Successful trading involves selecting the good company, diversifying the portfolio and selecting the good broker.
Thing to be taken care are
Risk Tolerance - The amount one can invest in the shares and to the extent one can handle risk while handling shares, in other terms one has to think about the loss in shares.
Investing in the Company - One has to decide about the investment as a short term or long term, if you are day trader or swing trader, you have the option to choose the stocks performing in short term, if you are a long term investor in SIP, you have the option to look into the prospects of the company for the long term.
Know about the broker - One has to know the broker's history, their brokerage and experience.
One has to invest in stocks and their ownership, they have to be careful in their investment, they might be carried away by brokers to raise the price, may lead to false inflation.
Reduce the risk by Diversifying - One has to buy the stocks from selected good companies, if one of the company is failed to show progress, other can compensate on it to make some profit.
Sunday, August 23, 2009
Evaluation of Stocks
The following factors has to be considered before investing in shares.
Company History - Ten years of solid performance withstanding recession and showing stable results.
Dividend - Money paid by the company for the existing shareholders to share the profit, and it can be quarterly and half-yearly and annual, the long term investors will be benefited as it gets compounded annually.
Market Cap - The market cap is the amount of sales, the company will make in a given year, it has to be above 10 million, and anything less will end in bankruptcy in the end.
Cash Flow - The profit a company will make in a year, it has to be really high to avoid bankruptcy.
Price Earnings Ratio - Expectation from stock, has to be between 10 and 30, it this show high, the expectation is really high from the investors, if the expectation is not met, then the company share may lose its value drastically, and also lead to bankruptcy, any value above 25 is a good one.
Return on Assets and Return on Equity - If the ROA and ROE are rising over a period of years, then the investors can buy the share, if the ROA and ROE are on the reverse, one has to think twice before investing in this company.
Financial Leverage - It tells about the company's acquisition in debt, one has to avoid investing in these stocks that has the value of above 5, on the other hand it will be high for banks and financial institutions.
Company History - Ten years of solid performance withstanding recession and showing stable results.
Dividend - Money paid by the company for the existing shareholders to share the profit, and it can be quarterly and half-yearly and annual, the long term investors will be benefited as it gets compounded annually.
Market Cap - The market cap is the amount of sales, the company will make in a given year, it has to be above 10 million, and anything less will end in bankruptcy in the end.
Cash Flow - The profit a company will make in a year, it has to be really high to avoid bankruptcy.
Price Earnings Ratio - Expectation from stock, has to be between 10 and 30, it this show high, the expectation is really high from the investors, if the expectation is not met, then the company share may lose its value drastically, and also lead to bankruptcy, any value above 25 is a good one.
Return on Assets and Return on Equity - If the ROA and ROE are rising over a period of years, then the investors can buy the share, if the ROA and ROE are on the reverse, one has to think twice before investing in this company.
Financial Leverage - It tells about the company's acquisition in debt, one has to avoid investing in these stocks that has the value of above 5, on the other hand it will be high for banks and financial institutions.
Monday, August 17, 2009
Making Money in Stock Market
Trading is a process in which a person and sells the stocks. It helps you to multiply your wealth. The parties involved in trading such as buyer, seller, stock broker and stock exchange and is classified into different categories such as day trading, swing trading, short term trading, long term trading, etc. It is classified according to the investment horizon.
Trader is a person buys and sells financial instruments such as shares, debentures, bonds etc.
The important bullets to keep in mind is Reliability, Experience, commissions and charges of the broker, if you are not satisfied with his experience, you have to search for the other one.
Check the licence of the broker with the SEBI, avoid the broker who has started their career, check with the brokerage of each firm and one has to carry out the required anaylsis to invest in the right shares.
This is to share the finance news throughout the globle, the details are derived from Indianmoney.com, copy right is with them
Trader is a person buys and sells financial instruments such as shares, debentures, bonds etc.
The important bullets to keep in mind is Reliability, Experience, commissions and charges of the broker, if you are not satisfied with his experience, you have to search for the other one.
