How to do stock trading using online trading Apps

How to do stock trading using online trading Apps
01/02/2020

If you have an online trading account, it is possible to access your internet trading interface through your smart phone. Most smart phones have a screen that is large enough to be able to read research ideas and transact. However, the internet trading screen is created to cater to a normal PC or laptop screen. Hence, you may find the smart phone screen slightly unwieldy to access the full-fledged internet site. The other option is to download a trading app.

Trading app is short for trading application. It is a small program that can be downloaded from the Apple store or the Android play store, depending on which mobile phone you use. Here are the steps you need to following to start using the trading application.

Download the app on to your mobile phone

As stated earlier, most online trading platforms today offer the facility to download the app for Apple and for Android. You can either follow the link provided in your broker website or you can just go to the store and search for the name of the broker. Normally, the trading application has size of less than 25MB to enable easy download on all types of connections. Most brokers take that additional effort to optimise the app so as to make it as light and user friendly as possible. Trading apps are nothing but small programs that can be downloaded on to your smart phone hardware by clicking on the link provided.

Run the application and authorise with your username and password

Once you double click on the app, it automatically downloads and then intimates you when the download is completed. After that, you just need to run the app based on a menu driven button. Once the app is downloaded, you can choose to place the icon on your desktop or in a specified folder for easy access. Once the app is opened on your mobile, you will have to authenticate with your username and password, which you have set in your internet trading interface. Remember that the app is unique to your phone and to your mobile number and hence you will have to authenticate with a one-time OTP.  Subsequent access to the app will be based on dual-level authentication.

Ensure to use a secured connection for the trading app

This is an additional level of safety you need to follow. You can use your existing mobile connection, which is secured anyways. Alternatively, if you have a private wi-fi at home, then you can use the private wi-fi to access your app. A couple of points to be noted are that you must never use the app over public wi-fi systems at airports / malls etc. Similarly, avoid opening your internet trading account at a cyber café or in any public place where your passwords can be easily stolen. Avoid downloading unnecessary software on your mobile phone as it may endanger your phone security and encourage phishing.

Get familiar with the mobile app interface and flow

This is a very important step. Broadly, the process flow of a mobile app is the same as the internet platform. However, you will find that it takes some time for you to get familiar with the new interface. This interface of the app looks different because it has been created with a mobile phone interface in mind. A good way to test the app is to place small orders at first and test the full process flow like order placement, order book checking, order modification, trade book verification, portfolio upload etc. Once you get familiar with the full process flow, you can start trading your normal size trading on the mobile app.

Create an app plan for your trading

What exactly does an app plan mean? For example, if you want to use complex technical charts or ready elaborate reports, then the app interface may not work for you. That would require a more expansive PC or laptop screen to be effective. However, for regular trading based on news, research calls and technical recommendations, apps are the perfect platform. Apps have an added advantage in the sense that they offer seamless call to action. The apps of most of the reputed brokers are designed in such a way as to take you from research to ideas tot action in less than 5 clicks. That is where apps work best.

The big merit in an app is that it becomes an anytime / anywhere platform. You can trade as you are travelling in a car or train and you can act on opportunities with alacrity. That is what sets the app apart.

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Union Budget 2020 – What’s It All About?

Union Budget 2020
01/02/2020

Budget 2020 was rich on expectations but the exemptions in the budget were much lower than what the market desired. The impact was visible in the performance of the stock market indices which cracked in response. While a detailed analysis is still due, the immediate reaction of the market appears to be that there was no big bang announcement in the Union Budget despite the tough macro conditions. Here are some of the major announcements in the Union Budget 2020.

Response to macro pressures

  • Nominal growth for fiscal year 2020-21 has been pegged at 10%. The real rate of GDP growth could be in the range of 5.5% to 6% depending on the nominal growth actually achieved as even 10% does look quite steep at this point in time.

  • The budget 2020 has fully utilised the 50 bps leeway on fiscal deficit offered by the N K Singh Committee. For 2019-20, the fiscal deficit has been pegged at 3.8% instead of 3.3% while for the fiscal year 2020-21 it is pegged at 3.5% instead of 3%.

  • There is some positive impact on post-harvest infrastructure. To improve post harvest infrastructure, including cold storage, the budget has announced viability funding based on public-private-partnership. Indian Railways will run dedicated trains to support the cold chain plan.

Some cheer for Corporates and MSMEs

  • Despite the lack of any cost advantage, the Budget 2020 has outlined big plans for manufacture of mobile phones and electronic equipment and semiconductor packaging. In addition, the 15% concessional tax will be extended to the power sector too.

