Top investing options India

Top investing options India

How to start investing in India

Before I begin with the know-how of how to invest in the right possible manner in stock market, I would like to share a small personal experience when I entered as a new player. Being a finance student I thought I was well equipped with the knowledge and statistics of the companies. I would need only a few guidance tips from a broker, maybe. That was my mistake number one. Next, I thought its some scheme to double the money. So I ended up investing most of my savings. Which was my mistake number

2. Last but the major was not only the wrong selection of companies but also the term of the investment. Deciding on the future goals is crucial to the locking up period of your cash.

To begin with a guide there are various types of investors in India

 

1. No risk-takers-

These are the ones who are never interested in the Equity market because they find it risky, they don’t want to depend on the Companies for their hard-earned money. 2. Investors with a vision- These are totally the opposites of the no-risk taker category. They hold a very strong vision of market growth and strategies. They work for long term events, these are the individuals who would make the investment strategies look like a cakewalk but only because of their stronghold in financial knowledge and expertise.

2. Go against the flow-

These types of investors have their own strategies and mindset and they stick to their own plans. They are confident players and trust themselves. In going against the flow they make sure not fall prey to the dubious schemes of the agents or the financial product sellers.

3. Bookish knowledge seekers-

Each and every information would reach them from somewhere, they have read it in some random newspaper, heard it at a stock discussion Forum. Basically they are always ready for advises, whenever or wherever you need Them or even when you don’t. 5. Advice takers- This is the category I fell into when I was a beginner. I practically took Advises from anyone who I thought was speaking the language of the markets. Being in this category you would be only wasting your money and time. Moreover you Would also lose the interest and confidence eventually. To begin with the guide let us Take into consideration this last category of investors so that you could save yourself from the losses and would come out as a prospective winner.

Let us follow a step by step strategy for a smooth investment:

 

1. Selecting the right Stocks for your portfolio

Instead of going through a vague approach or by relying on the information so heard would do you no good.
Rather careful analysis of the in hand financial information about the Companies should be done initially.

Market Cap > Rs. 500 cr Growth in sales and Profit >10% Constant increase in EPS for past 5 years atleast Debt Equity Ratio < 1 ROE > 20% Price to Book value <= 1.5 ideally Price to Earnings< 25 ideally Current Ratio > 1

These information are easily available on sites like Moneycontrol or EquityMaster.

2. On the basis of the stocks filtered narrow it down further by understanding the Company. Trust me it is not some rocket science. The procedure is simple, start with understanding the industry type of the Company. The Goodwill in the market, financial comparisons with the competing companies of the same industry. The methodology which the selected company follows. Its long term goals, financial standing in terms of loans and Borrowings.

3. After narrowing down your selection to the companies you somewhat understand proceed with the next step. Elaborating the last step it is vital to understand the Moat that Is the competitive advantage that the company selected by you has over the other Companies competing against the one you are targeting. A competitive advantage Over not only the players present but also over the emerging players in the sector.
​Ask these two questions to yourself: What is it that makes it stand out? What is it that makes it reliable for a long term venture?

4. Picking up another important factor from step two would be the amount of debt of the company you selected. Its credit ratings from a reliable credit rating agency. A simple method to understand a companies dependency on the debt would be to look at the Balance Sheet. Checking out the current liabilities and long term debts would give a transparent Outlook. But if you are not well versed with the Balance sheet or have difficulty in understanding the financials best way to gain clarity would be going through the Auditor’s report. Two important ratios to be focussed are the Debt-Equity ratio and the Current ratio. Debt Equity Ratio- Dividing total liabilities by shareholder equity would give you a debt-equity ratio. It is used to evaluate a company’s financial leverage.
A low debt-equity ratio indicates low risk. Current Ratio- It is the liquidity ratio that measures whether the company has enough resources to meet its current liabilities or not. Current assets divided by Current liabilities are the formula for the current ratio.

5. Once you are done with the above four steps of analysis comes the next step which Again is related to the ratio analysis. To increase shareholders’ wealth, the potential for future growth is very important and it can be tested by using RoE and RoCE ratios. A company with a high Return on Equity and a high Return of Capital Employed shows Higher efficiency.

Once you have completed the above selection criteria following additional points must be kept in mind.

● Simplify your targets that is whether you want to invest in for the long term or for the short term.

● For short term targets, you would need to be very careful about the right prices while buying a stock. Check out the Intrinsic prices of the shares and buy only when the price offered is lower than the intrinsic price.

● Be ready to short as soon as the price crosses the intrinsic price in case you target the short term.

● Always invest in a diversified portfolio. Never put all your money on one sector itself. Keep updated with the latest Government policies that relate to the sectors you are depending on.

● If you are a new investor never ever invest all your money on shares. Rather start with a minimum amount. Gradually you will learn and grow.

● Last but not least check out the competencies of the management of the company you are targeting. Along with the fraud track in the past. To do that analyze the annual reports, promoters shareholding etc.

