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7 Must Know Websites for Indian Stock Market Investors

7 Must know websites for Indian stock market Investors: The Internet is full of resources. You can find tons of information out there for free. However, as this count increases, 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 websites. Even if you only remember a few of the best ones, it will help you to keep yourself updated with all the market news, trends, announcements, happenings and all.

In this post, I am going to discuss seven such must know websites for Indian stock market investors.

Please note that there is one such website that every stock investor gets ‘used to’ when he/she starts learning the stock market. It is named INVESTOPEDIA. I won’t be discussing this website in this post as it is not a website totally based on the Indian share market. Today, I’ll only cover such seven best Indian sites. Further, do read the post till the end, as there is a bonus in the last section.

7 Must-Know Websites for Indian Stock Market Investors

1. Money Control

Website: http://www.moneycontrol.com/

Moneycontrol is certainly the most popular website among the Indian stock investor. 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.

2. Screener

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.

3. Investing.com

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 ‘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.

4. Economic Times 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.

Quick break: New to stock market? Confused where to start? Here is a great book on stock market investing, which I highly recommend the beginners to read: ONE UP ON WALL STREET by Peter Lynch.

5. Live Mint

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 your consistently updated with the latest news in India and abraod. 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.

6. NSE India

Website: https://www.nseindia.com/

This is the official website of the National stock exchange (NSE). You can get the information of all the companies listed on NSE exchange along with their financials on this site. The information provided on this website is consistently updated and accurate. As the company has an obligation to submit their financial reports to the exchanges, you can always find the financial data 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 and you can also read the daily updates of bulk and block deals on NSE website.

7. BSE India

Website: http://www.bseindia.com/

BSE India is the website of the Bombay stock exchange (BSE). This website is similar to NSE India in terms of most pieces of information. However, you can find more data here as BSE Sensex has been incorporated for a longe time ago compared to NSE and has over 5,500 publicly listed companies. Quick note, you can also download the complete list of ‘public’ companies listed on this exchange from the BSE India website.

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

Further, the various information available on BSE India is market info, charts, Public offers, OFS, IPOs, Domestic and foreign investors, etc. BSE India also provides training and certifications.

Bonuses (As promised)

Here are two common websites which you can visit to know the IPO allotment results.

Whenever you apply for an IPO (Initial public offering), although NSE/BSE will send you a text message/mail about the allotment result. However, their messages are mostly delayed by a day or two. If you want to check the result of IPO allotment in time, you can check it on the following websites. You just have to enter the PAN Card with which you have applied for the IPO.

LINK INTIME (https://linkintime.co.in/PublicIssues/)
Karvy (http://ipo.karvy.com/)

Seven more popular stock research websites that you should know:

Google Finance: https://www.google.com/finance
Yahoo Finance: https://in.finance.yahoo.com
Rediff money: http://money.rediff.com/index.html
MarketMojo: https://www.marketsmojo.com/
Investello: https://www.investello.com
Trendlyne: https://trendlyne.com
Chittorgarh: http://www.chittorgarh.com

Important Links on NSE/BSE:

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:

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

That’s all. I hope this post 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 it out. Further, if I missed any big name, please comment below. Happy Investing.

If you are new to stocks and want to learn how to select good stocks for long-term investment, check out this amazing online course: HOW TO PICK WINNING PICKS? The course is currently available at a discount.

Tags: must know websites for indian stock market investors, top stock research sites, indian stock research sites, stock market websites list, indian stock market websites, 7 must know websites for indian stock market investors, best stock market website for beginners, indian stock market blogs, must know websites for indian stock market investors for research

Kritesh Abhishek

Hi, I am Kritesh, an NSE Certified Equity Fundamental Analyst and an electrical engineer (NIT Warangal) by qualification. I have a passion for stocks and have spent my last 4+ years learning, investing and educating people about stock market investing. And so, I am delighted to share my learnings with you. #HappyInvesting

www.linkedin.com/in/kriteshrules/

January 22, 2020 Kritesh Abhishek Investment Basics 53 comments

Catching a falling knife stock - Is it worth it?

The stock market is filled with all kind of people. Some prefer investing in fast-growing companies while there are others who prefer investing in high dividend-paying stocks. There are also value investor who favors investing in discounted companies. And then comes the daredevil bargain hunters who are eager to invest in falling knife stocks.

In this post, we are going to discuss what exactly are falling knife stocks and why it is dangerous to invest in these type of stocks. We’ll also look into a few strategies that investors can use while trying to catch a falling knife stock.

What are falling knife stocks?

The falling knife is that category of stocks which has undergone a rapid decline in share price in a short amount of time. Here, the term ‘falling knife’ is used as a metaphor for the rapidly declining share price of the company.

Now, by definition, there is so specific ‘magnitude of drop’ or ‘duration’ to define these falling knife stock category. The stock which may fall +50% in a month or +80% in six months, both can be considered in the category of falling knife stocks.

In the investing world, it is always suggested that “Do not try to catch a falling knife!”, especially if you’re a beginner. Anyways, the investors should proceed with great caution if they are interested to invest in these kinds of stocks. In general, these stocks are extremely dangerous and may result in a severe loss if the investor enters at the wrong time.

Note: Even in real-world, trying to catch a falling knife is extremely dangerous and can easily hurt your hand. A thumb rule here is to wait for the knife to fall on the ground and then pick it up. Similarly, if you are planning to invest in a falling knife stock, wait until the prices drop at a significantly lower price with a huge margin of safety.

A few recent examples of falling knife stocks in the Indian market

— Yes Bank: The stocks of Yes Bank has declined over 85% in the time duration between August 2018 to September 2019.

— Manpasan Beverages: The stocks of Manpasand Beverages has declined over 95% in the time duration between May 2018 to September 2019.

— DHFL: The stocks of Deewan Housing Finance Corporate Limited has fallen over 90% in the time duration between September 2018 to September 2019.

If you have already tried catching these falling knives stocks during their downward journey, your portfolio would have been severely hurt by now. However, can these stock rebound and give massive returns to the investor who are planning to enter at this price? The answer to this question requires a lot more comprehensive study than just looking at their share price.

How falling knife stocks work?

The journey of falling knife category stocks is pretty straightforward. Initially, the negative news regarding a company can result in the decline of the share price. However, when the situation continues to degrade, it results in a market panic and subsequent fall in the prices. During such cases, there are two possible outcomes:

In a few cases, the share prices may rebound if there is positive news or the company is able to control the damage in the near future. Such scenarios can be extremely profitable for the investors who bought the stock at the discounted price before they bounced back.
However, in most cases, the investors may face severe loss even if they bought the stock at a discounted price if the company’s performance continued to weaken. In the worst-case scenario, if the company goes for bankruptcy, the investors may have to lose most of their investments.

Overall, picking such stocks at the near bottom can result in a massive gain. However, entering these companies at the wrong time may lead to a disaster. There are cases when these stocks never rebounded to the original price for decades since they started falling.

Reasons for the Company’s Price to fall:

There can multiple reasons for the company’s share price to decline. Here are a few of the top reasons:

A significant decline in revenue and profits for a continued time period.
Negative reports and the company continuously missing the market estimates/targets.
Deterioration of the company’s fundamentals
Discovery of malpractice by the company, fraud charges by SEBI or lawsuits
Changes in the management like the resignation of top managers, promoters, etc

Here, if the decline in the price is due to temporary reasons, the long term investor should continue to hold the stock or even buy more. However, if the reason is because of the change in the company’s fundamentals, it’s time to exit, even if you have to book a loss.

Also read: Why is a VALUE TRAP? The Bargain Hunter Dilemma!

Why investors are so much interested in catching falling knife stocks?

Many people find investing in falling knife stocks fascinating because of the following reasons:

As the share price of these companies has fallen significantly, they appear to be undervalued. Most investors consider these stocks as an excellent opportunity to purchase the stock before it rebounds to make handsome capital appreciation.
People anchor the current price of the company with its original price before it started falling and hence believe them as cheap. However, while anchoring the price, they do not give enough importance to recent events which resulted in the decline of prices.

Anyways, an investor should only buy these stocks if they have fundamental reasons backing the company, not just because the price has fallen significantly.

Also read: 11 Must-Know Catalysts That Can Move The Share Price.

A few points to consider which catching a falling knife stock:

If you are planning to invest in a falling knife stock category, here are a few points that may help you to analyze the situation better and avoid loss:

— Start with analyzing your own behavior: Are you planning to enter that stock because you’re anchoring its current price with its past prices, based on some predictions, or just to gamble.

— Say ‘no’ more often: In most of the falling knife cases, the stock is not profitable to the investors for sustained longer period of time. Although such stocks may seem like a great opportunity, try to say ‘no’ to the stock as much as possible. The more frequently you say ‘no’, the more time you’ll get to study the company and evaluate it better.

— Understand the situation: Read about the recent and past happenings and analyze whether the problem is temporary or structural.

— Do not buy stock on the first decline: There’s a famous Cockroach theory which says that if you find one cockroach in your kitchen, there are more cockroaches likely to be discovered. Similarly, if there’s a piece of bad news related to the company, more is yet to be revealed. Usually, after the first decline, there are more troubles ahead for the company. Therefore, as a thumb rule, do not jump into the stock on the first decline.

— Know the worst-case: Knowing the worst-case scenario can make you prepare for it. Before entering the stock, know how much risk can you handle. Will you be comfortable if your investment value in that stock falls below 70%? What is the risk vs reward for your investment?

— Be pessimistic: While calculating the intrinsic value of the stock, always be pessimistic and take conservative values while estimating the growth rate and estimating the future cash-flows.

— Always have a margin of safety: As these stocks have a higher risk, always have a bigger margin of safety while investing in these companies. For example, if the fair calculated intrinsic value turns out Rs 100, then give yourself a margin of safety of 40% and invest only when the price goes below Rs 60. The higher the margin of safety, the lower will be the risk.

— Diversify — Yes, you want to make big returns and the falling knife stocks seem to have the potential to give higher capital appreciation. However, if because of any reason, let’s say that your study is wrong or the stock didn’t perform the way you supposed it is going to, then you will face critical damage. Therefore, do not put all your money in a single stock, but diversify.

Also read: 5 Psychology Traps that Investors Need to Avoid

Closing Thoughts:

A falling knife stock category may represent a high opportunity, but they also have a higher potential to hurt the investor’s portfolio.

For newbie’s, it’s difficult to judge whether the stock is a value stock or value trap. If you are a beginner and not experienced in judging companies, I would suggest to simply ignore these stocks and try to find fundamentally strong companies.

For experienced investors, if you are planning to purchase them, then know what you’re getting into. Analyze the reward that you may receive by investing in these stocks, but also have the heart to see your investments going down and not making any gains for a long time. You should not expect the stock to bounce bank the very next day or even a month or so when you enter.

Kritesh Abhishek

www.linkedin.com/in/kriteshrules/

January 20, 2020 Kritesh Abhishek Investment Basics, Stocks No comments yet

10 Questions to Ask Before Purchasing a Stock - Investment Checklist!

Picking a winning stock that can give consistent returns for many years requires a lot of analysis and research. However, you can simplify the research process if you have an investment checklist.

