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5 Mantras for Trading in Equities

5 Mantras for Trading in Equities
by 5paisa Research Team 31/08/2021

 Know the difference between trading and investing:  The main difference between trading and investing is the timeframe for which you hold the trade. Generally, trading is more short-term in nature (can range from a few hours to a few weeks) while investing is more medium to long-term in nature (more than 1 year).

 Make the market your friend: You must take the time and effort to learn about the markets. How they move, why they move, what impacts them? Markets are ever evolving, which means that you can potentially learn something new every day. Thus, learning about markets should be a consistent and life long process.

 Only risk the capital that you can afford to lose: There is no hiding from the fact that trading is a risky proposition. Since markets can be volatile in the short-term, there is always a chance that you might end up with high losses. Thus, you should always ensure that the money you allocate to trading should not be earmarked for emergencies and other important goals. Basically, it should be money that you can afford to lose.

 Always have a stop loss: The best way to reduce the risk of trading is to always have a stop loss. This is basically a price point that tells you that it is time to cut your losses and exit your trade. For example, if your stop loss on a buy trade is 2%, then you will exit the trade if the stock falls by more than 2%.

 Make a trading plan and stick to it: Create a trading plan that can help you manage your trades better. Make a list of factors and metrics that will guide your trading strategy and the levels that will act as triggers for both entry and exit. More importantly, stick to your trading plan.

Log in to www.5paisa.com to start trading equities.

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5 Mantras to become Financially Independent

5 Mantras to become Financially Independent
by 5paisa Research Team 31/08/2021

  Start now:Your investing journey should ideally begin with your earnings journey. When you start early you have a longer investment time frame. This allows you to absorb intermittent losses and benefit from the power of compounding.

 Create and stick to a budget: When you receive your income, break it up into various pockets. Allocate some money to meet essential expenses. Then, keep aside some money to save and invest. Now, with the money that is left, you can spend on non-essentials and luxuries.

  Set SMART goals: Ensure that the goals you set are Specific, Measurable, Achievable, Realistic, and Timely. By doing this you will know exactly the amount of money that you need to save and the risk that you can take to achieve your goal.

 Risk profile is more important than Facebook profile: When it comes to investing, never punch above your risk category. You have a unique risk profile which could be conservative, moderate, or aggressive. Ensure that the investments you make are aligned with your risk profile.

 You can eat your cake and keep it too: Saving and investing don’t put a stop to your fun and expenses. Instead, if you budget properly and maintain discipline then you can create a good investment corpus and have enough money to meet your discretionary expenses.

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5 Mantras for Trading in Options

5 Mantras for Trading in Options
by 5paisa Research Team 31/08/2021

5 Mantras for Trading in Options

 

 Buy unlimited profit potential and limited downside potential:  If the stock moves in the desired direction, then you stand the chance of making unlimited profit. If it moves in the opposite direction, then you only lose the premium that you paid.

 Sell (Write) limited profit potential and unlimited downside potential: If the stock moves in the desired direction, your gain equals the premium amount you received when you sold the option. In that sense, your upside is limited. If it moves in the opposite direction, your losses can be unlimited.

 Options give you rights: When you buy a Call option, you buy the right to purchase the stock at a particular price (strike price). When you buy a Put option, you buy the right to sell the stock at a particular price (strike price).

 Spreads: You can create option strategies, call spreads, that can limit both the upside and downside. These strategies entail buying / selling multiple options (Call or Put) at different strike prices. By spreading them across price levels, you ensure that both your upside and downside are limited.

 Expiry: Every option contract is valid only for a particular period of time, after which it ceases to exist or expires. For index options, expiry will be as follows:

Last Thursday of the expiry month for the monthly, quarterly, and half-yearly contracts
 

Thursday of the expiring week for weekly expiry contracts
For stock options, expiry will be as follows:

 

Last Thursday of the month
For both, if the last Thursday is a trading holiday, then the previous day becomes the expiry day.

 

Log in to www.5paisa.com to start trading options.
 

 

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100% Peak Margins Kick-In From 1st September 2021

Peak Margin Rules by SEBI
31/08/2021

Effective Wednesday, the 1st September 2021, the fourth and final phase of the SEBI ordained peak margining system will kick in. When the peak margining system was introduced in September 2020, it had raised a furore with brokers and traders complaining that it would result in drying up of intraday volumes. To facilitate the adjustment to x`the change, SEBI implemented the peak margins in 4 phases as under.

