The Benefits of Mutual Funds: Why They Are a Smart Investment Choice

What Are Mutual Funds?

 #mutualfund is an investment vehicle that pools money from many investors to invest in a diversified portfolio of stocks, bonds, or other securities. A professional fund manager oversees the fund and makes investment decisions on behalf of the investors.

How Do Mutual Funds Work?

1. Pooling Money: Investors put their money into a mutual fund. This pooled money is then used to buy a variety of securities.
2. Diversification: The fund manager invests in a mix of assets (stocks, bonds, etc.) to spread risk.
3. Unit Allocation: Each investor is allocated units of the mutual fund based on the amount they invest. The value of these units changes with the value of the fund's holdings.

Example

Imagine you and nine friends decide to invest in a #mutualfund .

• Pooling Money: Each of you invests ₹1,000, so the total pooled amount is ₹10,000.
• Buying Securities: The fund manager uses this ₹10,000 to buy a mix of stocks and bonds.
• Unit Allocation: If the fund starts with a Net Asset Value (NAV) of ₹10 per unit, you will receive 100 units for your ₹1,000 investment (₹1,000/₹10 per unit).

After One Year:

• Fund Growth: Suppose the value of the fund's investments grows by 10%, so the total value of the fund becomes ₹11,000.

• New NAV: The new NAV would be ₹11 (₹11,000/1,000 units).

• Value of Your Investment: Your 100 units are now worth ₹1,100 (100 units × ₹11).

Key Benefits

1. Professional Management: Expert fund managers handle the investments.
2. Diversification: Spreading investments across various assets reduces risk.
3. Accessibility: You can start with small amounts, making it easy for many investors to participate.

Types of Mutual Funds

#mutualfunds are a great way for individuals to invest in a diversified portfolio managed by professionals, making it easier to grow their money while minimizing risk.

How to Start with #mutualfunds SIP

1. Choose a Fund: Research and select a #mutualfund that aligns with your investment goals and risk tolerance.
2. Open an Account: You can open an account directly with the #mutualfund company or through an online investment platform.
3. Set Up SIP: Decide the amount and frequency of your investment (e.g., monthly) and set up a SIP. The amount will be automatically debited from your account at the chosen interval.

 Monthly #SIPs are generally better for most investors due to lower risk and the benefits of rupee cost averaging. 

                        🗒️ What is a #SIP in Mutual Funds?

A Systematic Investment Plan (SIP) allows you to invest a fixed amount in mutual funds at regular intervals, typically monthly. Unlike lump-sum investments, where you invest a large sum at once, SIPs spread your investment over time, similar to recurring bank deposits.

🌟 Why SIPs are Popular

SIPs are particularly popular among salaried individuals because the investment amount can be automatically debited from their accounts once their salary is credited. This makes budgeting easier. Additionally, SIPs often allow you to start with small amounts, sometimes as low as ₹500 per month, making it accessible for many investors.

🏆 Benefits of SIPs

Convenience: SIPs make it easy to invest in the stock market regularly.

Rupee Cost Averaging: This strategy involves investing a fixed amount regularly, regardless of market conditions.

• When the market is down, your fixed investment buys more units (e.g., 50 units for ₹1000 at ₹20/unit).
• When the market is up, it buys fewer units (e.g., 25 units for ₹1000 at ₹40/unit).
• Over time, this averages out the cost of purchasing units, reducing the impact of market volatility on your investments.

📅 Frequency of SIPs

Some investors wonder if investing daily, weekly, or quarterly yields better returns than monthly SIPs. Studies have shown that the frequency of SIPs—whether daily, weekly, or monthly—doesn't significantly impact returns over the long term.

One-Time Lumpsum 🆚 Monthly SIP

#SIPs are a powerful tool for disciplined investing and can help mitigate market volatility through rupee cost averaging. Whether you invest monthly, weekly, or daily, the key is to remain consistent with your investments.

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Unlocking the Treasure: Your Guide to Sovereign Gold Bonds

    

 

🗒️ Introduction

Sovereign Gold Bonds (SGBs) offer a glittering opportunity to invest in gold without the hassle of physical storage. Let's embark on a journey to uncover the secrets of #SGBs and why they shine brightly in the investment universe.

💡 What are Sovereign Gold Bonds?

#SGBs are government-backed securities denominated in grams of gold. Think of them as digital gold, offering the convenience of bonds with the enduring value of gold.

🌟 Key Features

• Convenience: Purchase bonds in digital or dematerialized form from authorized institutions.

• Flexibility: Trade on the secondary market or redeem after a lock-in period.

• Safety: Backed by the Government of India, ensuring reliability and security.

💰 Advantages of Sovereign Gold Bonds

1. Security and Ease Sovereign Gold Bonds alleviate the worries and expenses linked with safeguarding physical gold. No necessity for secure storage, insurance, or worries about purity.