Having a reliable checklist for picking stocks can reduce the chances of missing an important detail that you should have studied before investing in the stock. As Charlie Munger, Vice-Chairman of Berkshire Hathaway has famously quoted:

“No wise pilot, no matter how great his talent and experience, fails to use a checklist.” — Charlie Munger

In this post, we are going to discuss ten key questions to ask before purchasing a stock by every stock investor. Let’s get started.

Quick Note: Although there are hundreds of points to check while picking a stock to invest, however, most of them can be categorized among the ten questions listed below. Anyways, by no means, I claim that this is the best checklist for picking stocks. My suggestion would be to study the investment checklist given below, improvise and make your own list of questions. Further, for simplicity, I’ve not included financial ratios.

10 Questions to ask before purchasing a stock.

Here are the ten key questions that every investor should ask before investing in a stock.

1. What does the company do?

What are the products/services that the company offers? Do you understand the company’s business model? How does the company actually make money? What are the top/best-selling products of the company?

2. Who runs the company?

Who are the promoters/owners of the company? It the company a family-owned or professionally managed one? Who is managing the company? What are the credentials/background of CEO, MD, Board of directors and the management team? What is the shareholding pattern of the company?

3. Is the company profitable?

How much profits did the company generated in the last few years? How are the company’s gross, operating and net profit and what is the profit margin at each level? Is the profit of the company growing over time or stagnant/declining?

4. Does the company have a sustainable competitive advantage?

Does the company have a moat like intangible assets, customer switching cost, network effect, cost advantages or any other sustainable competitive advantage that can keep the competitors away from eating their profits?

5. How was the past performance of the company?

How is the company’s financials in the past few years? What’s the trend in the company’s income statement and cash flow statement? How are the sales, EBITDA, Cash from operating activities, free cash flow and other financial metrics over the past few years?

6. How strong is the company’s balance sheet?

Are the assets of the company growing over time? How much is the liability of the company? Is the company’s shareholder equity increasing? How much cash does the company have on the asset side? How much is the company’s Intangible assets, Inventories, Receivables, Payables and more? Does the company invest in its Research & Development, especially in a few sectors like Technology, Pharmaceutical, etc?

7. Was the management involved in past fraud or scams?

Was the company’s promoters or management involved in any past scam? Does the company has any history of cheating the shareholders or any past penalty by SEBI?

8. Who are the key competitors?

Who are the direct and indirect competitors of the company? What is the market share of the company vs the competitors in the industry? What this company is doing differently compared to its competitors? Are there any global competitors or the possibility of global leaders entering the same market anytime soon?

9. How much debt the company has?

How much short-term and long-term debt the company has? Does the company generate enough profits or Free cash flow to cover the debt in the upcoming years? Have the promoters pledged any of their shares?

10. How is the stock valued?

What is the true intrinsic value of the company? Is the company currently over-valued, under-valued or decently valued? Is the company relatively undervalued compared to the competitors and industry? What is the calculated intrinsic value by different valuation method? How much is the margin of safety? Will you be overpaying if you buy the stock right now?

Also read: How To Select A Stock To Invest In Indian Stock Market For Consistent Returns?

Closing Thoughts:

Although getting a recommendation or investing where friend/colleague suggested may land you into a few profitable deals. But if you want to make consistent returns from the market (and not just being lucky), you need to build your own trustable investing strategy.

It’s true that picking a winning stock required a tremendous amount of research. However, having an investment checklist of questions to ask before investing in stock significantly reduce the chances of investing in fundamentally weak stocks. Moreover, you can easily eliminate over 90% of the companies that don’t meet your checklist.

I hope the questions discussed in this post is helpful to you. If I missed any additional important to ask before purchasing stock in this investment checklist, feel free to mention below in the comment box.

That’s all. Have a great day and Happy Investing!

Kritesh Abhishek

www.linkedin.com/in/kriteshrules/

January 7, 2020 Kritesh Abhishek Investment Basics 3 comments

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

Zerodha Review 2020 – Is Free Investing Legit? [Pros and Cons]

Zerodha Review– Brokerage, Trading Platform, Account Opening Charges, Pros, Cons & More

Zerodha is the biggest discount broker in India and perfect for traders & investors looking for low brokerage, easy interface, and reliable trading platform. It offers a zero brokerage for delivery equity & direct mutual fund investments.

For all intraday, Futures & Options, currency, and commodity trades across NSE, BSE, MCX, it offers a brokerage of Flat ₹20 irrespective of the trading volume. It doesn’t matter whether you trade for Rs 1 lakh or 1 crore, you have to pay a flat low brokerage of Rs 20 per trade. Therefore, you can save a lot of brokerage charges on your trades using Zerodha as your broker.

In this Zerodha review, we will discuss the brokerage charges, account opening charges, maintenance charges, trading platforms, products, my personal experience of using Zerodha & more. By the end of this post, you’ll have a complete understanding of Zerodha trading services and whether this broker is right for you or not. Let’s get started.

Zerodha Review –Brokerage, Charges, Trading Platforms & More

1. Introduction

There are two types of stockbrokers in India. Full-Service brokers and Discount brokers. The full-service brokers offer a trading platform along with advisory. However, their brokerage charges are high. A few major full-service brokers in India are HDFC Securities, ICICI Direct, Motilal Oswal, etc.

On the other hand, discount brokers offer trading platforms with minimum brokerage charges. Nonetheless, they do not provide advisory services. The biggest advantage of a discount broker is that it saves a lot of brokerages for the traders/investors. On all other prospects, like performance, computerized trading systems etc- both offer similar facilities.

An important point to know here is that all the brokers- Full service or discount brokers are licensed and regulated in India by regulating bodies like SEBI.

Zerodha is a leading discount broker in India in terms of daily trading volume, growth and customer base. It is one of the most technologically advanced and cheap stockbrokers. Zerodha has over +1 million clients and contributes to over 10% of daily retail trading volumes across NSE, BSE, MCX.

Ironically, the term ‘Zerodha’ is derived from the fusion of an English and Sanskrit word. ‘Zero’+’Rodha’ where ‘Rodha’ means barrier. Overall, Zerodha means ‘Zero Barrier’.

It was started by Nitin Kamath, an Engineer by qualification, in 2010. Nithin bootstrapped and founded Zerodha in 2010 to overcome the hurdles he faced during his decade long stint as a trader. He was named one of the “Top 10 Businessmen to Watch Out for in 2016 in India” by The Economic Times for pioneering and scaling discount broking in India. Here are a few of the famous awards won by Zerodha recently:

— National Stock Exchange (NSE) “Retail brokerage of the year 2019” (& 2018)

— Outlook Money “Retail broker of the year 2017”

— Ernst & Young “Entrepreneur of the year (Startup) 2017”

2. Zerodha Brokerage Charges

Zerodha offers trading services to buy and sell stocks, futures & options in equities, commodities, and currency segment. Here are the Zerodha brokerage charges:

– Free equity delivery

All your equity delivery investments (NSE, BSE), absolutely free — ₹0 brokerage.

– ₹20 intraday equity and F&O trades

₹20 or 0.01% (whichever is lower) per executed order on intraday trades across equity, currency, and commodity trades across NSE, BSE, and MCX.

Type	Brokerage Charges
Equity Delivery	Rs. 0 (FREE)
Equity Intraday	Lower of Rs. 20 per executed order or 0.01%
Equity Futures	Lower of Rs. 20 per executed order or 0.01%
Equity Options	Lower of Rs. 20 per executed order or 0.01%
Currency F&O	Lower of Rs. 20 per executed order or 0.01%
Commodity	Lower of Rs. 20 per executed order or 0.01%

Quick note:

1. You can use this Zerodha Brokerage Calculator to get more ideas.

(Zerodha Brokerage Calculator)

2. Apart from brokerages, there are also a few other charges that you have to mandatorily pay on your transactions like Exchange transaction charge, STT, SEBI turnover charges, GST, etc.

You have to pay these charges no matter which stockbroker you prefer to trade in stocks and that too on both sides of transactions i.e. while buying and selling. However, the brokerage cost can be controlled by choosing a discount broker. For example, in the case of Zerodha, you can notice the total brokerage of Rs 40 for both sides of Intraday equity trading, even though the total turnover is Rs 8.4 Lakhs.

You can have read this blog post to understand the different charges while trading in stocks.

3. Zerodha Account Opening Charges & AMC

Here are the account opening charges for Zerodha

Equity Trading Account: ₹200
Commodity Account:₹100

If you want to trade in both equity and commodity, then you need to pay an account opening charge of Rs 200+Rs 100 = Rs 300. Anyways, if you are just interested in trading in stocks i.e. equities, you can open demat and trading for equity account at Rs 200. The demat account annual maintenance (AMC) charge is Rs 300 per year.

4. Zerodha Products & Features

Zerodha has built its own trading applications for the customers. It offers different trading terminals, websites, and mobile apps (Android/iOS) which are free for the customers.

— Kite 3.0

Kite 3.0 is a modern technology-based trading platform with streaming market data, advanced charts, an elegant UI, and more. It is a minimalistic, intuitive, responsive, light, yet powerful web and mobile trading application offered by Zerodha. Kite provides Bandwidth consumption of fewer than 0.5 Kbps for a full market watch, extensive charting with over 100 indicators and 6 chart types, advanced order types like Brackets and cover, millisecond order placements, and more.

Overall, Kite provides an excellent experience to the users through its groundbreaking innovations presented with hassle-free usability.

— Kite mobile

This is a mobile version of KITE for a seamless experience for mobile-users and available in both Android and iOS devices.

— Coin

Zerodha Coin is a platform that lets you buy mutual funds online directly from asset management companies. This platform is absolutely free since August 24, 2018. Here, you can make your investments without any commissions.

With the help of Zerodha Coin, you can have Direct mutual funds in DEMAT form, with the convenience of one portfolio across equity, MF, currency, etc. Moreover, it also provides a Single capital gain statement, P&L visualizations, and more. This Coin by Zerodha has made investments through SIPs really simple and flexible.

Other Partner Products

Apart from the above products, Zerodha also offers a few other partner programs:

Smallcase: This thematic investment platform is powered by Kite Connect APIs. Smallcase helps users to invest in different themes by intelligently providing weighted baskets of stocks in each theme.
Sensibull: This is an options trading platform which offers simplified options trading for new investors by providing powerful trading tools. Sensibull aims to make options trading safe, accessible, and most importantly, profitable for all.

Besides, Zerodha has also started a few educational initiatives to improve financial literacy and increase the participation of the common people in the financial world. Here are a few other products offered by Zerodha

Zerodha Varsity: An educational platform to educate people about investing and trading. Zerodha Varsity offers free modules on Technical analysis, fundamental analysis, futures, options, risk management, trading psychology & more. Recently, Zerodha Varsity also launched its Varsity mobile app.
Trading Q&A: An online forum powered by Zerodha to answer people’s most troublesome investing and trading questions.

