Nifty 18210.95 (-0.31%)
Sensex 61143.33 (-0.34%)
Nifty Bank 40874.35 (-0.88%)
Nifty IT 35503.9 (0.97%)
Nifty Financial Services 19504.75 (-0.74%)
Adani Ports 745.85 (-0.54%)
Asian Paints 3094.65 (4.20%)
Axis Bank 787.50 (-6.46%)
B P C L 427.70 (-0.78%)
Bajaj Auto 3776.50 (-0.40%)
Bajaj Finance 7482.15 (-4.75%)
Bajaj Finserv 18012.00 (-1.86%)
Bharti Airtel 702.35 (0.88%)
Britannia Inds. 3697.85 (0.14%)
Cipla 922.50 (1.65%)
Coal India 173.60 (-0.83%)
Divis Lab. 5149.35 (2.60%)
Dr Reddys Labs 4662.70 (-0.08%)
Eicher Motors 2583.90 (-0.25%)
Grasim Inds 1728.40 (-0.63%)
H D F C 2915.00 (0.12%)
HCL Technologies 1177.15 (0.89%)
HDFC Bank 1642.80 (-0.60%)
HDFC Life Insur. 693.85 (0.55%)
Hero Motocorp 2690.15 (-0.38%)
Hind. Unilever 2396.60 (-1.65%)
Hindalco Inds. 479.85 (-1.28%)
I O C L 130.80 (-0.53%)
ICICI Bank 835.00 (0.68%)
IndusInd Bank 1142.55 (-1.07%)
Infosys 1728.95 (1.48%)
ITC 238.45 (0.74%)
JSW Steel 684.90 (-1.36%)
Kotak Mah. Bank 2188.25 (-1.03%)
Larsen & Toubro 1784.55 (-0.65%)
M & M 886.80 (-0.87%)
Maruti Suzuki 7356.25 (0.81%)
Nestle India 19004.60 (-1.11%)
NTPC 141.30 (-1.33%)
O N G C 157.90 (-3.19%)
Power Grid Corpn 190.25 (-0.08%)
Reliance Industr 2627.40 (-1.26%)
SBI Life Insuran 1186.00 (1.19%)
Shree Cement 28107.75 (1.19%)
St Bk of India 519.15 (1.29%)
Sun Pharma.Inds. 825.10 (1.43%)
Tata Consumer 818.75 (1.22%)
Tata Motors 497.90 (-2.11%)
Tata Steel 1326.15 (-1.30%)
TCS 3489.75 (0.21%)
Tech Mahindra 1567.85 (0.29%)
Titan Company 2460.10 (0.22%)
UltraTech Cem. 7354.20 (1.17%)
UPL 741.50 (3.96%)
Wipro 671.10 (0.44%)

How to Trade Stocks Online?

How to Trade Stocks Online?
by Nutan Gupta 21/06/2017
New Page 1

Illustration: Two friends, Anil and Neeraj, who also happen to be colleagues, live vastly different lifestyles. While Anil struggles to make ends meet with his salary, Neeraj enjoys a growing bank balance. This is due to the fact that he is proficient in stock trading online and through it, enjoys a second source of income.

Observing his financial success, Anil seeks to enter the online stock market. However, he has zero knowledge in this area. As a beginner, how can he start investing and trading in the Indian stock market online?

This is a common dilemma among young professionals today, who look towards building their wealth through diverse means, online stocks being the favorite one.

The Basics of Online Trading

Stocks are the ownership of a company, broken down into small parts, thus, anyone with a stock of a company has part ownership of that company. If you wish to trade stocks online, then start by opening a Demat Account (for storing your shares in an electronic form) and Trading Account (to place orders for the buying and selling of stock options).

All your shares will be shown systematically in your Demat account, so you don’t need to carry physical share certificates.

As far as India is concerned, BSE (Bombay Stock Exchange) and NSE (National Stock Exchange) are the two big players where a major chunk of stock trading takes place.

Stock Up on Your Knowledge

To understand the workings of any stock market, it is important that you learn as much as you can.

