt to capitalize on major technological, societal and other trends that keep a huge impact on the world.
While pursuing megatrends, the mindset of thematic investors roams around transport, technology, robotics, energy, fuel etc. Before investing in megatrends, a thematic investor asks himself the following questions: Concerning transport as a megatrend, should I only invest in auto stocks if the auto company has planned to build electric cars?
Similarly, if a thematic investor seeking a megatrend called the older population, the first thing he asks himself is: should I invest in pharma stocks as the senior citizen depends more on medication and pills for their overall wellbeing. What old fashioned companies will robots disrupt?
Asking such questions will help investors to move to a trend early and achieve bountiful benefits to earn good returns.
Here are the megatrends that investors might consider pursuing:
All the mutual funds have underlying assets which bring them adequate stock trading returns. If we talk about large-cap funds, the underlying assets are stocks of renowned companies with a huge market capitalization.
Same things about thematic investments: thematic funds have a company’s stocks as underlying assets that are united by predetermined themes.
Let’s understand it with an example:
If a fund has an SG fund, it will invest in the companies that are based on environmental, social and corporate governance factors from different sectors such as technology and financial services.
This is what makes thematic investment different from other investment approaches which are based on value and growth, market cap, sectoral based (pharma, technology, infrastructure).
As per the SEBI guidelines, the minimum investment in equity and equity-related instruments of a particular theme shall be 80% of total assets.
What Sort of Cautions One Need to Take Before Investing in Thematic Investing:
While putting money in thematic investing, one needs to do a lot of stock market research on the companies you want to invest in and constantly monitor the themes that are working well in the world. The frequent changes in the trends will give you an idea of which companies will increase your ROI.
It is good to invest in the companies that are actually on a boom but one thing to keep remember is that’s exactly what people were doing when they invested in useless companies in the 80s.
Carefully invest in the companies that have published and have strong financial records. Hence, it is recommended to carefully invest in the trends of the companies that you can understand and track.
Also, keep in mind the fact that there is a huge difference between investing in a company that is currently in business and delivering good returns and investing in the new-fangled business.
To successfully invest in a good company, one should have the ability to see foresight and evaluate the financial performance of a company.
Portfolio diversification is imperative when investing in thematic investment because diversifying your money in different sectors mitigate the risk of losing money.
1. Helps you to Create a High Powered Portfolio
Global investors like Warren Buffet and Peter Lynch once said that the successful way to create wealth for a long duration is only through focused themes that possess a strong profit generation potential.
2. Enables you to Leverage on a Particular Theme
If you measure the performance of thematic stocks vs indexes over a fixed duration, then you may see a lot of difference in the performance of these stocks. Here, the former outperformed the other.
3. Sustainable themes can outperform the equity funds
It's a fact that the themes that are sustainable for a longer period can outperform the equity funds. Hence, if you shift 10-15% of your portfolio into specific themes can bring a huge difference in your portfolio returns.
4. Specific themes can be added to mitigate the portfolio risks
In order to reduce the portfolio risk, you can add specific thematic stocks to your portfolio. When you add multiple themes to your portfolio, it not only diversifies it but also reduces the risks associated with certain stocks, which in turn improves the share trading returns.
5. It can multiply your amounts in the coming years
You have all heard of how an investment of Rs 10,000 in Wipro in 1980, costs around Rs 450 Crore today. Also, a minimum investment in Eicher motors in 2001 would give you a maximum profit today. That’s the power of a thematic investment.
Thematic investing requires a full understanding of the business models and market prospects and hence many people seek advice from experts who have in-depth knowledge about it.
Thematic investment is a lot more complicated than just investing your money in a diversified equity fund. It may be noted that not all themes will give you big returns. Hence you are required to carefully choose thematic funds.
Right Entitlements of shares a term that recently made the headlines these days when India’s famous brokerage firm reported that it lost a huge amount of Rs 10 Crore in expired Rights Entitlements.
Rights Entitlements is a fresh concept that was introduced in India’s share markets only in 2020 with RILs Rs 53,125 crore rights issue.
Rights Entitlement is issued by a company launching its share to its shareholders, which ultimately give them the right to subscribe to the issue or sell it to the other investors. Rights entitlement are issued similar to the rights issue in the same ratio to the shareholders as on the record date.
