What is IPO in Share Market And Is it Worth Investing in IPOs cover

What is IPO in Share Market? And Is it Worth Investing in IPOs?

Understanding what is IPO in Share Market: Everyone gets excited about new things. The new clothes, new bike, new car, new job, etc always attract the public. Investors are also like ordinary people and hence they are also tempted by the word ‘NEW’. Be it new technology, a new industry or a new company. And hence, listing on new companies in stock market always excites investors.

In this post, we are going to discuss what is IPO in share market and whether it’s worth investing in these new companies which enter the market for the first time.

What is IPO – Initial Public Offering?

When a privately held company offers its shares for the first time to the public, then it is called Initial public offering (IPO). It is a way for companies to enter the stock market. Until a company offers IPO, the public is not able to buy the company’s share.

Before the IPO of a company, its shareholders include limited people like founders, co-founders, relatives, friends and initial investors (like an angel investor, venture capitalist etc). However, after the company offers its IPO, anyone (public, institutional investors, mutual funds etc) can buy the shares of the company.

A few of the popular IPOs listed in the Indian share market in 2021 are Kalyan Jewellers, Craftsman Automation, Ease my trip, Indigo Paints, IRFC, etc.  You can get more details about the latest IPOs in India here.

what is IPO and how do ipo works

What does ‘Going public’ mean?

Going public means that a ‘privately owned company’ is conducting an initial public offer (IPO) to the public in order to enter the stock market as a ‘public company’. In short, when a company is offering an IPO, it is said that the company is going public.

Also read: #27 Key terms in share market that you should know

Why do companies conduct IPOs?

The basic reason why companies issue their shares or go for an IPO is to raise capital or funds.

Stock exchanges facilitate the exchange of shares for capital. The process involves shares being offered, shares being allotted to investors, and finally the shares being listed on an exchange where they can be bought and sold. By doing so companies can get access to a wider pool of investors which includes retail and domestic/foreign institutional investors.

There can be a number of reasons why any company offer an IPO. Here are a few of the top ones:

  1. For a new project or expansion plan of the company
  2. To raise capital (financial benefit)
  3. For carrying out new research and development works
  4. To fund capital expenditures
  5. To pay off the existing debts or reduce the debt burden
  6. For a new acquisition
  7. To create public awareness of the company
  8. For the group of initial investors desiring to exit the company by selling their stakes to the public.

In addition, IPOs generate lots of publicity for the company and hence helps in creating market exposure, indirect exposure, and brand equity.

Why are the Disadvantages of Conducting IPOs?

Here are the few disadvantages for the companies who offer their IPOs:

  1. Public disclosure: When a privately held company offers its IPO, it has to disclose a number of documents to the public like its financials, promoters list, debts etc.
  2. Entering a regulated market: Indian stock market is highly regulated by Securities and exchange board of India (SEBI) and hence the newly public company has to play by the rules of SEBI. There has been a number of cases of companies getting delisted by SEBI as they do not follow the norms of the market.
  3. Market pressure: The companies performance are closely scrutinized by the public and investors. Hence, the company’s management is consistently is pressure. Sometimes the companies focus more on short-term performance over long-term due to market pressure.
  4. Loss of control: As the shares are distributed among the investors, the decision making power is now in the hands of the shareholders.
  5. Failing of IPO: Many companies fail to attract investors during its IPO and the offered shares might remain under-subscribed. In such a scenario, the company is not able to raise enough capital that is expected to achieve the goal of IPO.

Why do most IPOs come in the bull market?

bull market ipo

The promoters of the company sell their stakes only when they are confident of getting a good price. This generally happens only in a bull market. During a bull market, the owners of the company can raise enough fund for their cause as the public is optimistic. People are willing to pay good prices to buy shares of the company.

Why do not many IPOs come in bear market?During bear market, people are pessimistic and are not willing to pay a good price for the shares of a newly public company. The owners feel that they won’t be getting the right price for their shares and hence most owners do not introduce their IPO during a bear market

Also read: What is Bull and Bear market? Stock Market Basics

Who gets MOST Benefits from IPOs?

There is a common myth that the company’s shares are undervalued during its IPO and hence the early subscribers of the IPO feel that they have made a very good deal.

However, IPOs are the by-products of a bull market and they are generally over-priced.

The owner and the initial investors of the company (like angel investors, venture capitalist etc) are the ones who get maximum profits during an IPO as they are able to sell the shares at a good price.

Why are people excited about IPOs?

There are a few common reasons why people are excited about IPOs. They are:

  1. Under-pricing myth: When a company announces its IPO, it’s presumed that the offered price is less than its true value. People are excited about the fact that they are the first one to buy the stock and will be rewarded handsomely when the company’s true price will be realized by the market. However, it’s very rare that the owners will be willingly underpricing the shares.
  2. Herd-mentality: As everyone they know will be applying for the IPO, people do not want to be missed out.
  3. Overhype by media/ underwriters: Media gets a high advertisement fee for the promotion of the IPO. Moreover, IPOs are intentionally overhyped by the investment banker and the underwriters. They make sure that these IPO’s get enough attention as this is their job to promote and sell the shares.
  4. ‘The Next …’ strategy: People compare the upcoming IPO with the Winners in the same industry and conclude that it will perform the same. ‘The next Eicher motors’, ‘The next symphony’, ‘The next Infosys’ etc. This ‘Next’ philosophy makes a lot of people excited about the upcoming IPO.

Is it worth investing in IPOs?

A lot of investors have made huge wealth by investing in IPOs. Had you invested in ‘INFOSYS’ when it got listed, you might have been sitting at a huge pile of wealth today.

Also read:

However, the performance of the majority of the IPOs in the Indian stock market is under-satisfactory. The number of IPOs underperforming in long-term are comparatively quite larger than the number of IPOs that performs well in the market.

Further, IPOs are never priced in the benefits of the public. In the case where few IPOs are fairly priced, it gets a lot of demand from the public during its offerings and gets over-subscribed. Moreover, it soon becomes over-priced once it starts trading in the market. A few IPOs might give you a good return in the one or two months of its listing as they are introduced in the bull market, however, in the long run, their performance is quite poor.

If you are willing to invest in the long-term, then be cautious about investing in IPOs. Focus on the quality of the company, not the hype generated by media or underwriters.

Nevertheless, you can always pick these companies from the secondary market once the hype is over and the price is attractive. There are over 5,000 companies listed in Indian stock market. It’s better if you pick a good one among them than picking the upcoming hyped company.

What is Portfolio Backtesting How to perform it on Indian Stocks

What is Portfolio Backtesting? How to Perform it on Indian Stocks?

Portfolio Backtesting is a strategy used by investors and traders to backtest how a portfolio would have performed if they have invested in a few specific assets during a defined time frame. The results of the portfolio backtesting help investors to create their own strategy (or expectations) while investing with similar assets in an alike situations.

To perform stock research, Portfolio Backtesting is a powerful tool for stock market investors. However, there are very few quality tools available in the Indian market to backtest Indian stock portfolios. In this post, we’ll discuss how to backtest portfolio using the Portfolio Backtesting tool by Trade Brains.

Portfolio Backtesting Tool by Trade Brains

portfolio backtesting 1

Using Trade Brains’ Portfolio Backtesting tool, you can backtest your strategies to find out the returns that you might have got on any past investments. Here, you can test how portfolios would have performed if you’ve invested in different stocks with varied allocations for 5Yrs/10Yrs back, before Demonetization, amid COVID19, or any other desired time frame.

This advance portfolio backtesting feature allows you to build one or multiple stock portfolios based on different allocations and backtest their performance. Moreover, you can find the detailed result and can look into the absolute returns, CAGR, Portfolio growth, Y-O-Y or M-O-M returns in stocks on these portfolios.

Example: How to perform Portfolio Backtesting on Indian Stocks?

In this example, we’ll discuss how much returns you would have got if you’ve invested Rs One Lakh (1,00,000) in four companies Asian Paints, HDFC Bank, Hindustan Unilever (HUL), and Reliance between Jan 2014 to Jan 2019.

The allocations on all four stocks can vary in different portfolios. For example, an equally distributed portfolio will have Rs 25k invested in each stock. On the other hand, you can also give different weightage to some stocks in an unequally distributed portfolio.

portfolio allocation

Let’s backtest the return on these four stocks between 2014 to 2019. Here are the steps to perform Portfolio Backtesting on Indian stocks using Trade Brains Portal:

1. Got to Trade Brains Portal.

2. In the ‘Tools’ section on Top Menu Bar, select “Portfolio Backtesting”. Else, here is the direct link to the Trade Brains’ Portfolio Backtesting tool.

3. Enter the Start Date, End Date, and Initial Amount. For this example:

  • Start Date: 1st Jan 2014,
  • End Date: 1st Jan 2019 and
  • Initial investment amount: Rs 1,00,000

4. Next, allocate funds in different stocks to build your portfolio.

For Portfolio 1 (which is equally distributed), enter (25, 25, 25,25) which means 25% of Rs 1,00,000 allocated equally in each stock. In the other two portfolios take two different uneven allocations. For instance, (40, 40, 10, 10) and (20, 20, 30,30) allocation in stocks for Portfolio 2 and Portfolio 3.

portfolio backtesting 2 - allocations

5. Finally, Click on “Backtest”

After clicking on Backtest, a tabular result will appear that will show how much returns each portfolio would have made. Here is the result for the above example of portfolio backtesting:

portfolio backtesting result trade brains portal

From the above table, you can see that portfolio 1 has given a CAGR return of 18.81% per year. If you have an evenly distributed portfolio with the stocks of Asian Paints, HDFC Bank, HUL, and Reliance invested between Jan 2014 to Jan 2019, your investment amount of Rs 1,00,000 would have appreciated to Rs, 2,36,819.16 by 2019.

Note: You can look into the ‘Analysis’ segment on Trade Brains’ Portfolio Backtesting tool to get more details about the results of your backtest.

Further, please do notice that the second portfolio has given the best returns out of three with a CAGR of 19.81%. This shows that a better allocation can improve the final returns on the portfolio.

ALSO READ

Trade Brains Portal – How to use for Stock Research?

Closing Thoughts

In this post, we discussed what is portfolio backtesting and the exact steps to perform it on Indian Stocks using Trade Brains Portal. If we summarize, portfolio backtesting is a powerful tool to find the historical performance of a bundle of stocks and evaluate how much returns can be expected if a similar portfolio is made. Another important point that we learned from this post is that the returns on a good portfolio can be improved by an efficient allocation of money on different stocks, rather than investing evenly in all.

That’s all for this post. I hope this post was useful to you. If you’ve got any queries related to Trade Brains’ Portfolio Backtesting tool, do let me know by commenting below. I’ll be happy to answer your doubts. Have a great day and Happy Investing.

Why Do Companies Like MRF Don’t Split the Stock cover

Why Do Companies Like MRF Don’t Split the Stock?

Ever wondered why do companies like MRF don’t split the stock? If you check the current market price of MRF Share, it’s hovering at a whopping price of Rs 84,470 per share. Its all-time high for the last 52 weeks is Rs 98,599. Even though the price of one share is too high for this company, the interesting question here is why the MRF’s management/promoters are not splitting its shares? After all, buying a stock at Rs 84,470 per share is not financially viable for most retail investors.

In this article, we are going to answer the same. Here, we are going to discuss why companies like MRF don’t split the stock. However, before we discuss these expensive stocks, let’s first study why companies split their stocks?

MRF latest Share price - most expensive share in India

Quick Note: If you are do not know what is stock split and bonus shares, then check out this post first- Stock split vs bonus share – Basics of stock market

An Interesting study on companies that Rapidly Split Stocks in Past

You might have heard about the wealth creation story of Infosys. A small investment in the 100 shares of Infosys in 1993 would be worth over Rs 6.04 crores by now. (Also read: How to Earn Rs 13,08,672 From Just One Stock?)

In the last 25 years, Infosys has given multiple bonuses and stock splits to its shareholders. And, that’s why the share price of Infosys is still in the affordable purchase rate for the average investors. In fact, if Infosys has not given so many bonuses and splits, the price of one share of Infosys might have been over multiple lacks by now. Here is the bonus and split history of Infosys from 1993 till 2018:

infosys split

(Source: Moneycontrol)

Besides, Wipro is another common stock with a similar story. Because of its consistent bonuses and splits, the Wipro share is still in the purchase range for the retail investors. Else, if the management had decided not to give any split or bonus, then the share of Wipro might also have been over multiple lakhs and maybe over crores by now. (Also read: Case Study: How 100 shares of WIPRO grew to be over Rs 3.28 crores in 27 years?)

The big question – Why do companies split a share?

Here are four common reasons why companies split their shares-

  1. Stock splits help the companies to make the share price affordable for retail investors. For example,  if a company is trading at a share price of Rs 3000 and it offers a stock split of 10:1, then it means that its price will drop to Rs 300 per share after the split. Now, which price is more affordable to the public- Rs 3,000 or Rs 300? Obviously, Rs 300.
  2. The stock split makes the stock more liquid and hence increases its trading volume. This is because the total number of outstanding shares increases after the stock split.
  3. Splitting a stock does not affect the financials of a company. Although the outstanding shares of the company will increase after the split, however, the face value will decrease in the same proportion. Overall, stock splits don’t affect the financials and hence the companies are willing to go for it.
  4. As small and retail investors are more interested in affordable shares, stock splits help in increasing their participation and overall helps the companies to build a broadly diversified investor base for their stock.

Overall, in terms of value, the stock split doesn’t matters much as the financials of the company remains the same. However, by splitting the shares- the company is able to keep the shares affordable to the public and hence maintains a wide ownership base.

Companies that do not split their shares – List of few Costliest Shares!

The reasons to split shares might be clear by reading the above paragraph. However, the next big question is why few companies do not split their shares? Why the share price of many stocks in the share market is still in the 5 figures if they have an option to split their stocks.

If you check the current market price of the companies listed on the Indian stock exchange, you can find out that there are many companies whose share price is above Rs 5,000. Here are a few of the top ones:

CompanyIndustry Market Cap (Rs Cr)Current Price (Cr)
MRF Ltd.Tyres & Allied35528.2983770.55
Honeywell Automation India Ltd.Consumer Durables - Electronics39314.5844465.85
Rasoi Ltd.Consumer Food303.231387.65
Page Industries Ltd.Textile33131.1929703.75
3M India Ltd.Diversified30843.2527379.55
Shree Cement Ltd.Cement & Construction Materials97260.3526956.3
Nestle India Ltd.Consumer Food159994.6516594.25
Abbott India Ltd.Pharmaceuticals & Drugs31139.5814654.4
Bosch Ltd.Auto Ancillary42343.1314356.7
The Yamuna Syndicate Ltd.Trading433.3514099
Tasty Bite Eatables Ltd.Consumer Food3559.8213873.05
Procter & Gamble Hygiene & Health Care Ltd.Household & Personal Products42288.0613027.45
Bombay Oxygen Investments Ltd.Industrial Gases & Fuels153.7410249
Bharat Rasayan Ltd.Pesticides & Agrochemicals4082.519608.75
Bajaj Finserv Ltd.Finance - Investment149727.659408.7
Polson Ltd.Chemicals106.638885.9
Paushak Ltd.Chemicals2479.928046.15
Indiamart Intermesh Ltd.e-Commerce24265.637991.65
Sanofi India Ltd.Pharmaceuticals & Drugs17683.377678.2
TTK Prestige Ltd.Consumer Durables - Domestic Appliances10043.827231.65
Maruti Suzuki India Ltd.Automobiles - Passenger Cars214573.517103.2
Lakshmi Machine Works Ltd.Textile - Machinery7439.486963.85
Atul Ltd.Chemicals20425.576903.55
Ultratech Cement Ltd.Cement & Construction Materials194197.976728
Procter & Gamble Health Ltd.Pharmaceuticals & Drugs10543.516351.75
Wabco India Ltd.Auto Ancillary11639.556136.55
Kama Holdings Ltd.Plastic Products3556.685512
Hawkins Cookers Ltd.Consumer Durables - Domestic Appliances29125507
Gillette India Ltd.Household & Personal Products17895.315491.85
Bajaj Finance Ltd.Finance - NBFC324743.365389.15
Alkyl Amines Chemicals Ltd.Chemicals10885.795332.85
Schaeffler India Ltd.Bearings16580.545303.95
Affle (India) Ltd.Telecommunication - Equipment13510.525299
SRF Ltd.Diversified31296.585282.55
Blue Dart Express Ltd.Courier Services12436.885241.45
Bayer CropScience Ltd.Pesticides & Agrochemicals22897.555094.9

Quick Note: The above prices and values are updated till March 2021!

