The New Age Stock Brokerage - Buy Stocks Online
Digitization seems to be the word of the decade. All the moves by numerous organizations and governments around the globe seem to be either a step toward digitization or partially to influence digitization. The stock markets aren’t aloof from such influential and substantial changes. In fact, gone are the days when trading activities were conducted under a tree. However, for a longer time duration, trading in the stock market was carried out over phone calls. The brokers and the marketers used technology for assistance. However, the help from technology was limited to end users of the market. Let’s look at the new age of stock brokerage—the online world.
What is online trading?
Nowadays, you can buy anything and everything online. So why not your investments? With the help of the internet, you can invest in stock market, commodities market, forex, crypto currencies and much more.
What the online world and technological advancements have to offer?
With the help of RSS feeds, you are equipped with myriad information. Thus, you have the option to invest from the comfort of your home, sitting on your couch while sipping hot coffee. However, technology is ever-evolving and it won’t stop until you are utmost relaxed. Thus, comes the next logical step in the technological revolution: mobile based apps. These apps enable you to trade in the stock market on the go. You no longer need a computer to invest in the stock market, you just need an internet-enabled smartphone. The upcoming versions of the apps would allow you to even invest in initial public offerings (IPOs), Mutual Funds, fixed rate instruments such as non-convertible debentures and company deposits. You get the option to SIP your way into a stock market without having to invest in mutual funds with these apps.
The benefits of online investment
Online investments have made life simpler. Processes have now become faster. Instant trading has been facilitated due to internet banking and Demat accounts. In fact, internet banking simplifies trading transactions with features like NEFT and IMPS. The online world connects you with every nook and corner of the world. Thus, trading in global share markets, like Dow Jones or NIKKEI, is also facilitated and further simplified with online trading. Additionally, your go-to information sources, that is newspapers, have been replaced with online articles, blogs, videos, PowerPoint presentations etc. Thus, you could learn about the investing world and then invest. You have the opportunity to make informed decisions because of the internet and the online world.
To sum it up
Online trading provides you access to numerous tools that help you estimate your financial health and make financial decisions. You get the option to monitor investments in real time. Online trading presents you with more control and flexibility. So what are you waiting for? Get your own online trading account now and start investing!
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IPOs Are Great Investments
Initial Public Offering (IPO) is when a private company owner lists his company on the market for the very first time. It can be an exciting offer as you get to invest your money in a new idea and get the shares of the company in return. Contrary to the popular belief of it not being a good investment option, it is among the ones that can give you highest returns if chosen correctly. So, let’s first understand what is an IPO and how becomes a profitable investment option.
When do companies go public?
IPOs are issued when smaller companies are seeking funds to expand their businesses and hence invite investors to provide capital to them. The investors are then given the shares on the company which is in proportion to the capital they invest. Since the public or the general investor is directly involved, it helps boost the company’s brand image as well.
What are the various IPO issue types?
The company that goes public can issue in broadly two types:
1. Fixed Price
This is simple and just like the name suggests, the price of the shares are fixed. The company offering IPOs decide the price well in advance and you as an investor get no say in it. You need to buy the shares at the fixed rate decided by the company.
2. Book Building Issue
This is used when the company does not want a specific price set on the security. In cases like these, they offer a price range to the investors. Contrary to the previous type, here you can bid your price anywhere in the given range. This offers more flexibility to the investor.
Advantages of IPOs to the investors
IPOs present a variety of benefits to the investors. These include:
1) The initial stocks are only available to those who are alert and knows about it
2) The prices are on the lower side
3) The prices might shoot up once the company starts picking pace and hence buying IPOs could mean getting those prospective positive shares at low rates
4) If you wish to sell some shares once the company has made profit, you would not only get back your investment but also a significant amount of profit in terms of dividends or capital gains
5) As you own the share of the company, depending on the portion of the stake, you get a chance to attend and have a say in the Annual General Meetings
Benefits for the company
IPOs are a profitable proposition from the company standpoint as well.