As per the capital market regulators SEBI, a shareholder may trade the entitlement in favor of another person for a price.
Before getting a deep down into this, let’s have a quick understanding of what Rights Issue is:
In a Rights Issue, a company gives its shareholders the right to buy more shares at a discounted price.
Here, the Rights shares issued by a company are of two types: Fully paid-up shares or partly paid shares. In fully paid-up shares, you don't have any obligation to the company which means you don’t have to pay any additional amount to the company as you are a shareholder with limited liability.
If your company has partly paid rights share to you, then in this case you need to pay installments over a given period. In case, if you failed to pay the fixed amount decided by the company, you need to pay interest on the called amount.
The rights entitlement has a specific time frame within which one has to apply for rights share or sell it before they stop trading. These instruments cannot be traded on an intraday basis. Hence, one has to take delivery of these instruments before applying for the rights issue within the issue period or selling them again in the stock market.
Several investors have zero clues on what it is and have just bought them from the market thinking it will be like regular shares in the market. Some of them have not applied for the rights share within the issue period and saw them disappear from their Demat account.
In January 2020, SEBI did an announcement regarding the launch of rights entitlements tradable in the Demat form. The Right Entitlement instrument was first made available to the shareholders of Reliance Industries when its rights issue launched in May 2020.
All the shareholders will get Rights Entitlement credited to their Demat account after a few days from the record date. Rights Entitlement usually traded in the secondary market for a definite period of time.
For instance, if you had 15 shares of Reliance Industries and the companies announced that they are raising more funds through the Rights issue at a ratio of 1:5 at a price of Rs 1200. You will get 3 quantities of Rights Entitlement that you can choose to apply for the rights issue or sell in the secondary market.
The Rights Entitlement will lapse at the rate of 0 and the RTA (Registrar and Share Transfer Agent) will debit the REs from your Demat Account. To make use of REs that were credited to the DEMAT account, you can either sell it in the secondary market or apply for the Rights Issue shares.
Fully Paid Up Shares
When a company is raising funds in a shot and issues the actual shares if the client is applying for the rights issue, it is said to be a fully paid up issue. The company will announce the price at which an eligible shareholder can apply for the Fully paid Rights Issue a few days before crediting the Rights Entitlement to the Demat account.
M & M financial services announced a fully paid up rights issue in the month of January 2021, where the shareholders 1 Rights Entitlement (RE), against 1 share of M&M financial services and the RE holders had the rights to apply up for the fully paid up shares at the rate of Rs 50 (including a premium of Rs 48 per fully paid-up equity share).
Partly Paid Up Shares
Here, a company is said to raise funds partially with a formal notice to the shareholder on every call. Irrespective of one applying for the next partly paid up shares will get extinguished with zero value, so it's better to apply for the next call or to sell it in the secondary market as it will trade for a temporary period of time in the secondary market.
Example:
Reliance Industries announced a partly paid up rights issue in May 2020 where the RE holders had the right to apply for the partly up shares of Reliance Industries and the company is set to raise funds in the first call (From May 17, 2021, to May 31, 2021) at the rate of Rs 314.25 per partly paid-up equity share.
And the second call will be in the month of November. We recommend you either pay the first call in order to carry forward to get the next partly paid-up shares or sell them within the last trending day which is on 10 May 2021. Contact us to learn more.
Many investors are seeking the best funds that not only give them accurate results but also save their taxes to a greater extent.
In India taxation is a major concern and therefore many Indian investors are looking for the equity trading investment that gives them adequate tax benefits. As a result, they opt for ELSS funds.
ELSS is basically an equity-linked saving scheme mutual fund that invests in equity, stocks and equity-related securities across different market segments.
Investment in ELSS mutual funds allow investors to gain outstanding tax benefits under section 80 C of the income tax act. For instance, one can save around 1.5 lakh per year by investing in ELSS funds.
One thing you should be aware of about ELSS mutual funds is that the funds come with a lock-in period of 3 years. The period is less than other schemes such as PPF whose minimum lock-in period is 5 years.
To invest in ELSS funds, either you can make a lump-sum investment or start a SIP. The minimum amount of SIP starts with Rs 500. Though there is not a maximum limit on the investment amount, investors can enjoy tax benefits up to Rs 1.5 Lakh under section 80 C in the financial year.