2. Assured Returns #SGBs provide a fixed interest rate alongside the potential rise in gold value, rendering them a highly profitable investment.

3. Tax Benefits Individuals enjoy exemption from capital gains tax upon redemption, and the availability of indexation benefits for long-term capital gains enhances the tax efficiency of SGBs.

🚀 Why Invest?

#SGBs offer a golden opportunity to diversify your portfolio, mitigate risks, and harness the timeless allure of gold for long-term wealth creation.

Tenure of Sovereign Gold Bonds

The tenure of Sovereign Gold Bonds (#SGBs) typically spans eight years. However, investors have the option to exit the bond prematurely from the fifth year onwards. This exit option can be exercised on interest payout dates during the fifth, sixth, and seventh years.

Advantages of Sovereign Gold Bonds over Other Investments

# Risks Associated with Investing in #SGBs

📉 Gold Price Fluctuations

The price of gold can vary significantly, leading to potential capital loss if prices drop. However, the amount of gold you initially purchased remains unchanged.

💧 Liquidity Risk

#SGBs have an eight-year tenure, with an exit option after five years. Selling them before maturity might be difficult due to limited market liquidity, and secondary-market transactions can result in capital gains or losses.

💹 Interest Rate Risk

#SGBs provide a fixed interest rate, which might seem less appealing if other investments offer higher returns.

📈 Stock Market Correlation

Gold prices often move inversely to the stock market. Thus, a strong stock market could lead to falling gold prices, impacting the value of #SGBs.

🌟 Conclusion

In FY24, the RBI achieved a remarkable milestone by selling 44.3 tons of Sovereign Gold Bonds (#SGBs), the highest since their launch in November 2015. Valued at $3.26 billion, these #SGBs are projected to reduce India's annual gold import bill by 7-8%.

#SGBs present a compelling opportunity for long-term investors, combining convenience with security. They offer several advantages, such as:

• Safety: Government-backed assurance of gold's purity.
• Interest Income: An annual interest rate of 2.5%, paid semi-annually.
• Capital Gains: Potential for appreciation in gold prices without the hassle of storage.

However, investors should consider the associated risks:

• Price Fluctuations: The value of gold is subject to market volatility.
• Liquidity Risk: Limited liquidity before the fifth year of investment.
• Interest Rate Risk: Fixed interest rates might be less attractive compared to other investment options over time.

Despite these risks, #SGBs remain an attractive investment for those looking to diversify their portfolio with a secure and potentially profitable asset.

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Mastering ETFs: Everything You Need to Know About Exchange-Traded Funds

 

#ETFs are a unique type of investment fund that blends the best features of two popular assets: they offer the diversification benefits of mutual funds with the ease and flexibility of trading individual stocks.

An Exchange-Traded Fund (#ETF) is a pooled investment vehicle comprising a collection of assets such as stocks or bonds. #ETFs allow you to invest in a broad array of securities all at once, typically at lower costs compared to other types of funds. They also provide the convenience of trading like individual stocks on an exchange, making them highly accessible and liquid.

However, it's important to remember that #ETFs are not a universal solution for every investor. It's crucial to assess them based on their individual characteristics, including management fees, commission costs, ease of trading, suitability within your existing portfolio, and the quality of the investments they hold.

1. Meaning and Benefits: #ETFs combine the diversification of mutual funds with the trading flexibility of stocks. They allow for investment in a wide range of securities at lower fees and are easily traded on exchanges.

2. What is an #ETF?: An #ETF is a collection of investments, often including stocks or bonds. They provide exposure to multiple securities at once and are traded on stock exchanges, offering both diversification and liquidity.

3. Considerations: Like any investment, #ETFs should be evaluated on factors such as management fees, commission costs, ease of trading, fit within your portfolio, and the quality of the underlying investments.

Advantages of #ETFs That Elevate Portfolio Performance

In the first half of 2023, active #ETFs grew by 14%, outpacing the growth of passive #ETFs.

#ETFs are an excellent way to diversify your stock investments. Investing in individual stocks limits you to the number of equities you can acquire based on your investment corpus. Therefore, selecting the right stocks becomes crucial. However, investing in an #ETF that tracks a sector or asset class gives you exposure to a broader range of assets, enhancing your portfolio's diversity and strength.

Key Advantages of #ETFs

1. Diversification

#ETFs typically hold a collection of assets, providing instant diversification. This can help mitigate risk compared to investing in individual stocks.

2. Liquidity

#ETFs are traded on stock exchanges throughout the trading day, offering liquidity and the ability to buy or sell shares at market prices.

3. Lower Costs

#ETFs often have lower expense ratios compared to traditional mutual funds. This cost efficiency can contribute to higher returns for investors.

4. Transparency

#ETFs disclose their holdings daily, allowing investors to know exactly what assets they own. This transparency enhances the understanding of the fund’s composition.