  • Finally, MSMEs have something to be really pleased about. Invoice financing via the factoring method will be extended to MSME as will be the issue of subordinated debt to MSMEs and handholding in the early stages.

No cheer for markets and that was evident

  • LTCG on equity stocks and equity funds was not scrapped, despite the STT being introduced in 2004 in lieu of LTCG tax. This is resulting in the cascading effect of STT plus LTCG tax and that is adding to the costs of traders and investors.

  • While DDT has been scrapped on equity and on equity funds, it comes back in another form. At the same time, the dividend distribution tax on debt funds will continue as before. There will be a single point of taxing dividends as other income at the applicable peak rates of tax for individuals.

  • Efforts are being made to reduce tax burden on middle class. People earning in the range of Rs.5 lakh to Rs.15 lakhs will see reduction in taxes.

Direct tax; more complicated than effective

  • Direct tax regime has suddenly become a lot more complicated. There will be two regimes; first regime will focus on status quo with all exemptions and rebates. The new regime with lower rates applicable will be devoid of exemptions and rebates. Loss of exemptions could be a big cost as many exemptions are virtually mandatory or inevitable like life premiums, provident fund, tuition fees, home principal etc.

  • Under the new tax regime, direct taxes will be as under:

Income bracket

Below 5l

5l to 7.5l

7.5l to 10l

10l to 12.5l

12.5l to 15l

Above 15l

Tax Rate (%)

Zero

10

15

20

25

30

Above table represents the new regime. If you opt for the second option, then your IT form will be auto-filled. That simplicity appears to be the only visible advantage.

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Hurled by the IPO Rush? Here’s All You Need to Know About ASBA

ASBA IPO
IPO
by Nikita Bhoota 27/02/2020

ASBA (applications supported by blocked amounts) was introduced by SEBI to protect the interests of the retail investors. ASBA can used to apply for IPOs, FPOs, rights issues etc. In ASBA, the designated bank account only gets blocked to the extent of the application money. On the date of allotment, the amount gets debited to the extent of allotted shares and the balance gets released. If zero shares are allotted to the applicant, then the entire blocked amount under ASBA is released.

Who can make an ASBA investment?

ASBA is mandatory for all IPOs after January 01st 2016. However, an ASBA investor has to fulfil some basic conditions.

  • He must be a resident individual applying under the Retail Quota
  • Bid must be at cut-off price with a single option of number of shares bid
  • ASBA application has to be made through self certified syndicate bankers (SCSB)
  • Such price intibid made in ASBA cannot be revised later on
  • ASBA cannot be used for other categories like employees / shareholders etc.

What are the advantages of ASBA?

ASBA comes as a major boon to retail investors. Here are some of the major advantages.

  • Since the amount is only blocked, you continue to earn interest
  • You don’t worry about refunds as only the allotment money is debited
  • The application process is very simple and you can apply through your bank
  • The blocked amount is included in average quarterly balance (AQB)
  • Even through bids cannot be revised, they can be cancelled.

How can an ASBA application be cancelled?

While an ASBA application cannot be revised as per the rules, the ASBA application can certainly be cancelled. There are two distinct situations here. If the IPO has not closed, you can cancel the ASBA application through your online trading account or through the bank. Your SCSB will cancel the bid and unblock the amount right away. However, if you withdraw after the issue closes, then you have to write to the registrar to cancel the bid. The SCSB will only remove the block after the allotment is complete and they get intimation from the registrar.

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Here’s All You Need to Know About Getting a Demat Account

Open Demat Account
by 5paisa Research Team 25/03/2020

Demat Account is almost like a bank account. Just like you hold funds in your bank account, you hold shares and other securities in the Demat Account. Having a Demat Account is mandatory for trading in equities as per SEBI regulations. 

How to open Demat Account?

Demat Account can be opened online or offline. It is normally opened along with trading account (TCD) by the broker. Demat Account can be opened with any authorised depository participant (DP); which could be a bank or a broker. Here is how to open a Demat Account.

For offline Demat Account, you need to fill up the demat form and sign the demat agreement and submit to your DP. Basic documents like PAN Card, Proof of identity, Proof of residence and cancelled cheque are required. Copies of self-attested documents must be submitted to the DP along with the signed DP agreement. Carry the originals for verification by the officer. Demat account opening can take up to 4-5 days, if all the documents are in place.