5. Pros and cons of Zerodha Discount broker

Here are a few advantages and disadvantages of using Zerodha trading platforms:

Pros of Opening Account with Zerodha

Zero Brokerage Charges for Delivery
Flat Charge for Intraday (Rs 20 or 0.01% whichever is lower per executed order for everything else)
Same pricing for across all exchanges
No upfront fee or turnover commitment
Z-Connect, interactive blog, and portal for all your queries
Trading, charting, and analysis, all rolled into one next-generation desktop platform Pi.
Minimalistic, intuitive, responsive web-based trading platform Kite
No minimum balance required to open Zerodha trading account
Invest in direct mutual funds with same demat account through coin

Cons of Opening Account with Zerodha

No advisory services or research report.
3-in-1 account (Saving+Demat+Trading) not available.
Online IPO investment not available. (Now, Zerodha customers can invest in IPO’s through UPI payment. Read more about Zerodha IPO applying process here)

Note: Zerodha has recently started offering Zerodha IDFC FIRST Bank 3-in-1 account. However, to open a 3in1 account at Zerodha, you need to have an existing account with IDFC FIRST Bank. Accounts can only be opened online. Read more here.

6. Is Zerodha a Reliable Stockbroker? And is Free investing legit?

Is Zerodha safe for long-term investments? This is one of the biggest questions that come in the mind of first-time investors. Obviously, HDFC Securities, ICICI Direct, SBI cap, Kotak securities, etc are big brands in the name of the broking industry and been in the market for decades. Hence, they have built greater trust compared to Zerodha, especially for the ones who have never heard its name before.

Anyways, Zerodha, the discount broker, originated only in 2010. Therefore, if you’re not involved in the share market investments/tradings in the last decade, it’s no surprise to say that you might have not known this broker. However, in the short span of around 10 years, this broker has been able to beat all the big traditional brokers. Currently, Zerodha is the biggest stockbroker in India, based on the number of clients (over 15 lakh users), followed by ICICI Direct and HDFC securities ranking second and third.

Now, answering your question, Yes, Zerodha is safe and reliable. In fact, since origin, Zerodha has never faced any case of major violations from SEBI or any of the other exchanges. It is a profitable private company with no debts or liabilities.

Moreover, Zerodha is partnered with Central Depository Services Limited. CDSL’s main function is the holding securities either in certificated or uncertificated form, to enable the book-entry transfer of securities. Therefore, when it comes to the security of the shares in your demat account with Zerodha, you do not need to worry at all. The stockbrokers are just the agents of depositories.

Your stocks are actually held by central depositories and not by the depository participants (brokers). Therefore, even if something didn’t work out well with Zerodha, your stocks in the demat account are safely intact with CDSL. In short, Zerodha is completely legit and reliable for your trading or long-term investments in the Share market.

7. My experience of using Zerodha

It’s been over three years since I’m using Zerodha and I’m satisfied with the trading services provided by Zerodha.

Initially, I started with ICICI direct as my broker, but later I switched to Zerodha when I realized that I was paying way too much brokerages for my trading transactions.

Most beginners do not consider the brokerage charges while calculating the profits. I use to make the same mistake. And that’s why many times the final profits in my bank account (after deducting the brokerage and other charges) disappointed me as it was considerably lower than what I calculated in my head. I wish I had switched to a discount broker earlier as it could have saved me a lot of ‘unnecessary’ brokerages and moreover trading experience is even better on Zerodah. Nonetheless, I use Zerodha for making all my stock investments now.

Besides, there was one ‘cons’ of using Zerodha as a broker which bugged me in the past. And it was not having the facility for the customers to directly invest in Initial public offerings (IPOs) through the Zerodha dashboard. But this issue is also solved by Zerodha. Investors can now apply for IPOs directly within the Zerodha console. And the best part is that the process is really simple.

Finally, a lot of people complain that Zerodha doesn’t provide advisory services or buy/sell calls. I believe that one should never invest or trade based on the broker’s recommendation. There’s a conflict of interest here as the brokers will always make money when you trade and doesn’t matter whether you win or lose. Therefore, they might always motivate investors to trade frequently. Overall, Zerodha not giving advisory services doesn’t bother me. Moreover, they make us for these cons by providing educational initiates like Varsity.

8. How to open your trading & demat account with Zerodha?

Opening a demat and trading account with Zerodha is really fast and hassle-free. In fact, if you’ve all the documents, you can open your account and start trading within an hour.

Here are the documents required to open a demat and trading account at Zerodha: PAN CARD, Aadhar Card, 2 Passport size photos, Canceled cheque/ Saving bank account passbook. I will recommend keeping photocopies of all these documents ready before you apply for opening the accounts.

To open your trading & demat account at Zerodha, go to Zerodha website and click on ‘OPEN AN ACCOUNT’. Here is the direct link.

Note: You can find the detailed explanation on how to open your demat and trading account at Zerodha here.

9. Closing Thoughts

In the last decade, Zerodha has earned trust and respect among the trading population by providing reliable and technologically advanced trading services. It is definitely the largest discount broker in India. If you are looking to open your brokerage account with a reputable brand that offers low brokerages, and have a fast trading platform, Zerodha is definitely one of the best options.

That’s all for this post. I hope this Zerodha review is useful to you. If you have any additional queries regarding Zerodha or if you want to share your review of Zerodha, you can post it in our forum. I’ll be happy to answer your questions. Have a great day!

Kritesh Abhishek

www.linkedin.com/in/kriteshrules/

January 3, 2020 Kritesh Abhishek Online Brokers 15 comments

21 Do’s and Don’ts of Stock Market Investing for Beginners

Making money from stocks is simple if you strictly follow the do’s and don’ts of stock market investing. However, because of the lack of financial education, the majority of the investing population do what they are not supposed to ‘do’ in the market and vice-versa.

For example, the first and foremost rule to invest intelligently in stocks is to ‘not speculate’, but invest only after proper research. However, most people speculate in stocks and bet that the share price will go high in the upcoming days without any significant analysis.

In this post, we are going to discuss the do’s and don’t of stock market investing for beginners. Let’s get started.

21 Do’s and Don’ts of Stock Market Investing for beginners.

Do’s of Stock Market Investing

Here are a few of the do’s of stock market investing that every investor should follow:

1. Get an education

This is probably the most relevant do’s of stock market investing. If you really want to become a successful stock investor, start learning the market.

It doesn’t mean that you should enroll in a college program/degree. Self-education is the best way to learn. There are tons of free information available on the internet which you access to learn the market. Moreover, if you want to get a head-start, you can also enroll in a few good online stock market investing courses. Let the learning begin.

2. Start small

If you are just starting to learn how to swim, you won’t jump in 8 ft deep water, right? Similarly, when beginning to start investing in the stock market, start small. Invest the lowest possible amount and gradually increase your investments as you get more knowledge and confidence.

3. Get started early

I cannot emphasize enough on the importance of getting started soon with your finances. Time is in your favor when you start investing early. Moreover, here you get enough time to recover even if you make some losses during the early time of your investment journey.

Also read: Bunty and Babli: A financial story of how Bunty lost Rs 1,29,94,044!

4. Research before investing

One of the key reasons why people do not make money from stocks is that they do not put the initial efforts before investing in the share. Every investor needs to research the company before investing. Here you need to learn the company’s fundamentals, financial statements, ratios, management and more. If you do not want to regret later, research the company first before investing.

Also read: How To Select A Stock To Invest In Indian Stock Market For Consistent Returns?

5. Only invest what is surplus:

The stock market gives an immense opportunity to invest in your favorite companies and make money. However, there are always a few risks involved in the market, and no returns are guaranteed. Moreover, many times a bad (or bear market) may even last for years. Therefore, you should only invest the surplus money which does not affect your lifestyle even if you can’t get it out.

6. Have an investment goal

It’s easier to plan your investments (and to monitor your progress) if you have an investment goal/plan. Your goal may be to build a corpus of Rs 10 Crores in the next ten years or to build a retirement fund. Having a goal will keep you motivated and on track.

7. Build a stock portfolio

For making good consistent money from the stock market, just having two or three stocks is not enough. You need to build a winning stock portfolio of 8–12 stocks which can give you reliable returns.

Although it’s very less likely that you can find all the fantastic stocks to invest at once. However, year-after-year you can keep adding/removing stocks to build a strong portfolio that can help you reach your goals.

8. Average out:

It’s challenging to time the market and almost impossible to buy the stock at the exact bottom and sell them at the highest point. If you’ve done it, you might be lucky. A better approach here is to Buy/Sell in ‘steps’ (unless you find an amazing opportunity which the market offer sometimes).

9. Diversify

“Do not put all your eggs in one basket!”. The risk involved while investing in just one stock is way higher compared to a portfolio of ten stocks. Even if one or two of your stock starts performing poorly in the later scenario, it may not affect the entire portfolio too much. Your stock portfolio should be sufficiently diversified.

10. Invest for the long-term

It’s a common fact that all the veterans of the stock market who made an incredible fortune from stocks are long term investors. But why do long-term investing helps to build wealth? Because of the power of compounding, the eighth wonder of the world. If you want to build massive wealth from the market, invest for the long-term.

11. Hold the winners, cut the losers

Cut you losing stocks if they underperform for a long time and hold your winning stocks longer to allow them to offer even better returns. This is the golden mantra of investing that you should strictly follow. Moreover, keeping your winners and cutting losers will also help in building your dream portfolio.

Also read: The Biggest Investing Mistake that 90% Beginners Make!

12. Invest consistently

Most people get excited and enter the stock market when the market is doing well, and the indexes are touching new highs. However, if you only invest in a bull market and exit when the market is down i.e. when stocks are selling at discount, you will never find fantastic opportunities to pick cheap stocks.

Do not invest in the market just for a year. If you want to make good money from stocks, invest consistently and periodically increase your investment amount.

13. Have Patience

Most stocks take at least 1–2 years to give good returns to the investors. Moreover, the performances get better when you give more time. Have patience while investing in the share market and do not sell your stocks too soon for short term gratification.

Don’ts of Stock Market Investing:

14. Don’t take investing as gambling

Let me repeat this in simple words- “INVESTING IS NOT GAMBLING!”. Do not buy any random stock and expect it to give you two times return in a month.

Also read: 5 Signs That You are Gambling in Stocks.

15. Don’t invest blindly on free tips/recommendations

The moment you open your trading account, you’ll start getting free messages on your phone with BUY/SELL calls. But remember, there is no FREE lunch in this world. Why would anyone send a stranger free tips for multi-bagger stocks? Never invest blindly on free tips or recommendations that you receive, no matter how appealing they may sound.

16. Don’t have unrealistic expectations:

Yes, many lucky guys in the market have made 400–500% return on their single investment. However, the truth is that these kinds of news get quickly circulated (and inflated).

Have realistic expectations while investing in stocks. A return between 12–18% in a year is considered good in the market. Moreover, when you compound this return over multiple years, you will get way higher returns compared to 3.5% interest on your savings account.