1) With more shares made public, it gains the trust of investors in the market
2) Listing on the bourses can enhance the credit rating of the company
3) It can attract top talent and resources as it now offers the stock options to the stakeholders
4) Executive’s wages are adjusted with the promise of cashing it out with the IPO late
To sum it up
Investing in IPO is like playing dart and not carrom. Here, you can’t invest your funds in any and every pocket (IPO) that is closest or convenient. You need to focus instead on the ones that you are confident about and aim for the bull’s eye for the best returns. You might have to wait sometimes, but it is definitely worth the wait!
5 Large-Cap Stocks For Investment
Large-cap stocks also popularly known as Blue-chip stocks is the one with large market capitalization. These stocks are safe and less volatile as compared to mid-cap and small-cap stocks. However, with a lot of options available, and in such an expensive market where Nifty has crossed the 10000 mark for the first time, picking up the right large-cap stocks for investment is a real challenge. Mentioned below are some of the large-cap stocks that are good for long-term investment bets.
HDFC Bank is the largest private sector bank in India in terms of loan book. The Bank has a customer base of ~4 cr with a network of 4,715 branches as of 31st March 2017. Retail & wholesale business forms are ~53% & ~47% of its loan mix respectively. Its CASA ratio is comparatively better than its peers (~48% as on Q1FY18). The rising proportion of high yielding retail segment is likely to increase the NIMs from 4.2%-4.5% over FY17-FY19E. HDFC Bank has registered ~21% loan book CAGR over past 3 years to ~Rs 5.46 lakh cr as of FY17. It is expected to grow at a similar run rate of ~21% CAGR over FY17-FY19E led by diversified product mix and strong branch network. It is expected to register ~19% PAT CAGR over FY17-FY19E as a result of improving advances and better loan mix. The company’s GNPA and NNPA ratio stands at 1.2% and 0.4% as on Q1FY18. We expect an upside of 20% from CMP of Rs 1,787 over next 12 months.
Source: 5paisa research
Larsen & Toubro
L&T is India’s largest engineering and construction company with no real competitors when compared to breadth and strength of their offerings. We expect the revenue CAGR of 12% over FY17-FY19E on account of strong order book and pickup in domestic investment cycle particularly in defence, infrastructure and power sector. The company has a total order book of Rs 2,61,300 cr which provides strong revenue visibility for the next 2 years. EBITDA is expected to grow at 14% CAGR over FY17-FY19E due to L&T’s strong efforts to scale up its high margin hydrocarbon business and better product mix. We estimate PAT CAGR of 11% over FY17-FY19E. We expect an upside of 19% from CMP of Rs 1,181 over next 12 months.
Source: 5paisa research
* Numbers are adjusted for bonus issue of 1:2 in May 2017
Britannia is an established brand in the Indian food market with strong domestic presence in biscuit segment. It has 33% market share in the biscuit business. The company has recently launched new products such as Tiger Cream, Jim-jam priced at Rs 10, Vita Mariegold, Nutri choice oats milk cookies and Good Day Wonderfulls with three variants in India. Thus, we expect revenue CAGR of 15% over FY17-FY19E. Britannia has tied up with a Greek company with 60% share, Chipita, for the manufacturing and sale of ‘ready to eat’ filled croissants and is expected to be commercialized by Q2FY18E. Britannia is also looking out for potential partnership opportunities for dairy business and biscuit business. EBITDA is expected to grow at 18% CAGR over FY17-FY19E as the company is planning a price hike of ~4% in biscuit segment and increase in product offerings. We expect PAT CAGR of 17% over FY17-FY19E. We expect an upside of 18% from CMP of Rs 3,870 over next 12 months.