ELSS mutual funds are the best investment options to make money through equity markets. This allows investors to save adequate tax amounts from the funds. Since the funds come with a flexible lock-in period, it allows investors to stay invested in the long run and avoid selling.
One interesting thing about ELSS funds is that some of these funds are considered as growth funds as they reinvest the returns and generate outstanding stock trading returns at the end of the lock-in period.
ELSS funds also come with dividend reinvestment options which enable investors to decide if they want to reinvest the dividend amount in the markets.
Many investors invest in ELSS funds only because these funds help investors to save tax who have a lock-in period of only three years. For instance, if an investor invests 1.5 Lakh each year, he can save a tax up to 46,800.
After a period of three years, the gains come from ELSS funds considered as a long term gain and are taxed at 10% for the gains occurring above 1 Lakh.
The taxes saved by ELSS funds are via tax deductions, tax exemption and benefit of indexation. If someone invests 1.5 Lakh, it can be deducted by taxable income and the return comes under 1 Lakh and is exempted from the taxation.
Hence by investing in ELSS funds, investors can save tax and generate wealth for a better future.
Investing in ELSS mutual funds is a smart way to save a large amount of money that may go toward taxes. However, it may be noted that ELSS funds may not give expected returns as these funds are mostly dependent on equity and online stock trading markets.
Hence, ELSS mutual funds are apt only for those who want to save their taxes and have a will to take a risk by investing in equities.
Another benefit of investing in ELSS funds is that the investors who are willing to take an adequate risk may earn huge returns as compared to fixed-income investments. Therefore, the ELSS funds are for those whose age comes between 20-35.
People of a large age group such as above 40 should not seek ELSS funds as they are full of risks. Instead, they can invest in other safer schemes such as PPF, NPS, FD and more.
Anyone who can invest for a longer duration without seeking the locking period should invest in ELSS funds.
One of the greatest advantages of investing in ELSS mutual funds is that it offers a safer investment medium for investors who have zero knowledge of equity markets.
Secondly, the mutual funds are managed by fund managers who are experts in the equity segment. They invest their money in the top companies as per their knowledge and experience.
This gives investors an opportunity to generate better returns than other tax saving schemes such as PPF, NPS etc.
Thirdly, ELSS funds come with a lock-in period of three years which is less than other closed-ended funds and tax saving schemes.
Last but not the least, ELSS funds also invest in mid-cap companies which allow investors to substantially earn higher returns than large-cap funds. Although the risk factor of mid-cap funds is higher than large-cap funds, you need to analyze your investment aim and risk appetite before making any such decisions.
Let’s discuss the Top 10 Tax Saving Mutual Fund Schemes:
Quant Tax Plan Direct-Growth
The fund has given an annualized return of 30.02% in the past three years. Last year, the scheme's total return was 126.78%.
Why Invest:
This fund has consistently outperformed other funds by giving a whopping 126.78% return in the past year. The minimum lump sum amount required to invest in this scheme is Rs 500.
Mirae Asset Tax Saver Fund Direct-Growth
In the last three years, the fund has given an annualized return of 20.92%. Last year, the returns generated by this fund was 74.49%.
Why Invest
It is considered the most remarkable equity mutual fund in India that has managed to provide a 74.49% return in the last year.
Canara Robeco Equity Tax Saver Direct-Growth
The fund has given an annualized return of 20.36% in the last three years. In the last year, the returns were 67.43%. The fund has continuously hit the benchmark in the equity segment.
Why Invest
The fund has consistently outperformed the other similar funds by generating a 67.43% return in the last year.
DSP Tax Saver Direct Plan-Growth
The fund’s annualized return for the last three year was 17.77%. It’s last year returns were 68.95%.
Why Invest
It is also counted as the remarkable fund in India by giving a 68.95% in the last year. The minimum investment amount required to invest in this scheme is Rs 500.
BOI AXA Tax Advantage Direct-Growth
The fund has given an annualized return of 17.65% in the last three years. The fund’s last year returns were 75.15%.
Why Invest
The minimum investment amount required to invest in this fund is Rs 500. The fund has outperformed other funds by providing 75.15% returns in the last year.
ELSS schemes offer amazing tax benefits compared to other schemes. That’s the reason investors prefer to invest in schemes that generate outstanding returns with tax benefits.