Further, do not assume that you can get the same profits as others, who might be investing in stocks from many past years and may have acquired an amazing skill set. You can also get similar returns, but only after enough knowledge and practice.

17. Don’t over trade

When you are trading frequently, you are repeatedly paying for the brokerage and other charges. Don’t buy/sell the stocks too often. Take confident decisions and make transactions only when necessary.

18. Don’t follow the herd

Your colleague purchased a stock and made 67% returns from it within a year. Now, he’s boasting about it, and many of your office-mates are buying that stock. What would you do next? Should you buy the stock? Wrong!

No investor can get significant success from the market by following the herd. Do your own research, rather than following the crowd.

19. Avoid psychological biases/traps

There are a lot of physiological biases while investing that can adversely affect your investment decisions and your ability to make effective choices. For example- Confirmation Bias, Anchoring bias, Buyer’s Remorse, Superiority trap, etc.

Most of these biases are pre-programmed in human nature, and hence it might be a little difficult to notice them by the individuals. Anyways, knowing these biases can help you to avoid them causing any serious damage. Moreover, a good thing regarding these biases is that — like any habit, you can change or get over them by practice and efforts.

Also read: 5 Psychology Traps that Investors Need to Avoid!

20. Don’t take unnecessary risks

Investing all your money in a hot stock/industry to get a little higher return is never a wise move. Safeguarding your money is equally important than getting high returns. You should never take unnecessary risks while investing in stocks and your ‘risk-reward’ should always be balanced.

21. Don’t make emotional decisions

The human mind is very complex, and there are many factors both internal and external that can affect the choices we make. While investing in the stock market, do not take emotional decisions. No matter how much you like a company, if it is not profitable and doesn’t have a bright future potential, it may not be the right investment decision. Do not get emotional while making your investment decisions.

Bottom line

In this post, I tried to cover the do’s and don’ts of stock market investing for beginners. However, this is just a guide and not a manual. You will learn more do’s and don’t through your personal experiences when you start investing on your own.

I hope this article is useful to you. Have a great day and happy investing!

Kritesh Abhishek

www.linkedin.com/in/kriteshrules/

January 3, 2020 Kritesh Abhishek Invest Intelligently, Investment Basics 7 comments

How to Open a Demat and Trading Account at Zerodha?

How to open a demat and trading account at Zerodha? (Updated: Jan 2020)

When I first started investing, I used ICICI direct as my stockbroker for opening my demat and trading account. Although I was happy with the facilities and platforms provided by it, I soon realized that ICICI Direct was very expensive.

Many times, profits were killed by the brokerages in ICICI direct. The worst part was paying too much of brokerage even when you were selling the stock at a loss.

Then I asked for feedback from my friends who were using SBI Smart and HDFC securities. They both were also paying high brokerages and suggested not to go with them.

Finally, after researching a lot, I opened my second demat and trading account at ZERODHA.

Zerodha is the biggest discount broker in India with over 10+ lakhs customers. It contributes to over 15% of all retail order volumes in India daily by trading and investing in NSE, BSE, MCX, and MCX-SX. The charges offered by Zerodha are nominal and the trading platform provided by it is also fast and friendly.

It charges a brokerage of 0.01% or Rs 20 per executed order, whichever is lower, irrespective of a number of shares or their prices.

This is way cheaper compared to ICICI direct which asked a brokerage of 0.55% on each transaction in equity. If you buy stocks for Rs 50,000 in ICICI direct, then you have to pay a brokerage of Rs 275 (On the other hand, Zerodha will ask for a maximum of Rs 20 any trade). Further, as this amount is charged on both sides of the transaction (buying & selling), hence you have to pay a total of Rs 550 for the complete transactions (which is way too expensive than Zerodha).

In short, if you are new to the investment world, I would recommend opening accounts in discount broker such as Zerodha so that you can save lots of brokerages.

To get started, here is the direct link to the account opening page at Zerodha.

Why should you open a demat and trading account at Zerodha?

If you are still confused about why you should open a demat and trading account at Zerodha, then here are top reasons:

Rs 0 (FREE) for equity delivery trades.
Rs 20 or 0.01% whichever is lower per executed order intraday trading and for everything else
Same pricing for across all exchanges
No upfront fee or turnover commitment
Z-Connect, interactive blog, and portal for all your queries
Over 1.5 million happy customers with a reputable brand name
300+ dedicated support team to ensure the fastest turnaround time for your queries via email or phone
Trading, charting, and analysis, all rolled into one next-generation desktop platform Pi.
Minimalistic, intuitive, responsive web-based trading platform Kite
Average exchange margin utilization of 55% vs. an industry average of 70%—lower risk.

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

How to open a demat and trading account at Zerodha?

Documents required to open a demat and trading account at Zerodha.

Here are the documents required to open a demat and trading account at Zerodha. I will recommend keeping soft copies of all these documents ready before you apply for opening the accounts as you’ve to upload them during the account opening process:

PAN CARD
Aadhar Card
Canceled cheque/ Bank statement
Your Signature on a piece of paper
Passport size photos

*Optional– Income proof: It is mandatory to submit income proof if you wish to trade in Futures and options – Equity, Commodity, and Currency. You can submit Form-16, IT acknowledgment copy, 6-month Bank statement or your latest salary slip as proof. Anyways, ignore this document if you are planning to invest only in just stocks, and not in derivatives, commodity or currency.

Account opening charges at Zerodha

Here are the account opening charges at Zerodha

Demat and Trading Account: Rs 200
Commodity Account: Rs 100

(Note: This is the Revised account opening charges updated in December 2019 by Zerodha)

If you want to trade in both equity and commodity, then you need to pay an account opening charge of Rs 200+Rs 100 = Rs 300. However, if you want to trade just in equity (stocks), then you need to pay the charge of Rs 200 only.

Now, there are two ways to open a demat and trading account at Zerodha:

Online method
Offline method

Using the online method, you can open your account with Zerodha within 15 minutes, if you have all the required documents.

However, in the online method, to complete the eSign process, you will have to authenticate it with an OTP. So, make sure you have the number is linked to your Aadhaar. If not, you will not be able to complete the process. If the number linked to your Aadhaar is inactive, or if you don’t have any number linked, then you can visit your nearest Aadhaar Seva Kendra to get it updated.

Anyways, if you don’t want to use your Aadhaar, you can still open your account via the offline route. However, I would recommend you to open online as it is fast and easier.

In the trading world, you need to be tech-savvy and comfortable with doing things online. All the transactions (buy/sell) etc that you’re going to perform in future, once your account is opened, will be online and through advanced trading platforms. They will require you to be technically smart. And therefore, start taking the online route as you can’t ignore the digital path in the future.

How to open your account with Zerodha Online?

Short Answer to Open Your Zerodha Account

First of all, let me give a short answer on how to open your account at Zerodha before my step-by-step explanation.

To get started, here is the direct link to the account opening page at Zerodha.

On this page, the front step is to signup using your mobile number and verifying the OTP. Then you’ll be required to enter your PAN, bank account, Aadhar verification, and personal details to continue with the signup.

All the instructions are clearly mentioned in the each-step of the account opening page. If you are good at reading and following instructions efficiently, then you do not need to read this entire post. Just go to the account opening page, follow the instructions, upload the documents and your account will be opened.

Besides, if you face any difficulties while opening an account online, you could contact Zerodha at – 080 4913 2020.

A Quick Intro to DigiLocker

While opening your account online with Zerodha, it will ask you to connect with your DigiLocker account. However, if you are new to DigiLocker, let me give you a quick introduction about it.

I was quickly impressed with DigiLocker concept when I first heard about it in early 2017. DigiLocker is an online service provided by the Ministry of Electronics and IT, Government of India under its Digital India initiative. I always keep this app on my mobile phone and let me tell you why.

If you live in a city, many times, you may face a similar situation like this. You went out to buy some groceries from a nearby shop or to drop someone. And because of a hurry, you forgot your wallet. This means that you don’t have your Driving license or vehicle registration doc with you. Next, if a traffic police stop you, then it might be a little trouble for you to explain to them why you traveling without docs.

However, if you have the DigiLocker app on your phone, you can show the driving license and vehicle registration from the app itself. Motorists can show docs in Digi locker during a traffic check as it is provided by the government of India. Moreover, it is more secure and acceptable by traffic police compared to the camera pic that you keep in your phone gallery.

Further, you can also keep all your other important docs in DigiLocker app like Aadhar card, Pan Card, Driving License, Voter Id, Education certificate, etc.

Overall, if you don’t have a DigiLocker account yet, I’ll highly recommend you to open one and download the app on your phone. It will help you to keep all your docs secured.

Moreover, this account is required while performing Aadhar verification during your Zerodha Account opening.

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Detailed Step-by-step procedure to open your account with Zerodha online

Now that you’ve got a basic idea of how to open your account at Zerodha online and what are the docs/things required, next, let me give you a detailed step-by-step explanation of the process:

Step 1: Go to the Zerodha account opening page on your browser. Here is a direct link.

Step 2: Enter your mobile number to sign-up. You’ll receive an instant OTP to verify the mobile number.

Step 3: Enter your full name and email id. Please enter your email address correctly as you’ll again receive an OTP to verify your email id. This is the same email where you’ll receive all your future correspondence from Zerodha. Enter the OTP that you’ve received on your email to verify your email address.

Step 4: Next, enter your PAN and date of birth (DOB) details in the field provided.

Step 5: Complete the account opening payment.

For equity– you’ve to pay Rs 200 and for commodity, the charge is Rs 100. You can complete the payment through UPI or Net-banking/Card payment.

Tick the checkboxes according to your requirement and click on ‘Pay & Continue’ button. Make sure to uncheck the commodity account, if you’re not planning to trade in it and save Rs 100.

After payment, you will see the Congratulations message displayed on the screen and receive an email regarding the payment confirmation.

Step 6: After completing the payment, it will ask you to connect Aadhar details via Digilocker.

As already mentioned earlier, you need to create a ‘DigiLocker: Towards Paperless Governance’ account and link your Aadhar with it. Click on ‘Connect to DigiLocker’ and this will open a new page to sign up to Digilocker using your phone number.

If you already have an account, click on ‘Sign in’ option in the bottom.

Step 7: After entering your DigiLocker account, select the Aadhar card. If you’re just created a new account, enter your Aadhar number and verify using OTP received on your phone.

After that, you need to click on ‘LINK YOUR DIGILOCKER WITH ZERODHA’.

Step 8: Once your Aadhar verification is complete, a new screen will come displaying “Let’s finish the application”. Here, you need to fill up more details starting by filling up Bank Details i.e. your bank account number, bank name and branch’s IFSC Code.

Below that, you have to fill some details like Marital status, Father’s first name, Father’s last name, etc. After entering the details, click ‘CONTINUE’

Step 9: Next is IPV Verification over webcam/phone.

IPV or In-person-verification is a process where a depository participant in personal verifies documents and other details as per the law by SEBI. It is compulsory for every investor to go through the in-person verification process before opening a demat and trading account.