Motherson Sumi Systems Ltd (MSSL)
Motherson Sumi Systems Limited (MSSL) - flagship company of the Samvardhana Motherson Group, is a joint venture between Samvardhana Motherson International Limited (SMIL) and Sumitomo Wiring Systems, Ltd., Japan (SWS). The standalone company- MSSL is India’s largest manufacturer of automotive wiring harnesses. Through its subsidiary- Samvardhana Motherson Reflectec (SMR); MSSL is present in rearview mirrors market for passenger cars and has a 24% global market share. It’s other subsidiary, Samvardhana Motherson Peguform (SMP), manufactures IP modules, door trims and bumpers for European OEMs. SMRPBV’s (JV between MSSL and SMIL)’s order book at EUR 12.9bn (FY17) provides strong revenue visibility in the coming years. In addition, acquisition of PKC Group (Finland), a truck wire maker company will also aid revenue growth as it widens MSSL’s customer base and increases cross-selling opportunities. We estimate revenue CAGR of 21% over FY17-FY19E. We expect EBITDA CAGR of 22% (FY17-FY19E) led by margin improvement in SMP (51% of the total sales) as its low-margin legacy orders have started phasing out. The company is de-risking its business by aiming that no country, customer or component should contribute more than 15% of the sales. We expect PAT CAGR of 22% over FY17-FY19E. We expect an upside of 19% from CMP of Rs 319 over next 12 months.
Source: 5paisa research
* Numbers are adjusted for bonus issue of 1:2 in May 2017
Reliance Industries is one of the leading private sector companies in India. The company derived 64% of its total revenue from refining business, 23.5% from petrochemicals and rest from oil & gas and retail business in FY17. Reliance has rapidly grown its broadband business (4G) and has reached a customer base of 125 million vs 108 million in March 2017. Additionally, in petrochemicals, it has doubled its PX capacity from 1.9 MMT to 3.77 MMT making it world’s second largest producer of PX with 11% global market share. Further, Reliance’s USD 18.5 billion projects (pet coke gasification, polyester expansion, off-gas cracker and ethane sourcing) are on the completion stage which will improve the returns and cash flows going forward. Retail re-opening of 1441 fuel outlets is also in the last stage and is projected to be completed by Q2FY18E. Thereby, we expect revenue CAGR of 15% over FY17-FY19E. EBITDA is expected to grow at 17% over FY17-FY19E due to firm margin outlook in refining and petrochemicals business supported by delay in capacity additions in the US. Gross Refining Margin (GRM) is expected to be at $12/barrel by FY19E. However, PAT is expected to remain flat due to loss in telecom business. We expect an upside of 18% from CMP of Rs 1,592 over the next 12 months.
Source: 5paisa research
* Numbers are not adjusted for bonus issue of 1:1 in July 2017
Best Investment Options for Fixed Returns
The financial needs and priorities of every individual are different. Also, the risk taking ability of every individual differs. Some individuals might have a higher risk appetite, while some may not be willing to take any risk at all. For individuals who have a low risk appetite, fixed return products suit them the best.
Here are some of the smart investment options for fixed returns:
Fixed deposits are offered by banks at attractive interest rates. FDs are offered to investors for a period as low as 7 days up to 20 years. Fixed deposits offer higher returns than a savings bank account. At present, FDs are giving a return of 6-6.75%. The returns vary from one bank to another.
Bonds are loans which an individual makes to the government and large organisations. The government and companies issue bonds in order to raise money. The principal amount along with the interest is given back to the investor at a future date as per the agreement between the two parties. A lot of people are under the wrong impression that one cannot sell bonds until maturity. However, one can buy and sell bonds in the open market. At present, bonds are giving an interest rate of 7-7.5%.
Public Provident Fund
Public Provident Fund (PPF) is a type of investment which is provided by the Government of India. PPF comes with a lock-in period of 15 years. The rate of return provided on PPF changes as per government policies. At present, PPF is providing a return of 8.1%. Amount invested in PPF is also eligible for a tax deduction under section 80C of the Income Tax Act.
National Savings Certificate
NSC are bonds issued by the government for small savings and one can purchase these bonds from post offices. The interest rate on NSC is decided by the government every year. It is linked to the yield of 10-year government bonds. The current interest rate is 8%. The lock-in period for NSC is 5 years.