The mutual fund schemes described above are the best schemes to invest in in 2021.
The second wave of Covid-19 is almost near to an end. Where the states had uplifted the lockdown with some major precautions, still in many states the number of cases are coming frequently though the number is in declining ratio.
Tough many states still have not lifted the lockdown rules and extended it till mid or end of June 2021, whereas in some states there are weekend restrictions and at some places, there are restrictions regarding the opening of necessity shops and so on.
The vaccination drive is also increased its pace and getting more & more candidates vaccinated as soon as possible. This show the sign of recovery.
The Economy had suffered huge losses since the rise of covid-19 cases across the nation the country suffers a lockdown in the first wave starting from March 24 2020 which leads to the first nationwide lockdown for the entire 21 days which later on continued till June 2020.
After that, the country started opening up stably and the economy was trying to get back on track again. Since then the economy is trying to recover, Last year we also posted negative GDP data which shows how badly our countries manufacturing & other business units got affected due to the pandemic.
Many startups, small businesses, & professionals lost their earning due to this. Even though some giant business firms confirmed they will pay some portion of salary to them but still that won’t be enough.
Some major steps were taken by big companies like Reliance, TATA sons as they said & agreed to pay to the person family those who lost earning members in this covid-19 cause. This is a great measure taken by these companies and help their family members.
The impact of the 2nd wave was still on and many businesses are still affected by it. The government is trying to overcome the situation and also provided some major monetary reliefs and incentive schemes which later on boost up the market and the economy will soon back on track.
Somehow the Indian government is mainly focusing on Atmanirbhar Bharat which usually wants our companies to produce more and more goods in the domestic market to avoid relying on the Import of it.
Somehow this condition will soon overcome and everything will begin to get normal sooner or later, along with that the vaccination drive is also getting faster which will also boost up to fight against this.
But after this 2nd wave of COVID-19, some sectors will perform well once the lockdown is been lifted totally from all the states and everyone will begin to live a normal & healthy life.
Last year IT and Pharma were the outperformers at the time of the pandemic, even after unlocking the nation the culture of work from home is in the run even the school and colleges are also not opened and all the sessions were conducted online via virtual lectures only.
Which shows the country is moving towards the digitization era. Everything is becoming easier with online mode and will remain continue till 2021-22.
1) Entertainment: Due to covid-19 and to avoid vast spreading among everyone the movie theatre was put on shut and will not be allowed to run due to adverse conditions. But now once everyone got vaccinated the sector will reopen again and will show some robust growth. Earlier this year many states started functioning with 50% capacity which actually turns into losses and later on it shut down again due to 2nd wave.
Stocks to Watch: Inox Leisure & PVR
2) Hotel & Restaurants: Once the lockdown is done the hotel industry will again see some good hope, due to the current situation there were no tourist and other persons are visiting or traveling across the nation, which affected the industry and from last 2 years, it is running under losses.
Even the specialty food chains & restaurants are only providing parcel services or take away service.
Stocks to Watch: Lemon Tree Hotels & Indian Hotels
3) Airlines: Once the lockdown is lifted the airline industry will again back into functioning, which shows some improvements & recovery in the economy.
Stocks to Watch: Intergolbe Aviation & Spice Jet
4) Tours & Travels: This sector also witnessed a huge impact during the pandemic but now conditions are getting better, this segment will see some robust change, the major reason is the psychological impact on every individual who is in lockdown will plan out to move and visit some new places for a change.
Sometimes it seems like a fortune that investment in stocks gives you a tremendous return more than your imagination. The sum invested in this kind of stock is quite very low. Apart from this, the investment which we made takes a long-term run to provide these returns.
As it is always considered that investment in equities will provide a return in long term. But there is always a question that arises how we can select is good value investing stock that can give better returns in the long term.
Every investor desires to have a good return from his investments. But for that, they often do a lot of study or research work to get desired results.
It is not that easy to identify multibagger stocks as there are more than 5000+ companies listed on the exchange in the Indian Stock Market, an investor must be selective with the sector of investment alongside all the other factors related to that sector's growth, future outlook, etc.
A great saying by Mr. Warren Buffett
“Our eyes are placed in front because it is more important to look ahead than look back”
This statement means whatever we decide to do today will have an impact in the future, so if we invest Rs 1000 today it may be Rs. 100000 Or Rs. 1 crore anything can happen.