Online Demat Accounts can be opened by filling up the online form on the DP website. You must authenticate your identify and address with your Aadhar Card and verify the same with OTP sent to mobile. An in-person-verification (IPV) has to be done before fully activating the demat account. Only Aadhar address will be considered for online demat.

Check: Procedure to open a Demat account


How to use the Demat Account

With a demat account, your purchase, sale and holding of securities are in electronic mode. You must issue a signed Debit Instruction Slip (DIS) to sell shares or you can give a power of attorney (POA) to the broker. When you sell shares, the demat account gets debited and when you buy shares the demat account gets credited.  All corporate actions like bonuses and splits are automatically credited to your demat account. Dividends are directly credited to the mapped bank account. 

Documents Required for Demat Account

As stated earlier, demat account opening requires proof of identity and proof of address. Proof of identity can be any statutorily issued photo identity like passport, Aadhar, driving license, voter card etc. Proof of address can be any of the above with complete and latest address or electricity or land line bill. In case of online demat account opening, the Aadhar address will be considered. In addition, submission of PAN card and cancelled cheque are mandatory for opening demat account.

Importance of having a Demat account

Here are some of the key uses of having a demat account.

1. It facilitates non-physical holding of securities

2. Demat account can hold equities, bonds, ETFs, gold bonds and other securities

3. Corporate actions are automatically executed in demat account

4. One point intimation of change in address, email, mobile to all companies

5. Eliminates risk of physical holdings like bad delivery, mutilation of certificates, loss in transit, forgery, fake certificates etc.

6. Trading shares, holding in demat and bank transfers become one seamless chain if you opt for online trading

7. Demat is also cost effective compared to dealing in physical certificates

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5 Multi-bagger stocks for the next 5-years

multi bagger stocks
by Nikita Bhoota 07/04/2020

The Indian benchmark indices Nifty 50 and Sensex have plummeted 27.8% and 28% respectively from February 28, 2020 to April 03, 2020.  Rise in coronavirus cases in the country as well as at the global level and inability to find a vaccine to treat the epidemic has created panic all over the world.

As per the media reports, India has crossed the mark of 4,400 Covid19 cases. To curb the situation, the Government has announced a 21days lockdown due to which the economic activity and income of the people in the country are adversely affected. However, the Government has announced Rs.1.7lakh cr relief package to support the stressed pockets in the economy.

The investors are liquidating their market investments and ready to book losses in the fear that the market will fall further. However, investors from a long term point of view should act opposite, instead of selling their investments, they should accumulate the stocks with strong fundamentals and with attractive valuations.

Therefore, based on the positive outlook, future growth prospects, and management pedigree of the companies, we have selected the below 5 stocks that could be likely multi-baggers over the period of next 5-years. 

Quess Corp

We are positive on the stock on account of strong financial position, presence of strong promoter group and attractive valuations. The company has not seen any downsizing of temporary headcount by the clients due to spread of Covid 19. Not a single FTE (full-time equivalent) has so far been de-mobilised by clients. In general staffing, clients are retaining headcount in preparation for recovery, while IT staffing is benefitting from ramp-up at captives. The housekeeping business is steady. In staffing as well as FM, tri-partite agreements imply that Quess has on obligation to retain FTEs in the event of down-sizing by clients. However, the early closure of colleges will impact F&B revenues in the short run. We consider the recent correction in the stock to accumulate the stock for the long run. The stock is currently trading at 8.4x FY21EPS.

Year Net Sales (Rs Cr) OPM (%) PAT (Rs Cr) EPS (Rs) PE (x)
FY19 8,527 5.40% 256 17.3 12.7
FY20E 11,015 6.20% 115 7.8 28.2
FY21E 12,867 6.40% 388 26.2 8.4

Source: 5paisa Research

Tata Consumer Products

We are positive on the stock on account market share gains and new launches. Market share gains in India tea are mainly from regional and local players. The company commands 20% market share in tea segment in India.   Moreover, it will also benefit owing to the shift from unorganized to organized sales on the back of premiumisation, strong marketing campaigns (Jaago Re) and higher sales of new variants (Elaichi, Masala, Agni). The increasing trend of Specialty, herbal teas in international market (US, UK, Canada) will also drive future growth. Thus, we expect revenue CAGR of 6.8% over FY19-21E. We expect EBITDA CAGR of 18.5% over FY19-21E due to to favorable commodity prices and improvement in margin of coffee business. We expect PAT CAGR of 15.9% over FY19-21E. The stock is currently trading at 30.7x FY21EPS.