Best Performing Tax Saving Mutual Fund for 2016-17 - DSP BlackRock
With the financial year end coming closer, a lot of people are seeking financial advice from tax planners and chartered accountants in order to save as much tax as they can. Equity linked savings scheme (ELSS) is considered to be the best tax-saving mutual fund and it has given exceptional returns over the years. While there are a lot of tax-saving mutual funds available in the market, only a few have managed to attract the attention of investors by giving higher returns. One such fund is DSP BlackRock Tax Saver Fund.
Launched in the year 2007, DSP BlackRock Tax Saver Mutual Fund has given returns of 13.83% since its inception. The primary objective of this scheme is to generate medium to long-term capital appreciation from a diversified portfolio that is substantially constituted of equity and equity related securities of corporates, and to enable investors avail of a deduction from total income.
DSP BlackRock Tax Saving Mutual Fund has outperformed its benchmark Nifty 500 and its category returns over a 7-year period.
|Trailing Returns (%)|
*Source: Ace equity
The fund is managed by Rohit Singhania and the total assets under management of the fund stand at Rs. 1,494 crore as on 31st December, 2016. Majority of the fund’s corpus i.e. around 75% is invested in large-cap stocks. As far as the sector allocation is concerned, the fund has a higher exposure to the banking sector. The fund comprises a total of 68 stocks in its portfolio. There is no exit load that one has to bear if he chooses to redeem his investments.
While DSP BlackRock Tax saving Mutual Fund has been performing consistently over the last few years, it is advisable for investors to consult their financial advisors before making any investment decision. It is very important that the objective of fund should align with individual risk profiles.
Invest in Mutual Funds only after knowing the Basics
Mutual funds have become a popular investment over the last few years. Mutual funds give an investor a lot of exposure to different sectors and industries without letting him pick an individual stock. Mutual fund is an appropriate investment option for a common man as it offers a diversified and professionally managed portfolio of securities at a relatively lower cost. However, it is very important to know the basics before investing in a mutual fund, which will help you make better investment decisions.
What are the different types of mutual funds?
Mutual fund schemes vary based on their structure and investment objective. - By Structure
Open-Ended Mutual Funds
An open-ended fund is the one which is open for subscription throughout the year. An investor can buy and sell the units anytime as per the net asset value (NAV) at that time. Also, these funds do not have a fixed maturity period.
Closed-Ended Mutual Funds
A close-ended fund is the one which is not open for subscription throughout the year. An investor can invest in such funds only during the new fund offer (NFO). Thereafter, they can buy and sell the units after the fund is listed on the Bombay Stock Exchange (BSE).
- By Investment Objective
Growth Mutual Funds
Growth funds are for investors who want to invest for a longer period of time. These funds aim to provide capital appreciation over medium to long term. Majority of the corpus of such schemes is invested in equity.
Income Mutual Funds
As the name suggests, the aim of income funds is to provide a regular income to its investors. These schemes usually invest in fixed income securities like bonds and government securities. As these funds invest in fixed income securities, risk is lower than that in a growth fund.
Balanced Mutual Funds
A Balanced funds aim to provide both growth and regular income to its investors. These funds invest a part of their earning in both equity and fixed income securities. These funds are ideal for investors who are looking for a combination of regular income and growth.
What are the different plans that mutual funds offer?
Mutual funds offer two investment options - growth option and dividend option.
Growth Option in Mutual Fund
Under the growth option, all profits made by the fund are invested back into the scheme. An investor does not receive any intermediate payments in the form of bonus and dividends. An investor gets returns only on selling the units, which is determined by the net asset value (NAV) of the scheme. Under growth option, the NAV of the fund increases over a period of time which helps in capital appreciation, thereby giving you more returns.
Dividend Option in Mutual Fund
Under the dividend option, an investor receives regular income at periodic intervals in the form of a dividend. In this option, whenever the NAV of the fund reaches a certain level, the fund distributes the profit to its investors as dividend. Hence, the NAV of the fund does not change drastically at the time of selling the units. Also, the power of compounding is less in the dividend option.