This was my brief guideline for a new investor. Hope it helps.

Hope it helps !!

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ZERODHA

zerodha demat account offer

zerodha demt

● Rs.300 is the Demat account opening fee
● Rs.300 is the Demat account AMC
● Rs. 20 or 0.01% whichever is lower for NRI and Flat Rs.20 for
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based trading platform
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the CEO himself
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How I do short sell a stock?

How I do short sell a stock?

What is Short Selling of Shares?

Short Selling of Shares is a trading strategy where the trader anticipates that the price of the stock or other assets is going to decrease. So, to make a profit in the falling market, they sell the shares by borrowing them. Once and if the price falls as per their expectation, they buy the shares and return the same. The profit is the difference between the selling price and the buying price of the shares. However, the risk is unlimited as the share price can go up against the anticipation of the trader to any amount.

If you are thinking of adopting this strategy, you should know these facts first –

  • The shares sold are borrowed shares and not owned shares
  • Anyone can short sell irrespective of retail or institutional investment factor
  • It is completely based on speculation
  • Traders are obliged to return the shares they have borrowed from the market on the expiration date
  • It generally happens when bears rule the market that is in a bearish market

Can I do a sell of stock before purchase?

Yes, short sell of stock  is allowed method where any share ca be sell before purchase. Place a purchase order for the qty required to short sell of a share and which can be purchase again in intraday basis.

 

जेरोधा में demat अकाउंट खोले और पाए rs ० ब्रोकरेज शेयर ट्रेडिंग

How a IPO price is finalised initially

How a IPO price is finalised initially

List of contents

How to value a new IPO

IPO or Initial public offer is a great opportunity for investors in India to invest in the stock market. Since it is a time when many startups are coming into the market, there are multiple IPO offers as well.

However, as an investor, you need to understand how the companies value the IPO before investing in the same. There are certain factors that influence the IPO price determination and they are –

  • Number of shares issued
  • Administration and organizational set-up of the firm issuing IPO
  • The market price of the shares of competitors
  • Business model and revenue model – Whether financially sound or not
  • The growth potential of the firm
  • Market trend
  • Finally the demand for the product or the service that the firm is offering.

Methods of IPO value determination

  1. Discounted Cash Flow Method: The first method which is used for determining the absolute value of the firm is DCF or Discounted Cash Flow method. It is calculated by finding out the present value of future cash flows. The future cash flows are obviously anticipated taking different assumptions from the company’s aspects.
  2. Economic Value: The second method is the economic value method where the IPO value is found out by –

Value of Equity = Firm’s value + cash and investments of the firm – debt and other liabilities

It is also for finding out the absolute value.

  1. Price to Earnings Multiple: IPO value in relative terms can be found out by using the Price to Earnings multiple. Here the market cap of a firm is compared to its yearly income. The value can be derived by

Price to Earnings Multiple = Estimated Equity Value/ Net Income of the current year

  1. Value to EBITDA Multiple: Similar to the Price to Earnings Multiple, here the enterprise value is used instead of the estimated equity value and in place of net income, EBITDA is used. EBITDA stands for Earnings before interest, tax, ansd depreciation and amortization.

It is crucial for an investor to know and understand the valuing process of an IPO because the underwriters often try to look the IPO price lucrative and in such process, they turn around some financial facts and information. So, it is important for the investor to value the IPO on their own to find out if the IPO worth investing in or not.

means Initial Public Offering means any company looking for business expand financial requirements, company offer initial public and get listed for the open market.

 

It is when the share of a company is listed on a stock exchange for the first time and offered to the public in general. They apply for the IPO and shares are allotted according to the number of applications.

 Demat and trading. Check the latest offer for upstox demat account.

The next step after opening or registering on Upstox, you have to log in with the UCC ID (This is code which is provided by broker to your mail , Unique coustomer code) and the PAN card number.

How to invest in IPO with Upstox

How to invest in IPO with Upstox

How To Apply For An online IPO With Upstox?

IPO means Initial Public Offering means any company looking for business expand financial requirements, company offer initial public and get listed for the open market.

 

It is when the share of a company is listed on a stock exchange for the first time and offered to the public in general. They apply for the IPO and shares are allotted according to the number of applications.

If you are looking to purchase any IPO then nowadays it’s a very easy and fast process.

Now, if you are thinking to invest in some of the upcoming IPOs, you need to know how to do it. If you want to experience a hassle-free and easy IPO investment process then you can do it with Upstox and here are the steps for making an IPO investment with Upstox. Upstox,s online IPO portal offers an easy and user-friendly experience to apply online IPO.

#Step 1 Login to Upstox website

You have to visit the Upstox website following this link. You have to register or login on to the Upstox website. If you do not have an account with Upstox, then you have to first open an account – How to get upstox Demat and trading. Check the latest offer for upstox demat account.