Here, they’ll display an OTP on the screen. You need to write down this OTP show on a piece of paper or your smartphone. Then, hold the piece of paper/ mobile phone with the code in front of your mobile phone/ webcam.

Click on “Start IPV”, then click on “Take Video” and finally on “SAVE IPV”.

Step 10: Next, you will have the option to either Digitally sign the application with Aadhaar (mobile OTP) or else print & courier it. I will suggest you selecting Aadhaar Option as it is a faster approach.

Step 11: Upload scanned copy of the documents: Bank Account Proof, your current signature, PAN. Income Proof is optional & only required if you want to trade Futures & Options, currency, and commodity.

Step 12: Next, it’s time to eSign. Click on ‘eSign Equity’ button and proceed to the next step. Enter the ‘Security Code’ received on your registered Mobile no/Email and click on ‘submit’.

Step 13: In the next window, enter your Aadhaar number, tick the checkbox and click on ‘Request OTP’ button. Here, enter the OTP number received on your mobile. With this the eSign process for Equity is complete.

Note: If you also opted for commodity trading account, repeat the same process by clicking on ‘eSign commodity’ as shown in ‘Step 12 ‘.

Step 14: Once you’ve completed the application sign up, you will have to download the Demat POA (Power of attorney) form, fill it up & send it to the address mentioned below.

Address:

Zerodha, #153/154 4th Cross Dollars Colony,
Opp. Clarence Public School,
J.P Nagar 4th Phase,
Bangalore – 560078

Besides, here are the complete instructions on how to fill the POA form.

Note: Although you can start trading from the day you receive your client-id and password, nevertheless, do send the POA and nomination documents as soon as possible. If your POA has not been received by Zerodha, then you won’t be able to sell the stocks (however, you will be able to buy stocks). Hence, do fill and send the documents as soon as you can.

Offline Account Opening Process

How to open your demat and trading account with Zerodha offline?

You can also open your account with Zerodha offline. However, the offline account opening charges are different than the online charges. Here are the charges for offline account opening:

Rs. 400 – for Trading & Demat Account
Rs. 600 – for Trading, Demat & Commodity account

In this approach, you will have to download application forms from Zerodha website, print out the forms, fill it up and sign it. If you need help at any point in filling out the application form you can call us on 080 4913 2020.

Here are the applications forms that you’ll need to fill and courier for account opening:

Application Form: Trading Account & Demat Account – Equity Segment
Application Form: Commodity segment
POA (Power Of Attorney) – Already included in the Application form above
ECN (Electronic Contract Note) for enabling Commodity segment – Already included in the application form 2
Nomination Form: In case you would like to appoint a nominee to your trading and DEMAT account like your wife, father, mother or any other.

The documents required for opening your account offline is the same as that of the online process. You need to get a photocopy of your PAN Card, Address proof (Aadhar Card, Driving License, Voter-Id etc), Cancelled Cheque/Bank statement, Income proof & Passport size photographs. You also have to cross sign as self-attest on all these docs. You can find the list of all acceptable docs for account opening here.

Once you fill it up and sign it, you have to send the application forms over to the Zerodha head office address:

#153/154 4th Cross Dollars Colony,
Opp. Clarence Public School,
J.P Nagar 4th Phase, Bangalore – 560078

Alternatively, you can schedule a meeting with a Zerodha representative at an address, date and time as per your convenience, by calling up the account opening helpline (080 4913 2020) or by placing a request with the sales manager assigned to you.

Here, a Zerodha representative will contact you and direct you to keep all such necessary documents ready at the decided time and place of the meeting. The representative would take all necessary signatures and self-attested documents/attachments as required to complete the account opening procedure.

What Next After Opening Your Zerodha Account?

Once your account is open, you can log in to this link or use the KITE app on your mobile. Here’s the link to the KITE trading platform.

Alternatively, you can also download the KITE app on android/iOS to start trading/investing in stocks. Besides, you can find the list of other Zerodha products like Console, Coin, Connect API, etc here.

Closing Thoughts

I will recommend using the online method while opening your account. Zerodha is working towards the Digital India initiative and you should be a part of it too. Although online methods seem to have too many steps, they do not take too long. Once you’ve started the application form, you can build a flow and complete the form within 15-20 minutes.

The offline method is good if you do not have an Aadhar card and you want to provide another address proof like Driving license, Voter Id, etc. However, if you are living in a village/small city, it might be a little difficult for you to get a Zerodha executive. Moreover, the offline method can easily take 7-10 days to open a demat and trading account.

That’s all. These are the steps to open a demat and trading account at Zerodha, online and offline. I hope this post on ‘How to open a Demat and trading account at Zerodha?’ is useful to the readers. If you have any doubts, comment below.

Kritesh Abhishek

www.linkedin.com/in/kriteshrules/

January 2, 2020 Kritesh Abhishek Online Brokers 104 comments

7 Powerful New Year Resolutions For Stock Market Investors!

7 Powerful New Year Resolutions For Stock Market Investors!

A new year always excites everyone. It’s time for the people to make different personal and professional resolutions like to learn a new skill, learn how to swim, join the gym, try martial arts, create a new blog, explore a new language/country, start maintaining a journal, etc.

I’ve always loved new years and enjoyed making plans for the next year. This time also I’ve made a few resolutions. Professionally, this year I’m planning to expand my team, add new interactive features to our android app and become more active on Youtube. Personally, at the top of the list is to travel to three new countries and learn the Spanish language by the end of 2020.

Anyways, stock investors are ordinary people and hence, they also like to make resolutions for their new investing journey. However, if you an equity investor but do not have made resolutions for the new year yet, then we’ve got you covered.

In this post, we are going to discuss seven powerful new year resolutions for equity investors. All these resolutions are designed to make you a better investor by the end of the calendar year.

7 Powerful New Year Resolutions For Equity Investors

Here are the seven best new year resolutions for the Indian equity investors. I would recommend you to challenge yourself and accept as many resolutions (out of seven) as possible.

1. Save enough, Invest more

This is something that most youngsters struggle with. Although the older generation is doing much better in the art of saving, however, when it comes to intelligent investing — they too are not much mature.

If you are struggling with savings, plan to optimize your expenses this year. Track your spendings and perfect them wherever possible in order to increase your savings. However, do not just stop there. Invest those savings in different investment options based on your needs and risk tolerance. For beginners, investing in blue-chip stocks are a good option to get started.

2. Start goal-based investing

Goal-based investing is a new way of wealth management where the individuals focus on attaining specific objectives or life-goals through their investments. Here, before starting to invest, the individual tries to answer the question- “What exactly are you investing for?”. The best part about goal-based investing is that here the investors do not focus on getting the highest possible returns. But the aim of this investment is to reach the desired returns that meet their goals.

This year, switch from the traditional investing to goal-based investing. Set a specific goal and start investing to achieve it. This goal can be owning your new house, funding your business venture, corpus for your kid’s education/marriage, retirement, travel fund, etc.

3. Increase your circle of competence

Because of different background, qualification, or experience, everyone has built up a greater knowledge in a specific area. In this certain field, these people have the expertise and hence, have a significant advantage. This is called the circle of competence.

The circle of competence might vary from people to people depending on the criteria mentioned above. For example, a doctor might have expertise in medicines, healthcare or pharmaceutical and he can consider this area as his circle of competence (COC).

This year, make a resolution to increase your circle of competence.

For example, let’s say you might have been ignoring tax saving mutual funds or ELSS or any other investment option just because you were not competent earlier. But this year, spend some time and effort to get comfortable in those investments.

Even for stock investors, there might be different industries or sectors that you may be ignoring. This can be because you do not have good knowledge of that industry and hence not inside your circle of competence. This year, learn those new industries and expand your circle of competence.

4. Be consistent

Consistency is the key to build long-term wealth. If you invest in equities just in a bull market and shy off during the bear market, it’s definitely not a good strategy. Bulls and bears are the part of the market and stocks are characterized to go up and down.

This year, make a resolution to become consistent in your investments.

If you have got a monthly SIP, then consistently keep investing in that plan. If you are a direct stock investor, then fix an allocation of money that you’ll invest in the market throughout the year, whenever you find the best opportunities. Overall, to win the game, you need to stay in the game. And that’s why you need to be consistent in your investment plans.

5. Become more Socially Responsible Investor

Socially Responsible Investing or SRI is choosing to invest in stocks that provide a financial gain as well as do social good. For example- investing in companies promoting health, cleaner energy, healthy foods, etc. The companies are evaluated based on the ESG index: environment, social justice, and corporate governance.

Being an investor gives you a lot of power in the financial world. This year, make a resolution to realize the power and influence you have as share investors to make a positive impact on society.

6. Continue your education

The stock market is very dynamic and things keep on changing very fast here. New technology, a new sector, new research tool, etc. And that’s why the biggest resolution that you need to make this year is to continue your education.

This doesn’t mean to go and enroll in a university. You simply have to keep learning more. Whether it’s through courses, seminars, workshops, books or youtube videos, it’s up to you. But make sure that you keep on learning. One best way to continue your education is by taking a resolution to read at least one investing book each month. This is not a tough resolution and easily achievable. If you are not sure which books to read, here is a list of ten must-read books for stock market investors.

7. Diversify to other investments

This is the last resolutions to make this year. No matter how good you are in equities, do not invest all your money in the market. Stock market investments are subjected to market risk. And if you’ve allocated all your money in the market and it doesn’t perform well (because of whatever reason)– you are doomed.

This year, make a resolution to expand your investment options and look into alternative investment options. Maybe investing in real estate or diving into startups as Angel investor. Diversify your investments and reduce the potential risks.

Closing Thoughts

The new year is the best time to ‘make the change’ or ‘be the change’. Whether you want to meet your needs/goals or become a better investor, this is a great time to start working on it. Through the new year resolutions, take your investing to the next level this year. I wish you all the best and a happy new year 2020!

Kritesh Abhishek

www.linkedin.com/in/kriteshrules/

December 30, 2019 Kritesh Abhishek Challenge, Investment Basics No comments yet

Dividend Growth Investing – A Beginner’s Guide

In this article, we are going to discuss Dividend Growth Investing. First of all, if you are not familiar with the meaning of dividends and want to learn what exactly are dividends, their pros and cons, please read this article. I’m confident that it will be helpful to you.

Today, we’ll take our earlier dividend investing discussion to the next level and understand what exactly is dividend ‘growth’ investing and why it is an amazing tool to make money from the share market for the passive investors. Here are the topics that we’ll discuss in this article:

What is Dividend Growth Investing? And how it differs from Dividend Investing?

Dividend investing in an old and proven formula for receiving money from your investments and building wealth. It means buying shares of those companies which pay good dividends.

When you invest in dividend stocks, you get this money directly credited in your bank account as dividends. By purchasing stocks, you’re a shareholder of that company. And hence you can enjoy the hard work of the CEOs and their employees of big corporations and earn dividends.

Next, dividend growth investing is a sub-set of dividend investing. However, the major difference is that here investors not just look at the high dividend-paying companies but also at the growth rate of the dividends and the company.