Check the licence of the broker with the SEBI, avoid the broker who has started their career, check with the brokerage of each firm and one has to carry out the required anaylsis to invest in the right shares.
Steps to make Profit from Stock market
- Find a well-established brokerage firm through family and friends.
- Check with the investment consultant to choose the risk profile.
- Check with the monthly statements from the brokerage firm
- Decide in advance with your consultant an annual or other time period in which you will sit down together to review your portfolio performance.
- Check and make the necessary adjustments in your investments.
- Be very clear about your investment objective
- Make sure which kind of trader you are such as Day Trader, Swing Trader, Short term Investor or Long term Investor.
Types of Trading/ Investing
The types of traders are- Day Trader
- Swing Trader
- Short term Investor
- Long term investor
Day Trader
Day trader is a person who makes the buying and selling of the stock in the same day. The difference between buying and selling price is his profit/ loss. A day trader should have a good risk profile. Possibility of making money and losing money is highly volatile in this kind of trading.
Swing Trader
Swing Trader is engaged in Buying and selling of stocks. Their trading pattern is different from that of Day traders. A swing trader will trade (Buy/sell) stocks with a time horizon of 2-3 days. Many of the traders are using this pattern to make profit from the market. Swing Trading is comparatively less risky than Day Trading.
Short term Investor
Short term investment is suitable for investors with a time horizon of less than a year and average risk tolerance. Normally short term investors are undertaking less risk compared to first two categories of investors (Day Trading and Swing Trading). A short term investor will Buy and Sell the securities within month.
Long term investor
Long term investor is a person with an investment horizon with more than a year. Compared to other kinds of investments risk is less in Long term investments. A long term investor will be able enjoy all the benefits like capital gain, cash dividend, stock dividend, etc.
How Profit is generated from stock market
There are a number of ways through that one can make profit from stock market, like capital gains, right issue, etc. Investors can profit in the stock market any or a combination of the following:
- Capital Gains
- Cash Dividend
- Stock Dividend
- Stock Rights
Capital Gains
Capital Gains are profits made due to an increase in the market price of a stock from the buying price. Market price of a stock/share will keep on changing each moment. There is no guarantee that you can sell the shares at the same price you have bought or for a higher price. If you are able to sell the share for a higher price than its purchase price, you have made capital gain. For example; think you have bought the share of Reliance Industries for Rs. 1900 after few days you sold it for Rs. 2100. Here you have made a capital gain of Rs. 200 (i.e. 2100-1900=200).
There is a possibility of making capital loss also. If there is a decrease in stock price from the purchase price, it will lead to capital loss. For example; if you have bought the shares of Reliance industries at Rs. 1900 and after few days you sold it for 1700, you have to face a capital loss of Rs. 200 (i.e. 1900-1700=200)
Cash Dividend
Sometimes companies declare cash dividend to its share holders. Cash Dividend is a dividend given to shareholders in the form of cash. Apart from capital gains it is another form of revenue for an investor. Cash dividend is declared on the face value of the share. It is computed by multiplying the number of shares held by a person by the cash dividend rate declared.
For example; Mr. Arjun is holding 1000 shares of “X” company and the company is declared a dividend of 20% on its face value. Face value of the share is Rs. 10/-. In this case Mr. Arjun will receive a dividend of Rs. 2/- on each share (10 x 20% = 2) so total cash dividend of Mr. Arjun is Rs. 2000/- (1000 x 2 = 2000). Below given is a simple formula to find out the total dividend on the number of shares held.
Dividend = (Dividend Rate x Face Value of share) x No. of shares
Stock Dividend
Stock Dividend is a dividend given to shareholders in the form of additional stocks. It works similar to cash dividend, instead of cash, stocks will be issued to share holders. It is computed by multiplying the number of shares held by the percentage of the stock dividend declared.