#Step 2 Input your UCC code

The next step after opening or registering on Upstox, you have to log in with the UCC ID (This is code which is provided by broker to your mail , Unique coustomer code) and the PAN card number.

Further, enter the date of birth to verify the account.

#Step 3 Verification process

Once log in with UCC ID,  will find various details of many IPO that are coming up or already open.

Select the one you want to see and find all the details of the IPO once click on the ‘Details’ tab beside the IPO if want to see it.

#Step 4 Choose right IPO

Now, click on the button/tab – ‘Place Bid’ which is placed at the bottom of the details page. Further, mention the price at which you want to purchase the IPO.

#Step 5 Submit details

In this step, enter your UPI Id if like to purchase with UPI IDs.

#Step 6

In this step, enter the lot size and check  bid price again, and then click on the ‘continue’ button

#Step 7

Here you will get a message where you have to confirm the order. Once you confirm, you will get a confirmation message/mail where you will get to know whether your application is successful or not.

So, as you can see the process of investing in IPO is so simple with Upstox. On top of that, there are so many trading platforms that Upstox has for its clients which makes trading and investment much easier.

Mutual fund

Mutual fund

MUTUAL FUNDS, (TOP FUNDS FOR FOR 2020)

If you are one of those investors who want to invest in the markets but does not have clear information about investing, a mutual fund is the best option for you. There are various advantages of mutual funds as compared to direct investment. So before we proceed to discuss the best mutual funds to invest in 2020, let us first understand what a mutual fund is, how does it function and what are the advantages.

MUTUAL FUND AND IT,S TYPES

Mutual Fund is basically a professionally managed investment fund that pools money from different investors and purchases securities.

Also, there are various types of mutual funds to choose from depending upon your future financial goals.

 Types of Mutual Funds

Money Market Funds these invest in short term fixed income securities like treasury bills, Government Bonds, Commercial papers etc. Low level of risk as well as low returns.

 Equity Funds

They invest in stocks majorly growth stocks that do not pay dividends and income funds which usually pay large dividends.

 Balanced Funds

These invests in a mix of equities and fixed income securities. They usually follow the diversification model.

 Specialty Funds

These invest in real estate, commodities or in Companies that support socially responsible causes.

 Fund of Funds

These funds invest in other funds again focusing well on diversification.

 Tax Saving Funds With long term financial goals

especially if you a salaried person tax saving fund is the most suitable choice to go for. It helps in wealth creation as well as saving tax with a minimum lock-in period of 3 years.

 Advantages of Mutual Funds

  • Affordable- Usually have minimum investment requirements.
  • Diversification- This is the most important benefit involved with mutual funds. With adequate diversification comes a lower risk.
  • Various types- As mentioned above there are various categories and types to choose from depending on the financial goals of each person.
  • Less complex and easy to buy- It is simple to understand and can be easily purchased from brokers, banks, insurance companies.
  • Professionally Managed- Another unique feature of a mutual fund is that it is well-managed by a professional team of experts and consequently there is a low chance of loss.

After giving you a brief introduction to the relevance of Mutual Funds we will now look at the

top ten Mutual Funds to invest in 2020. (Values in cr)

CR Equity Diversified Fund (G)-

It is a multi-cap fund with NAV of 126.96.

  1. Mirae Asset India Equity (G)- It is also a multi-cap fund with NAV of 48.08.
  2. Axis Bluechip Fund (G)- It is a large-cap fund with NAV of 27.
  3. CR Bluechip Equity Fund (G)- It is also a large-cap fund with NAV of 23.55
  4. Edelweiss Large Cap- A (G)- Also a large-cap fund with NAV of 33.78
  5. Invesco Growth Opprtunities Fund (G)- It is a large and mid-cap fund with NAV of 32.28.
  6. Sundaram LArge and Mid Cap Fund (G)- It is a large and mid-cap fund as well with NAV of 32.56.
  7. Axis Mid Cap Fund Growth- It is a mid-cap fund with NAV of 34.20
  8. Invesco India Mid Cap (G)- It is also a mid-cap fund with NAV of 46.51.
  9. HDFC Small Cap Fund (G)- It is a small-cap fund with NAV of 41.66.

 

Top Five Tax Saving Mutual Funds

 ELSS ( Equity Tax Saving Schemes) –

Tax deduction under section 80c can be claimed in Income tax by investing in these tax saving mutual funds. Minimum 3 years of lock-in period is applicable from the purchase date.

  1.  ABSL Tax relief’96 Direct (G)
  2. Invesco India Tax Plan DP (G)
  3. Taurus Tax Shield (G)
  4. Taurus Tax Shield Direct (G)
  5. Invesco India Tax Plan (G)

All the above mentioned are top rated Mutual Funds by CRISIL as well. But before investing please do remember that markets are subject to risk and make sure your selection of Mutual Fund is in align with your financial goals and risk tolerance.

Hope it helps !!

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