These days, books, as well as various online sites and seminars provide a wealth of information for online stock trading. It proves to be a big help in learning the various features and tools of this dynamic platform. Books like ‘How to Make Money in Stocks’, ‘Market Wizards’, ‘Trade Your Way to Financial Freedom’, ‘The Intelligent Investor’ etc. are a great way to get a crack at the financial market.

Before opening an account, be sure that you know what you’re getting into. Share market is not for earning a quick buck or a get-rich-overnight scheme. It demands hard work and a lot of planning to achieve a monetary return.

After all, as Benjamin Franklin said, "An investment in knowledge pays the best interest."

Practice Your Trade

As soon as you feel comfortable with the market, start practicing by investing in small denominations. By doing this, you get a practical knowledge of the market workings and can start towards bigger investments.

For beginners, it is advised that they keep their investments diversified. Investing in a broad range of financial instruments lessens the risk of losing it all in one go. Eventually, with experience, you can calculate your risk/reward and invest accordingly.

Stay Updated with the Market

It is of utmost importance to keep a pulse on the market happenings to protect your investment interests. Financial news sites are a great source of current market trends and help you to monitor the markets each day.

Due to online trading, there is no need to depend on any trader or broker for buying and selling your stocks. It is convenient and you rely on your own intellect to make investment decisions. All in all, it is a good way of creating your own wealth.

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How a SIP works more for you than an EMI?

How a SIP works more for you than an EMI?
by Nutan Gupta 21/06/2017
New Page 1

With increasing space and time crunch in cities and suburbs, four walls and a roof for a sound sleep is what a common man yearns for. The want for having something that is yours is fairly justified. A young investor buys a home for his family and acquires a vehicle to drive around, mostly covered by a loan with an EMI (Equated Monthly Installment). But, EMIs are potentially detrimental to one's mental satisfaction. Also, there are other schemes that provide a much better rate of return than the asset acquired under an EMI.

One scheme that could work in your favor, more than an EMI does, is the SIP. SIP (Systematic Investment Planning) is nothing but a specified amount that is invested in a scheme for a continuous time period, at regular intervals.

Analyzing the Idea

The fundamental here is clear and simple; EMI is negative compounding, while SIP is positive compounding. For starters, it is to be understood that towards the end of your loan EMI period (which is usually a few years), you actually end up paying a significant amount more than what the asset's actual worth was. The difference in between both these investment systems can be elaborately explained by a simple example.

Let us imagine you have an EMI tenure of 20 years, of which Rs 20,000 is your EMI. Also, assume that the loan amount would be 80% of the house's purchase price (20% down payment by the buyer), all at an interest rate of 10.5%. Calculating, we see that the interest payable goes up to Rs 27,90,000. The total payable amount, against the Rs 20 lakh loan amount, shoots up to a significant Rs 47,90,000. Basically, one is paying back more than double of what he's borrowing. Taking in all the aspects, assume the value of the asset 20 years later may be somewhere around 5 times the current value, which would be Rs 1.25 crore.

In an alternative scenario, you decide to invest your money in SIP. Let us say you live in a rented flat costing you Rs 9000 rent per month. Comparing with the provisions above, you would still have Rs 11,000 to invest in a SIP. Assume that the general inflation rate of 6-7% and the increasing rent is checked by other factors. At an expected return of 15%, calculations for the period of 20 years showcase the return to be Rs 1.7 crore. Against the invested Rs 26.4 lakh, your net wealth gain will be Rs 1.4 crore (excluding rent payment of the rented flat).

 

Asset Bought Through Loan

SIP

Down Payment

Rs 5 lakh

-

Monthly Installments

Rs 20,000

Rs 11,000

Loan Amount

Rs 20,00,000

-

Rent

-

Rs 9,000 (with 5% yearly increment)

Total Investment

Rs 52,90,000

Rs 48,75,000 (Including rent payment of the rented flat)

Expected Rate of Return

Five times the current value

15%

Returns After Time Period

Rs 1.25 crore

Rs 1.7 crore

Observed Wealth Gain

Rs 72,10,000

Rs 1,21,25,000

Summing It Up

The table above speaks about SIP and its benefits at a length. The observed wealth gain does show a huge gap in investment through SIP and asset bought through loans. It would, hence, seem wiser to be on the more patient side. With a longer term vision, SIPs provide unmatchable returns, which would further help you once you enter the post-retirement stage.