Stock Dividend = No. of shares held x percentage of the stock dividend declared
Right Issue/ Stock Rights
Right issue is the option given to the existing shareholders of a company to buy additional shares of the company at a price lower than its market price. In other words when the company goes for further issue, it gives the first preference to the employees and the present share holders this is called right issue. Right issue helps in getting the shares at reduced price.
Thursday, August 13, 2009
Beware with Fake currency in 1000s
The 1000 denomination note has counterfeit currency circulated in the market through PAKISTAN's ISI in the Indian money market. It was first found by Anti-Terrorist squad, they have circulated nearly Rs. 2000 Crore in the market.
Despite the strengthened security features such as optical variable ink, colour shift and security thread 1000 rupee notes are getting counterfeited.
The series contains 2AQ and 8AC are in circulation, and if any found has to be reported to the
Reserve Bank of India, or Central Bank of India.
The RBI advised all financial institutions to use currency sorting machines compulsorily.
Despite the strengthened security features such as optical variable ink, colour shift and security thread 1000 rupee notes are getting counterfeited.
The series contains 2AQ and 8AC are in circulation, and if any found has to be reported to the
Reserve Bank of India, or Central Bank of India.
The RBI advised all financial institutions to use currency sorting machines compulsorily.
Friday, August 7, 2009
Inflation is low, but prices are sky rocketing
Government data showed on Thursday that the annual rate of inflation for all commodities stayed negative for the eighth straight week, but prices of food items continued to surge, signaling political concern for the Centre and three states preparing for assembly elections in a few months.
Maharashtra is facing polls in October-November, while Haryana, which is supposed to go to polls next year is likely to advance it to this year-end. Jharkhand, now under President’s rule, is also likely to go to polls later this year.
As per the latest official data, annual inflation based on the wholesale price index (WPI) stood at -1.58% for the week ended July 25, against 12.53% a year ago. The negative inflation is, however, no consolation for consumers as inflation in food articles is almost in double digits—9.7% for the week ended July 25. The sharp run-up in prices of food articles, which were up 0.8% in the week under consideration, does not adequately reflect in the WPI due to its low weight in the index.
A negative rate of annual inflation offers the government little comfort when prices, particularly of food, go up week after week, as was evident from finance minister Pranab Mukherjee’s statement in Parliament on Thursday.
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“The government is responsible... the government is responsive. We are sensitive to it (price rise) ...as and when appropriate policy measures are needed, they will be taken,” Mr Mukherjee said. The minister said vegetable and milk prices have increased due to erratic monsoon.
He said when inflation had reached a very high level last year, the government took a number of steps to insulate the common man. While the overall inflation has come down and the tight monetary policy of last year has been reversed, there are signs of global pressures building up on commodity prices.
Mr Mukherjee said this was related to appreciation and demand for dollars and it would be difficult to predict the global behaviour of prices of commodities, including fuel.
India’s chief statistician and the top bureaucrat in the ministry of statistics, Pronab Sen, told ET that rising food prices have more to do with speculation at this stage than a crop failure.
“Before the harvest, a lot of speculation activity takes place, driving up prices. We cannot say as yet that crops are failing...There is no real threat to economic growth this fiscal (on account of any disappointing harvest),” said Mr Sen.
Maharashtra is facing polls in October-November, while Haryana, which is supposed to go to polls next year is likely to advance it to this year-end. Jharkhand, now under President’s rule, is also likely to go to polls later this year.
As per the latest official data, annual inflation based on the wholesale price index (WPI) stood at -1.58% for the week ended July 25, against 12.53% a year ago. The negative inflation is, however, no consolation for consumers as inflation in food articles is almost in double digits—9.7% for the week ended July 25. The sharp run-up in prices of food articles, which were up 0.8% in the week under consideration, does not adequately reflect in the WPI due to its low weight in the index.
A negative rate of annual inflation offers the government little comfort when prices, particularly of food, go up week after week, as was evident from finance minister Pranab Mukherjee’s statement in Parliament on Thursday.
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“The government is responsible... the government is responsive. We are sensitive to it (price rise) ...as and when appropriate policy measures are needed, they will be taken,” Mr Mukherjee said. The minister said vegetable and milk prices have increased due to erratic monsoon.