As growth is the measure of financial health, Dividend growth investing involves collecting the shares of fundamentally strong companies with a high annual dividend growth rate. As a thumb rule, the growth rate should be equal to or higher than inflation.

For example, if a company gave a dividend of Rs 10 per share last year, Rs 11 per share this year and expected to give a dividend of Rs 12.5 per share in the next year, this company can fall into this category. Anyways, the dividend growth investors look at more than at least five years of growth history while picking the stocks. Moreover, the dividend growth will not always be a linear curve but will be full of ups and downs. Nevertheless, the overall trend of dividend growth should be positive.

In short, the dividend growth investors do not want just a high dividend but growing dividends over time.

Dividend Growth Stocks Characteristics

In which scenario will you be able to sleep better?

Knowing that you’re getting high dividends right now, but the dividends may fall in the future as the company is saturated. Or, the other scenario where you are getting decent dividends and have confidence that it will pay more dividends in the future as the company is continuously growing its revenue and profit.

A few characteristics of the Dividend Growth Stocks are:

A strong business model with a well-managed and reliable board of directors.
History of a shareholder-friendly company i.e. a company with regular dividends and no dividend cuts.
Dividends continuously growing for the past few years.
Strong Financials: Continous healthy growth in Topline and the Bottom line of the company’s income statement and cashflows.

These are the signs that reflect the company’s ability to grow and maintain solid cash flow to give regular dividends to its investors.

Examples of Dividend Growth Investing Stocks

For example, if you want to understand dividend growth investing, here are the examples of a few stocks whose dividends have been continuously growing for the past couple of years:

Name	Last Market Price	Market Cap (in Crores)	Mar-14	Mar-15	Mar-16	Mar-17	Mar-18	Mar-19
National Aluminum Co.	₹42.35	₹7,901.00	₹1.50	₹1.25	₹2.00	₹2.10	₹4.28	₹4.16
Bharat Petroleum	₹492.00	₹1,06,727.00	₹5.67	₹7.50	₹10.34	₹21.68	₹19.05	₹17.24
Vedanta	₹147.15	₹54,699.00	₹3.25	₹4.10	₹3.50	₹19.45	₹21.20	₹18.85
Hero MotoCorp	₹2,308.00	₹46,108.00	₹65.00	₹60.00	₹72.00	₹85.00	₹95.00	₹87.02
Tata Steel Ltd	₹421.00	₹47,431.00	₹10.00	₹8.00	₹8.00	₹10.00	₹10.00	₹13.00
Infosys	₹714.00	₹3,04,054.00	₹15.57	₹15.83	₹12.97	₹13.77	₹22.01	₹21.70
Bajaj Auto	₹3,220.00	₹93,188.00	₹50.00	₹50.00	₹55.00	₹55.00	₹60.00	₹60.00
Tata Chemicals	₹654.00	₹16,661.00	₹10.00	₹12.50	₹10.00	₹11.00	₹22.00	₹12.50
Hindustan Zinc	₹206.25	₹87,147.00	₹3.50	₹4.40	₹27.80	₹29.40	₹8.00	₹20.00
Power Grid	₹186.95	₹97,805.00	₹2.58	₹1.31	₹2.31	₹4.35	₹5.25	₹8.63

This table shows the Adj. Dividends Per Share for the given stocks from 2014-19 | (Data Source: EquityMaster)

Benefits of Dividend Growth Investing

We all know that holding good stocks for the long term can help build a huge portfolio. But what if we get regular dividends along with it. This can reduce the burden of timely selling your stocks to book profit. As dividends are continuously pumped in your account, you do not have to worry about the stock market price fluctuations. Moreover, here dividend re-investing can create wonders.

Here are a few of the common benefits of dividend growth investing:

Dividend growth investing can be a major source to build long-term wealth to create passive returns.
They can help you to get returns no matter how stocks are performing. And hence, dividend growth investing helps to avoid the biggest threat of getting no returns because of stock underperformance.
Investors also get tax benefits while investing in dividends. It helps in minimizing taxes as dividend tax rates are lower compared to the regular capital gain taxes. Dividend earning up to Rs 10 lakhs is taxfree in India.

How to get started with Dividend Growth Investing?

There is a common misconception that high dividend yield means high returns. However, this may not be true and sometimes high yield may also represent a depressed stock.

Dividend Yield vs Dividend Growth:

Dividend yield = Dividend per share / Stock price per share

High dividend yield can be either because of an increased dividend payout or decreased share price. If the yield is high because the share price of that company has fallen significantly, it may also represent a value trap. Here, the stock may appear as a value stock because of low valuation. However, the main reason for its low valuation can be its poor performance or bad future prospects. Overall, high yield doesn’t refect a fundamentally strong dividend stock.

Further, also check the dividend payout while researching dividend growth stocks. Payout should be sustainable and growing. If a company offers a solid record of increasing payout per share on an annual basis, it is way better than a company giving a high dividend for just that year.

Dividend payout = Dividends per share / Earnings per share

As a thumb rule, a very high dividend payout is dangerous as it means that the company is giving away the majority of its profits as dividends and not retaining enough. A company generally distributes the majority of profits only when it does not have much growth investment opportunities. Typically, a payout ratio of more than 80–85% may reflect a dividend fall or cut in the near future.

Also read: How to Plan Your Passive Income The Right Way?

Summary

Dividend growth investing is an insanely powerful way to build passive wealth by investing in stocks. Moreover, as most dividend growth investors are long term investors, time is their best friend. A few common factors to check while investing in dividend growth stocks are dividend yield, payout ratio, and dividend growth rate. Apart, the company should also be well-managed and should have a decent financial growth rate.

Kritesh Abhishek

www.linkedin.com/in/kriteshrules/

December 17, 2019 Kritesh Abhishek Investment Basics No comments yet

5 Types of Stocks That Every Investor Should Know

5 Types of Stocks That Every Investor Should Know:

There are thousands of stocks publicly listed in the Indian stock market. And researching them one-by-one to pick the one that suits you the best may take weeks. That’s why these stocks are divided into different categories to help investors/traders classify these stocks to help them study better.

Stocks may be categorized based on different factors like their size, industry, location, etc. In this article, we are going to discuss five popular types of stocks that every investor should know.

5 Types of Stocks That Every Investor Should Know

— Based on Company Size (Market Capitalization)

To classify stocks based on their size, we use Market capitalization or market cap.

Market Capitalization refers to the total rupee value of the company’s share. It is calculated by multiplying the total number of shares by its present market share price.

Here, according to the size of the company, companies can be broadly divided into large-cap, mid-cap, and small-cap stocks. In general, the commonly accepted classification of companies based on their market capitalization in the Indian stock market is:

Market cap Less than 8,500 Cr → Small cap
Market cap Between 8,500 Cr to 28,000 Cr → Mid Cap
Market cap Greater than 28,000 Cr → Large-cap

Note: You can read more about Small cap, Mid Cap and Large Cap Companies here.

Here are two more types of stocks based on the size that you should know:

Penny Stocks: Those stocks which trade at a very low market price (less than Rs 10) and have a very low market capitalization (typically under 100 crores) are called penny stocks in the Indian stock market. Penny stocks are the darlings of new investors. The low market price of these stocks makes them quite attractive to beginners.
Blue-chip stocks: Blue chip companies are large and well-established companies with a history of consistent performance. These companies are financially strong (usually debt-free or very low debts) and are capable to survive in tough market situations. Most of the blue-chip companies are the market leaders in their industry. A few of the common examples of blue-chip companies in India are HDFC Bank, ITC, Asian Paints, Maruti Suzuki, etc.

In addition, the stocks may also be classified as Mega-caps and Micro-caps based on their size. However, they are not frequently used.

— Based on Industry

Stocks are often categorized based on the sector or industry they fall like— Automobile stocks, Energy stocks, Technology stocks, etc. For example — all the companies that are related to automobiles will be considered as automobile stocks. Maruti Suzuki, Tata Motors, Ashok Leyland, Hero Motocorp, etc.

However, sometimes it might be a little difficult to quickly classify companies when their business model lies in two or more industries. For example, ITC Limited is a conglomerate, although it generates more than sixty percent of their revenue from tobacco products.

— Based on the Business Cycle

Based on the business cycles, the stocks can be classified as Cyclicals or Non-cyclical (Defensive) stocks.

Cyclical Stocks: As the name suggests, cyclical stocks are those that move in the direction of the market. That is when the economy is doing well, the stocks go up and when there is a downturn in the economy, the value of the stock goes down too. Cyclical industries usually may include services like automobile, construction, travel and tourism, luxury products, etc.
Non-Cyclical/Defensive stocks: The revenue and cash-flows and share price of non-cyclical companies continue to do well during an economic slow-down or depression as they are industries that produce the basic needs of life that people will continue to consume. Defensive stocks include goods and services in industries that are not affected by market fluctuations such as utilities, food, and medicines. It is basically any good or service that people will buy whether or not the economy is doing well. Moreover, Tobacco, Alcohol producing companies may fall into this category as people continue to consume these products even during a bad economy.

Also read: Cyclical and Non-cyclical stocks: How do they differ?

— Based on Investment Style

Based on the buying or investment style, stocks can be classified as growth stocks, value stocks and dividend stocks.

Growth stocks: We can define a growth stock as a company that is growing at a very fast rate compared to its industry or market index. The share prices of these companies appreciate at a fast pace and the investors are ready to pay high prices for these companies to compensate for the faster growth.
Value Stocks: The concept of value investing was famously introduced by Benjamin Graham, the mentor of Warren Buffett, back in the 1930s in his famous book ‘The Intelligent Investor’. A value stock has completely different characteristics than the growth stocks. These companies do not have a high growth rate, rather they grow slow. However, these stocks trade at a low (discounted) market price compared to their true/intrinsic value.
Dividend Stocks: This is the third way to invest apart from the value stocks and growth stocks. An income stock approach is investing in those stocks which pay a high, regular and increasing dividend. The high dividend yield of these stocks mostly generates consistent returns for passive investors.

Also read: Growth Stocks vs Value stocks – A logical Comparison

— Based on Location

Finally, companies can also be classified based on where they are located. If the company is located in the same country as the investors, it is considered domestic stock. Otherwise, it will be regarded as International stocks. A lot of investors invest based on categories like the International market stocks, emerging market stocks, etc to diversify their portfolio.

Also read: 3 Easy Ways to Invest in Foreign Stocks From India.

Closing Thoughts

As discussed in this article, stocks can be classified in different types based on their characteristics. A few of the popular types of stocks that every investor should know are –

Based on Size: Large caps, Mid caps, and Small caps,
Based on Industry: Automobile stocks, Pharma Stocks, IT Stocks, etc.
Based on Business Cycle: Cyclical and Non-cyclical,
Based on Style: Growth stocks, Value stocks, Income stocks,
Based on Location: International stock, Emerging markets, etc.

Classifying stocks makes it easier for investors to study the companies based on their preferences. That’s all for this article. Please comment below if you’ve any queries. I’ll be happy to help. Happy Investing.