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5 Stocks Recommendation For Feb 25th, 2019 – Mar 1st , 2019

Stock recommendations
by Gautam Upadhaya 21/07/2017

1) Balkrishna Industries Ltd - Buy

 

Stock Balkrishna Industries Ltd
Recommendation The stock has witnessed a breakout from its sideways consolidation
backed by an uptick in volumes on the daily chart. It has also shown
positive momentum on the daily MACD-Histogram, an indication that
the uptrend will continue in the short term.
Buy/Sell Range Target Stop Loss
Buy (Cash) Rs850-855 Rs892 Rs827
NSE Code Market Cap (in Rs cr) 52-week high/low 200-Day EMA
BALKRISIND 16543 Rs1467/741 Rs987

 

2) REC Ltd - Buy

 

Stock REC Ltd
Recommendation The stock has witnessed a consolidation breakout backed by an uptick
in volumes on the weekly chart. Derivative data indicates fresh long
positions in the stock.
Buy/Sell Range Target Stop Loss
Buy (Cash) Rs131-133 Rs139 Rs127.8
NSE Code Market Cap (in Rs cr) 52-week high/low 200-Day EMA
RECLTD 26068 Rs148/89 Rs119

 

3) Mahindra & Mahindra Ltd - Buy

 

Stock Mahindra & Mahindra Ltd
Recommendation The stock has witnessed a rounding bottom formation and has managed
to close above its 10-DEMA, short-term resistance level on the daily charts.
It has also formed a bullish hammer candlestick on the weekly charts.
Buy/Sell Range Target Stop Loss
Buy (Cash) Rs641-647 Rs672 Rs625
NSE Code Market Cap (in Rs cr) 52-week high/low 200-Day EMA
M&M 80272 Rs992/615 Rs771

 

4) Raymond Ltd - Buy
 

Stock Raymond Ltd
Recommendation The stock has witnessed a breakout above its resistance levels backed by an uptick in volumes on the daily charts. It has also shown strong momentum on the daily MACD-Histogram.
Buy/Sell Range Target Stop Loss
Buy (Cash) Rs721-728 Rs755 Rs705
NSE Code Market Cap (in Rs cr) 52-week high/low 200-Day EMA
RAYMOND 4478 Rs1151/593 Rs806

 

5) HDFC Bank Ltd - Sell

 

Stock HDFC Bank Ltd
Recommendation The stock has formed a bearish engulfing candlestick pattern backed by an uptick in volumes on the daily chart. Derivative data indicates fresh short positions in the stock.
Buy/Sell Range Target Stop Loss
Sell (March Futures) Rs2105-2120 Rs2030 Rs2164
NSE Code Market Cap (in Rs cr) 52-week high/low 200-Day EMA
HDFCBANK 569029 Rs2219/1830 Rs2041

 

Research Disclaimer

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Short Put Options Trading Strategy

Short Put Options Trading Strategy
by Nilesh Jain 02/08/2017

What is short put option strategy?

A short put is the opposite of buy put option. With this option trading strategy, you are obliged to buy the underlying security at a fixed price in the future. This option trading strategy has a low profit potential if the stock trades above the strike price and exposed to high risk if stock goes down. It is also helpful when you expect implied volatility to fall, that will decrease the price of the option you sold.

When to initiate a short put?

A short put is best used when you expect the underlying asset to rise moderately. It would still benefit if the underlying asset remains at the same level, because the time decay factor will always be in your favour as the time value of put will reduce over a period of time as you reach near to expiry. This is a good option trading strategy to use because it gives you upfront credit, which will help to somewhat offset the margin.