All these shares are not easily affordable for the average retail investor. Even the shares of Maruti are trading at a current price of above Rs 7,100. 

Why Do Companies Like MRF Don’t Split the Stock?

Why do companies like MRF don’t split the stock

Here are a few common reasons why few companies do not split their shares:

1. They are already doing good. Why bother to split?

Many of these companies are already good. Then, why should they bother to split the share and make it cheap?

For example- MRF was trading at a share price of Rs 6,358 in March 2010. Currently, as of March 2021, it is trading at Rs 84,470. The people might have argued that the stock was expensive and not affordable even in 2010. However, it has done pretty well in the last 11 years and given a return of over 1,100% to its shareholders.

mrf latest share price march 2021

In short, if a company is doing good, they why it should bother to go through the splitting process. It’s already making money for itself and its investor, even when the share price is expensive.

2. No financial benefits

There are literally no financial benefits while splitting the shares. The value of the stock remains the same after stock splitting (the financial statements and ratios don’t change). That’s why until and unless the promoters have any good enough reason, the share splitting does not appeal much to the management and promoters.

3. Keeps Speculators away

The stock split increases liquidity and makes the stock affordable. This results in an increase in the participation of retail investors and traders. And with an increase in participation, speculation also increases. On the other hand, a high share price helps to keep the traders and speculators away from the stock. Only serious investors are the ones who can find these companies appealing and might want to enter these stocks.

Another benefit of the high share price is that it keeps the newbie investors away from them. As the new investors are mostly attracted to the affordable companies and are not willing to invest a high amount, therefore their participation is quite low in these companies.

4. Limited Public Shareholding

The high share price of a company results in limited public shareholding. Retail investors and traders can’t easily enter such stocks. Sometimes, this also helps in decreasing the volatility in the share price. Moreover, by allowing the high share price, the promoters tend to keep the voting right in their hands. This helps in maintaining a static voting right which allows the owners to make key decisions without much interference.

Besides, fewer public shareholding also helps in avoiding scenarios like creeping acquisition or in worst case hostile takeovers. Expensive stocks discourage acquisition.

5. Symbol of Status and Uniqueness

Do you know that one share of Warren Buffett’s company- Berkshire Hathaway costs around Rs 2.74 crores? Yes, that’s true. The current share price of Berkshire Hathaway Inc. Class A is $3,77,440. Similarly, MRF is known in India for such an extremely high share price.

A high share price can be sometimes regarded as a symbol of status. Splitting that share means losing this exclusiveness.

Closing Thoughts

There are no specific guidelines or rules from SEBI or any stock exchange about a stock split. Therefore, the prices of the shares can go as high as they can and the company is not obliged to offer any split.

As we discussed in this article, there are both pros and cons of a high share price. The biggest advantage of a high share price is that it helps to keep the traders and speculators away from that share. Anyways, a company might choose whether it wants to split a share or not- depending on what suits them best for their interests.

That’s all for this post on Why Do Companies Like MRF Don’t Split the Stock. I hope it was helpful to you. If you still have any doubts/queries on this topic, feel free to comment below. I’ll be happy to help. Take care and Happy Investing!

Sensex 30 Companies - List of 30 Stocks of Sensex by Weight [2021] cover

Sensex 30 Companies – List of 30 Stocks of Sensex by Weightage [2021]

List of Sensex 30 Companies: Sensex, the benchmark index of the Bombay Stock Exchange (BSE), consists of the top 30 companies listed on BSE. That’s why Sensex is also known as BSE 30. In this post, we are going to look into the Sensex 30 companies’ constituents, along with their weightage in the index. Let’s get started.

What is Sensex?

Before we look into the Sensex 30 companies’ weightage, let’s first brush up on the basics and revise what exactly is Sensex.

The BSE Sensex or the Sensex 30 tracks the behavior of the top 30 companies as per the free float market-cap registered on the Bombay Stock Exchange. BSE Sensex stands for S&P Bombay Stock Exchange Sensitive Index. Here are a few top facts about Sensex 30:

  1. The 30 companies are selected on the basis of the free-float market capitalization.
  2. The base year of Sensex is 1978-79 and the base value is 100. Currently, BSE is hovering at 50,000 points.
  3. These are different companies from different sectors representing a sample of large, liquid, and representative companies.

Sensex is an indicator of market movement. If the Sensex goes down, this tells you that the stock price of most of the major stocks on the BSE has gone down. If Sensex goes up, it means that most of the major stocks in BSE went up during the given period.

Constituents of Sensex 30 Companies by Weightage

Here is the list of 30 companies of Sensex along with the company’s Sensex weightage.

 NameIndustry Weight
1.Reliance Industries Ltd.Integrated Oil & Gas11.99%
2.HDFC Bank Ltd.Banks11.84%
3.Infosys Ltd.IT Consulting & Software9.06%
4.Housing Development Finance Corporation Ltd.Housing Finance8.30%
5.ICICI Bank Ltd.Banks7.37%
6.Tata Consultancy Services Ltd.IT Consulting & Software5.76%
7.Kotak Mahindra Bank Ltd.Banks4.88%
8.Hindustan Unilever Ltd.Personal Products3.75%
9.ITC Ltd.Cigarettes,Tobacco Products3.49%
10.AXIS Bank Ltd.Banks3.35%
11.Larsen & Toubro Ltd.Construction & Engineering3.13%
12.Bajaj Finance Ltd.Finance (including NBFCs)2.63%
13.State Bank of India Banks2.59%
14.Bharti Airtel Ltd.Telecom Services2.31%
15.Asian Paints Ltd.Furniture,Furnishing,Paints1.97%
16.HCL Technologies Ltd.IT Consulting & Software1.89%
17.Maruti Suzuki India Ltd.Cars & Utility Vehicles1.72%
18.Mahindra & Mahindra Ltd.Cars & Utility Vehicles1.48%
19.UltraTech Cement Ltd.Cement & Cement Products1.40%
20.Sun Pharmaceutical Industries Ltd.Pharmaceuticals1.16%
21.Tech Mahindra Ltd.IT Consulting & Software1.11%
22.Titan Company Ltd.Other Apparels & Accessories1.11%
23.Nestle India Ltd.Nestle India Ltd.1.07%
24.Bajaj FinservFinance (including NBFCs)1.04%
25.IndusInd Bank Ltd.Banks1.03%
26.POWERGRIDElectric Utilities1.03%
27.Tata Steel Ltd.Iron & Steel/Interm.Products1.01%
28.NTPC Ltd.Electric Utilities0.94%
28.Bajaj Auto Ltd.2/3 Wheelers0.86%
30.Oil & Natural Gas Corporation Ltd.Exploration & Production0.73%

Quick Note: Please note that the BSE 30 companies are updated as of March 2021 and the top 30 listed companies in BSE is subjected to change in the future, which might result in a change in the weightage of 30 companies of Sensex.

ALSO READ

Nifty 50 Companies – List of Nifty50 Stocks by Weight [2021]

Closing Thoughts

In this post, we looked into the Sensex 30 Companies by weightage. All the stocks in the BSE top 30 companies list are old and well-established companies and mostly leaders in their industry. Many of these stocks are able to move the index and the market if there is a significant movement in the share price of these companies.

That’s all for this post on the Sensex 30 companies or the Sensex stocks list. Do let us know which is your favorite stock in the top 30 listed companies in BSE list in the comment section below. Have a great day and Happy Investing.

7 Must Know Websites for Indian Stock Market Investors cover

7 Must Know Websites for Indian Stock Market Investors

List of Must know websites for Indian stock market Investors: The Internet is full of stock market websites and resources. You can find thousands of websites based on the stock market and tons of market information out there for free. However, because of this huge number of resources, it’s literally impossible to remember all the sources that you visit even in a single day. Luckily, for the Indian stock investors, there are not many such great stock market websites to remember. Even if you only bookmark a few of the best ones, it will help you to keep yourself updated with all the market news, trends, announcements, happenings, and more.

In this post, we are going to discuss seven such must know websites for Indian stock market investors. Knowing these websites will significantly simplify your stock market journey. Further, do read the post till the end, as there is a bonus in the last section. Let’s get started now.

7 Must-Know Websites for Indian Stock Market Investors

1. NSE India

nse india website

Website: https://www.nseindia.com/

This is the official website of the National stock exchange (NSE). You can get the financial information and stock quotes of all the companies listed on NSE exchange. The information provided on this website is accurate and consistently updated. As the company has an obligation to submit their financial reports to the exchanges, you can always find the financial data like quarterly reports, shareholding patterns, bulk/block deal details, etc of any company on this website, in case you can’t find it elsewhere.

Further, along with charts, there are tons of historical data regarding NSE and nifty available on this website. You can find information about the corporates, domestic and foreign investors, new listings, IPOs, etc. NSE India also provides courses and certifications (known as NCFM).

2. BSE India

bse india website

Website: http://www.bseindia.com/

BSE India is the website of the Bombay stock exchange (BSE). This website is complementary to NSE India in terms of most pieces of information. However, you can find more data on this website because more companies are listed on BSE compared to NSE. A few of the key information available on BSE India are market info, Indexes data, charts, Public offers, OFS, IPOs, Domestic and foreign investors, etc.

Further, similar to NSE India, you can find financial data like quarterly reports, shareholding patterns, bulk/block deal details, stock quotes, etc on the BSE India website.

Also read: How to find complete list of stocks listed in the Indian stock market?

3. Money Control

moneycontrol stock research

Website: http://www.moneycontrol.com/

Moneycontrol is certainly the most popular website among Indian stock investors. You can find all sorts of information on this website like market news, trends, charts, livestock prices, commodities, currencies, mutual funds, personal finance, IPOs, etc.

For equity investors, here you can find the fundamental data of any company along with technical indicators (including candlesticks charts). Moneycontrol website also provides a platform to track your investments and to create your own wish list.

Further, the discussion forum offered by this website is also among one of the unique features of this website. If you are unable to find the latest news regarding the drastic share movement of any company, just go to the forum of the stock, and read the discussions. However, please do not get influenced by the comments in the discussion section as a few may also be spam discussion posts.

In addition, money control also offers an app on all mobile platforms- Android, IOS, and windows. The app is amazing because of its simple user interface and great navigation features. If you do not have this app installed on your phone, I would highly recommend you to install it now.

4. Screener

screener dot in stock website

Website: https://www.screener.in/

The screener is a great website to perform the fundamental analysis of a company like reading its financial statements, ratios, etc. Most of the features on Screener are absolutely free. You can find a number of important information about the companies on this website like financial ratios, charts, analysis, peers/competitors, quarterly results, annual results, profit & loss statements, balance sheet, cash flows, etc.

The best part is the customized financial reports which are created in such a manner that only useful information is shown. No clutters! The financial statements of a company are very long, however, the screener simplifies the financials in small useful chunks. Anyone can easily read the annual reports, balance sheet, etc on this website because of the user-friendly display of the data.

I regularly use this website to check the financials of a company and will also recommend using this website. It saves a lot of time for the readers to navigate through the financials.

Also read: How to use SCREENER.IN like an Expert

BONUS: Here’s a video on how you can use the SCREENER website to find stocks to invest in the Indian stock market.

5. Investing.com

investing.com stock research website

Website: https://in.investing.com/

Investing is a great site if you want to find comprehensive information regarding a public company. You can perform both fundamental and technical analysis of stocks on this website. The different pieces of information available on this website are general info, chart, news and analysis, financials, technicals, forums, etc.

You can also use a number of amazing ‘tools’ available on this website for free. The best one is the ‘Stock screener’. Using this tool, you can screen stocks and shortlist them based on different criteria like market capitalization, PE ratio, ROE, CAGR, etc. I also use investing for technical analysis as there are a number of technical indicators that are available on this website and easy to use. In short, if you haven’t visited this website, then go on and check it out.

6. Economic Times Market

ET Market

Website: http://economictimes.indiatimes.com/markets

This is one of the best websites to stay updated with the latest market news. The economic times market provides instant and reliable financial news. It also posts morning and evening ‘briefs’. In case you missed the news an entire day, you can simply read all the happenings of the day here.

Further, the ET market provides similar information as the money control website in terms of features it provides like stock charts, portfolio, Wishlist, expert views, mutual funds, commodities, etc.

7. Live Mint

live mint website

Website: http://www.livemint.com/

Another amazing website to read a variety of posts regarding the stock market, finance, economy, politics, science, sports, etc. If you’re involved in the share market, you should also keep yourself consistently updated with the latest news in India and abroad. This website will keep you updated with all the happenings so that you do not miss out on any important news that might affect your stock selection in the future.

Bonuses Stock Market Website (As promised)

In addition to the above mentioned websites, here are a few popular websites in India that you should also know:

Popular stock research websites that you should know:

  1. Marketsmojo: https://www.marketsmojo.com/
  2. Trade Brains Portal: https://portal.tradebrains.in/
  3. Tickertape: https://www.tickertape.in/
  4. Yahoo Finance: https://in.finance.yahoo.com
  5. MarketMojo: https://www.marketsmojo.com/
  6. Trendlyne: https://trendlyne.com
  7. Stockedge: https://web.stockedge.com/
  8. Finology Ticker: https://ticker.finology.in/
  9. Equitymaster: https://equitymaster.com/
  10. Tijori Finance: https://www.tijorifinance.com/

Important Links on NSE/BSE:

  1. Bulk/ Bulk Deal (BSE)
  2. Bulk/Block Deal (NSE)
  3. Download the complete list of NSE Stocks
  4. Download the complete list of BSE Stocks

Securities and Exchange Board of India (SEBI)

  1. SEBI: https://www.sebi.gov.in/

Websites to read the financial news:

  1. ET Market (http://economictimes.indiatimes.com/markets)
  2. LiveMint (http://www.livemint.com)
  3. Bloomberg Quint (https://www.bloombergquint.com)
  4. Business Standard: https://www.business-standard.com/
  5. The Hindu Business Line: https://www.thehindubusinessline.com/
  6. Moneycontrol: https://www.moneycontrol.com/
  7. Financial Express: https://www.financialexpress.com/

Stock Screeners that you should know:

  1. Screener: https://www.screener.in/
  2. Trade Brains Screener: https://portal.tradebrains.in/screener/
  3. Tickertape Screener: https://www.tickertape.in/screener
  4. Investing: https://in.investing.com/stock-screener/
  5. Edelweiss: https://www.edelweiss.in/oyo/equity/user/screener
  6. Equity master: https://www.equitymaster.com/research-it/company-info/stock-screener-india.asp
  7. Moneyworks4me: https://www.moneyworks4me.com/stock-market/stock-screener
  8. CapitalCube: https://online.capitalcube.com/#!/screener
  9. Investello: https://www.investello.com/screeners
  10. Trendlyne: https://trendlyne.com/stock-screeners/
  11. Google Finance: https://finance.google.com/finance#stockscreener

Also read: 7 Best Stock Market Apps that Makes Stock Research 10x Easier.

Summary

In this post, we discussed the seven must know websites for Indian stock market investors. Let’s quickly revise those websites:

  1. NSE India (https://www.nseindia.com)
  2. BSE India (http://www.bseindia.com)
  3. Money Control (http://www.moneycontrol.com)
  4. Screener (https://www.screener.in)
  5. Investing (https://in.investing.com)
  6. ET Market (http://economictimes.indiatimes.com/markets)
  7. LiveMint (http://www.livemint.com)

That’s all for this post. I hope this article on ‘7 must know websites for Indian stock market investors’ is useful to the viewers. In case, you haven’t visited the above-mentioned websites, do check them out. Further, if I missed any big website name, please comment below. Happy Investing.

10 Reasons To Start Investing In Stock Market Today cover

10 Reasons To Start Investing In Stock Market in 2021!

Understanding the Reasons to start investing in stock market: Most people at some time have thought to start investing in the stock market. Their reasons to start investing may be different, yet the final goal is always the same “To make money”. However, because of some myth or misconceptions that they heard from their Uncle or close kin, they were afraid to take the next steps.