5. Flexibility

#ETFs cover a wide range of asset classes, including stocks, bonds, commodities, and more. This versatility enables investors to tailor their portfolios to specific investment goals.

 How Do ETFs Work?

#ETFs, or Exchange-Traded Funds, are an innovative investment vehicle that combines the benefits of mutual funds and stocks. Here's a breakdown of how they operate:

Fund Creation

The underlying assets are owned by the fund provider, who forms a fund to mirror the performance of these assets. They offer shares in this fund to investors, who then own a part of the #ETF without directly owning the fund's assets.

Dividend Payments

Investors in an #ETF that tracks a stock index may receive lump-sum dividend payments or reinvestments from the index's constituent companies.

How #ETFs Operate

1. Asset Selection: An #ETF provider selects a variety of assets—stocks, bonds, commodities, or currencies—and builds a basket of them, each assigned its own ticker symbol.

2. Investment: Investors purchase shares in this basket similarly to how they would buy shares in a company.

3. Trading: Like stocks, #ETFs are traded on exchanges throughout the trading day. This means buyers and sellers can trade #ETF shares at market prices at any time during trading hours.

Exploring the Spectrum of #ETF Types

Bond ETFs

A balanced portfolio is essential for mitigating risk, and savvy investors often turn to bond #ETFs for this purpose. These fixed-income #ETFs provide stable returns and typically carry lower risk compared to equity #ETFs, making them a solid choice for diversifying your investments.

Stock/ Industry #ETFs

In 2023, stock #ETFs surged to $294.6 billion from $292.5 billion. These #ETFs are collections of stocks designed to track specific industries or sectors, such as technology or international markets. They offer broad exposure within a single industry, including established leaders and emerging companies, while typically having lower fees and not requiring direct ownership of the underlying securities.

Gold #ETFs

Gold #ETFs are a specialized type of commodity-based mutual fund that invests in gold assets. Traded like individual stocks, Gold #ETFs combine the convenience of stock trading with the benefits of liquidity, cost efficiency, transparency, and diversification. In October 2023, Gold #ETFs saw the highest fund inflows of the year, reaching Rs.1,069.51 crore, underscoring their popularity among investors seeking exposure to precious metals.

Currency #ETFs

Currency #ETFs allow investors to engage in the performance of a single currency, like the US dollar, or a basket of currencies. These #ETFs can involve direct investments in currencies, derivatives, or a mix of both. While derivatives add a layer of complexity, they offer strategic opportunities for investors anticipating currency strengthening or looking to hedge their portfolios against currency risks. Global market-focused #ETFs often incorporate strategies to manage currency risk effectively.

Inverse #ETFs

Inverse #ETFs are designed to capitalize on declines in the underlying market or index. By using various derivatives, these funds aim to produce returns that move in the opposite direction of their benchmark. This makes them a strategic tool for investors looking to profit from market downturns without the need to directly engage in complex trading practices like short-selling.

# Benefits of Investing in #ETFs

Investing in Exchange-Traded Funds (ETFs) offers several advantages:

1. Diversification: #ETFs provide access to a broad range of assets within a single fund, spreading risk across various securities, sectors, or geographies.

2. Low Cost: #ETFs generally have lower expense ratios compared to mutual funds. This cost-efficiency arises from their passive management style, which tracks indices rather than actively selecting securities.

3. Trading Flexibility: #ETFs trade on stock exchanges, allowing investors to buy and sell them throughout the trading day at market prices. This flexibility is akin to trading individual stocks.

4. Transparency: #ETF holdings are usually disclosed daily, providing investors with clear insights into the assets they own.

5. Tax Efficiency: Due to their unique structure, #ETFs are often more tax-efficient than mutual funds. The creation and redemption process of #ETFs minimizes capital gains distributions.

6. Liquidity: The ability to trade #ETFs on exchanges adds a layer of liquidity, making it easier to enter and exit positions compared to some other investment vehicles.

Risks of #ETFs

Investing in Exchange-Traded Funds (#ETFs) carries several risks that investors should be aware of:

1. Market Risk: Like any investment that includes securities, #ETFs are subject to market risk, meaning their value can fluctuate based on the performance of the underlying assets.

2. Tracking Error: #ETFs aim to replicate the performance of an index, but discrepancies between the #ETF's performance and the index can occur, known as tracking error.

3. Liquidity Risk: While many #ETFs are highly liquid, those with lower trading volumes can pose liquidity risks, making it difficult to buy or sell shares at desired prices.

4. Sector and Single-Stock Concentration: #ETFs that focus on specific sectors or hold significant portions in single stocks can be more volatile and carry higher risk if those sectors or stocks perform poorly.

5. Currency and Geopolitical Risks: #ETFs that include foreign investments are exposed to currency risk and geopolitical instability, which can affect their value.