Strategy Short Put Option
Market Outlook Bullish or Neutral
Breakeven at expiry Strike price - Premium received
Risk Unlimited
Reward Limited to premium received
Margin required Yes

Let’s try to understand with an Example:

Current Nifty Price 8300
Strike price 8200
Premium received (per share) 80
BEP (strike Price - Premium paid) 8120
Lot size 75

Suppose Nifty is trading at Rs. 8300. A put option contract with a strike price of 8200 is trading at Rs. 80. If you expect that the price of Nifty will surge in the coming weeks, so you will sell 8200 strike and receive upfront profit of Rs. 6,000 (75*80). This transaction will result in net credit because you will receive the money in your broking account for writing the put option. This will be the maximum amount that you will gain if the option expires worthless. If the market moves against you, then you should have a stop loss based on your risk appetite to avoid unlimited loss.

So, as expected, if Nifty Increases to 8400 or higher by expiration, the options will be out of the money at expiration and therefore expire worthless. You will not have any further liability and amount of Rs. 6000 (75*80) will be your maximum profit. If Nifty goes against your expectation and falls to 7800 then the loss would be amount to Rs. 24000 (75*320). Following is the payoff schedule assuming different scenarios of expiry. For the ease of understanding, we did not take into account commission charges and Margin.

Short Put Options Trading Strategy

Analysis of Short Put Option Trading Strategy

A short put options trading strategy can help in generating regular income in a rising or sideways market but it does carry significant risk and it is not suitable for beginner traders. It’s also not a good strategy to use if you expect underlying assets to rise quickly in a short period of time; instead one should try long call trade strategy.

 

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What are Sensex and Nifty?

What are Sensex and Nifty?
by Nutan Gupta 05/08/2017

Sensex and Nifty are stock market indices which represent Bombay Stock Exchange (BSE) and National Stock Exchange (NSE) respectively.

Sensex - BSE is India’s first listed exchange which was established in 1875. The total companies listed on the exchange are close to around 6000. The total market capitalisation of all the companies listed on BSE is Rs. 1,24,69,879 crore. BSE's popular equity index - the S&P BSE SENSEX - is India's most widely tracked stock market benchmark index. It is traded internationally on the EUREX as well as leading exchanges of the BRCS nations (Brazil, Russia, China and South Africa). BSE Sensex consists of 30 top scrips from different sectors which forms this index. BSE SENSEX is calculated on a free-float market capitalization methodology and the performance of these stocks impact the performance of Sensex.

BSE has recently launched a special platform for trading in SME securities. It has also launched a free float index - S&P BSE Sensex. BSE has a lot of other indices under various categories of Equity and fixed income. Indices under Equity include- Market cap/broad, Sector & Industry, Thematics, Strategy, Sustainability, and Volatility. Indices under Fixed income include - Composite, Government, Corporate, and Money Market.

Nifty - NSE began its operations in the year 1994. Nifty consists of 50 top scrips from different sectors which forms this index. NSE has a lot of other indices under various categories - broad market indices, sectoral indices, strategy indices, thematic indices and fixed income indices. The total market capitalisation of all the companies listed on NSE is Rs 12,282,127 crore.

In the year 2016, NSE launched Nifty 50 Index futures trading on TAIFEX. Nifty50 was earlier known as CNX Nifty. It was renamed Nifty50 in the year 2015. NSE has also been felicitated with a lot of awards over the years.

About 5paisa:- 5paisa is an online discount stock broker that is a member of NSE, BSE, MCX and MCX-SX. Since its inception in 2016, 5paisa has always promoted the idea of self-investment and has ensured that 100% operations are executed digitally with minimal to no human interventions. 

Our all-in-one Demat account makes investment hassle free for everyone, be it an individual newly venturing into the investment market or a pro investor. Headquartered in Mumbai, 5paisa.com - a subsidiary of IIFL Holdings Ltd (formerly India Infoline Limited), is the first Indian public listed fintech company.

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Short Call Ladder Options Strategy

Short Call Ladder Options Strategy
by Nilesh Jain 05/08/2017

A Short Call Ladder is the extension of Bear Call spread; the only difference is of an additional higher strike bought. The purpose of buying the additional strike is to get unlimited reward if the underlying asset moves up.

When to initiate a Short Call Ladder?