For a very long time, our family members, friends, and news channels have told us to stay away from the market. The common misconception that ‘Stock investing is like GAMBLING’ has become more of a fact than a myth for many. And maybe this could be the reason why even less than 3% population of India is actively investing in the stock market.

Today, we are going to break the barriers. In this post, we are going to discuss 10 great reasons to start investing in stock market. Therefore, be with us for the next 5-6 minutes to enjoy this roller coaster ride that may open your eyes towards investing in stock market.

Top 10 Reasons to Start Investing in Stock Market.

1. To keep pace with inflation

Inflation is defined as a state where the prices are rising and the value of purchasing power of money is decreasing. Inflation occurs in an economy when there is an expansion in the total amount of money. Overall, Inflation is not desirable for a common person.

Let us understand inflation with an example. Suppose you have Rs 5 lakhs in your account and you want to buy a car, which also costs Rs 5 lakhs currently. However, you changed your mind, deciding to buy the car next year, and kept your money in the savings account.

The bank is giving you a decent interest of 3.5% pa. Now, let us fast forward to next year. You went to the bank and came home happily with your money that has become Rs 5.17 lakhs now. Next, you went to the car showroom. But boom! You get the shock.

The price of that car has now increased to Rs 5.5 lakhs. The car, which you could have easily bought last year, is now not affordable to you. That is inflation. The same thing happens with groceries, or all other products that you buy and their price inflates with time.

The inflation in India for the last few years has been around 4-5%. The return on the savings account (Interest rate) is around 3-4% per annum. Hence, a savings account cannot beat inflation.

inflation in india yearwise tradingeconomics

(Source: Tradingeconomics)

Overall, if you want to beat inflation, you have to invest your money intelligently in high-return investment instruments. And the stock market is the best place for intelligent investors. If you buy stocks of good companies, you can make a decent consistent return of 12-18% per annum depending on how good the stock is and how much time you invested in choosing the stock. Therefore, investing in the stock market is a great option if you want to keep pace with rising inflation.

2. Most Capital Growth Potential

For the past couple of decades, Stocks and real estate are the two investments, which have constantly beat all other forms of investments in India.

Whether it is fixed deposits, insurances, bonds or commodities like gold, silver, petroleum, etc. the stock market has been able to outperform all these investments with the best returns on the investments. Hence, with the tremendous growth potential in the stock market, it is always advisable to invest in stocks for those who want to grow their money.

3. Investing Makes Your Money Work for You

Money is important to buy comforts and in all other aspects of life. Most people say that they do not work for money and lack of money is the root of most problems. However, investing is the solution to this problem.

If you invest your money in good companies, you just have to sit idly and do nothing. Your money will grow as the company prospers. In the meanwhile, when your money is growing by itself, you can use your time to focus on your primary job or in whatever way you want. In this way, you can make your money work for you, unlike your primary job where you have to work for money.

4. Stock Investing Requires As Little Amount as buying a ‘Burger’

There is a common misconception among many people that they need a huge amount to start investing in the stock market. However, that is not true. You can start investing with as little money as required to buy a burger.

There are a number of stocks whose price is less than Rs 100. You can invest very small amount of money and start getting good returns. This option is not available in other for other forms of investments like gold or real estate. In addition, remember a little bit of things every day ads up to a big result.

ALSO READ:

What is The Minimum Money I Need to Start Stock trading in India?

5. You do not need to be a ‘Genius’ to invest in Stock Market

peter lynch quote investing - Reasons To Start Investing In Stock

If you can understand 5th standard math, then you can understand stock market’- Peter Lynch.

Peter Lynch is one of the most renowned fund managers famous for giving around 30% return for a continuous period of 13 years at Fidelity. He always inspires common people to invest in stocks and believes the stock market is for everyone. You do not need to be a mastermind or rocket scientist to invest in stock market.

Unlike starting most business or start-ups, the stock market requires only a little money, knowledge, time and interest. Anyone can get decent returns by investing in the stock market.

Quick Note: If you are new to investing and want to stay away from common myths and mistakes in stock market, I will highly recommend you to read this book: One Up On Wall Street: How To Use What You Already Know To Make Money In the Market. It is one of my favourite books on stock market.

6. Investing in Stocks is lot easier ‘Now’

Investing and trading with the online brokerage account is a lot simpler now. Now with the help of leading online brokers, you can buy and sell stocks within seconds using your smart phone.

Moreover, with the increase in financial websites and apps; finding and selecting stocks is also simpler. You do not need to go through all the boring financial newspapers and magazines now and need not rely on newsletters to get the company’s financial reports now.

Also read: How to Invest in Share Market? A Beginner’s Guide

7. Tax benefits from Government on Stock Investing

taxes - Reasons To Start Investing In Stock Market in 2021

There are a number of tax benefits in investing in stock market. The long-term capital gain tax is 10% for gains exceeding Rs 1 lakh. Still, this is better than the return of 6.5% from FDs, which is again taxable up to 10-30% depending on your tax slab. That’s why it is a popular quote ‘The rich pay less tax’.

8. You do not Always have to Pick Hidden Gems.

hul share price stocks

There are a number of other examples of common stocks as well that has given more than several hundred percent returns over the last few years. For example, Asian Paints, Hindustan Unilever, HDFC Bank, Symphony, Maruti Suzuki, Titan Company, etc. These companies are well-known to the common people. People can easily find such growing companies around them as they are already using their products.

In short, you are not always supposed to find a hidden gem or a very rare/unheard chemical stock. You just have to look around and find leading companies with amazing products and invest in them.

9. To create a Alternate source of income

It has always been taught in our school- ‘Get a high paid safe and secure job’. What is not taught is what will happen if you’re fired or the company is shut down. We should always have multiple source of Income. For the common people, stocks market investment can help to create this additional source of income.

Most people are completely busy with their office their entire life. For those people, Investing in the stock market can be their second source of income. Through value appreciation and dividends, they can steadily grow additional income. That is why people need to start investing in the stock market.

10. The Power of Compounding through Long-term Investments

Stock Investing allows you to take advantage of compound interest, which grows your wealth exponentially. Most of the bank savings account gives you a simple interest. However, with investing in stock, you can get compounded returns. The famous scientist Albert Einstein once said- “Compounding is the eighth wonder of the world”.

The world’s greatest investor, Warren Buffett, is known to have a compounded return of around 22% for the last 5 decades. Moreover, this compounded return for a long time has made him one of the richest men on earth. The power of compounding is one of the major reasons why people should invest in stock market.

Closing Thoughts

In this article, we discussed 10 of the best reasons to start investing in share market. The biggest reasons to invest in share market are to beat inflation, create a secondary source of income and obviously to get a superior returns on your capital.

That’s all for this post on top reasons to invest in stock market. I hope the post is useful to you. If there is an additional reason to invest in the stock market that I missed or you want to add to the list, feel free to comment below. I will be happy to include them also. Have a great day and Happy investing!

#12 Companies with Highest Share Price in India (Updated 2021)

#12 Companies with the Highest Share Price in India (Updated)

List of Companies with the highest share price in India (Updated – March 2021): The majority of shares in India trade at a share price below Rs 1,000 per share on Indian stock exchanges. However, there are a few stocks that trade at a price in the multiples of thousands of rupees.

Although, the share price of a company has nothing to do with the companies valuation, and even a company with a share price of Rs 2,000 can be undervalued compared to its peers. Anyways, for the small retail investors, it might be a little difficult to enter those stocks which trade at a very high share price.

In this article, we are going to discuss the most expensive shares in India i.e. the companies with the highest share price in India. Here, we’ll look at 12 of the costliest shares in India based on the current share price at which they are trading in the market.

Note: Please study the companies carefully if you want to invest in any of the stocks mentioned in the list here. A high stock price doesn’t guarantee a fundamentally strong company or a good investment. And vice versa. Let’s get started.

#12 Companies with Highest Share Price in India

1. MRF (Rs. 85,541)

mrf-tyres Companies with Highest Share Price in India

Market Capitalisation = Rs. 36,279 Cr

Madras Rubber Factory (MRF) is a Tyre manufacturer that produces a wide range of tyres. It specializes in Car & bike tyres, trucks/bus tyres, etc.

Currently, MRF has the highest share price in India among all the listed companies on BSE/NSE. The all-time high share price of MRF is Rs. 96,973. The stock is currently trading at a standalone PE of 22.66.

MRF has never split its share and has a face value of Rs. 10. Noticeably, this company was trading at a price of Rs. 10,000 in November 2012.

Also read: Why Do Companies Like MRF Don’t Split the Stock?

2. Honeywell Automation (Rs. 46,985)

honeywell

Market Capitalisation = Rs. 41,542 Cr

Honeywell Automation India Ltd, a part of Honeywell group, USA and is a leader in providing integrated automation and software solutions. It has a wide product portfolio in environmental and combustion controls, and sensing and control, etc.

This stock has given a return of over +235% in the last 5 years. It is currently trading at a PE of 88.92.

3. Page Industries (Rs. 28,675)

page industries

Market Capitalisation = Rs. 31,984 Cr

Page Industries is an Indian manufacturer and retailer of innerwear, loungewear, and socks. One of the popular brands under Page Industries is Jockey (Underwear and inner wears company). This stock has turned out to be a multi-bagger stock in the last couple of years and has given a return of over +2,000% in the last ten years.

Page Industries is currently trading at a PE of 124.92.

4. 3M India (Rs. 27,953)

3m india Products | Companies with highest share price in India

Market Capitalisation = Rs. 31,489 Cr

3M India Ltd is the subsidiary listed company of 3M Company USA in India. 3M Company USA holds a 75% equity stake in the company. It has a diversified portfolio of products in dental cement, health care, cleaning, etc.

This stock is currently trading at a PE of 544.93.

5. Shree Cements (Rs. 26,817)

shree cements

Market Capitalisation = Rs. 96,759 Cr

Shree Cement is an Indian cement manufacturer headquartered in Kolkata. This Indian cement manufacturer company was founded in Beawar, Ajmer district, Rajasthan, in 1979. Shree Cement is the biggest cement maker in northern India and also produces and sells power under the name Shree Power and Shree Mega Power.

Shree cements is currently trading at a PE of 45.38.

Also read: How to Invest in Share Market? A Beginner’s guide!

6. Dixon Technologies (Rs. 20,074)

Dixon Technologies Logo | Companies with highest share price in India

Market Capitalisation = Rs. 23,515 Cr

Dixon Technologies (India) Ltd is an Indian multinational electronics manufacturing services company, based in Noida, Uttar Pradesh, India. It is a contract manufacturer of televisions, washing machines, smartphones, LED bulbs, battens, downlighters, and CCTV security systems for companies such as Samsung, Xiaomi, Panasonic, and Philips.

It is currently trading at a PE of 170.61.

7. Nestle India (Rs. 16,458)

Nestle Products

Market Capitalisation = Rs. 1,58,681 Cr

Nestle India is in the food processing industry with a wide variety of products like Maggi, Kit-Kat, Nescafe, Every day, etc.

 It is the Indian subsidiary of Nestlé which is a Swiss multinational company.

This stock is currently trading at a PE of 76.20.

8. The Yamuna Syndicate Ltd. (Rs. 14,980)

The Yamuna Syndicate Ltd | Companies with highest share price in India

Market Capitalisation = Rs. 460 Cr

The Yamuna Syndicate Limited engages in trading & marketing tractors, industrial lubes, automotive, batteries, electrical, pesticides & fertilizers, sugar, and also runs petrol pumps. The company was incorporated in 1954 and is based in Yamuna Nagar, India.

This stock is currently trading at a PE of 52.52.

9. Abbott India (Rs. 14,730)

abbott india share

Market Capitalisation = Rs. 31,302 Cr

Headquartered in Mumbai, Abbott India Limited, a publicly listed company and a subsidiary of Abbott Laboratories, takes pride in offering high-quality trusted medicines in multiple therapeutic categories such as women’s health, gastroenterology, cardiology, metabolic disorders, and primary care.

It is currently trading at a PE of 48.22. This stock has given a return of over 179% in the last 5 years.

10. Bosch (Rs. 14,660)

bosch

Market Capitalisation = Rs. 43,238 Cr

Bosch ranks 10th in the list of companies with the highest share price in India. It is a part of the German multinational company Robert Bosch (or just Bosch), headquartered in Germany. Bosch belongs to the automobile ancillaries industry.

It is currently trading at a PE of 529.62 (52-week high – Rs. 16,679).

11. Tasty Bite Eatables (Rs. 13,977)

tasty bytes

Market Capitalisation = Rs. 3,586 Cr

This company operates in the food processing industry with products like tasty bite rice, noodles, entrees, etc. The Company offers a range of ready-to-serve (RTS) ethnic food products under the brand name Tasty Bite and Frozen Formed Products (FFP).

This stock is currently trading at a PE of 105.48.

Also read: How To Invest Rs 10,000 In India for High Returns?

12. Procter & Gamble (Rs. 12,855)

Procter and Gamble Products | Companies with highest share price in India

Market Capitalisation = Rs. 41,731 Cr

P & G is in the personal care industry with products in hygiene and health care. The Company is involved in the manufacturing, trading, and marketing of health and hygiene products. The Company’s brands include Ambi Pur, Ariel, Duracell, Gillette, Head & Shoulders, Olay, Oral-B, Pampers, Pantene, Tide, Vicks, Wella, and Whisper.

This stock is currently trading at a PE of 62.77.

Summary

Here is the list of Companies with the Highest Share Price in India along with a few other popular stocks added:

S.No.Company NameShare Price (Rs)MarketCap (Rs Cr)Current PE
1MRF85,541.6036,279.4222.66
2Honeywell Auto46,985.2541,542.1288.92
3Page Industries28,675.2531,984.01124.92
43M India27,953.6531,489.98544.93
5Shree Cement26,817.3596,75945.38
6Dixon Technologies20,074.7523,515.30170.61
7Nestle India16,458.101,58,681.9576.20
8The Yamuna Syndicate14,980460.4352.52
9Abbott India14,730.9531,302.2448.22
10Bosch14,660.3043,238.56529.62
11Tasty Bite Eatables13,977.853,586.72105.48
12Procter & Gamble12,855.9541,731.3662.77
13Bombay Oxygen10,306.05154.596.56
14Bharat Rasayan9,657.654,103.2826.74
15Bajaj Finserv9,544.851,51,894.30462.77
16Polson9,104.95109.2614.86
17Paushak8,556.252,637.1380.75

Disclaimer: The list of 12 Companies with Highest Share Price in India is till date March 2021. The stock market is dynamic and the stock prices will change in the future, which may change the list or the order of the companies listed here.

That’s all for this post on ‘#12 companies with the highest share price in India’. Most of the companies on this list are trading at a high PE. If you want to buy any one of them, then please study the company carefully.

Just being the costliest shares in India doesn’t make them a good pick for investment. Moreover, past performance does not guarantee future returns.

Further, do comment below which other stocks can find a place in this list of companies with the highest share price in India by next year (March 2022)? And which ones will be thrown out of the list, according to you? Happy Investing!

Value Investing and Behavioral Finance

Value Investing and Behavioral Finance by Parag Parikh – Book Review

Value Investing and Behavioral Finance Book Review: Parag Parikh did a decent job of applying the numerous ideas and concepts of Value-Investing to the Indian stock market and also introduced behavioural finance.

The 2017 edition of the book “Value Investing and Behavioral Finance” has over 350 pages and has been published by McGraw Hill Education.

In this article, we’ll cover Value Investing and Behavioral Finance Book Review along with a discussion few of the best concepts covered by Parag Parikh.

 

Why You Should Read “Value Investing and Behavioral Finance”?

“Those who do not learn from history are condemned to repeat it” – Santayana

This book is quite compelling for value investors and covers a number of fundamental concepts. The best part is that the book focuses on the Indian stock market and all the chapters are explained with the help of Indian stocks.

The book is well structured and contains 12 chapters. Here are they:

  • Success and failure
  • Understanding behavioral traits
  • Behavioural obstacles to value investing
  • Contrarian investing
  • Growth Trap
  • Commodity investing
  • Public sector units
  • Sector investing
  • Initial public offerings
  • Index investing
  • Bubble trap
  • Investor behavior-based finance.

Although there are great learnings from every chapter, however, I am going to give you a brief summary of a few of them, so that it won’t kill the fun when you read the book.