He said when inflation had reached a very high level last year, the government took a number of steps to insulate the common man. While the overall inflation has come down and the tight monetary policy of last year has been reversed, there are signs of global pressures building up on commodity prices.
Mr Mukherjee said this was related to appreciation and demand for dollars and it would be difficult to predict the global behaviour of prices of commodities, including fuel.
India’s chief statistician and the top bureaucrat in the ministry of statistics, Pronab Sen, told ET that rising food prices have more to do with speculation at this stage than a crop failure.
“Before the harvest, a lot of speculation activity takes place, driving up prices. We cannot say as yet that crops are failing...There is no real threat to economic growth this fiscal (on account of any disappointing harvest),” said Mr Sen.
CII make a dozen point recomm for infra
If the Confederation of Indian Industry is able to have its way, India could see the presentation of an infrastructure budget next fiscal year, instead of the regular railway budget. Infrastructure, being an amalgamation of various ministries, CII recommends that the concerned departments – roads, railways, shipping etc – get together, formulate and present the budget. This is one of the twelve recommendations that the industry body will be making to the Prime Minister’s Office (PMO) on infrastructure development.
Speaking to reporters at the sidelines of a two day summit on Infrastructure – SumInfra 2009 – organized by CII in Chennai on Thursday, summit chairman and L&T President, J P Nayak said, "What we need for infrastructure is a long term plan, with advance implementation procedures in place. This is one sector where the private sector cannot play a big role, as the time period of projects is over 15 years. It is the government which has to make the investments ."
Along the same lines, CII has recommended that the government ‘energise’ PSUs in the infrastructure space, and adopt 20 cross-sectoral projects of national importance and commit to delivering them on time. However, the recommendations also include a proposal for 20 domestic economic zones like SEZs. The body recommends that a National Infra Facilitation and Monitoring Agency [NIFMA] be set up along the lines of FIPB, along with an independent regulatory authority.
Clearly stressing the need for government to take up responsibilty for land acquisitions, CII has mooted the setting up of central and state land bank corporations, to procure and allot land for infrastructure projects on a continuous basis. "These will obviously address the needs of hard infrastructure projects like roads and airports and not soft ones like education or healthcare," Mr Nayak said.
Some of the other recommendations include pushing 74th amendment to Constitution for urban reform, promoting PPP in rural infrastructure and agri business, dissemination of quarterly statistics, mass transit systems in 20 top cities, and sectoral ‘consensus-based’ templates for PPP bid-process management. The last proposal is to provide guidelines for choosing the best tender rather than the cheapest one.
Earlier, in his theme address, Nayak said that India has seen as one of the most sustained growth stories. Despite the economic slowdown worldwide the Indian economy is still expanding significantly. This growth has attracted several international players to India. Hence, the key to sustaining India's growth rate during a global meltdown lies in developing India's infrastructure.
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India's 11th plan projects investment of nearly USD 500 billion in infrastructure. Given the limited resources of the government, the emergence of private-public partnerships (PPPs) is seen as a sustainable means of bridging the infrastructure gap. World-class infrastructure creates an enabling environment for growth.
He said the revival of the economy has a multiplier effect in infrastructure spending. It has the highest spending vis-à-vis other sectors at 1.8 per rupee of expenditure. It is but only right to say that there is a permanency of effects of spending on infrastructure for asset building. It is certainly not a one-time consumption, he added.
Mr. Parithi Ellamvazhuthi, Tamil Nadu, Minister for Urban Development, Government of Tamil Nadu in his special address said the State Government has taken several initiatives for the development of infrastructure in the State including setting up of new industrial parks, PPP projects in power, roads and ports sectors. The State continues to attract global investors to set-up their base in view of its investor friendly policies and availability of good infrastructure said Mr. Ellamvazhuthi.
The Minister invited private sector to actively participate in infrastructure projects in the State including projects related to social infrastructure. He also said that the Government recently enacted the ‘Business Facilitation Act’ to facilitate clearance of new industrial projects within 7 weeks, to promote industrial growth.