Year Revenue (Rs cr) OPM (%) Net Profit (Rs cr) EPS (Rs) PE (x)
FY19 7,251 10.8 408 6.5 41.3
FY20E 7,521 12.6 463 7.3 36.4
FY21E 8,269 13.3 548 8.7 30.7

source: 5paisa Research

Exide Industries

Exide Industries, a duopoly player, stands to benefit from auto replacement demand recovery, emerging opportunities (solar and e-rickshaws), cost control & minimal capex, and softer lead prices. However, the company will face short term challenges due to the temporary shutdown of manufacturing units and slowdown in the economy due to spread of Covid19. Thus, we see revenue CAGR of 5% over FY19-21E. We expect margins to improve by 120 bps in the same period on lower lead prices and better after market OEM revenue mix. We forecast 9% PAT CAGR over FY19-21E driven by healthy top-line growth (stable replacement demand + recovery in OEM volumes). The stock is currently trading at 10.8x FY21EPS.

Year Net Sales (Rs Cr) OPM (%) PAT (Rs Cr) EPS (Rs) PE (x)
FY19 10588 13.3 844 8.7 14.7
FY20E 10427 14 884 10.4 12.3
FY21E 11592 14.5 1008 11.9 10.8

Source: 5paisa Research

SBI Life Insurance (SBI Life)

SBI Life is India’s largest private life insurer, with an overall market share of 12.2% on a retail APE basis. The company has a product mix of participating, non-participating and linked policies, with the mix skewed towards linked products. Unlike peers, for which growth is largely driven by one or two product segments, SBI Life has delivered industry leading growth across protection, non-par annuity and guaranteed return products as well as ULIPs, defying the weak sentiment in the capital markets. We believe that it could continue to surprise the street positively via resilient growth in uncertain times driven by a strong distribution franchise and mass customer base. We expect 17.3%/25% EV/VNB CAGR over FY19-21E. The stock trades at 2x FY21E P/EV.

Year New Premuim Income (Rs Cr) VNB (Rs Cr) VNB margin (%) PAT (Rs Cr) EV per share P/EV (x)
FY19E 32,890 1,720 17.70% 1,326 224 2.7
FY20E 43,076 2,169 19.00% 1,659 262 2.3
FY21E 52,550 2,695 20.00% 2,102 308 2

Source: 5paisa Research

Deepak Nitrite (DNL)

We expect strong topline growth of 29.2% CAGR over FY19-21E driven by growth in the Basic Chemicals and the Fine & Specialty segments. Downstream derivatives of phenol and acetone should start contributing to growth from FY21E. The company continues to invest in R&D, and efforts are underway to launch new fine & specialty chemicals that are agrochemical and pharma intermediates. Further, Management expects DNL to benefit from the unfortunate outbreak of the novel coronavirus, which will likely accelerate the search for non-China suppliers. EBITDA margins are expected to improve 450 bps over FY19-21E due to continuous strength in basic chemicals, Fine and Specialty chemical segment and products business. We see PAT CAGR of 70.2% over FY19-21E. The stock is trades at 10.3x FY21E EPS.

Year Net Sales (Rs Cr) OPM (%) PAT(Rs Cr) EPS(Rs) PE(x)
FY19 2,699 15.3 173 12.7 29.9
FY20E 4,270 23 560 41.1 9.2
FY21E 4,505 19.8 501 36.7 10.3

Source: 5paisa Research

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Covid 19: A pain for Summer Stocks

summer stocks
by Nikita Bhoota 12/05/2020

As the temperature begins to rise, the experts generally recommend investors to buy stocks of companies associated with air conditioners, cooling systems, consumer durables and tours & travel that normally see an uptrend between March and June. Some of the other categories that benefit from a harsh summer include makers of talcum powders, ice creams, juices, fruit and aerated beverages, deodorants etc.

However, this year the scenario seems to be opposite. The demand for consumer durable goods, ice creams and beverages are shattered. The spread of coronavirus (Covid19) disease all over the world and in India has resulted in shutting down the manufacturing activities in the country.  Also, the consumers of beverages and ice creams are recommended not to consume these products to curb the spread of Covid19. Similarly, the aviation and hotel industry are not allowed to carry on their operations. Thus, the market performance of stocks associated with manufacturing and services like consumer durables, beverages and tours and travels will be adversely affected.