In the first chapters, Parag Parikh explains why people fail while investing. He gives the explanation using the human nature of laziness, greed, self-interest, ignorance etc. One of the main reason for the failure of people that he explained is ‘unwillingness to delay gratification’. Instant gratification causes the vast majority of people to indulge themselves in short-term gain for long-term pain.

A new term about investing that I learned from this book by Parag Parikh is ‘Heuristics’.

Heuristics is the shortcut that the brain takes when processing information. Our brain does not process full information. This leads to cognitive bias. Some common valuation heuristics are- Price to earnings heuristics, Price to book value heuristics and price to sales heuristics.

ALSO READ

10 Must Read Books For Stock Market Investors.

Contrarian Investing

The fourth chapter is an interesting one and covers the concept of contrarian investing.

A contrarian investor can be defined as the one who attempts to profit by betting against conventional wisdom, but only when consensual opinion appears to be wrong. What really differs a contrarian investor is his emphasis on looking for opportunities where the sensual opinion has led to mispricing.

Parag Parikh explains how contrarian investors have outperformed the other investors in a long run. He clarifies the difference between a value and a contrarian investor. Further, he also suggests why it’s difficult to follow contrarian investing with the behavioral reasons of group thinking, false consensus effects, ambiguity effect, herding etc.

Value Investing and Behavioral Finance – Growth Trap

In the chapter growth trap, Parag Parikh supports the concept of value investing overgrowth. He argues that many investors get trapped in growth investing without totally understanding the history and behavior of growth stocks. He explains the various reasons for growth trap like going with the herd, peer pressure effect, overconfidence bias, bystander effect etc.

The myth of IPO investing:

The concept of IPO investing is explained in chapter 9 of this book. Parag Parikh suggests that there has always been the craze of new things among the public like the latest dress, latest bikes, latest cars etc. He argues that even the investors are not free from this behavior and easily get influenced by the listing of a new company or a new emerging sector.

However, investing in IPOs is not a good idea for value investors. Parag Parikh explains this with the help of a study he conducted on the long-term performance of IPOs from 1991 to 2006. The study showed a disappointing picture.

From a total of 3122 IPOs that got their initial public offering in this period, only 1540 managed to remain listed. More than 50% of the companies either got delisted, merged, bankrupted or vanished.

Further, more than 56% of companies from this list of 1540, gave negative returns in the long term. Only 15% of 1540 companies gave return more than Sensex.

Parag Parikh concluded that the IPOs are the byproducts of the bull market and a long-term investor should be very cautionary while investing in IPOs.

Value Investing and Behavioral Finance – Commodity, PSUs, & Sector Investing

There are also full chapters on commodity, PSUs, and sector investing.

In the public sector units chapter, Parag Parikh explains the common perception of the stock market towards PSUs, advantages, and disadvantages of investing in PSUs etc.

In the sector investing chapter, he coverers top-down analysis approach and sector investing. Here, Parag Parikh analyzed different sectors like automobile, banking, real estate, telecommunications, FMCG etc and explained its past performance with future expectations. It’s a good read for all those who want to study the performance of different sectors or are interested in investing in a particular sector.

In the index investing chapter, Parag Parikh argues how the market index, over the long term, has given a better return than over 90% of actively managed mutual funds. He explained this with the help of returns from the indexes- Sensex and nifty.

Quick Read

Growth Stocks vs Value stocks – A logical Comparison

Closing Thoughts:

Overall, In this book- ‘Value investing and behavioral finance’, Parag Parikh focused on value investing and manifests that over the long term, value stocks have given the best returns to their investors.

The book educates the readers about the much-needed topics that are ignored by most financial websites, books, and media. It’s definitely one of the best books on value investing based on the Indian stock market.

We highly recommend the readers read this book to get the best insights into the Indian stock market. And its surely worthwhile reading it.

Grab a copy of ‘Value Investing and behavioral finance by Parag Parikh’ on Amazon here.

That’s all. We hope you have liked the Value Investing and behavioral finance by Parag Parikh book review and find it useful. You can also read The Intelligent Investor by Benjamin Graham review and find more insights on investing ideas.

Let us know which is your favorite book on investing in the comment section below. Happy investing!


Benjamin Graham Formula Cover

How to Find Intrinsic Value of Stocks Using Benjamin Graham Formula?

Find the intrinsic value of stocks using the Benjamin Graham formula: Valuation is one of the most important aspects while investigating any stock for investing. A good business might not be a good investment if you overpay for it. However, most valuation methods like DCF analysis, EPS valuation, dividend discount model etc requires little assumptions and calculations.

Luckily, there are also a few valuation methods available that are pretty simple to use in order to find the true value of a company. In this article, we are going to discuss one such valuation method which is really straightforward and simple to use. And this valuation method is known as the Graham formula.

Overall, this post is going to be really helpful for all the beginners who are stuck with the valuation of stocks and want to learn the easiest approach to find the true intrinsic value of companies. Therefore, make sure to read this post till the end. Let’s get started.

A brief introduction to Benjamin Graham

Benjamin Graham Photograph

Benjamin Graham was a British-born American investor and economist. He was a sincere value investor and often credited for popularizing the concept of value investing among the investing population. Graham was also:

Graham was a strict follower of value investing and preferred purchasing amazing businesses when they were trading at a significant discount.

In his book – Security analysis, Benjamin Graham mentioned his formula to pick stocks which become overly popular among stock market investors for valuing stocks since then.

Benjamin Graham Formula security analysis

The Benjamin Graham formula to find the intrinsic value of stocks

The Original formula shared by Benjamin Graham to find the true value of a company was

V* = EPS x (8.5 + 2g)

Where,

  • V* = Intrinsic value of the stock
  • EPS = Trailing twelve-month earnings per share of the company
  • 8.5 = PE of a stock at 0% growth rate
  • g = Growth rate of the company for the next 7-10 years

Anyways, this formula was published in 1962 and was revised later to meet the expected rate of return as a lot concerning the market and economy has changed since Graham’s time to present. The revised Graham formula is:

Benjamin Graham Formula

During 1962 in the United States, the risk-free rate of return was 4.4% (this can also be considered as the minimum required rate of return). However, to adjust the formula to the present, we divide 4.4 by the current AAA corporate bond yield (Y) to make the formula legit.

Presently, the AAA corporate bonds are yielding close to 4.22% in the United States. (Source: YCharts). In order to make an apple to apple comparison, we’ll consider the bond yield for 1962 and the current yield- both for the United States. Therefore, you can consider the value of Y equal to 4.22% currently, which may be subjected to change in the future.

Quick note: You can also use the corporate bond yield of India in 1962 and the current yield to normalize the equation for valuing Indian stocks. In such a case, the value 4.4. will be replaced by the Indian corporate bond yield in 1962 and Y will be the current corporate bond yield in India. Make sure to use the correct values.

Note: The Adjusted Graham formula for conservative investors.

Many conservative investors have even modified the Graham formula further to reach a defensive intrinsic value of the stocks.

For example, Graham originally used 8.5 as the PE of the company with zero growth. However, many investors use this zero growth PE between 7 to 9, depending on the industry they are investigating and their own approach.

Further, Graham used a growth multiple of ‘2’ in his original equation. However, many investors argue that during Graham’s time, there were not many companies with a high growth rate, such as technology stocks which may grow at 15-25% per annum. Here, if you multiply this growth rate with a factor of ‘2’, the calculated intrinsic value can be quite aggressive. And hence, many investors use a factor of 1 or 1.5 for the growth rate multiple in their calculations.

Overall, the adjusted formula of conservative investors turns out to be:

V* = EPS x (7 + g) * (4.4/Y)

Pros and cons of the Benjamin Graham formula

The biggest pros of Graham’s formula is its ease and straightforwardness. You do not require any difficult input or complex calculations to find the intrinsic value of a company using the Graham formula. In a few easy calculation steps, this method can help the investors to define the upper range of their purchase price in any stock.

However, as no valuation method is perfect, there are also a few cons of the Benjamin Graham formula. For example, one of the important inputs of the Benjamin Graham formula is EPS. Anyways, EPS can be manipulated a little by the companies using the different loopholes in the accounting principles, and it such scenarios the calculated intrinsic value might be misleading. 

Another problem with the Benjamin Graham formula is that like most valuation methods, this formula also completely ignores the qualitative characteristics of a company like Industry characteristics, management quality, competitive advantage (moat) etc while calculating the true value of stocks.

Real-life example of valuing stocks from the Indian stock market using the Benjamin Graham formula

Now that you understood the basics of how you can value stocks using the Benjamin Graham formula, let us use this formula to perform a basic stock valuation of a real-life example from the Indian stock market.

Here, we are taking the case study of HERO MOTOCORP (NSE: HEROMOTOCO) to find its true intrinsic value using the Benjamin Graham formula. For Hero Motocorp,

  • EPS (TTM) = Rs 186.29
  • Expected growth (for the next 5 years) = 9.89%

(Past 5-year EPS growth rate per annum (CAGR) of Hero Motocorp is 14.14%. Taking 30% safety on this growth rate as it is a large-cap, we can estimate a conservative expected future growth rate of 9.89% for the next few years).

Now first, let us find the intrinsic value of Hero motocorp using the original Benjamin Graham formula,

V* = EPS x (8.5 + 2g)
= 186.29 x (8.5 + 2*9.89) = Rs 5268. 28

Now, using the revised formula with conservative zero-growth PE of 7 and growth multiple of one, the intrinsic value of Hero motocorp turns out to be:

V* = EPS x (7 + g) x (4.4/4.22)
= 186.29 x ( 7 + 9.89) x (4.4/4.22) =3280.65

At the time of writing this post, hero Motocorp stock is trading at a market price of Rs 2961.90 and PE (TTM) of 15.90.  Therefore, by using the Benjamin Graham formula, we can consider this stock to be currently undervalued.

Disclaimer: The case study used above is just for educational purpose and should not be considered as a stock advisory. Please research the company carefully before investing. After all, no one cares more about your money than you do.

You can also use Trade Brains’ online GRAHAM CALCULATOR to perform your calculations fast.


Closing thoughts

An important point worth mentioned here is the concept of margin of safety that Benjamin Graham repeatedly taught in his books. Graham offered a very simple formula to calculate the intrinsic value of a growth stock and it can be applied to other sectors and industries.

In simple words, according to the concept of margin of safety, if the calculated intrinsic price of a company turns out to be Rs 100, always give your calculations a little safety and purchase the stock at a 15-25% below that calculated value, i.e. when the stock trades below Rs 75-85.

Overall, the Benjamin Graham formula is a fast, simple and straightforward method to find the intrinsic value of stocks. If you haven’t tried it yet, you should definitely use this valuation approach while performing the fundamental analysis of any stock.

Investing for Beginners

If you are new to investing, you can learn how to perform stock valuation and pick profitable shares for consistent returns in the Indian stock market with the Trade Brains flagship course ‘How to pick winning stocks’. It is a self-paced online course with lifetime access so that you can learn on your own schedule. This course is currently available at a discount. Check out more here. Happy investing!!!

Additional credits: Vasanth (for data inputs in Benjamin Graham Formula)

How to find Complete List of Stocks Listed in the Indian Stock Market cover

How to find Complete List of Stocks Listed in the Indian Stock Market?

A Guide to download the complete list of stocks listed in the Indian stock market: There are over 5,000 publically listed stocks on the Indian stock market. And this makes it really tough for an investor to study each one of them individually. Wouldn’t it be easier if you can find an excel sheet with the complete list of stocks listed in Indian stock market and categorized by their industry?

Well, you can download one!! Moreover, it’s pretty simple indeed. As a matter of fact, you can download the complete list of stocks within two minutes. In this post, I’m going to explain how to find the complete list of stocks listed in the Indian stock market in a fast and easy way.

Further, there’s also a bonus in the last section of this post. Therefore, make sure that you read this post until the very end so that you do not miss it. Let’s get started.

1. How to download complete list of companies listed on BSE?

You can download the complete list of stocks listed on the Bombay stock exchange from its official website- BSE India. Here’s the direct link to the BSE website.

All the publically listed companies on BSE can be found on its website. Here’s how you can download the complete list of stocks listed on the Bombay stock exchange:

1. Go to BSE India ‘LISTED COMPANIES | LIST OF SECURITY | BSE’ page. Here is the quick link.

2. Next, on the BSE India page for the list of securities, select ‘Equity’ in the segment and ‘Active’ as status.

  • Segment —> ‘Equity’
  • Status —> ‘Active’

Active status shows the list of companies that are active in the market. Further, do not change the rest of the options.

3. Finally, click ‘submit’.

Next, you can download the excel sheet of the complete list of stocks by clicking on the ‘download’ link on the top right corner as shown below.

bse india all stocks list

An excel sheet will be downloaded by clicking on the link as shown above.

Note: The above excel sheet will contain a column of ‘GROUP’ with types A, B, T, XT, P etc. These are the group types of different companies as per BSE. You can read more about it here.

That’s all. This is how simple it is to download the complete list of stocks listed on the Bombay stock exchange (BSE). It was fast and simple, wasn’t it? 

ALSO READ

7 Must Know Websites for Indian Stock Market Investors

2. How to download the complete list of stocks listed on NSE?

You can download the complete list of companies listed on the National stock exchange from its official website of NSE. Here’s a quick link to the NSE website.

Here is exactly how you can download the complete list of companies listed on NSE:

1. Go to the NSE India Website.

2. On this website, go to the top menu bar and Select Market data –> Securities Available for Trading (Under the Trade Information Section).

How to find complete list of stocks listed in the Indian stock market NSE India

3. Click on ‘Securities available for Trading’

4. Next, click on ‘Securities available for equity segment (.csv)‘ to download the complete list.

How to find complete list of stocks listed in the Indian stock market NSE India 2

3. A CSV file will be downloaded by clicking on the link.

This is exactly how you can download the complete list of companies listed on the NSE (National Stock Exchange).

BONUS: Complete List of Stocks on NSE/BSE with Sector

You can also get the complete list of stocks listed in the Indian stock market using the Trade Brains Portal website. Here is how you can download the list of companies:

1. Go to the Trade Brains Portal. Here is the link: https://portal.tradebrains.in/

2. Select ‘Screener’ on the top Menu Bar

3. Next, use a filter of ‘Market cap > 0’. This will give you the list of all the listed companies on Indian stock exchanges i.e. BSE and NSE.

trade brains screener all stocks

4. Further, you can also apply different filters to select stocks based on different criteria like price, market capitalization, ratios, etc on trade brains portal websites.

This is how you use the Trade Brains Portal website to get the list of the companies trading on BSE or NSE.

Conclusion

In this post, we discussed how to find complete list of stocks listed in the Indian Stock Market. Using the above steps, you can easily download the complete list of the companies listed on the Indian stock exchange using the official website of BSE & NSE. You can also get the same data using Trade Brains Portal website.

In addition, there are few other websites also like Money control, screener, etc where you can find the complete list of stocks listed in the Indian stock market. However, the easiest place to find the complete list is described in this post.

That’s all for this post. I hope this post is useful to the readers. If you have any questions, feel free to comment below. Have a great day and Happy Investing.

How to Choose a Stockbroker? 10 Ultimate Tips For beginners!

Tips for Beginners on How to Ch0ose a Stockbroker: Selecting your online stockbroker is one of the biggest steps that you will take while entering the world of investing. You cannot start investing or trading in stocks in India until you have a stockbroker (unless you are using someone else’s account :D). These stockbrokers offer demat and trading accounts that are essential for the investors to buy/sell stocks.

When I first opened my brokerage account, I had no one to guide me. I belong to a family where no one invests in stocks. My father has few holdings in mutual funds (paper certificates) and LICs. However, he never had an online stock broking account and never invested directly in the stock market. Therefore, I had to go through a number of websites to educate myself about where to start and how to choose a stockbroker in India.

That’s why I am writing this post for beginners so that they don’t have to go through all those troubles and also can save a lot of time. In addition, I’ll also recommend the three best stockbrokers in India for beginners for the ease of the readers. Let’s get started.

Word of Advice: Picking your first Stockbroker

First of all, I would like to mention that your first broker doesn’t necessarily is required to be your stock broker for life. You can definitely switch to another broker anytime you like. Moreover, you can even transfer your existing shares from one brokerage account to another. Personally, I have also switched brokers from ICICI Direct to Zerodha.