6. Counterparty Risk: Some #ETFs use derivatives to achieve their investment objectives, which can expose investors to counterparty risk if the other party in the derivative transaction defaults.

# Popular #ETFs in India

Several #ETFs have gained popularity in India due to their performance, diversification benefits, and cost-effectiveness. Some of the notable ones include:

1. Nippon India ETF Nifty 50 BeES: One of the top-performing #ETFs tracking the Nifty 50 index.
2. Nippon India ETF Gold BeES: A leading gold #ETF offering exposure to gold prices.
3. ICICI Prudential Nifty Infrastructure ETF: Tracks the Nifty Infrastructure Index, focusing on the infrastructure sector.
4. Axis Gold ETF: Provides investment exposure to gold, a popular choice among Indian investors.
5. Nippon India ETF Nifty PSU Bank BeES: Tracks the Nifty PSU Bank Index, comprising public sector banks.
6. SBI-ETF Sensex: Mirrors the performance of the BSE Sensex, offering a broad market exposure.
7. Mirae Asset NYSE FANG+ ETF: Provides exposure to leading technology and internet companies listed in the US.
8. Aditya Birla Sun Life Nifty PSE ETF: Tracks the Nifty Public Sector Enterprises (PSE) Index, focusing on public sector enterprises.

These #ETFs are chosen based on their liquidity, performance, and the sectors they represent, making them attractive options for diversified investment portfolios.

How to Start Trading in ETFs in India

Starting to trade in #ETFs (Exchange Traded Funds) in India involves a few straightforward steps:

1. Open a Brokerage Account:

   • Choose a brokerage platform that offers #ETF trading. Compare brokers based on fees, charges, commissions, and services.
   • Complete the account opening process by providing necessary documents and completing KYC (Know Your Customer) formalities.

2. Fund Your Account:

   • Transfer funds from your bank account to your brokerage account to have the necessary capital to start trading.

3. Research #ETFs:

   • Use the brokerage platform's tools to research various #ETFs. Consider factors such as the underlying index, expense ratio, historical performance, and market liquidity.

4. Place an Order:

   • Once you have selected the #ETF you want to invest in, place a buy order through your brokerage platform. Specify the quantity and type of order (market or limit order).

5. Monitor and Manage Your Investment:

   • Regularly review your #ETF investments and stay informed about market trends. Adjust your portfolio as needed to align with your investment goals.

6. Stay Informed About Costs and Taxation:

   • Be aware of any brokerage fees and the tax implications of your #ETF investments. Understand the tax treatment of dividends and capital gains.

By following these steps, you can effectively start trading #ETFs in India and build a diversified investment portfolio.

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Overview on Aviation Industry ✈️

Airlines is one of the most affected industries during the time of the pandemic. In the past two years, Indian Airlines incurred a loss of 8 billion dollar's. On one hand, the number of travelers are still more than the pre-covid level, on the other side the debts of the airlines are piling up day by day. The airline's sector in total lost around 39000 jobs during the pandemic. Even though airline companies are struggling to survive, Rakesh Jhunjhunwala plans to invest in $35 million.

Since 2020

1. Indigo combined loss for six quarters is 10,000 Crore
2. GoAir Plans to revive its loss by going through IPO
3. SpiceJet posts a loss of 1000 Crore

Let us know the cost structure of the airlines business:-

Airlines have a very high fixed cost and variable cost.

1. Fixed cost around 40%-50%

   Aircraft leases expenses(10%-16%)

   Maintenance(8%-12%)

   Staff cost(12%-18%)

2. Variable cost around 30%-40%

   Aircraft fuel expenses around 36%. Air fuel costs nearly 1/3 of the total fee.

3. Operating expenses around 25%

Why airline industry is not lucrative?

1. Less Operational Margin: Profit margins are very low and can't even meet operational expenses.

2. Lack of Pricing  advantage:- As there are a lot of LCC, they cannot even increase the fare as this may lead to less occupancy . Many low-cost carriers (LCCs) have entered the Indian air travel market and stimulated traffic through their low-cost business models. By using price stimulation as a core business strategy, LCCs have been able to cater to the vast appetite for air travel by India’s middle-class segment.

3. High debts: First of all overall profit earned is less, airlines need to pay this profit as interest for the loan taken from banks. Moreover, Airlines take huge loans to expand.

Why RJ wants to enter Airlines Business?

RJ named Akasa Airline which  will be an ultra-low-cost carrier. The price of the airlines is cheaper than low-cost airlines like SpiceJet.

As Boeing is in Big trouble, RJ has ordered  25 planes from Boeing. As Boeing undergoing this crisis, the Buyer gets bargaining power which leads to getting aircraft at extremely low prices. Akasa Airlines bought planes at a 50% discount  from Boeing which  saved around 1 billion dollars as operating expenditure. RJ aims to expand to 70 planes within 4 years- Goair took 15 years to achieve this mark.