The Updated Peak Margin Rules by SEBI

Phases

Effective from

% of Peak Margins

Phase 1

December 2020

25% of Peak Margins

Phase 2

March 2021

50% of Peak Margins

Phase 3

June 2021

75% of Peak Margins

Phase 4

September 2021

100% of Peak Margins

All About the New Rules for Peak Margin Implemented by SEBI

Peak Margins brought about 3 major changes. SEBI stipulates margins for all F&O and cash positions. If, for example, the margins for 1 lot of Reliance Futures is Rs.180,000, then effective 01-Sep, the entire amount has to be collected upfront. Secondly, margins will be also applicable on sale of demat shares, unless the trader marks advance pay-in. 

Lastly, the peak margins will be determined by taking 4 trade snapshots during the day and calculating the highest value as the peak margin. There will be stiff penalties for failure to meet this obligation by brokers. This effectively means that brokers funding the margins of clients intraday will no longer be possible under the peak margining system.

The objective of SEBI in the entire exercise of peak margin system was to reduce speculation in the market so that retail investors are not caught on the wrong foot in volatile markets. The protests, especially from bodies like ANMI, are that the volumes will dry up in the intraday market, but we are yet to see evidence of that. 

From the traders perspective, they must be prepared to pay up margins upfront for any position in the market. For the brokers, this surely reduces the risk of open positions since they would be covered by margins for peak risk.
 

 

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A New Addition to Rakesh Jhunjhunwala's Portfolio?

Rakesh Jhunjhunwala to Invest in Syska LED
31/08/2021

For a long time, Syska LED has been a prominent advertiser in the mass media. Syska LED is currently a privately held company, with the promoting Uttamchandani family controlling the business. In a recent development, it emerges that ace investor Rakesh Jhunjhunwala has invested in Syska LED through RARE Enterprises. 

Also Read: Rakesh Jhunjhunwala's Portfolio 

Will Rakesh Jhujhunwala Invest in Syska LED?

While the details of the size of the stake or the deal value are not yet made public, what has emerged is that the term sheet has already been signed between the Uttamchandani family and RARE Enterprises. Rakesh Jhunjhunwala’s flagship has already made 15% of the committed investment and the balance amount is slated to be invested in Syska LED over the next 60-days.

The Uttamchandani family started off as distributors of T-Series Audio cassettes and CDs but subsequently diversified their focus into electronic product categories like LED, Personal Care Appliances, Mobile accessories, home appliances etc. The underlying theme of Syska LED has been to focus on products that are environment friendly and also save electricity bills for the average households in India.

This is one more in the long list of private investments that RARE Enterprises plans to diversify its investment portfolio beyond the realm of listed stocks. It may be recollected that last month, Rakesh Jhunjhunwala had also announced investment in launching an airline company. The association will also help catapult Syska into the next phase of growth.

For Syska LED, this association brings three distinct advantages. Firstly, it gives them the much needed funds and 360 degree expertise for scaling up their business. Secondly, this association would automatically make a number of marquee qualified institutional investors also interested in Syska LED. Above all, this could pave the way for eventual IPO and listing of the company in the coming years.

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Ola In Talks With Investment Bankers for $2 Billion IPO

Ola IPO Price, Date
IPO
31/08/2021

With the IPO season ready for digital plays, big boys like Ola cannot be too far behind. It is reported that Ola is in advanced discussions with Citigroup, Morgan Stanley, JPM and Kotak Mahindra Capital to lead manage its proposed IPO. The final list of BRLMs will be finalized ahead of the DRHP filing. Ola is expected to file for an IPO in the range of $1.5-2.0 billion around October this year.

Ola IPO Initial Details

An issue size of nearly Rs.15,000 crore would put its IPO on par with Paytm which is also planning to tap the IPO market in the current fiscal year. With the IPOs of Zomato and CarTrade getting a good response, a slew of digital plays like PolicyBazaar, MobiKwik, Paytm and Nykaa are preparing for IPOs. All these IPOs are expected to happen during the current fiscal.

Also Read: Upcoming IPOs in September 2021

Ola is a cab hailing service which was launched in 2010 by Bhavish Aggarwal on the lines of Uber in the global markets. Since 2010, Ola has raised nearly $4 billion and the proposed IPO is likely to look for valuations of $8-9 billion. During the pandemic, Ola had to let go many of its staff as services were shut. However, now its cab hailing is operating normally.

In July this year, Ola had raised $500 million from Temasek and Warburg Pincus. Ola counts some formidable names like Softbank, Tiger Global and Steadview among early investors. While the dates for the IPO are not yet known, the filing of DRHP is expected in October. That means, the actual IPO could happen either by December this year or in the early part of next year.

The phenomenal success of the Zomato IPO has given confidence that loss-making digital plays have an institutional and retail appetite in India. However, Ola could consider a simultaneous listing in India and abroad.

Read Now: Upcoming IPOs in 2021