However, it is not recommended to switch brokers as it involves some hassles and wastes time unnecessarily. Why not go with the best stockbroker itself so that you don’t have to switch accounts later.  Moreover, it is good to start with a suitable broker, and choosing a bad stockbroker may ruin your first experience in investing/trading. In addition, it may also cost you some bucks as switching costs if you moved to another broker.

Next, you’ll need to open Demat and Trading Accounts (2-in-1 account) with your stockbroker. Most brokers offer these two accounts altogether. These accounts are necessary to invest or trade in stocks in India.

Before we dive into the topic, let me give you the smallest explanation of what’s the difference between demat and trading accounts so that we are all on the same page.

Just as money is kept in your savings account, similarly your bought stocks are kept in your demat account. When you buy a stock, it gets credited to your demat account. And when you sell it, it gets debited from the same. At any time, your demat account reflects all your holding stocks. By the way, a demat account is a short form for a ‘Dematerialised account’.

On the other hand, a trading account is a medium to buy and sell shares in a stock market. It is used to place purchase or selling orders for a stock in the market. Here’s a guide to learn more about demat and trading accounts in India.

How to Choose a Stockbroker? – Factors to Consider

How-to-choose-a-stockbroker-in-india

In order to Choose a Stockbroker in India, it is required that you spend some time researching about the stockbrokers. Conduct your own independent research. Listen to the advice of the experienced investors on which stockbroker they use, but do not follow them blindly. Their requirements might be different from yours. You can carry out your own research. Get a general idea about the stockbroker, their account opening charges, facilities offered, trading apps/websites etc.

Next, there are a number of factors that you need to check before choosing your stockbroker. Here are a few of the must-check factors while choosing a stockbroker in India:

– Background & Reputation of the broker

The first step is to check the background of the stockbroker and their reputations. How old are the brokers and what their customers say about their platforms? You can read the reviews, complaints and have a survey of the personal experience of the existing users. If you are going to use the mobile app to make investments, check the mobile app ratings on the google or app store.

Another way of checking the reputation of brokers is by looking into how big they are based on their total number of active clients. The bigger the stockbroker, the more stable will be its trading platform. Here’s a list of 15 of the biggest stockbrokers in India based on the number of clients as of 28 Feb 2021:

S.NoName of Stockbroker# of Active ClientsMarket Share (%)
1ZERODHA BROKING LIMITED339105918.85%
2RKSV SECURITIES INDIA PRIVATE LIMITED (Upstox)196086110.90%
3ANGEL BROKING LIMITED14541678.08%
4ICICI SECURITIES LIMITED14353567.98%
5HDFC SECURITIES LTD.9440915.25%
65PAISA CAPITAL LIMITED8458794.70%
7KOTAK SECURITIES LTD.7176583.99%
8SHAREKHAN LTD.6766313.76%
9NEXTBILLION TECHNOLOGY PRIVATE LIMITED (Groww)6565193.65%
10MOTILAL OSWAL FINANCIAL SERVICES LIMITED5433113.02%
11AXIS SECURITIES LIMITED4392732.44%
12SBICAP SECURITIES LIMITED3223531.79%
13IIFL SECURITIES LIMITED2875031.60%
14GEOJIT FINANCIAL SERVICES LIMITED1970011.10%
15EDELWEISS BROKING LIMITED1571980.87%

– Brokerage and Other Key Charges

Stockbrokers are the registered members of the stock exchange and they facilitate buy & sell orders in the share market for their clients. They charge some commission for offering this facility known as brokerage charge.

Now, there are two types of stockbrokers in India: A) Full-service broker & B) Discount broker.

A full-service broker provides advisory service and other premium facilities along with the trading platform. These brokers charge high commissions on every trade their clients execute as a percentage of each trade executed. On the other hand, discount brokers only provide the trading facility. They offer low brokerage and charges a flat fee per transaction.

Read more here: Full service brokers vs discount brokers: Which one to choose?

Choose a suitable broker according to your preference. If you want stock research advisory, research reports, and other personalized facilities, go with a full-service broker. If you are planning to invest or trade on your own and want to may the least brokerage, go with a discount broker.

Brokerage Charges for different brokers:

  • Full-service brokers: 0.3-0.5% of Turnover of Delivery | 0.1-0.275% of Turnover on Intraday
  • Discount brokers: FREE for Delivery trades | Flat Rs 10 or 20 for All other trades

These days, most investors and traders are preferring discount brokers (like Zerodha, Upstox, Angel Broking, etc) as it helps them to save thousands of rupees which is deducted as brokerage. Moreover, many discount brokerage firms have started offering premium features to their clients at no additional cost.

Quick Note: You can use this brokerage calculator to get an idea of how much brokerage and other charges you’ll pay while trading or investing in stocks.

— Customer Services

If you are new to investing/trading, you will require some customer service, unless you already have a mentor or advisor. Check the customer service provided by the stockbroker.

Investing using online platforms is easy to use and has a number of resources available on the internet. However, there may be a few times when you will require technical support. It’s good to have someone to look for in such cases. Do not avoid customer services. Look for the reviews before opting for any stockbroker and if the customer service is poor, then search another broker.

An easy way is to try calling their customer care helpline number. If it takes years for the customer executive to pick up the phone, then avoid that stockbroker. Further, if you want one-to-one customer service, then check the website of the stockbroker if they provide personal services. In addition, you can also look into if Investors Education initiatives or archives of issues are available that you can navigate through in case you’ve stuck anywhere.

— Trading Platforms Offered

This is one of the most important factors to examine. Inspect whether the trading platform offered is friendly, its user interface, latency, and easy to use. Check the demo videos of the trading platform on youtube. Moreover, also read the reviews of the mobile app on Google and iOS platform.

Checking the trading platform is the key factor while choosing a stockbroker and all other factors are secondary. This is because you’ll spend a lot of time on the trading platform only to make your buy/sell orders. If you’re not comfortable with the platform, it will be a lot of trouble for you.

zerodha kite app

— Advisory & Research Facilities

If you are ‘not’ planning to invest on your own and need an advisory/ research report, then check for the facility offered.

The reliability of the advisory is also a must to check. The stockbroker should have a good reputation in advisory and research works. Many leading stockbrokers in India offer Research reports and advisory facilities like Angel Broking, ICICI Direct, Motilal Oswal, Sharekhan, etc.

– Range of Facilities Offered

If you are looking for diversified investing and trading options, look for the one stockbroker which offers all. For example, if you’re planning to trade in Stocks, Derivatives (futures & options), currencies, commodities etc, then look for a broker that offers the facility to trade in all, not in just one.

Similarly, if you’re planning to also invest in other options like mutual funds, bonds, etc, then check if this range of facilities is available with that broker or not. These days, most leading brokers offer services in multiple investments and trading instruments.

— Hidden Charges

There should be ‘no’ or minimal hidden charges while investing and trading. All the charges incurred while transactions should be specifically mentioned. Aske for any hidden charges with your customer care executive before selecting the stockbroker. Besides, you can also check the pricing and charges section of the stockbroker to know about all the charges that must be paid by clients.

Most stockbrokers offer brokerage calculators on their websites now. Remember, transparency is the key to any service.

— Fund Transfer

The easy linking facility of your trading account with your saving account should be available. Look for the fund transfer process in your stockbroker. Online money transfer and withdrawal should be fast and easy. Moreover, also check if there is any fund transfer fee with that stockbroker.

— Tools for Education/Learning

Many stockbrokers provide education facilities to their clients. For example, Zerodha educates its clients via ‘Varsity’ and through its blog for free. If you are in the learning phase, look if any tools of education are available with your stockbroker.

This is not a ‘must have’ factor for your stockbroker, however, it can be a worthy add-on.

Related Post: How to Open a Demat and Trading Account at Zerodha?

A few other points to know while Choosing Stockbroker

Most of the important points while picking your stockbroker are already covered above. However, there are few other points also that a beginner should know on how to choose a stockbroker. They are listed below:

– Discounts and low-commission are not always good:

If you are new to the market and you will need a lot of help in the service while getting started. Although, it’s good to pay less, however, if you are getting premium facilities at a commission, it’s better for beginners. Once you are experienced, you can carry out your investing/trading on your own.

Further, these days, there are a lot of discount brokers in India which offer the cheapest brokerages. You have multiple options even in the discount brokers. Do not always go with the cheapest one, but also look into the other factors discussed in this article.

— Offline/Local Branches Availability

There are very few offline branches of discount brokers, whereas there are tons of branches of older full-service brokers. For newbies who are not that comfortable online, offline branches can be a good alternative. If you can find a branch in your city, where you can easily go and personally meet the customer care executive to clear all your doubts, then it’s good to go.

— Look for Extras/Add-ons

Many stockbrokers provide extras like FREE Account Opening, or ‘No Annual Maintenance Charges (AMC), free additional vouchers, etc. Check the add-on and added benefits. It’s always good to have some bonuses.

Top Picks For Best Demat & Trading Account in India

ZerodhaNo 1 STOCKBROKER IN INDIA
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5paisaGET FREE DEMAT ACCOUNT
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That’s all for this post on how to choose a stockbroker in India. The points discussed in this article are key factors to look at before selecting stockbrokers. I hope this post on How to choose a stockbroker? was helpful to you. If you have any doubts, feel free to comment below. I will be happy to help you out. Have a great day and Happy investing.

15 Biggest Stockbrokers in India With Highest Active Clients

15 Biggest Stockbrokers in India With Highest Active Clients!

List of Biggest Stockbrokers in India (Updated: Mar 2021) In this article, we are going to look at the 15 Biggest Stockbrokers in India based on their total number of unique active clients.

There are over three hundred stockbrokers in India registered with SEBI and different stock exchanges. Even on National Stock Exchange (NSE), there are 299 registered stockbrokers in India (including defaulters or expelled) as of 28th Feb, 2021. When you are looking for the best stock broker to open your demat and trading account, one of the most straightforward factors to look into is its total number of active clients. Although a large client base doesn’t guarantee a better service, however, being a big firm, it reduces the possibility of the brokerage firm disappearing or running out of the service soon enough. 

These days, one and all stockbrokers will argue that they are trustworthy as they are registered with SEBI. However, just because they are registered with SEBI doesn’t make them reliable for the long term. Time and again, a lot of such small brokers are either expelled out of the exchange or simply go out of the business and files for bankruptcy. And this leads to a lot of trouble for their current clients.

Therefore, a safer option for the customers to avoid any such kind of inconvenience is by opening their trading account with the biggest stockbrokers in the Industry.

15 Biggest Stockbrokers in India with Highest Active Clients

Several websites rank stockbrokers in India based on different factors like their brand value, trading platforms, customer services, facilities offered, complaint ratio, etc. However, in this article, we are not going to look into these factors. 

Here, we are going to look at just one factor, i.e. the total number of unique active clients for that stockbroker. In this post, the stockbroker with the highest number of clients is ranked first, followed by the subsequent stockbrokers with top active clients. 

For this approach, we are going to use the data available on the NSE India website. The national stock exchange website provides the details of the monthly total number of unique clients of the different stockbrokers registered with it. Here’s a quick link to the page. You can also download the spreadsheet available on this page to analyze the stockbrokers further. 

Here are the 15 Biggest Stockbrokers in India based on the total number of unique active clients:

S.NoName of Stockbroker# of Active ClientsMarket Share (%)
1ZERODHA BROKING LIMITED339105918.85%
2RKSV SECURITIES INDIA PRIVATE LIMITED (Upstox)196086110.90%
3ANGEL BROKING LIMITED14541678.08%
4ICICI SECURITIES LIMITED14353567.98%
5HDFC SECURITIES LTD.9440915.25%
65PAISA CAPITAL LIMITED8458794.70%
7KOTAK SECURITIES LTD.7176583.99%
8SHAREKHAN LTD.6766313.76%
9NEXTBILLION TECHNOLOGY PRIVATE LIMITED (Groww)6565193.65%
10MOTILAL OSWAL FINANCIAL SERVICES LIMITED5433113.02%
11AXIS SECURITIES LIMITED4392732.44%
12SBICAP SECURITIES LIMITED3223531.79%
13IIFL SECURITIES LIMITED2875031.60%
14GEOJIT FINANCIAL SERVICES LIMITED1970011.10%
15EDELWEISS BROKING LIMITED1571980.87%

Please note that the total number of active clients of all stockbrokers is 1,79,87,749 (1.79 Cr) as of Feb 2021, mentioned on the NSE India website.

From the above table, you can quickly notice that Zerodha is the biggest stockbroker with the highest numbers of unique clients registered on the National stock exchange in India. 

As of 28th Feb 2021, Zerodha constitutes around 18.85% of the total market share of the active clients registered on the National Stock Exchange. It has over 33.9 lakh active customers compared to a total of over 1.79 Crore active clients of all stockbrokers on the NSE.

What makes this list even more interesting is that Zerodha was just founded in 2010 and still has been able to outrank all the old and well-matured traditional brokers. Anyways, other discount brokers like RKSV Securities (Upstox), Angel Broking, 5Paisa, and Groww (NextBillion Technologies) have also made into the top ten stockbrokers in India as per the number of active clients.  

Also read: Zerodha Review –Discount Broker in India | Brokerage, Trading Platform & More

According to the above table, Zerodha is followed by Upstox, which ranks second and has over 19.6 lakhs unique clients. 

The other most prominent stockbrokers in this list are Angel Broking (14.5 lakh clients), ICICI Securities (14.35 lakh clients) HDFC Securities (9.44 Lakh clients), 5Paisa (8.45 lakh clients), Kotak Securities (7.17 lakh clients), Sharekhan (6.76 lakh clients), Groww (6.56 lakh clients) and Motilal Oswal Group (5.43 lakh clients). Together these 15 biggest stockbrokers constitute over 70.19% of the total share of the unique clients registered on NSE.

Also read: Compare Online broker in India – Stockbrokers list

Bonus: Additional Top Stockbrokers

Here is a list of the ‘Next’ 15 biggest stockbrokers in India with the highest active clients registered on the National stock exchange as of 28th Feb, 2021.

S.NoName of Stockbroker# of Active ClientsMarket Share (%)
16SMC GLOBAL SECURITIES LTD.1357150.75%
17RELIGARE BROKING LIMITED1298550.72%
18NIRMAL BANG SECURITIES PVT. LTD.1237680.69%
19ALICE BLUE FIN SVCS P LTD1191060.66%
20RELIANCE SECURITIES LIMITED1177990.65%
21MARWADI SHARES AND FINANCE LIMITED1090490.61%
22VENTURA SECURITIES LTD.950700.53%
23ANAND RATHI SHARE AND STOCK BROKERS LIMITED847950.47%
24SAMCO SECURITIES LIMITED764360.42%
25JAINAM SHARE CONSULTANTS PRIVATE LIMITED743480.41%
26ASTHA CREDIT & SECURITIES (P) LTD699930.39%
27PAYTM MONEY LTD.698790.39%
28TRADEBULLS SECURITIES (P) LTD.668660.37%
29CHOICE EQUITY BROKING PRIVATE LIMITED606710.34%
30ADITYA BIRLA MONEY LIMITED550420.31%

That’s all for this article. I hope this list of 15 Biggest Stockbrokers in India with highest Active Clients was helpful to you. Further, please comment below which brokerage firm you’re using for trading in the Indian stock market and your review for the same. Happy investing!

Value investing in india a complete guide

Value investing in India – An Ultimate Guide for Value Stock Pickers!

Understanding Value investing in India: There are many successful investment strategies in the stock market. Three of such popular investing strategies are- Value investing, growth investing, and dividend investing. It’s really difficult to say which one is better as it totally depends on the investor’s preference, style, and knowledge.

Nevertheless, value investing is one such proven strategy that has created huge wealth for many investors over the years who have followed this strategy with discipline. In fact, one of the biggest followers and advocates of value investing is the legendary investor, Warren Buffett.

“Price is what you pay. Value is what you get.” -Warren Buffett

In this post, we are going to discuss the principles of value investing. It’s going to be a captivating post for long-term investors who are trying to understand the concept of value investing in India. Therefore, without wasting any further time, let’s understand the concept of value investing in India.

What is value investing?

The basic strategy of value investing is very simple. You find an amazing company, calculate its true value (also known as Intrinsic value) and pay a lot less to purchase the stock (when the market is down or when the stock is on sale in the market). As you have bought the stock at a discount, you can make a profit by selling the stock when the price reaches its true value.