A Short Call Ladder spread should be initiated when you are expecting big movement in the underlying assets, favoring upside movement. Profit potential will be unlimited when the stock breaks highest strike price. Also, another opportunity is when the implied volatility of the underlying assets falls unexpectedly and you expect volatility to go up then you can apply Short Call Ladder strategy.

How to construct a Short Call Ladder

A Short Call Ladder can be created by selling 1 ITM call, buying 1 ATM call and buying 1 OTM call of the same underlying asset with the same expiry. Strike price can be customized as per the convenience of the trader. A trader can also initiate the Short Call Ladder strategy in the following way - Sell 1 ATM Call, Buy 1 OTM Call and Buy 1 Far OTM Call.

Strategy Sell 1 ITM Call, Buy 1 ATM Call and Buy 1 OTM Call
Market Outlook Significant moment (higher side)
Upper Breakeven Higher Long call strike price + Strike difference between short call and lower long call - Net premium received
Lower Breakeven Strike price of Short call + Net Premium Received
Risk Limited (expiry between upper and lower breakeven).
Reward Limited to premium received if stock falls below lower breakeven.

Unlimited if stock surges above higher breakeven.

Margin required Yes

Let’s try to understand with an example:

Nifty Current spot price (Rs)

9100

Sell 1 ITM call of strike price (Rs)

9000

Premium received (Rs)

180

Buy 1 ATM call of strike price (Rs)

9100

Premium paid (Rs)

105

Buy 1 OTM call of strike price (Rs)

9200

Premium paid (Rs)

45

Upper breakeven

9270

Lower breakeven

9030

Lot Size

75

Net Premium Received (Rs)

30

Suppose Nifty is trading at 9100. An investor Mr. A is expecting a significant movement in the Nifty with slightly more bullish view, so he enters a Short Call Ladder by selling 9000 call strike price at Rs 180, buying 9100 strike price at Rs 105 and buying 9200 call for Rs 45. The net premium received to initiate this trade is Rs 30. Maximum loss from the above example would be Rs 5250 (70*75). It would only occur when the underlying assets expires in the range of strikes bought. Maximum profit would be unlimited if it breaks higher breakeven point. However, profit would be limited up to Rs 2250(30*75) if it drops below the lower breakeven point.

For the ease of understanding, we did not take in to account commission charges. Following is the payoff chart and payoff schedule assuming different scenarios of expiry.

The Payoff chart:

The Payoff Schedule:

On Expiry NIFTY closes at

Payoff from 1 ITM Call sold (9000) (Rs)

Payoff from 1 ATM Calls Bought (9100) (Rs)

Payoff from 1 OTM Call Bought (9200) (Rs)

Net Payoff (Rs)

8600

180

-105

-45

30

8700

180

-105

-45

30

8800

180

-105

-45

30

8900

180

-105

-45

30

9000

180

-105

-45

30

9030

150

-105

-45

0

9100

80

-105

-45

-70

9200

-20

-5

-45

-70

9270

-90

65

25

0

9300

-120

95

55

30

9400

-220

195

155

130

9500

-320

295

255

230

9600

-420

395

355

330

9700

-520

495

455

430

9800

-620

595

555

530

Impact of Options Greeks:

Delta: At the initiation of the trade, Delta of short call condor will be negative and it will turn positive when the underlying asset moves higher.

Vega: Short Call Ladder has a positive Vega. Therefore, one should initiate Short Call Ladder spread when the volatility is low and expects it to rise.

Theta: A Short Call Ladder has negative Theta position and therefore it will lose value due to time decay as the expiration approaches.

Gamma: This strategy will have a long Gamma position, which indicates any significant upside movement, will lead to unlimited profit.

How to manage Risk?

A Short Call Ladder is exposed to limited loss; hence it is advisable to carry overnight positions. However, one can keep stop Loss in order to restrict losses.

Analysis of Short Call Ladder Options strategy:

A Short Call Ladder spread is best to use when you are confident that an underlying security will move significantly. Another scenario wherein this strategy can give profit is when there is a surge in implied volatility. It is a limited risk and an unlimited reward strategy if movement comes on the higher side.