Method to identify multibagger stocks.
1) Identify Companies Management:
Management plays a vital role in the growth of companies business. As it said no business succeeds without a capable management team. The sustained growth & success of every business is a strong & capable management team.
One can look at other multiple aspects like governance practices, board, diversion of funds, pledging of shares, discipline, and most important financial matters, etc. to determine the strength of the company’s management team.
2) Competitiveness:
The best way to identify multi-bagger stocks in India is to understand the ability of companies to be competitive. A company can remain in the competition by offering the best quality services and products as it grows ahead. To understand whether a company has a competitive advantage, just see how innovative they are.
3) Promoters Holding in the Company:
One of the most important factors is to know that the holding of promoters remains the same for a long tenure as they are the ones who started that business and their commitments show how honestly they are focusing on the growth of the company. The longer the promoter is associated with the company the more reliable they are.
4) Earnings Growth:
A shareholder receives when the company makes profits. When you analyze the earnings of a multi-bagger stock, you will find a high growth in the earnings of the company due to its various growth models like revenue growth, profitability, and also its allocation towards the capital.
5) Allocation of Funds:
Companies use their internal funds (Profit after tax) to expand the business or launch some new products for the expansion. This helps companies to have a lower debt against their equity and helps them to generate free cash flow This cash can be used to pay future expansion expenses or dividends.
6) Future Growth:
A company might not be able to make money and survive if it doesn’t have a versatile range of products or services as the markets are very dynamic in nature & the current scenario the world over is looking for change and advancement. The major characteristics of a multibagger stock are that the management is very clear about its vision and can take the necessary steps to achieve the same.
Our Country is the largest supplier of generic medicines across the world. The pharmaceutical industry supplies 50% of global demand,& 40% of generic medicines in the US, and 25% of other medicines in the UK. India ranks 3rd position in terms of pharmaceutical products in terms of volume and stands 14th in terms of value.
The domestic Pharma industry includes 3,000 drug manufacturing companies and 10,500 units for manufacturing. India has an important position in the global pharmaceutical supply. The country holds a large number of scientists and engineers with high potential to take the industry ahead.
As per the Indian Economic Survey in 2021, the Domestic market is expected to grow nearly 3 times in the next decade. Our domestic market is estimated at around US$ 41 billion by 2021 and may reach US$ 65 billion by 2024. The biotechnology industry in India was valued earlier in 2019 at US$ 64 billion which is expected to reach up to US$ 150 billion by 2025. Our exports of drugs & pharmaceuticals stood at US$ 22.15 billion in FY21.
With the slogan of PM Mr. Narendra Modi “Self Dependent India” and to achieve self-reliance and reduce dependency on imports for essential bulk drugs, the Department of Pharmaceuticals has initiated a PLI scheme in this union budget to promote domestic manufacturing.
Under this Union Budget 2021-22, the Ministry of Health and Family Welfare has allocated a sum of Rs. 73,932 cr. and the Department of Health Research has been allocated with Rs. 2,663 cr.Indian government allocates Rs. 37,130 cr for the 'National Health Mission’. Prime Minister Atma Nirbhar Swasth Bharat Yojana got an allocation of Rs. 64,180 cr.
The Ministry of AYUSH gets allocation Rs. 2,970 cr. With all such developments and growths, India is moving ahead to be the Pharmaceutical Giant in the upcoming decade. The best example is Covaxin & Covishield which India exports to other countries. That shows India is emerging as a Major Pharmaceutical supplier.
The spending on medicines in India is expected to grow approx. 9 to 12% in coming next five years, which leads India to become the part top 10 countries in terms of spending on medicines
Moving forward, with better growth in terms of domestic sales which also depends on the ability of companies to align their product portfolio towards other chronic therapies for diseases like cardiovascular, anti-diabetes, antidepressants, and anti-cancers, which gradually spikes up in recent days.
The Government of India has taken various steps to reduce the cost and bring down healthcare expenses. A quick introduction of generic drugs in the market has remained in focus and is expected to benefit pharmaceutical companies in India. Along with the focus on rural health development programs & lifesaving drugs and other preventive vaccines also surge well for the companies. To trade in pharmaceutical sector stocks open demat account with us.
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