For example, if the true value of a share (as per your calculations) is Rs 200, however, it is currently trading at Rs 120. Then the stock is undervalued. Value investing strategy educates investing in such stocks that are trading way below their true value or are undervalued. Here, you’ve to wait for their prices to appreciate and reach their actual intrinsic value to make profits.

A few common approaches that value investors use for stock valuation (or its intrinsic value) are Relative and Absolute Valuation.  In order to find undervalued stocks using the relative valuation, financial tools like lower than average price to book value, a low PE ratio, or higher dividend yields are used. On the other hand, you can also use absolute valuation techniques like Discounted Cashflow (DCF), Dividend Discount Model (DDM), etc to find out the true value of stocks.

Quick Note: We’ve already covered important financial ratios and valuation methods like relative valuation, DDM etc in my earlier posts. Further, if you want to learn different valuation tools (like DCF, ROE valuation etc), feel free to check out our online course: ‘HOW TO PICK WINNING STOCKS?’

A brief history of value investing:

“It is much better to buy a wonderful company at a fair price than a fair company at a wonderful price.” -Benjamin Graham

Although value investing is a very old strategy of investing in stocks, however more than anyone else, Benjamin Graham is credited for popularising this concept. Graham developed the value investing philosophy after surviving the great depression of 1929-30s, when the Dow lost an unbelievable 89% over a three-year span.

Graham was the professor of finance at Columbia business school and authored the book ‘The Intelligent Investor’ in 1947. Coincidently, Benjamin Graham was also the mentor of the Billionaire Investor “Warren Buffett“. After inheriting the concept of Value Investing from Graham, Buffett further popularised it among the investing population.

Here’s a snippet of Value investing Strategy from the book “The Intelligent Investor” by Benjamin Graham:

chapter 1 the intelligent investor

(Image: A snippet from Ben Graham’s book – The Intelligent Investor)

Like Graham, Warren Buffett also looks for undervalued companies that are steady cash flows driven, alongside a straightforward business model. Buffett’s company- “Berkshire Hathaway” has generated an average annual return of above 22% for more than 50 years using Value investing strategies, making Buffett one of the richest people in this world.

Three Fundamental philosophies of Value investing

Value investors believe that the market overreacts to good and bad news and hence they do not correspond with the company’s long-term fundamentals. Therefore, at a specific time in the market, stocks can be overvalued, undervalued or decently valued.

The strategy of value investing is to find the undervalued stocks -which are trading at a discount because of short-term reasons or market not yet realizing their true potential. Here are the three fundamental philosophies of value investing:

1. Look for the True/Intrinsic Value

What distingue value investing from other popular strategies is that value investors believe that stocks have an intrinsic or true value. They find this concrete number using different valuation methods like discounted cash flow analysis. When the market value of that stock is below the calculated value, the value investors purchase that stock. Further, as these investors have bought the stock at a discount, they sit back and relax until the stock reaches its true value.

Quick Note: Value investors do not believe in the Efficient Market Hypothesis (EMH).

2. Avoid following the Herd

“Be greedy when others are fearful and be fearful when the other’s are greedy.” -Warren Buffett

Interestingly, you can find a large population of investing community following herd mentality psychology in making various financial decisions like buying a new property or investing in the stock market. Seeing others getting profited with investment, our brain tells us to go for it without a second thought.

However, the value investors avoid the herd mentality. They do not believe in group thinking or buying a stock just because everyone else is buying. That’s why, many a time- the value investing strategies looks similar to contrarian investing

charlie munger quote value investing

3. Always have a “Margin of Safety”

The margin of safety is the guiding philosophy of value investing to reduce risk and avoid loss. Here, the value investor gives a benefit of doubt to themselves by purchasing a stock with a margin of safety.

For example, let’s assume that an investor calculated the true value of a company to be Rs 100. Here, buying the stock at any price below Rs 100 can be considered as an undervalued price. However, if the investor wants a margin of safety of 20%, then he/she will buy that stock at Rs 80 or less. Here, the value investor is safeguarding his investment by adding a significant margin of safety in his/her purchase price.

Does value investing in India works?

Yes, Definitely!!

Tell me one thing- If I offer you to purchase the stock of a good business at a discount of 50% on its share price- Isn’t this a good deal profitable to you? You can sell it for a price way higher than your original purchase price in the future. Even if you’re not planning to sell it, you’ll be happy that you’ve bought the shares of an amazing company at a great discount. You can keep that stock in your portfolio confidently.

Value investing works on the same concept everywhere. Here, you buy superb stocks at a price below their intrinsic value (i.e. discount price) and hold it till they reach their true value.

So, does value investing in India works? Absolutely!! Value investing is a time-tested strategy. From Benjamin Graham to Warren Buffett to Joel Greenblatt to Raamdeo Agrawal -all these super investors have made a massive fortune by following the strategies of value investing.

Best books to learn value investing in India

I tried to cover most of the critical points related to value investing in India in this post. However, there are still many concepts yet to learn for beginners. Here are the best books to learn about value investing in India. (Note that few of the books mentioned below are written by foreign authors, but the concepts are applicable everywhere)-

Also read: 7 Best Value Investing Books That You Cannot Afford to Miss.

7 Best Value Investing Books That You Cannot Afford to Miss

Closing Thoughts

Value investing is a proven strategy to build wealth. And value investing in India definitely works for those who apply this strategy with discipline. However, the exact definition of value investing is subjective and depends on the investor’s style of investing.

While many value investors only look for undervalued stocks, few also consider the growth, future earnings expectations, and cash flows to determine the future value. For example, the star fund manager Peter Lynch (Author of One up on wall street) was more interested in undervalued stocks with good growth prospects. That’s why he preferred PEG ratio over PE ratio. Such kinds of stocks are called GARP (Growth at Reasonable Price) stocks. 

Whatever the approach- the underlying principle of value investing is the same– find an amazing company and pay less than what it’s true worth with a significant margin of safety. That’s all for this post on Value investing in India. I hope it was useful to you. Have a great day and Happy Investing. 

What is The Minimum Money I Need to Start Stock trading in India cover

What is The Minimum Money I Need to Start Stock trading in India?

Understanding what is the minimum money I need to start stock trading in India: Whenever a newbie enters the work of the stock market, the biggest question that comes to his/her mind is that What should be the ideal amount to start investing in the Stock Market or What is the minimum money I need to start stock trading in India. Basically, they want to trade or invest in share market, but do not know how much to invest.

In this post, we are going to discuss what is the minimum amount that one needs to invest in stock market. By the end of this post, you’ll be able to figure out how much money you need and what’s the minimum requirement to trade or invest in share market. Let’s get started.

What is The Minimum Money I Need to Start Stock trading in India?

The shortest answer to all these questions is that there is no minimum money required to start investing in the stock market in India. You can buy stocks for even less than Rs 10 also.

It totally depends on which stock you find interesting enough to trade or invest. Indian stock exchanges, BSE & NSE, have a number of stocks pricing less than even Rs 10. You don’t need to have thousands or lakhs to start trading in India. Any amount from which you can buy a stock is decent enough to start trading, no minimum money required to start trading in the Indian stock market.

Here is a list of a few popular companies whose stock prices are less than Rs 100 (at the time of writing this post).

CompanyIndustry Market Cap (Rs Cr)Current Price (Rs)
Indian Oil Corporation Ltd.Refineries92447.0498.2
Punjab National BankBank - Public40129.5238.3
Bank Of BarodaBank - Public38759.3674.95
IDBI Bank Ltd.Bank - Private38547.3635.85
Yes Bank Ltd.Bank - Private37832.9115.1
IDFC First Bank Ltd.Bank - Private34594.360.95
Adani Power Ltd.Power Generation/Distribution33613.2287.15
Steel Authority Of India Ltd.Steel & Iron Products29843.0572.25
Vodafone Idea Ltd.Telecommunication - Service Provider28275.629.84
Indian Overseas BankBank - Public27449.7716.7
NHPC Ltd.Power Generation/Distribution24208.5324.1
Union Bank Of IndiaBank - Public22552.0935.2
Bank Of IndiaBank - Public22479.6968.6
Bharat Heavy Electricals Ltd.Engineering - Industrial Equipments17445.1450.1
The Federal Bank Ltd.Bank - Private15998.8180.15
GMR Infrastructure Ltd.Engineering - Construction15814.1826.2
JSW Energy Ltd.Power Generation/Distribution13618.782.9
UCO BankBank - Public13558.3713.67
Bank Of MaharashtraBank - Public13481.1320.55
Central Bank Of IndiaBank - Public10546.6317.95
National Aluminium Company Ltd.Aluminium & Aluminium Products10503.4356.3
Alok Industries Ltd.Textile10402.1820.95
SJVN Ltd.Power Generation/Distribution10099.5725.7

You can easily invest in any of these companies.  Funny, the stock prices of these companies are even less than the Ola or Uber ride fare that you take in your hometown.  Still, people speculate that buying stocks are expensive. In addition, you can also find a complete list of stocks listed on Indian stock exchanges here.

Overall, the answer to the question of ‘what is the minimum money I need to start stock trading in India?’ is that there is no minimum money limit required for starting stock trading in India. However, is this all that you wanted to learn from the topic of the post? I don’t think so. Let’s move forward to understand a few more things that a beginner should know.

Ideal Amount for Beginners to Start Investing or Trading

The next big question should be then ‘How much should I invest in the stock initially if there is no minimum money I need to start stock trading?’.

The answer is that if you are new to the market and still in the learning phase, it is always recommended to start small. Invest as low as possible and focus on learning. Anything between Rs 500- Rs 2,000 is good enough. You really don’t want to lose thousands of money at the start of your investment journey and then angrily leave and promise to yourself that you won’t ever return to the market.

But, this doesn’t mean that you should take this amount as a stern rule for your initial investment. Suppose, you found a stock, which is a bit costlier, say Rs 2500 per share. Here, you have done your homework, read the stock fundamentals, and are confident that the stock will give a good return in the future, then, you should go for it. Anyways, as a thumb rule for beginners, anything between Rs 500- Rs 2,000 can be used as the first stock market investment amount.

Want to learn more? Here is a best selling book on stock market which I highly recommend to read: Beating the street by Peter Lynch

The best advantage of this thumb rule is that you won’t lose too much if things don’t work out as you imagined. Maybe, you misinterpreted the stock or did the fundamental study wrong, or the stock price fell due to some bad fortune. Still, you won’t be affected too much financially by the loss. Nonetheless, this investment will teach you a few lessons. As the saying goes: “Failures are the best teachers.”

A Few Other Points to Know

— Your First investment will teach you a lot

From your first investment, you will learn a lot. Remember, it’s not always about winning. You should always remember this famous quote ‘Sometimes you win, & sometimes you learn’. Further, from your first investment, you will learn more important things. You will learn what things to do and moreover, you will learn what things not to do.

Besides, losing small money won’t affect your morale and you can come back in the game again, and next time even more prepared and informed. On the other hand, if you win i.e. the stock performed well, then congratulations. You have done a good job! 

Your first investment teaches you a great lesson if it is a failure. On the other hand, if your first stock is a winner, it gives tremendous joy and becomes a memory for a lifetime. Both ways, you’re gonna receive something. Either a lesson or joy.

In my case, I bought three stocks during my first investment. Out of three, two performed well and the third underperformed for three continuous months. Although the overall portfolio was in profit, still the returns were not as good as I expected. Therefore, I sold the third stock after the third month. (Quick spoiler: The third stock became a multi-bagger in the next two years. But, I don’t have any regrets.)

For beginners, I will suggest following their stock portfolio for three-five months before investing heavily in the market. The initial big profits on your stock might give you great confidence to keep buying additional stocks. But you shouldn’t be greedy at that moment.  You must remember that for beginners, it’s more important to learn how to do value investing, that to earn money. And once you have learned the basics, the game is yours.

Also read: How to create your Stock Portfolio?

minimum money I need to start stock trading-4

 

— Basic Charges and One-time Payments

Before we move forward, you need to know that Demat and Trading accounts are required to trade or invest in stocks. For both these accounts, account opening charges and Annual maintenance charges (AMC) will be applicable. The account opening charges can be somewhere between Rs 200-500 (one-time payment) and AMC can be Rs 300-600 per year for most stock brokers with which you open your account. Therefore, be ready for these charges.

Further, there are also some additional charges while buying a stock online and the stock buyer/sellers have to pay them. They are generally less than even 0.5% of the amount of the transaction. The additional charges are brokerage charges, transaction charges, GST, etc. Therefore, you also have to keep these charges in mind during buying a stock. Although these are a very small amount, still they will add up in the final amount of the stock that you bought.

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— 100 Minus your age rule

There is a famous rule regarding how much you should invest in the stock market and widely known as the ‘100 minus your age rule’. The rule is based on the principle of gradually reducing your risk as you get older. The rules go like this. The percentage of the stock holding in your net worth should be equal to 100 minus your age.’

For example, Let’s say your age is 20 and your total savings to date is Rs 1,000. Then, the amount that you should invest in the stock market should be (100-20) = 80% of your total net worth. In other words, you should invest Rs 800 in the stock market if you are of age 20 from a total saving of Rs 1,000.

You can read the complete post about ‘100 minus your age rule’ here.

— The X/3 Rule of Investing

This is another popular rule for beginners to reduce risk while investing. The rule says to invest only x/3 amount in the beginning if x is the total amount you intended to invest in a stock. After a few weeks, you can invest your next x/3 amount to the stock if it’s doing good. And finally the last x/3 again after another few months.

For example, if you intend to invest Rs 10,000 in a stock, don’t buy from the whole amount all in one go. Invest only 10,000/3=  Rs 3,333 initially. If you find your investment grow, then you can add Rs 3,333 in the next round of investment and the last Rs 3,334 in the final round. The rule greatly minimizes the risk and helps in averaging out the purchase price.

Anyways, a minor problem with this rule is that it reduces the focused amount. Therefore, the final profit might be a little less than expected if the whole amount was invested at the same time. Still, it’s a great rule for stock market beginners and helped a lot of newbies to reduce their risk and losses significantly.

There is one more rule called the ‘75% profit rule’. However, it is more like a hypothesis than a rule. It states that if 75% of stocks in your portfolio are doing good, then you can invest further. For example, if you have bought 4 stocks and 3 of them are doing good, then it means that your strategy is working and you can increase your investment. The chances of all the stocks in your portfolio(4/4) working great is very limited. Even Warren Buffett, the greatest investor of all time, has some stocks in the portfolio which gives him negative returns.

In short, if 75% of your stocks are doing great, it means that your strategy is good and it’s not the luck that is driving your portfolio. In other words, if you have only one stock in your portfolio and it’s growing fast, there might be a luck factor. But if 7 out of 10 stocks in your portfolio are growing, it’s more because you did your research correctly.

minimum money I need to start stock trading-3

Quick Note: If you are new to stocks and confused where to start, here’s an amazing online course for the newbie investors: INVESTING IN STOCKS- THE COMPLETE COURSE FOR BEGINNERS. Enroll now and start your stock market journey today!

Closing Thoughts

For all those who are asking ‘What is the minimum money I need to start stock trading in India?’, the answer is that there isn’t minimum money you need to start trading in India. Anything that suits you is good enough for the market. Any money at which you can buy a stock works fine for entering the market. Any amount that you are ready to invest, is great to start stock trading in India.

That’s all. These were the basics tips and tricks for beginners to invest in the stock market. Also remember the answer to the original question ‘what is the minimum money I need to start stock trading?’ is that there is no minimum money you need to start stock trading. That is no lower limit for that minimum money you need to start stock trading.

Lastly, I hope my post on what is the minimum money I need to start stock trading in India is useful to you. If you need any further clarification or have any doubts, feel free to comment below. I’ll be happy to help you out. Have a great day and happy investing.

Top 10 Warren Buffett Quotes on Investing and Famous Lines!

Handpicked top 10 Warren Buffett Quotes on Investing: Warren Buffett, the most renowned investor of all time and one of the richest men on earth, needs no introduction. He’s is probably the most famous figure when it comes to the investment world. This veteran investor and CEO of Berkshire Hathaway, an American multinational conglomerate holding company is known for his investing prowess.

As the world’s greatest stock market investor, people constantly look at Warren Buffett for investment advice. A quick google search will give you millions of results about the famous quotations by the legendary investor. Moreover, this clever stock picker has also an amazing wit & sense of humor. The philanthropist investor, who has pledged to give 99% of his total worth to the philanthropic cause, has many of the famous quotations on investing that are worth sharing.