RJ planned to implement strategies deployed by Ryan Airlines and Southwest Airlines.

Aditya Ghosh, President of Indigo Airlines in 2018 joined Akasa Airlines and holds a 10% stake in Akasa.

How RJ able to buy at low cost 50 % discount from Boeing?

There are only two manufacturers: Boeing & Airbus

• In 2021, Boeing is in big trouble as the Boeing 737max  model has been banned for 2 years.  Two Boeing 737max  crashed within 5 months which lead to the death of 346 people.
•  After this news, many airlines canceled orders to Boeing. The orders of Boeing 737 max fell from 837 in 2018 to 69 in 2019 which lead to a profit of 10.4 billion dollars company to a loss of 636 million dollars. The company has a loss of $12 billion in 2020 alone.

Disclaimer:

We are not interested to invest in any Airline Stock.😂😂😂

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How To Overcome Your Fear Of Investing In The Stock Market

How To Overcome Your Fear Of Investing In The Stock Market

Most of the people are market-averse when it comes to investing their hard-earned money in it. The primary and most significant reason for this is the fear of loss of money. More often than not, this fear stems from the lack of knowledge surrounding stock markets. In this blog, we try to overcome this fear of investing in stock markets by following some easy steps.

Here are some of the things you can do to get rid of your fear of investing in stock markets:

1. Gain Knowledge of Stock Markets: Start by educating yourself with the basic concepts related to stock markets and how do they work. You can reduce your investing risk significantly by understanding the basic fundamentals, which are not as tough as you think. When you do that, you automatically become more sound and comfortable to make your decisions. You gain an understanding about the buys and sells and learn as you read more.

2. Set Goals: You must set goals in terms of where you see yourself financially after 5, or say 10 years. The times that we live in today, we cannot ignore the effect of inflation on just about everything. Investing in the stock market works as an added bonus over and above your normal income and assists you in your future needs. This should serve as the main motivation to overpower your fear and channel it to a useful outcome.

3. Start with Modest Investments: It is completely acceptable to start small. When you start small, you are not too worried about the risk of losing all your money while you are still trying to grasp everything. As you go on, you can increase your investments depending on your level of comfort. So for example, you can begin by purchasing a single stock of a company you are interested in and gradually increase it later on as you get more familiarized with the functioning of the stock market.

4. Develop an Investment Strategy: Even if you have no prior experience in investing, it is still very imperative and helpful to have an investment strategy. When you have a well chalked out plan, it becomes easier to manage your investments. You can develop an investment strategy by reading about various trading strategies online and customizing one for yourself by applying your own skills.

5. Talk to a Finance Professional: Apart from assessing your personal finances and developing an investment strategy, if you still feel lost, you can take the help of a finance professional to guide you. Not only do these professionals help you with your investment decisions, but they also remove all your worries regarding investments risks.

6. Don’t Lose Hope: Even with all the planning, there is still a chance that things might not go as planned. Take that as a lesson, learn from it, and apply that knowledge in your future transactions. It is even better if you can mentally prepare yourself for such smaller setbacks which are a part and parcel of any investment decision you make, not just in the stock markets.

7. Determine the Opportunity Cost of Investing: A lot of people keep procrastinating their decision to invest in stock markets to a later day which never comes. This can be avoided by acknowledging the opportunity cost of investing. Investments tend to increase in value over time and you cannot deny the power of compounding. So each day counts, the earlier you invest, the more money you get later on.

8. Simple Approach: Every penny counts. The sooner you begin to invest your money in stock markets, the sooner you reach your financial goal set for your future or savings for your retirement. You can diversify your investments depending on the risk you are willing to take. Not every stock market investment bears a high risk. There are many options that give you regular returns at a minimal risk. You can plan your approach accordingly.

9.  Find Your Favourite Sector: As you read about stock markets and various listed companies you could invest in, find your favourite sector you might want to specialize in. If you decide that rental properties excite you, then try to gain as much knowledge as you can about how the real estate companies fit into the stock market. You can learn about some of the top companies, how their returns have been in the past, etc. to be more confident in investing your money.

10. Stock Market Volatility: Don’t let the stock market volatility affect you. Keep a tab on the news channels and stock market trends, but not to a point where they start making your decisions for you out of sheer panic. Be calm and tune out the noise that might make you take drastic steps which prove harmful in the long run.