Kritesh Abhishek

www.linkedin.com/in/kriteshrules/

December 16, 2019 Kritesh Abhishek Investment Basics 3 comments

what is sustainable growth rate ssr cover

What is Sustainable Growth Rate (SGR)?

While investing in a company, one of the most critical factors to look at is its growth rate. At what percentage the company is estimated to grow in the upcoming years? This is because, as the company grows & generate more profits, generally, your investment will grow along with it. Moreover, it’s not a viable strategy to invest in declining companies or the ones with no significant growth aspects.

But how to calculate the growth rate of a company?

A common approach that most investors follow is to look into the historical growth rate. Here, they try to find out the rate at which revenue, earnings, etc are historically growing, to assume a similar growth rate in the future.

Although past performance doesn’t guarantee future growth, however, it can give you a rough estimation if you expect the company to perform similarly in the future. Here, investors can use the compounded annual growth rate approach to define growth.

However, forecasting growth based on such estimations may not always be valid. Besides, the estimates can change depending on the ‘number of years’ that you’re considering. For example, past 3-years, 5-years, and 10-years historical growth rate might be totally different. Which one should the investors focus on while forecasting the future?

A better approach while studying growth is to look into the sustainable growth rate (SGR) of a company that focuses on different factors like earnings, shareholder’s equity, payout, etc to find out the growth percentage of a company. But what exactly is a sustainable growth rate? This is what we are going to discuss in this post.

Sustainable Growth Rate (SGR)

The sustainable growth rate is the maximum growth rate that a company can sustain using its own resources i.e. without financing the growth using debt or equity dilution. It is calculated as:

**Sustainable Growth Rate (SGR) = ROE * Retention Rate (RR)**

Where,

Return on Equity(ROE): ROE is the amount of net income returned as a percentage of shareholders’ equity. It can be calculated as: ROE= (Net income/ average stockholder equity). ROE shows how good is the company in rewarding its shareholders. A higher ROE means that the company generates a higher profit from the money that the shareholders have invested.
Retention Rate (RR): This is the percentage of net income that is retained to grow the business, rather than being paid out as dividends. Retention rate is calculated as: RR= (1 — Payout ratio) = ( 1 — DPS/EPS), where DPS is the dividend per share and EPS is earnings per share.

For example, if a company ABC has a ROE of 15% and payout ratio of 40%, then its sustainable growth growth rate can be calculated as: SGR = 15 * ( 1–0.4) = 15 * 0.6 = 9%.

Also read: 19 Most Important Financial Ratios for Investors

Ideally, the growth of a company funded by its own resources is the best form of growth compared to any other leveraged growth options. The later scenario may lead to financial stress and in the worst case, bankruptcy.

Moreover, any company can grow faster if it takes a lot of debt and spends on marketing, new product development, acquisitions, etc. However, returning that debt can be a troublesome process if it’s business model is not that strong.

By looking into the SGR of a company, Investors can find out its long-term growth, current life cycle stage, cash flow projections, borrowing & dividend allocation strategies, etc.

Maximum SGR:

According to the sustainable growth rate formula, SGR = ROE * RR = ROE* (1 – Payout Ratio)

Here, when the payout ratio is zero, the SGR becomes equal to the ROE of the company. You can maximize the sustainable growth rate by increasing ROE or decreasing payout (i.e. retaining more earnings rather than paying out as dividends).

Note: You can also analyze the root cause of ROE further using the DuPont Analysis.

Technically, a few ways to maximize SGR is by increasing sales & profit margin, managing account payable & receivables, efficient inventory management, etc. However, a point to note here is that a high SGR is always difficult to maintain. As the company matures, it cannot sustain similar high past growth rates.

Closing Thoughts:

An efficient management’s goal is to grow the company at its sustainable growth rate. If the SGR is 15%, the company can safely grow at this percentage per annum without taking any additional financial leverage. It can be considered the ceiling growth rate of a company while using its own resources.

Kritesh Abhishek

www.linkedin.com/in/kriteshrules/

November 23, 2019 Kritesh Abhishek Valuations No comments yet

15 Biggest Stockbrokers in India With Highest Active Clients

(Updated: 31st October 2019) 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 287 registered stockbrokers in India as of 31st October 2019.

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 bankrupt. 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.No	Name of the Stockbroker	# of Active Clients	% Share
1	ZERODHA BROKING LIMITED	909008	10.35%
2	ICICI SECURITIES LIMITED	843975	9.61%
3	HDFC SECURITIES LTD.	672044	7.65%
4	SHAREKHAN LTD.	509787	5.80%
5	KOTAK SECURITIES LTD.	437822	4.99%
6	AXIS SECURITIES LIMITED	419455	4.78%
7	ANGEL BROKING LIMITED	412809	4.70%
8	MOTILAL OSWAL FINANCIAL SERVICES LIMITED	319138	3.63%
9	KARVY STOCK BROKING LTD.	266287	3.03%
10	IIFL SECURITIES LIMITED	214149	2.44%
11	SBICAP SECURITIES LIMITED	209301	2.38%
12	GEOJIT FINANCIAL SERVICES LIMITED	162789	1.85%
13	RELIGARE BROKING LIMITED	159030	1.81%
14	RELIANCE SECURITIES LIMITED	120227	1.37%
15	EDELWEISS BROKING LIMITED	120132	1.37%

Please note that the total number of active clients of all stockbrokers is 87,82,207 as of October 2019, 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 October 2019, Zerodha constitutes around 10.35% of the total market share of the active clients registered on the National Stock Exchange. It has over 9.09 lakh active customers compared to a total of over 87.82 lakh 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. It is the only broker with a discount brokerage business model in the top ten list. Anyways, Angel broking has also started a similar discount brokerage model recently, along with its full-service model.

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

According to the above table, Zerodha is closely followed by ICICI securities, which ranks second and has over 8.43 lakhs unique clients.

The other most prominent stockbrokers in this list are HDFC Securities (6.72 Lakh clients), Sharekhan (5.09 lakh clients), Kotak Securities (4.37 lakh clients), Axis Securities (4.19 lakh clients), Angel Broking (4.12 lakh clients) and Motilal Oswal Group (3.19 lakh clients). Together these 15 biggest stockbrokers constitute over 65% 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 31st October 2019.

S.No	Name of the Stockbroker	# of Active Clients	% Share
15	EDELWEISS BROKING LIMITED	120132	1.37%
16	5PAISA CAPITAL LIMITED	106280	1.21%
17	SMC GLOBAL SECURITIES LTD.	105981	1.21%
18	RKSV SECURITIES INDIA PRIVATE LIMITED	99546	1.13%
19	NIRMAL BANG SECURITIES PVT. LTD.	93607	1.07%
20	MARWADI SHARES AND FINANCE LIMITED	83111	0.95%
21	ANAND RATHI SHARE AND STOCK BROKERS LIMITED	76095	0.87%
22	VENTURA SECURITIES LTD.	76088	0.87%
23	TRADEBULLS SECURITIES (P) LTD.	69362	0.79%
24	JAINAM SHARE CONSULTANTS PRIVATE LIMITED	49367	0.56%
25	MONARCH NETWORTH CAPITAL LIMITED	45620	0.52%
26	INDIABULLS VENTURES LTD.	44730	0.51%
27	ADITYA BIRLA MONEY LIMITED	44234	0.50%
28	IDBI CAPITAL MARKETS & SECURITIES LTD.	40859	0.47%
29	MASTER CAPITAL SERVICES LIMITED	39790	0.45%
30	SAMCO SECURITIES LIMITED	39316	0.45%

That’s all for this article. Please comment below which brokerage firm you’re using for trading in the Indian stock market and your review for the same. Happy trading!

Kritesh Abhishek

www.linkedin.com/in/kriteshrules/

November 20, 2019 Kritesh Abhishek Online Brokers 3 comments

Good Debt vs Bad Debt: What You Need to Know?

Good Debt vs Bad Debt: What You Need to Know?

A common misconception among most of the working population is that all debts are bad, and hence they should avoid debts at any cost. Now, it is possible that you may never take any debt/obligation throughout your lifetime. However, this is not a very smart move.

Many times, taking debts to reach your goals can be a wise action and can help people succeed in the long term. As a matter of fact, all those who run a business or have a winning mindset know that – “Not all debts are bad!”

Although buying luxury goods through debt on your credit card should definitely be considered as a bad debt, however, sometimes, it is okay to take a debt to start a business, buy your new house, for getting a higher education, etc when the possible returns in future are higher compared to the interests paid.

In this article, we are going to discuss good debt vs bad debt. By the end of this post, you’ll completely understand what good debts, bad debts, their characteristics, examples, and more are. Let us start with Good debts.

Good Debt vs Bad Debt

1) Good debts

There is a common saying in the business world– “Money makes money.” In other words, it means that you need money to make more money.

Concerning good debt vs bad debt, if you can use your debt to generate more money/value or simply increase your net worth, then it can be considered as good debt.

In general, these debts have lower interest rates than the potential returns and, therefore, treated as an investment for the future.

For example, if you’re starting a business, it is not necessary that you should have enough savings to get it off the ground. Here, if the future growth potential and expected returns from your business are high, you can take a business loan. The business loan can be considered as a good debt (on the condition that your business is fruitful).

Here are a few other common examples of good debts:

— Education loans:

“The more you learn, the more you can earn.”

If taking a degree can increase your earning potential as an employee (or an employer), it’s okay to go for that debt. You are more likely to be better paid if you have higher knowledge and degree. Always be ready to “Invest in yourself,” and hence, taking a student/college debt can be considered good debt.

Anyways, please note that an education loan may turn out to be bad debt if you do not get employment as per your developed skills after graduation. Therefore, always choose the degree/program carefully because if there’s no substantial earning potential after you have completed the education, it may not be a good debt.

— Business loan:

If taking a business loan can increase sales, earnings, and improve your company’s financial health in the future, it can be a good debt. Moreover, having a balance in the account can also reduce the financial stress of owners as they do not have to worry about running out of cash constantly. And therefore, they can make better decisions for their business.

With time, the owners can slowly pay down the debt when their business becomes profitable and moreover stable. Anyways, a business loan can also become a bad debt if the businessman is blindly taking money for a risky business idea.

— Mortgages:

Mortgages for buying a house or real estate debts for property ownership can be considered as good debt.

Generally, buying a house or property involves a massive upfront cost. If you do not have saved a lot of money to invest in a house/property, but the potential earnings that you can make from your real estate investment are way high, then taking a loan may be a good idea.

Here, you can buy the property, live in it for years, save money on rent, and also sell it in the future for making money. Else, you can buy the property and rent it out to make money as rental income. As you are taking a loan to build an asset that increases in value, mortgages can be considered as good debts in the long run.

Also read: What are Assets and Liabilities? A simple explanation.

The Risks of Good Debt:

Although good debts may sound like a viable option for a better future, however, they are always dependent on a lot of assumptions. There’s no guarantee that the future will turn out to be the same as planned. For example:

You can get a college degree from your education loan but may have no job offer.
Your business loan may be a waste if your business/startup fails
You may be paying high mortgages for your house and may be left with no savings for the future.