Today, we are covering the top 10 Warren Buffett Quotes that will change the way you look at investing. Here it goes.

Top 10 Warren Buffett Quotes on Investing.

Here is the collection of the top 10 Warren Buffett Quotes on investing that will motivate and guide you in your stock market journey:

1. “Rule No.1: Never lose money. Rule No.2: Never forget rule No.1.”

This is probably the most popular quote by Warren Buffett and also his most important saying. The biggest rule for success in stock market investing is never to lose money. You need money to make money. Further, if you lose it, then it takes double the effort to reach even at your previous highs. Therefore, Rule No 1 and 2 is to never lose your money.

gain required to break even a loss

2. “Price is what you pay. Value is what you get.”

Through this quote, Warren Buffett advocates that Price and value are two different things. You can overpay to buy a product or underpay to get the same one (value investing). Always look into the value that you’re getting before paying the price.

3. “Only buy something that you’d be perfectly happy to hold if the market shut down for 10 years.”

This is a famous Warren Buffett quote on long-term investing. Here, Warren Buffett educates his audience that when you’ve bought a good stock for the long term, it doesn’t matter what’s happening in the market currently or short-term fluctuations in the market prices. Always look for a longer vision.

4. “We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful.”

In simple words, this Warren Buffett quote advocates avoiding herd mentality or herding. Do not blindly follow the crowd. Buy on the dips when everyone is selling as you’ll get good discounted prices on the shares. Sell, when everyone wants to buy as you’ll get a good selling price on the same shares.

5. “Risk comes from not knowing what you’re doing.”

This is the best Warren Buffett Quote on risk-taking. If you don’t know swimming, don’t jump in 20 ft water. A similar rule is applicable in stock market investing. Before you invest in stocks, get at least basic financial education. You are at the highest risk when you blindly invest in a stock without knowing anything about it.

6. “If you are not willing to own a stock for 10 years, do not even think about owning it for 10 minutes.”

Making short-term profits is really difficult unless you’re trained to do so. Do not get confused between investing and trading. Do not jump in stock just to book small profits and call it investing. When you’re investing, look for the long term.

7. “We don’t have to be smarter than the rest. We have to be more disciplined than the rest.”

The stock market is very tempting as Greed and fear run it. This famous quote by Warren Buffett educates that it’s more important to be disciplined in the stock market, than rather being just smart if you want to make consistent money in the stock market. Consistency needs discipline.

8. “Cash combined with courage in a time of crisis is priceless.”

When there is an amazing opportunity in the market, you need two things. First, enough cash or financial ability to take that call. And second, the courage to pursue that opportunity. This Warren Buffett Quotes advocates that a combination of good financial ability and courage can do wonders in the stock market.

9. “If you have more than 120 or 130 I.Q. points, you can afford to give the rest away. You don’t need extraordinary intelligence to succeed as an investor.”

Stock market investing is not rocket science. This Warren Buffett quote educates that you do not need to be supersmart to invest and make money from the stock market. Anyone can make good returns from the market if they are willing to learn and are disciplined.

10. “Unless you can watch your stock holding decline by 50% without becoming panic-stricken, you should not be in the stock market.”

This final quote by Warren Buffett advocates the risk involved in stock market investing. There are many factors that govern the stock price movement. There may be situations when one of your holding stocks may decline up to even 50% due to some bad news or unpredicted news. If you’re investing in the stock market, you should have enough risk appetite to move over it and should not be panic-stricken.

Quick Note: This rule may sound a little contradictory to the first quote discussed in this post. However, the first quote generally advocates about the net worth or the entire portfolio of the investor, not an individual stock. A single stock from your portfolio may decline significantly and you should have the risk apetite to handle it.

That all for the top 10 Warren Buffett quotes on investing. I hope these quotes from this oracle of Omaha have some impact on you and can also brighten your path to become a successful stock market investor. We have included most of the best quotes by Warren Buffett in this top 10 Warren Buffett quotes on investing list.

In the end, here’s one more of our favorite Warren Buffett quote that you should read:

top 10 warren buffett quotes on investing

Further, if you think that we missed any popular Warren Buffett quote, please let us know by commenting below. We’ll love to add that quote to our list too. Have a great day and Happy investing.

7 Best Stock Market Apps that Makes Stock Research 10x Easier!

List of Best Stock Market Apps in India 2021: Now a day, if you are a stock market trader, then it’s essential for you to stay updated with every minute market movements. The modern stock market traders keep tabs on the rising and fall of the stocks on daily basis and sometimes that too hourly. The high-speed internet and handy mobile apps have made the life of traders simple, faster, and efficient. These financial apps help the traders to stay informed and ready all the time.

From checking the real-time streaming market price of the stock, making a virtual portfolio, drawing stocks charts, following market trends to tracking your portfolio; everything is now accessible from your smartphone or tablet.

Therefore, today I am going to present to you the 7 Best Stock Market Apps that will make your stock research easier in India. Moreover, all the apps listed here are free. In short, be with me for the next 5-8 minutes to learn the best stock market apps for Indian stock research.

7 Best Stock Market Apps in India 2021

1. MoneyControl

best stock market apps money control

Play store rating: 4.1/5 Stars (349k Reviews)
Downloads: +10 Million
Available on: Android, IoS, Windows

This is my personal favorite mobile app for stock market news and updates. If you are planning to keep only one stock market app on your smartphone, then I will highly recommend you to have this one. The money control app is simple, yet has tons of information and news.

You can track the latest updates on Indian and Global financial markets on your smartphone with the Moneycontrol App. It covers multiple assets from BSE, NSE, MCX, and NCDEX exchanges, so you can track Indices (Sensex & Nifty), Stocks, Futures, Options, Mutual Funds, Commodities, and Currencies with ease.

Key Features:

  • Ease of Use: Easy navigation to all financial data, portfolio, watchlist and message board. Single search bar with voice search for stocks, indices, mutual funds, commodities, news, etc
  • Latest Market Data: Latest quotes of stocks, F&O, mutual funds, commodities and currencies from BSE, NSE, MCX, and NCDEX
  • News: All-day coverage of news related to markets, business and economy; plus interviews of senior management
  • Portfolio: Easy monitoring your portfolio across Stocks, Mutual Funds, ULIPs, and Bullion. Timely updates on the performance of your portfolio, and news & alerts relating to stocks you hold
  • Personalized Watchlist: Adding your favorite stocks, mutual funds, commodities, futures, and currencies to monitor. Get timely alerts in form of news and corporate action
  • Message Board: Follow your favorite topics and the top borders to get recommendations. Engage and participate in conversations relating to your portfolio or interest

You can download from google playstore here

(Source: Money Control)

2. Stock Edge

stock edge

Play store rating: 4.4/5 Stars (29k Reviews)
Downloads: +1 Million
Available on: Android, iOS

Stock Edge helps Indian Stock market traders and investors do their own research and make better decisions by providing them with end-of-day analytics and visualizations and alerts.

Key Features

  • Daily Updates Section for filtered major market tracking with News, NSE & BSE Corporate Announcements, Forthcoming events, & Corporate Actions and more.
  • FII/ FPI & DII Cash and Derivatives with strong historical data visualization Daily, Monthly & Yearly.
  • Opportunity Scans: Price Scans, Last week high/ low, Last Month high/ low, 52 weeks high/low, 3 days price behavior, etc
  • Track what Big Indian Investors are doing. Use MyInvestorGroup section to create your own group of Investors with their multiple names/entities etc
  • Sector Research: Sector List, Industries in a sector, Companies in a sector/Industry, Price Movement of last 30 days presented in a simple graph, Gainers, Losers etc.

You can download StockEdge App here!

3. Economic Times(ET) Markets

best stock market apps et market

Play store rating: 4.7/5 Stars (45k Stars)
Downloads: +1 Million
Available on: Android, IoS, Windows

This is another of the best stock market apps. I regularly use ET Markets app for reading market news and updates as they provide the best latest news. Moreover, the stock details feature on this app is always very well organized.

Key Features:

  • To track BSE Sensex, NSE Nifty charts live and get share prices with advanced technical charting.
  • Follow stock quotes real time, get tips on intraday trading, stock futures, commodities, forex market, ETFs on the go.
  • One-stop destination for mutual fund news, NAVs, portfolio updates, fund analysis, SIP calculator
  • Simple swipe to build, manage and access your portfolio; get customized news, analysis and data of the Indian stock market
  • To create your watchlist and track them regularly
  • Get analyses/expert views delivered to you, participate in discussions/conversations through comments

You can download ET Markets app here

4. Tickertape

tickertape app android

Play store rating: 4.5/5 Stars (9.3k reviews)
Downloads: +1 Million
Available on: Android, IoS,

This app has become quite popular in the best stock market apps in India in recent months and relatively newer when compared to other apps in this list. Tickertape is a modern stock analysis platform that is designed for keeping you at the center of the process. It focuses on salient metric analysis with powerful tools and robust ecosystem support that can be a catalyst to improve your knowledge about the market and their participation in the same.

Key Features:

  • Detailed stock analysis for all the publically listed companies in India.
  • Advanced Screener with 130 filters for you to analyze any Indian stocks.
  • Market mood Index (MMI) which is the market sentiment indicator trusted to correctly time their trades.
  • Peer comparisons, news, and events are presented in such a way that will help in your investment decisions.
  • Finally, Broker Connect to help you log in and connect your broker account to the Tickertape account.

You can download Tickertape app here

5. Yahoo Finance

best stock market apps yahoo finance

Play store rating: 4.1/5 Stars (171k reviews)
Downloads: +10 Million
Available on: Android, IoS, Windows

First of all, after downloading this app, you need to change the settings. In the region settings, select ‘India (English)’ for getting updates about the Indian stock market. The simple yet dynamic user interface makes it one of the best stock market apps for stock research.

Key Features:

  • Follow the stocks you care about most and get personalized news and alerts.
  • Access real-time stock information and investment updates to stay on top of the market.
  • Add stocks to watchlists to get real-time stock quotes and personalized news
  • Track the performance of your personal portfolio.
  • Find all the financial information you need with sleek, intuitive navigation
  • Go beyond stocks and track currencies, bonds, commodities, equities, world indices, futures, and more
  • Compare stocks with interactive full-screen charts

You can download Yahoo Finance app here!

Also read: 7 Best Mutual Fund Apps for Direct Investment

6. Market Mojo

best stock market apps market mojo

Play store rating: 4.2/5 Stars (2k Reviews)
Downloads: +100,000
Available on: Android

This is a new yet powerful app for stock market research. Market Mojo is great for the fundamental analysis of stocks. It offers pre-analyzed information on all stocks, all financials, all news, all price movement, all broker recommendations, all technicals and everything that matters in the Indian stock markets.

Key Features:

  • The Mojo Quality rank reflects the company’s long-term performance vs its peers.
  • Its Valuation determines how the stock is valued at its current price
  • The current financial trend indicates if the company is currently on a growth path and its ability to generate profits.
  • The Portfolio Analyser evaluates every hidden opportunity and risk in the portfolio and tells the investor what he should be doing rather than what he should be just tracking. Every portfolio goes through our test of seven parameters-Returns, Risk, Diversification, Liquidity, Quality, Valuation & Financial Trend

You can download Marketsmojo app here!

7. Investing.com

investing com mobile app

Play store rating: 4.6/5 Stars (355k Reviews)
Downloads: +10 Million Downloads
Available on: Android, iOS

Investing.com is a popular stock market app uses worldwide. Along with Indian stock details, you can also find the details about the world indexes and foreign stock exchanges. It offers a set of financial informational tools covering a wide variety of global and local financial instruments.

Key Features:

  • Live quotes and charts for over 100,000 financial instruments, traded on over 70 global exchanges.
  • Live updates on global economic events customized to your personal interests.
  • Build your own customized watchlist and keep track of stock quotes, commodities, indices, ETFs and bonds – all synced with your Investing.com account.
  • Breaking news, videos, updates and analysis on global financial markets, as well as technology, politics and business.
  • Quick access to all of our world-class tools, including: Economic Calendar, Earnings Calendar, Technical Summary, Currency Converter, Market Quotes, advanced charts and more.

You can download Investing.com app here!


BONUS App to Check: Best Stock Market Apps in India

1. Trade Brains -Learn to Invest

trade brains learning app Feature Page 2

Play store rating: 4.7/5 Stars (482 Reviews)
Downloads: +50,000
Available on: Android

Trade brains is a FREE financial education app focused on teaching stock market investing and personal finance to the DIY (do-it-yourself) Investors. Trade Brains app will guide you on how to invest in the Indian stock market with simple, easy-to-understand, and original content.

Key Features:

  • Pocket guide for stock market Investment.
  • LEARN- Step-by-step stock investing lessons.
  • Easy to understand contents on various investment concepts and strategies.
  • Financial Calculators to Simplify your investment planning
  • Stockbrokers section to compare the best Online Stockbrokers in India.
  • Investing quizzes to test your knowledge.

You can DOWNLOAD TradeBrains App here!

2. Trendlyne

trendlyne mobile app

Play store rating: 4.2/5 Stars (855 Reviews)
Downloads: +100,000
Available on: Android

Trendlyne is a fast-rising best stock market app in India for market analysis and research. This app offers stock data, stock screeners, alerts, stock recommendations from analysts, SWOT Analysis, portfolio and watchlist tools, and a real-time newsfeed and many other powerful features to its users. Here are a few of the key features of the Trendlyne App:

Key Features:

  • NSE and BSE market feeds, and Trendlyne’s trademark DVM Stock Scores
  • Fundamentals + Technicals – Keep track of price feeds, technicals, SMA/EMA, delivery and volume, insider trades, bulk block deals, and more.
  • SWOT Analysis for every Stock
  • Powerful Stock Screeners from Expert Strategies to Red Flags

You can download the Trendlyne App here for Android!

3. Intrinsic Value Calculator

trade brains learning app Feature Page 2

Play store rating: 4.0/5 Stars
Downloads: +10,000
Available on: Android

Want to find the undervalue valued stocks? Then, download this app!! The intrinsic value calculator App helps the users to calculate the true value of stocks by offering different IV calculators like a Discounted cashflow calculator or DCF Calculator, Return on Equity Valuation or ROE Valuation calculator, Graham number valuation or Graham Calculator, Price to Earnings valuation, PE Valuation calculator and more.

Key Calculators and Features:

  • Discounted Cashflow (DCF) Calculator: DCF analysis is a method of valuing a company using the concepts of the time value of money.
  • Fair Value Calculator: This is a simple discounted model calculator to help you find the fair value of a company using Earnings per share (EPS) forecast. With a few simple values, you can estimate the intrinsic value of a company.
  • Graham Calculator: This calculator is a good tool to find a rough estimate of the intrinsic value. It is simple and very easy to use.
  • Future Value Calculator: This is a basic compound interest calculator. It will give the future value of one time lump-sum investment.

You can DOWNLOAD IV Calculator App here!

That’s all. I hope this blog post ‘7 Best Stock Market Apps that makes Stock Research 10x Easier’ is useful to the readers. If I missed any amazing app that you believe should be mentioned here, feel free to comment below.

Further, please comment below which Stock market app is your favorite? Happy Investing!

3 Best apps Virtual Stock Trading in India (Without Risking Your Money)

3 Best Sites to Learn Virtual Stock Trading in India (Without Risking Your Money)

Best Sites to Learn Virtual Stock Trading in India (Paper trading): Entering the Indian stock market can be a tedious job for beginners. First, you need to open your brokerage account (demat and trading account). This means that you have to pay the account opening charges and go through the complex documentation process. Further, as stock market trading involves market risk, you can always lose some money— especially, you are a beginner.

So, how to solve this problem? How to Learn stock trading in India without actually risking any money. The answer is by using virtual stock trading platforms.

In this post, we are going to discuss how to use virtual stock trading platforms in India. It’s going to be an exciting post. Therefore, without wasting any time, let’s get started. Here are the topics that we’ll cover today:

1. What is Virtual Stock Trading?

A virtual stock trading (also known as paper trading) is similar to the actual trading where you can buy and sell stocks. However, here no real money is involved. You invest only in virtual money. Such platforms that provide virtual trading facilities are called stock simulators.

When you register in these stock simulators, you will get virtual money (Say Rs 10 lakhs or 1 Crore) in your account. You can use this money to practice trading.