Company Name

2-Mar-20

8-May-20

Gain/ Loss

Indian Hotel

133.6

67.5

-49.5%

Mahindra Holidays

214.1

125.8

-41.3%

Bluestar

809.4

478.2

-40.9%

Vadilal Industries

774.3

494.3

-36.2%

Varun Beverages

804.9

619.6

-23.0%

Voltas

663.2

456.6

-31.2%

Symphony

1,291.6

829.6

-35.8%

Emami

258.4

182.3

-29.4%

Pidilite

1,529.0

1,367.4

-10.6%

Source: BSE

Indian Hotel

Covid-19 outbreak and the control measures introduced by the Centre have resulted in a severe drop in foreign and domestic travel, across both the tourism and business traveller segments. As per the Media reports, the hotels’ sector witnessed a decline of more than 65% in occupancy levels in the third week of March 2020 as compared to the same period of the previous year. Indian Hotel is the major brand in hotel sector in India. The stock price have declined 49.5% from March 02, 2020 to May 08, 2020.

Mahindra Holidays

Mahindra Holidays has over 55 resorts in India and 52 internationally, with over 2.51 lakh members. Due to complete lockdown in the country, the business of the company will be highly impacted. The company had suspended the operations in most of the resorts for the time being till 31st March, 2020. The stock price has tumbled 41.3% from March 02, 2020 to May 08, 2020.

Bluestar

Blue Star stock slips 40.9% on halting operations due to the COVID-19 outbreak. Blue Star is an air-conditioning and commercial refrigeration company. The company conducts various activities, such as electrical, plumbing and fire-fighting services. Its segments include electro-mechanical projects and packaged air conditioning systems, and unitary products.

Vadilal industries (VIL)

A harsh summer bodes well for ice-cream makers like Vadilal. However, this year the spread of Covid 19 has affected the consumption and production activity of the company. VIL operates in two major segments – ice cream, under the brand name Vadilal and processed food, under brand name Quick Treat. Ice-cream brand Vadilal has a legacy of 100+ years. It has a strong presence in north, west and east India.

Varun Beverages

PepsiCo India's bottling partner stock was down 23% as the production and distribution facilities have been temporarily shut down and will be operated as per the local guidelines. Varun Beverages is one of the largest franchisees in the world (outside the USA) for PepsiCo. The company has operations across 17 states and two union territories in India. The manufacturing footprint is well spread out and includes 17 units in India and four production facilities in international markets. Products manufactured by Varun Beverages include carbonated soft drinks - Pepsi, Mountain Dew, Seven Up, Mirinda; non-carbonated beverages - Tropicana Slice, Tropicana Frutz; and bottled water - Aquafina.

Voltas

Voltas, a Tata Group company founded in 1954, has successfully evolved from a refrigeration and air-conditioning company into a fully-fledged mechanical, electrical and plumbing (MEP) contractor. The company’s key offerings include heating, ventilation, air-conditioning and refrigeration (HVAC&R) solutions, turnkey electromechanical projects (EMP), and room AC products. The stock plummeted 31.2% from March 02, 2020 to May 08, 2020 due to covid19 impact.

Symphony

The heatwave is likely to be more towards the central and northern parts of India as per the IMD, and Symphony could be a major gainer as it is more into the cooler segment than the air conditioner. It also has a very good brand recall. However, this summers will get impacted by lockdown in the country. The Symphony management has said consumer footfalls dropped sharply in March, as malls, modern retail formats and small dealers in small towns started shutting operations. Transport and inland logistics services are disrupted. Even the e-commerce platform has stopped delivering non-essentials. Symphony is the leading manufacturer of evaporative air coolers in India, with a value market share of ~50% in the organized market.

Emami

Emami’s April- June quarterly volume growth likely to get impacted this summer due to the spread of Covid19.  Summer portfolio sales for products like Navratna Cool Oil, Talc and HE deodorant which contribute about 25% to the total portfolio on annualised basis may be impacted. The Emami Group is one of India’s leading consumer-goods companies, with a presence in niche categories such as ‘cooling oils, pain balms and antiseptic creams, with no competition from MNCs so far. The company also markets men’s fairness creams and ayurvedic OTC medicines.

Pidilite

Pidilite has a product that needs to be applied to roof and walls so that the walls absorb heat.  The halt on construction, repairs and maintenance activity in the country will impact the financial numbers of the company. The company’s product range includes adhesives and sealants, construction and paint chemicals, automotive chemicals, art materials, industrial adhesives, industrial & textile resins, and organic pigments and preparations. Consumer products form nearly 80% of Pidilite’s sales consisting of adhesives, construction and plant chemicals and art materials. Pidilite shares are down 10.6% from March 02, 2020 to May 08, 2020.