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Tomato 🍅 kilo 40 in supermarket, but 140 per kilo in Stock market 😂

*NEW PARADIGM* -

Company X accumulated losses of over Rs 4,600 Crore

Incurred Loss of Rs. 106.9 Crore in 2018

Loss of Rs. 1000 Crore in 2019

Loss of Rs. 2400 Crore in 2020

Loss of Rs. 800 Crore in 2021

Loss of Rs. 350 Crore in 3 Months Apr to June 2021

Aggregating Total Loss of Rs. 4600 Crore from 2018 to 2021 June

With this Losses continue to mounting high, they managed to stand in their foot from 2018 till Today. Strange that it is not a Year old Business having Past years of Profit Accumulated which can set off their Present and Future Losses. Hence it is Quite evident that Net loss is funded by Capital and Debt. But Why the Investors keep pumping the fund in the Startup even when they see no Profit in 4 years.

If the Business was running on Loss 

*Q) Were the Employee Not Paid ??*

Answer is No, They were paid handsomely

*Q) Were the Customer forced to Pay the high amount ?*

Answer is No, they were instead given Meals at high discount

*Q) Might the Founders and Top Brass was taking less Perks ?*

Answer is No, 

Founder Basic Salary was Rs. 3.5 Crore

Co-Founder -Gross Remuneration was Rs. 3.7 Crore

CTO 1.5 Crore

CFO 3.26 Crore

*Q) Any Income Tax*

A) Since the Company was running at a loss, there is no Income Tax payable

So who was bearing the burnt of Heavy Loss ??

Answer is the Investor of X Company having stake in the company.

*It is Proved here the Loss of 4670 crore is funded by External Investor*

So Save this Word in your mind, It is the Existing Investor of X Company who are at Loss.

Now How this External Existing Investor would gain if the Company is running Loss ??

Now here the Trick, there is a Trading of Loss. What If I tell You that Loss can be sold at a Profit !!

Yes that is Possible

Investors (Top 5 Investors were holding around 50% Stake) who pumped fund into the startup has already eaten up their fund with the losses.Yet in the books they were holding Numbers of Share and % of Stake.

*VALUATION*- The Talking Point

Now, The Company gone for Independent Valuation by *a Valuer* 

*The Valuer* valued the Loss Making Company for Rs.60000 Crore !!! Strange But True

With this Valuation, Company went for IPO that means they are going to list their Shares in Stock Market making their Shares easily accessible for all Public to Purchase and further Sale.

Strong Advertisement, Endorsement by *Some Experts*, News Channels, Social Media, etc created such a Hype in the market of Forthcoming IPOs that it gave the feeling for any Stock Market Trader a Cake 🎂 which no one going to give a miss to bite.

With such a Marketing, Valuation and Expert Endorsement, IPO got over subscribed by whopping 38% with Listing priced at Rs 116 which was Valued at 72-76( which itself was questionable)

The interesting point was that Company X went for IPO for Rs. 9400 Crore, Out of Which only 400 Crore will only pumped into Company, Rest 9000 Crore was Part of *Offer for Sale* by Existing Investor. (Did anyone Noticed that Subscribing to IPO means Purchasing Shares from Existing Investor which generally People reluctant to do, as they are more interested in funding the company then buying such shares from Existing Investor.) That means out of 9400 Crore subscribe and funded by Public in the form of Rs. 116 share, the 9000 crore will go into the pocket of *Early Investors*

Now here we go !!!! 

*Who are these Early Investors ?*

*These are the same people who funded the loss making Company and now they sold their stake at higher profits.*

Now the Value of Share of Early Investor, is 1010 times higher than they Purchase the share at first. 

So, for 4700 Crore Loss Making Company, Everyone was Paid at value more than worth

- Employee

- Customers

- Founders

- Top Management

- And at Last and at Higher rate - The Investors

So who is now Handling the Loss ?

Yes, We Public holding Shares of X Company !!!

Right, The Loss has been Traded from the Top 10 Investors to Public at a Profit from 60 to 1010 times !!

This is Stock Market for You !!!!

Valuation, Media Marketing, Experts has made the Loss traded into pocket of Public at extremely High Value at the entrance

Now, What is the use of fundamental, Even Loss making Company is beating Profit yielded organization just on the basis of Future perception which is made to be created by Environmental element (sponsored or independent is questionable)

We see the way Stocks are traded in Stock Market are influenced by Promoted factors rather than Fundamentals and Scientific cause.

*Burden of Actual loss of 4600 Crore + Now Additional Loss due to Over Valuation are into pockets of Public*

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Dow Theory

 

1) What is Dow Theory?

• Dow Theory is a trading approach developed by Charles Dow who is also known as the father of Technical Analysis. It is still the basis of technical analysis of financial markets. 

• The basic idea of Dow Theory is that market price action reflects all available information and the market price movement is comprised of three main trends.

• Most of modern day technical analysis theory has an origin from ideas proposed by Dow and his partner Edward Jones back in the 19th century. Those ideas were published in the Wall Street Journal and are still assimilated by most of the technicians. 

• Dow Theory still dominates the far more sophisticated and equipped modern study of technical analysis.