Stock simulators provide real-time stock data, which means that you can try out different strategies of trading in stocks just like the real world stock market, but risk-free.

Also read: 7 Must Know Websites for Indian Stock Market Investors.

2. How do virtual stock trading platforms work?

It’s a really straightforward process to use a stock simulator to do the virtual stock trading. Here are the steps required to start virtual stock trading in India-

  1. Open a free account (using your email-id) on a simulating platform (discussed below).
  2. Get instant virtual money in your account.
  3. Start buying/selling stocks like real trading scenarios.
  4. Monitor your portfolio and track profit/loss.
  5. Try different strategies and learn the trading basics.
  6. When you get enough confidence and experience- move to real trading.

3. What are the pros and cons of using the virtual trading platform?

Nothing is perfect in this world. Although there are many advantages of using virtual trading platforms (especially for beginners), however, there are also a few disadvantages. Let’s discuss them- one by one:

— Advantages of using Virtual stock trading platforms

  1. No need to open a demat/trading account or go through any documentation process.
  2. No real money is required to start virtual trading.
  3. Real-time market scenarios to try out different strategies and to learn the basics.
  4. Risk-free trading practice.
  5. Okay to make mistakes and take risks as there’s no real loss here.

— Disadvantages of using virtual stock trading platforms

  1. There’s no emotional attachment as real money is not involved. 
  2. You can quickly get bored as winning/losing virtual money is not much exciting.
  3. The real market scenario might be a little different than the virtual trading environment. (In the virtual trading platforms, participants take extra risks and bets than they would actually take in a real scenario.)

Also read: 7 Best Stock Market Apps that Makes Stock Research 10x Easier.

#3 Best sites to learn virtual stock trading in India.

1. Moneybhai

moneybhai virtual stock trading website

Website — https://moneybhai.moneycontrol.com/

Moneycontrol website offers Moneybhai. It is a free virtual trading platform where you’ll get Rs 1 crore virtual cash on registration which you can use to invest in shares, commodities, mutual funds, or fixed deposits on the platform.

At Moneybhai, you can also compete with fellow Indian traders by joining different leagues. There’s also a free forum on this website where you can ask your queries or participate in the on-going discussion threads.

2. Trading View

tradingview - virtual stock trading app india

Website: https://in.tradingview.com/

TradingView is another popular virtual stock trading website/app in India. It is one of the best paper trading websites in terms of the facilities it provides like charts, technical tools are more. Users can sign up for free and connect to Paper trading to start virtual trading.

For the budding traders, who want to practice live candlestick charts or technical indicators tool to make their trades, they should definitely try out Tradingview paper trading.

3. TrakInvest

TRAK INVEST - Virtual Stock Trading in India

Website— http://www.trakinvest.com/

TrakInvest is a global trading platform that helps you to learn, develop and improve your investing skills. Currently, it provides curated market data and news from 10 exchanges. It also offers beginners’ guides and videos, certification courses designed by industry experts and simulations for competing for rewards.

At TrakInvest, you can also track other traders and dig deeper into their trading activity (portfolio) where you can replicate their trades using the ‘Copy Trade’ facility. Overall, TrakInvest provides a simple and friendly platform for ‘Social’ virtual trading for beginners.

Bonus: Other Popular Virtual Stock Trading Platforms

Bonus #1: Dalal Street

DSIJ Virtual Stock Trading in India

Website: https://www.dsij.in/Stock-Market-Challenge

Dalal Street Investment Journal (DSIJ) popular virtual stock trading platform in India which helps you to understand the different trading nuances and to test your investment strategies.

On registration, you’ll get virtual cash of Rs 1,000,0000 to create your portfolio. At DSIJ, you can also discuss strategies with like-minded participants in the discussion group.

New to stocks? Confused where to begin?  Here’s an amazing online course for beginners: ‘HOW TO PICK WINNING STOCKS?‘ This course is currently available at a discount. 

Bonus #2: Investopedia stock simulator

Website: https://www.investopedia.com/simulator/

This is my favorite stock simulator.

Investopedia provides a FREE stock simulation platform where you can easily learn how to place trade orders (like market order, limit order, stop loss, etc), how to create a portfolio, how to create a watchlist and more. On registration, you’ll get $100,000 as virtual cash which you can use to trade. You can also compete with thousands of Investopedia traders/players on the same platform.

The reason why I didn’t place this platform in the top 3 is that you cannot trade in Indian stocks on the Investopedia stock simulator. Therefore, if you’re looking to learn virtual stock trading in India, then it might not be a good option. However, if you are comfortable with trading in foreign stocks like Apple, Google, Amazon, etc, then feel free to check out this simulating platform.

Closing Thoughts on Virtual Trading

In this article, we discussed the best virtual stock trading websites in India, where you can evaluate your investing and trading skills for FREE without risking any money and with the least documentation required.

Virtual stock trading in India is an excellent way to learn the basics of trading in the stock market. Using these platforms, you can try different investment/trading strategies without any fear to lose your real money. It’s always advisable to try paper trading (virtual stock trading) for a few weeks before directly jumping into the market.

Porinju Veliyath Success Story

Porinju Veliyath Success Story – How Porinju Became The Smallcap Czar!

An Inspiring Porinju Veliyath Success Story: The famous stock market investor Porinju Veliyath comes from Kerala from a very humble background. His stock market success story is really captivating for the new investors. In this article, we are going to look into the Porinju Veliyath Success Story and learnings from his journey. Let’s get started.

Porinju Veliyath Stock Market Success Story

Porinju Veliyath started his career in Mumbai as a floor trader with Kotak securities in 1990. Later, he joined Parag Parikh securities as a research analyst and worked as a fund manager till 1999. Here he learned the skill of buying and selling stocks.

After learning the investing skills from his previous employers, Porinju shifted back to Kochi and founded his own portfolio management service firm named ‘Equity Intelligence’.

Equity Intelligence is a SEBI registered portfolio management firm that was incorporated in the year 2002. The Fund has three key personnel, namely, Porinju Veliyath, the fund manager, Abhilash Varghese, the Director of Operations, and Miriam Philip, the relationship manager.

Porinju is a popularly known small-cap value investor. He has identified several multi-bagger stocks early in his career such as Shreyas Shipping, Kitex Garments, KRBL, etc. Porinju is reported to have made crores for himself and his clients in multi-bagger deals investing in small-cap stocks. In an interview with ET,  Porinju Veliyath said:

Equity investment is not a hectic activity if someone makes it that way, they will underperform. This is something we have to keep simple. Too much information/noise is not good, it takes away a lot of spirit of living”,

Porinju Veliyaht often prefers to work from his farmhouse where he was actually born. In a calm situation, he says that he is able to analyze more effectively. In another interview with ET, Veliyath claimed his investment portfolio has generated 33 percent average compounded returns every year since 2003.

Porinju Veliyath Latest Portfolio

Porinju Veliyath is a master of choosing the winning stocks in his and his client’s portfolio. Here is the latest stock portfolio and shareholding of Porinju Veliyath and his firm (Dec 2020 Quarter):

#NAMECOMPANYQUARTERNO OF SHARESPERCENTAGE
1Equity intelligence india private limitedArchies Ltd.Dec-2011000003.26
2Porinju veliyathAshok Alco-Chem Ltd.Dec-201000002.17
3Equity intelligence india private limitedOrient Bell Ltd.Dec-206095124.25
4Equity intelligence india private limitedEastern Treads Ltd.Dec-201000001.91
5Equity intelligence india private limitedPraxis Home Retail Ltd.Dec-205000001.81
6Equity intelligence india private limitedAnsal Buildwell Ltd.Dec-201500002.03
7Porinju v veliyathDuroply Industries Ltd.Dec-202000003.1
8Porinju veliyathDigicontent Ltd.Dec-207000001.2

Porinju Veliyath Stock Market Learnings

Although Porinju has picked many multi-bagger stocks that have given him amazing returns, nevertheless, he is not correct all the time. Regarding his stock-picking strategy, he said that “We cannot go and casually buy any stock in any industry. One has to be really choosy in picking stocks and that is required every time, anytime,”

Porinju has also written one insightful book ‘Ohariyiloode Engane Nettam Koyyam’ (Complete step-by-step guide to share market and investing) in 2008 by Dhanam Publications.

Apart from stocks, Porinju loves nature and he has a huge farmhouse in his hometown. Porinju Veliyath is an organic farmer and his farm is spread over hundreds of acres. He has a huge pond and hence the source of water is natural as spring water runs through it. As the land is very fertile, he grows chikku, mangoes, and a number of other vegetables. A lot of birds and animals are also there.

porinju veliyath farm

In addition, Porinju is also quite active on Twitter and has huge followers there. He has got over 1.2 Million followers on Twitter.

ALSO READ:

Rakesh Jhunjhunwala Success Story- Rs 5,000 to Rs 19,000 Crores!!

That’s all for this post on Porinju Veliyath Success Story. I hope this post was helpful to you and you’ve found some learnings from Porinju’s stock market journey. In addition, if you want us to cover any other popular stock market investor, let us know in the comment section below. Have a great day and Happy investing!

The Intelligent Investor by Benjamin Graham Book Review

The Intelligent Investor by Benjamin Graham – Book Review & Summary!

The Intelligent Investor Book Review: The Intelligent Investor by Benjamin Graham, also referred to as the bible of the stock market, was originally written in 1949 by Benjamin Graham, a legendary investor and also known as the father of value investing. Interesting, Benjamin Graham was also the mentor and professor of the well-known billionaire investor, Warren Buffett.

The revised 2006 edition of the book “The Intelligent Investor” has added commentary by Jason Zweig, a famous wall-street investor, and editor. These added commentaries are used to relate Graham’s idea to the present world. Further, the commentaries highlight those sections of the book concepts that have time-tested techniques. This edition has over 600 pages (although originally around 450-500 pages but the added commentaries in the revised edition increased the size of the book). Overall, it’s a classic book with multiple value investing concepts along with quick notes.

In this article, we’ll cover The Intelligent Investor Book Review along with a discussion few of the best concepts covered by Benjamin Graham.

Why You Should Read “The Intelligent Investor”?

Warren Buffett (worth over $102 billion dollars) says- “This book is by far the best book on investing ever written”.

Needless to mention that this book is Warren Buffett’s all-time favorite. He also admitted that the book helped him in developing a strong conceptual framework for his future investments and capital allocations. Further, he made the following remarks about the book in its preface:

  • Investing doesn’t require a stratospheric IQ, unusual business insights, or inside information. What’s needed is a sound intellectual framework for making decisions and the ability to keep emotions from corroding that framework. This book precisely and clearly prescribes the proper framework.
  • Pay special attention to chapters 8 & 20 in the book.
  • Outstanding results are based on three things – Effort, Research, amplitudes of the market (This book will allow you to profit from them, not participate)

NOTE: If you want to buy THE INTELLIGENT INVESTOR by Benjamin Graham, I highly recommend you to buy through Amazon at this link.

The Intelligent Investor by Benjamin Graham book is a must-read for all the stock market investors and has many valuable concepts. The first few chapters of the book are dedicated to the general financial market concepts. As the book was originally written in 1949, the book also consists of lots of details about the bond market, preferred stocks & inflation.

The next few chapters describe the methods to analyze stocks using ratios, balance sheets, cash flow, etc. The second half of the book is of more importance for the stock investors as it explains the different strategies of the defensive & enterprising investors, along with chapters on management, dividend policy, and case studies.

Quick Read: 10 Must Read books for the Stock Market Investors

Intelligent Investor Book Review: The Three Main Concepts

Although there are lots of proven concepts covered in the book, however, the key three points in the book- The Intelligent Investor by Benjamin Graham is summarized here:

1. Investing vs. Speculating

“An investment operation is one which, upon thorough analysis, promises safety of principal and a satisfactory return. Operations not meeting these requirements are speculative.” – Benjamin Graham

Let’s understand this concept with the help of an example. Imagine you are planning to buy a printing press. Now, to buy this company you can use two approaches.

First, you visited the company, calculated the asset value of the printing shops, checked the total income and cash flow of the company, verified the effectiveness of the managers, calculated the total assets & liabilities, and then lastly come up with a final price for the printing company.

The second approach is that you met with the owner and decided to pay the price whatever he is asking for.

From the example, we can establish the difference between an investor and a speculator. The Investor follows the first approach while the speculator follows the other. Here is the key difference between these two:

InvestorSpeculator
Goes through proper analysisDoes not meet these standards
Considers the safety of principle--------
Gets adequate returns--------

Here is the quote about Speculators by Benjamin Graham:

the intelligent investor summary 5

2. The margin of Safety

This is another one of the pronounced concepts introduced by Benjamin Franklin. He says that one should always invest with a margin of safety. Let us understand this by example.

Imagine you are in a construction business. You took an order to make a bridge, which can hold up to 8 tons. Now, as a constructor, you might consider making the bridge with an additional 2 tons of holding capacity so that it will not collapse in some extraordinary situation. Overall, you will make the bridge with a total of 10 tons of holding capacity. Here, your additional 2 tons is the margin of safety.

In the same way, while investing we should consider this margin of safety. It is the central concept of value investing.  If you think a stock is valued at Rs 100 per share (fairly), there is no harm in giving yourself some benefit of the doubt that you may be wrong with this calculation. And hence, you should buy at Rs 70, Rs 80 or Rs 90 instead of Rs 100. Here, the difference in the calculated amount and your final price is your margin of safety.

Here is the quote about the importance of margin of safety by Benjamin Graham:

The Intelligent Investor by Benjamin Graham

3. Mr. Market – The Pathetic Emotional Fool

In the book “The Intelligent Investor”, Graham tells a story about a man he calls Mr. Market. In the story, Mr. Market is a business partner of yours (Investors). Every day Mr. Market comes to your door and offers to either buy your stake of the partnership or sell his stake to you.

But here’s the catch: Mr. Market is an emotional man who lets his enthusiasm and despair affect the price he is willing to buy/sell shares on any given day. Because of this, on some days he’ll come to the door feeling jubilant and will offer you a high price for your share of the business and demand a similarly high price if you want to buy his.

On other days, Mr. Market will be inconsolably depressed and will be willing to sell you his stake for a very low price, but will also only give you the same lowball offer if you want to sell your stake.

On any given day, you can obviously buy or sell to Mr. Market. But, you also have the option of completely ignoring him i.e. you don’t need to trade at all with Mr. Market. If you do ignore him, he never holds it against you and always comes back the following day.

The intelligent investor will attempt to take advantage of Mr. Market by buying low and selling high.  There is no need to feel guilty for ripping off Mr. Market; after all, he is setting the price. As an intelligent investor, you are doing business with him only when it’s to your advantage. That’s all.

The key point to note here is that though Mr. Market offers some great deals from time to time. Investors just have to remain alert and ready when the offers come up.

Now, like Mr. Market, the stock market also behaves in the same manner. The market swings give an intelligent investor the opportunities to buy low and sell high. Every day we can pull up quotes for various stocks or for the entire market as a whole. If you think the prices are low in relation to value, you can buy. If you think prices are high in relation to value, you can sell. Lastly, if prices fall somewhere in the grey area in between, you’re never forced to do either Mr. Market and Stock Market:

So, this is a value-oriented disciplined investing. Don’t fall victim to irrational exuberance if the underlying fundamentals of the company are strong. In short, do not react to the hyperboles of the market’s daily fluctuations. Don’t panic, don’t sell.

Benjamin Graham on Mr. Market

Intelligent Investor Book Review: Other key points

  • A common stock portfolio is certain to fluctuate over any period of time. The investor should be prepared financially and psychologically for this fluctuation. Investors might want to make a profit from market-level changes. But this can lead to speculative attitudes and activities which can be dangerous. Anyways, if you want to speculate do so with your eyes open, and knowledge that you will probably lose money in the end.
  • Graham’s Opinion on aggressive investing: The low probability of aggressive picks will out-weigh the gains collected over a long period of time. ‘The aggressive investor will expect to fare better than his passive equivalent, but his results may well be worse.’

Warren Buffett Quote on Ben Grahab

That’s all. I hope this post about the ‘The Intelligent Investor Book Review & Summary’ is helpful to you. I will highly recommend you to get a copy of this book and start reading. There are many valuable concepts by Benjamin Graham that new and old stock investors should learn.

Do let me know your views about The Intelligent Investor in the comment section below. Take care and Happy Investing!