C K Ranganathan Chairman, Tamil Nadu State Council, CII said, " We have seen excellent growth and even in this time of economic downturn India is seeing substantial growth. However, the country’s infrastructure is weighed down by our progress".
Tamil Nadu has to its advantage a well - developed industrial infrastructure, ranging from heavy industries, refineries, an international airport, two major all weather posts in Chennai and Tuticorin and six minor ports. The State offers huge opportunity for private sector to invest in several infrastructural projects, he added.
Speaking to reporters at the sidelines of a two day summit on Infrastructure – SumInfra 2009 – organized by CII in Chennai on Thursday, summit chairman and L&T President, J P Nayak said, "What we need for infrastructure is a long term plan, with advance implementation procedures in place. This is one sector where the private sector cannot play a big role, as the time period of projects is over 15 years. It is the government which has to make the investments ."
Along the same lines, CII has recommended that the government ‘energise’ PSUs in the infrastructure space, and adopt 20 cross-sectoral projects of national importance and commit to delivering them on time. However, the recommendations also include a proposal for 20 domestic economic zones like SEZs. The body recommends that a National Infra Facilitation and Monitoring Agency [NIFMA] be set up along the lines of FIPB, along with an independent regulatory authority.
Clearly stressing the need for government to take up responsibilty for land acquisitions, CII has mooted the setting up of central and state land bank corporations, to procure and allot land for infrastructure projects on a continuous basis. "These will obviously address the needs of hard infrastructure projects like roads and airports and not soft ones like education or healthcare," Mr Nayak said.
Some of the other recommendations include pushing 74th amendment to Constitution for urban reform, promoting PPP in rural infrastructure and agri business, dissemination of quarterly statistics, mass transit systems in 20 top cities, and sectoral ‘consensus-based’ templates for PPP bid-process management. The last proposal is to provide guidelines for choosing the best tender rather than the cheapest one.
Earlier, in his theme address, Nayak said that India has seen as one of the most sustained growth stories. Despite the economic slowdown worldwide the Indian economy is still expanding significantly. This growth has attracted several international players to India. Hence, the key to sustaining India's growth rate during a global meltdown lies in developing India's infrastructure.
IndianMoney.com Stock Tips Daily Perfomance Click Here
India's 11th plan projects investment of nearly USD 500 billion in infrastructure. Given the limited resources of the government, the emergence of private-public partnerships (PPPs) is seen as a sustainable means of bridging the infrastructure gap. World-class infrastructure creates an enabling environment for growth.
He said the revival of the economy has a multiplier effect in infrastructure spending. It has the highest spending vis-à-vis other sectors at 1.8 per rupee of expenditure. It is but only right to say that there is a permanency of effects of spending on infrastructure for asset building. It is certainly not a one-time consumption, he added.
Mr. Parithi Ellamvazhuthi, Tamil Nadu, Minister for Urban Development, Government of Tamil Nadu in his special address said the State Government has taken several initiatives for the development of infrastructure in the State including setting up of new industrial parks, PPP projects in power, roads and ports sectors. The State continues to attract global investors to set-up their base in view of its investor friendly policies and availability of good infrastructure said Mr. Ellamvazhuthi.
The Minister invited private sector to actively participate in infrastructure projects in the State including projects related to social infrastructure. He also said that the Government recently enacted the ‘Business Facilitation Act’ to facilitate clearance of new industrial projects within 7 weeks, to promote industrial growth.
C K Ranganathan Chairman, Tamil Nadu State Council, CII said, " We have seen excellent growth and even in this time of economic downturn India is seeing substantial growth. However, the country’s infrastructure is weighed down by our progress".
Tamil Nadu has to its advantage a well - developed industrial infrastructure, ranging from heavy industries, refineries, an international airport, two major all weather posts in Chennai and Tuticorin and six minor ports. The State offers huge opportunity for private sector to invest in several infrastructural projects, he added.
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