2) The 6 tenets of Dow Theory

1. Market moves in summation of three trends: Primary, Intermediate & Minor Trend.

2. Market trends have three phases: For uptrend, the phases are Revival of confidence (accumulation), Response (public participation),Over-confidence (Speculation) .The three defined stages of the Primary Bear Trend are Abandonment of hope (Distribution),  Selling on decreased earnings (doubting),  Panic ( distressed selling ).

3. All news is discounted in the stock market.

4. Averages must confirm: Initially, when the US was a growing industrial power, Dow had formulated the two averages. One would reflect the state of manufacturing and the other, the movement of those products in the economy. 

5. Volumes confirm trends: Dow was of the belief that trends in prices could be confirmed by volumes. When the movements in price were accompanied by high volumes, they would depict the ‘true’ movement of the prices.

6. Trends continue, unless definitive reversals come about : Irrespective of the day to day erratic movement and market noise that maybe witnessed in prices, Dow believed that prices moved in trends. Reversals in trends are hard to predict unless it’s too late due to the nature and difference in magnitude of trends.

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STRONG MONOPOLIES

  

 *IRCTC* 100% Market share in Rail Network.

 *IEX* >90% market share in power trading.

 *Zydus wellness* >90% market share in sugar free product.

 *Eicher motors* >85% market share in 250cc bikes category.

 *MCX* >85% market share in commodity trading.

 *Coal India* >80% market share in coal production in India.

 *ITC* >75% market share in cigarettes.

 *Honda Siel* >75% in portable power generators.

 *Hindustan Zinc* >75% market share in primary zinc industry.

 *Asahi India Glass* >70% market share in automotive glass.

 *NRB Bearings* >70% market share in needle roller bearings.

 *Pidilite* >65% market share in adhesives.

 *CAMS* >65% market share in RTA within mutual fund industry.

 *Time Technoplast* >65% market share in polymer based industrial packaging.

 *Concor* >65% market share in domestic container cargo transport.

 *Exide* >60% market share in lead batteries.

 *Naukri* >60% market share in the Indian job market space.

 *Praj* >60% market share in ethanol plant installing.

 *Indiamart Intermesh* >55% market share in the online B2B Classified space.

 *Borosil Renewables* >55% market share in Lab glass.

 *Vst Tillers* >50% market share in Power tillers.

 *Delta corp* >50% in online poker games.

 *Vinati Organics* >50% market share in IBB.

 *OCCL* >50% market share in IS.

 *LMW* >50% market share in textile machinery.

 *Bajaj consumer* >50% market share in almond hair oil.

 *Asian paints* >50% market share in decorative paints.

 *Colgate* >50% market share in oral care.

 *Symphony* >50% market share in coolers.

 *PGHH* >50% market share female care & vaporub.

 *La Opala Rg* >50% market share in opalware.

 *HLE Glasscoat* >50% market share in filtration & drying equipment.

 *Maruti suzuki* >50% market share in passenger cars.

 *APL Apollo* >50% market share in structural & pre galvanized tubes.

 *GMM pfaudler* >50% market share in glass lined equipment.

 *Marico* >40% market share in hair oil (coconut) & edible oil.

 *HUL* >40% market share in soaps, household products.

 *Nestle* >40% market share in Instant noodles. >95% in infant nutrition.

 *Blue dart* >40% market share in air express courier service.

 *VIP* >40% market share in luggage.

 *USL* >40% market share in spirits/whisky.

 *UBL* >40% market share in beer.

 *Sundram fasteners* >40% market share in fasteners.

 *Nocil* >40% market share in rubber chemicals.

 *Gillette* >40% market share in razors & blades.

 *Alkyl Amines* >40% market share in DMAHCL.

 *TTK Prestige* >40% market share in pressure cookers.

 *Hero Motocorp* >35% market share in 2 wheelers.

 *Reliance* >35% market share in telecom.

 *Britannia* >35% market share in biscuits.

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What are Multibagger Stocks?

   

Multibagger stocks are equity shares of a company which generate returns multiple times higher than its associated cost of acquisition. These stocks were first invented by Peter Lynch, published in his book ‘One Up on Wall Street’.

Multibagger shares are issued by companies having tremendous growth potential, demonstrating sound management and production techniques. It also exhibits excellent research and development skills of a company, allowing this product to generate high demand in the market.

What Characteristics Should a Company Possess to Generate Multibagger Shares?

Multibagger stocks are associated with manifold returns on investments. Such profits can only be realised if companies possess certain characteristics, such as:

• Advanced research and development skills 

Robust growth of a company is associated with a massive volume of sales of its product in the market. To achieve this, quality products have to be delivered by such companies, providing immense customer satisfaction. Considerable investment in research and development of a product has to be undertaken by companies to enlist its securities in the stock exchange as Multibagger stocks.

Start-up companies launching products having tremendous customer usage scope and no close substitutes are likely to generate massive demand in the market. These companies can increase their paid-up capital by issuing Multibagger stocks. 

Companies acting as a monopoly or duopoly in the market can also be classified as issuer of Multibagger shares. Aggressive pricing strategies along with entry restrictions, can help companies increase their total revenue generation.

• High growth 

You can easily identify Multibagger stocks by looking at the performance of an issuing company. Businesses demonstrating high-profit generation and limited debt liability are top contenders. Multibagger shares have high earnings per share as well, increasing your dividend income on the investment amount. These companies tend to have a low debt to equity ratio, indicating strong financial management skills. Price to earnings growth ratio (PEG) is also high, as the returns on one unit value of a share is several times of the primary investment.

Multibagger stocks are issued by companies having trained and experienced managers. With inefficient management, proper flow is not likely to be maintained in the production chain, as coordination between production and sales chain would be faulty. Several analysts are also employed by such companies to identify optimal pricing level, to ensure revenue maximisation.

Why Should You Invest In Multibagger Stocks?

Multibagger stocks are known to increase your wealth manifold, as the returns on such investments are tremendous. For example, you can invest in such shares for Rs.100, and realise profits amounting to Rs.1000 (ten times the original amount – tenbagger stock).

However, investment in multibagger shares has to be kept in for a minimum amount of time, to ensure extensive capital gains through turnover of funds to final products sold in the market. Funds obtained from listing shares in stock exchange are used for both research and development and production of a product, thereby effectively realising high profits through massive sales volume.

What Is The Risk Associated With Multibagger Shares?

Multibagger stocks in India have to be purchased in bulk for wealth creation of an individual. Therefore loss incurred by an individual would also be substantial in case he/she is caught in a market downturn.

Many investors purchasing Multibagger shares can get caught up in an economic bubble or value trap. Companies trading at high prices might reflect the creation of an asset bubble in the country, wherein the product being manufactured is in high demand due to underlying market conditions. This would lead to massive losses incurred by an individual when the bubble pops and the asset value spirals.

Similarly, value traps are a rising possibility when it comes to Multibagger stocks. Products manufactured by a company might seem like a profitable investment option in the present but would lead to losses in the long term. Investors expect the prices of such shares to rise tremendously in the future. However, this situation does not arise, as the asset does not have any intrinsic value.

Thus, investors need to carefully analyse the financial statements of a company and the prevailing situation in stock markets before investing in Multibagger stocks.

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Reasons Why You Should Invest In The Stock Market?

 

Reason 1

INVEST IN STOCKS TO GROW YOUR MONEY

• This is the simplest reason to invest and is often at the core of why people buy stocks.

• You can grow the money you invest by anywhere from 8% — 12% per year over the long term.

Reason 2

 INVEST IN STOCKS FOR THE POWER OF COMPOUNDING

• If you earn a good steady return on your investments over a long period of time, that investment grows WAY bigger than seems possible.

• For example, If we invest just Rs.20,000 per month for 30 years while earning a 8% yearly return turned into well over Rs.3 Crores.

Reason 3

 INVEST IN STOCKS BECAUSE MONEY SITTING IN CASH WILL LOSE ITS VALUE

• Inflation can vary over time and When your money is sitting in cash it is steadily eroding in value.

• Easy Concept: If you have enough money to buy a New Duke 200 today, and you put that money under your mattress, in 30 years you’ll be able to buy a Hercules Cycle.

Reason 4

 INVEST IN STOCKS BECAUSE THEY’RE EASY TO HANDLE

• Stocks are often called “liquid assets,” which just means they can be turned into cash relatively quickly.

• A lot of people invest in stocks because they feel like their money is never far away and can always be called home in an instant.

Reason 5

INVEST IN STOCKS FOR TAX FREE PROFITS

• The government offers several types of tax free accounts that allow you to legally avoid paying taxes on your investments.

• Avoiding taxes can make an enormous difference in how much money your investments earn over time.

Reason 6

 INVEST IN STOCKS TO SAVE FOR RETIREMENT

• If you start investing when you’re young, you can build a tremendous amount of wealth for when you’re older.

• If you’d like to stop working at some point and don’t want to simply trust that social security will be there to support you and your family, investing in stocks can be a great way to save for retirement.

Reason 7

 INVEST IN DIVIDEND STOCKS FOR STEADY INCOME

• Dividend stocks are special because they pay you real hard cash on a regular basis.

• Depending on the dividend stock you buy, it could pay you cash ranging from 1% up to 10% (and beyond) of the total money you invest, every year.

• Retirees tend to like dividend stocks because regardless of whether the market goes up or down, they receive a steady dividend check of cold hard cash.

Reason 8

INVEST IN STOCKS SO YOU CAN OWN PART OF A COMPANY YOU LOVE

• When you buy even a single share of a company, you’re officially a Part Owner. If you buy Reliance stock, you’re actually an owner of the company.

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