Even for good debts, there are a lot of risks involved as people are forecasting the future based on their assumptions. Therefore, before taking an obligation, carefully assess the risks and rewards.

For example, if you are planning to get an education loan, choose to take the loan for a degree/program that you’re confident to be fruitful. Know the expected salary after graduation so that you can plan to pay the money back.

Besides, considering the worst-case scenario may also help here as you can even plan for it. Overall, always act smartly as a good debt may not always be right for everyone.

2) Bad debts

Bad debts are the money that is borrowed to purchase depreciating assets or liabilities. In other words, if the value of assets doesn’t go up or generates income in the future, you should not buy it by borrowing money as they are bad debts.

In general, bad debts have a higher interest rate, and people can prevent taking these debts by making smart use of money. Here are a few examples of bad debts:

— Debts to buy fancy cars:

Cars cost a lot. While having a vehicle can be a necessity as it saves money and time, however, taking debt to buy an expensive car is never a good idea. The value of a vehicle depreciates over time, i.e. becomes less than what you paid for in the future. And hence, borrowing money to buy fancy cars can be considered as bad debt.

— Debts to buy luxuries:

Taking consumer/personal loans to purchase luxuries like expensive watches, clothes, dining in fancy restaurants, services, etc. are again bad debts. Personal loans have incredibly high-interest rates and are usually caused by living beyond one’s means. The money spent on these goods/services could have been used somewhere else.

— Credit Card debts:

Credit card debt is the worst form of bad debt. The interest paid on credit card debts is significantly higher than the rates on consumer loans. Moreover, as the outstanding amount accumulates each month, it makes it easy for the people to fall behind and become prey to the credit card companies.

Mixed/Special Cases of Good Debt vs Bad Debt:

The world is not just ‘Black’ and ‘White’. There’s also ‘Grey’!

Similarly, a debt cannot always be classified as good debt or bad debt. Sometimes, it can be both. It depends on your financial situation and preference. Here are a few examples:

— Borrowing to invest:

If you are getting money at a lower interest rate and making more money by investing it, then it can be considered as good debt. In the trading world, this is called leveraging, and it can help the traders to make a lot of profits using other people’s money.

Anyways, if the interest rate on the borrowed money is way high and the profits earned from your investment is low, then this money can be considered as a bad debt.

Overall, there’s a risk involved in borrowing money to invest. Until and unless, you’re trained and experienced to do so, this approach can be dangerous.

— Credit card rewards:

Although relying too much on credit cards be harmful, however, they are also a lot of benefits of using credit cards. Most of these cards come with amazing rewards like free airline tickets, movie tickets, cashback, etc. If you can use the credit cards efficiently, it can be considered as good debt.

— Consolidation loan:

In finance, consolidation occurs when someone pays off several smaller loans with one more jumbo loan. Here, the individual gets this loan at a lower rate to pay off the higher interest rate loans. In general, it can be considered a good idea to get rid of high-interest debts. However, the problem arises when the individual is not able to pay off the bigger loan or when the debts pile up.

Also read: 11 Best Passive Ways to Make Money While You Sleep.

Summary

Let us quickly summarize what we discussed about Good Debt vs Bad Debt in this article.

Good debt is a debt for getting product/service that has the potential to increase its value with time. As a thumb rule, if it increases your net-worth or value, it is good debt. The right amount of good debt can increase your net worth, value, and help you get the things that you want in your life without taking unnecessary risks.

On the other hand, if you are borrowing money to spend over depreciating assets or liabilities, it is bad debt. Bad debt tries to lure people for instant gratification. However, they do not create any significant long-term value. Try to avoid getting bad debs for luxury products/services or borrowing high-interest rate money.

Finally, there’s no fixed boundary for defining good and bad debts. A good debt for one can be bad for another, depending on their financial situations.

Kritesh Abhishek

www.linkedin.com/in/kriteshrules/

November 13, 2019 Kritesh Abhishek Personal Finance No comments yet

Where to open your Demat & Trading account?

Two years back, I wrote an article on the difference between a demat and trading account. That article got a lot of attention from the readers, asking me to further elaborate on where to open these accounts.

As I didn’t cover which stockbrokers are suitable for which users in that article, I received a lot of queries from the readers regarding where to open demat and trading account. Most of them were beginners and therefore, I decided to write an article on the same which can be helpful for the newbie investors.

In this post, I’ll discuss the stockbrokers which I’ve personally used and researched. In my investing journey of the last five years, I’ve come across many trading platforms. From full-service brokers like ICICI direct, HDFC securities, SBI Smart, etc, to the newer discount brokers like Zerodha, Upstox, 5Paisa, Trade Smart Online, etc, I’ve reviewed them all. Moreover, being in the trading field, I need to remain updated with the latest brokers and their charges.

By the end of this article, you’ll have a good knowledge of where should you open your trading and demat account. I’ll try to keep things as simple as possible while answering. In addition, I’ll also disclose which stockbroker I use for trading in stocks. Therefore, make sure that you read this article till the end. I’m confident that it will be helpful to you.

Where to open your Demat & Trading account?

1) Difference between demat and trading account?

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 in 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 ‘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 order for a stock in the market.

For example, let’s say you want to buy some shares. Then, you need to enter details like ‘Which share you want to buy?’, ‘How many quantities of shares you want to buy?’, ‘At what price you want to buy that shares’, etc. And all these placings of buy/sell order is done using a trading account.

While trading in Indian stocks, you’ll need to have both demat and trading account. Anyways, both these accounts are linked and can be opened with any stockbroker. Further, in the era of the internet, opening these accounts is really simple and fast.

2) Do you need a stockbroker to trade in stocks?

This is one of the frequently asked questions that I receive over email. Therefore, I needed to answer this one here.

Yes, you need a stockbroker to trade in Indian stocks.

You just cannot walk in the stock exchange to buy/sell your stocks. There are a lot of processes involved in the transfer and settlement of stocks for a satisfactory buying and selling experience of the participants. And here, stockbrokers plays an important role, along with the stock exchanges and regulators. Overall, you’ll need a stockbroker to trade in stocks.

3) What is a stockbroker?

Basically, a stockbroker is an individual/organization who is a registered member of the stock exchange and are given license to participate in the securities market in place of its clients.

From big banking corporations like HDFC Securities, ICICI Direct, Kotak securities, etc to newer fastly growing startups like Zerodha, Fyers, etc all are examples of stockbrokers in India.

Stockbrokers can directly buy & sell stocks in the share market on behalf of their clients and charge a small commission for this service. However, the commission is minimal compared to the fast trading platform that they offer. Using these platforms, you can buy/sell stocks within minutes using your web/phone while sitting on your home sofa.

4) What are the types of stockbrokers in India?

There are two basic types of stockbrokers in India: Full-service brokers (Traditional Broker) & Discount brokers (Budget brokers).

— Full-service brokers

These are traditional brokers who provide trading, research, and advisory facility for stocks, commodities, and currency. These brokers charge commissions as a percentage of each trade executed by their clients. They also facilitate investing in Forex, Mutual Funds, IPOs, FDs, Bonds, and Insurance.

A few examples of top full-service brokers in India are:

— Discount brokers

These brokers just provide the trading facility to their clients for stocks, commodities and currency derivatives. They do not offer advisory services. However, these stockbrokers can save you a lot of brokerages while trading in stocks. Here, you need to pay a flat brokerage charge on the executed trades.

Here is a list of a few top discount stockbrokers in India:

5) Brokerage comparison while using full-service vs discount brokers

Let’s compare the brokerage charges of a full-service broker compared to a discount broker.

A full-service broker charges commission as a fixed percentage on every trade their clients execute. This commission can be somewhere between 0.25–0.55% of the overall trade. Here, the bigger is the transaction, higher is the brokerage.

On the other hand, the discount broker offers a flat brokerage charge. This charge can be somewhere between Rs 10–20 per trade.

Moreover, these charges are applicable to both sides of trading. Therefore, when you buy a share, you’ve to pay brokerage and when you sell these shares, you again have to pay these charges.

For example, full-service broker ICICI Securities that charge 0.275% as brokerage on Intraday trading. Therefore, the total brokerage in a trade will be 0.275%* 2 = 0.55%, if we include both buying and selling.

If you make an overall transaction of Rs 5 lakhs per month with ICICI direct, the total brokerage in a year will be equal to 0.55% * 5,00,000 * 12 months = Rs. 33,000

Now, let us look at the brokerage charges offered by discount brokers. The popular discount brokers in India like Zerodha or Upstox charges Rs 20 per trade.

Let us assume that you make 20 trades per month using such a discount broker. Here, your total brokerage in a year will be Rs 20 (brokerage) * 20 trades per month * 12 months = Rs 4,800.

Clearly, you can notice here that you can save a lot of brokerage charges while opting for discount brokers. Moreover, both these brokers provide a similar trading platform and hence overall experience is not much different. Overall, you are paying some un-necessary brokerage while trading with full-service brokers.

6) What factors to check while selecting your stockbroker?

Brokerage charge is one of the biggest factors to look at while picking your stockbroker as an expensive broker can hurt you financially.

Apart, the second biggest factor to check is the reputation of the stockbroker. A stockbroker with a long history of a reliable trading platform and good customer service should be preferred.

When you are opening your trading account with a stockbroker, it’s a long term relationship. You might trade in stocks for years after opening your account. And here, you do not want your brokerage firm to be shut down in between and all your bought equities getting trapped with them. Therefore, while picking your stock broker, first always check the reputation and reliability of the stockbroker. A simple google search or reading the reviews by the existing users can help to find red flags.

Besides, you need to look into their web and mobile trading platforms, advisory services (if you are looking for trading advice), customer service and other perks offered by that stockbroker like research reports, trading/investing education, etc.

7) Where should you open your demat and trading account?

By now, you would have got a decent idea regarding stockbrokers in India. Next, let’s discuss the central topic of this article- where should you open your demat and trading account.

If you are looking for multiple services like shares, mutual funds, bonds, currencies, fixed deposits, commodities etc along with research reports and do not mind paying a few extra bucks for additional services, then you should open your account with full-service brokers like ICICI direct, HDFC securities, etc.

However, personally, I believe that if you planning to trade just in stocks (or commodities), opening accounts with discount brokers is more advantageous. They offer a fast trading platform with a low brokerage charge which helps traders to save a lot of money.

Moreover, with the rise of the internet, most of the information that you need to make trading/investment decisions are freely available online. If you want to read the research reports on companies, they too are freely available on websites like Trendlyne, markets mojo, etc.

Note: If you really need advisory to buy and sell stocks, it’s better to go with expert advisory services in this field, who can offer you personalized services rather than relying upon these big corporates for whom you might be a very small client.

8) Which stockbroker do I use?

I use Zerodha discount broker for making all my traders.

Initially, I started my investment journey with ICICI direct. The reason I opened my account with ICICI was because of their good reputation and 3–in-1 account service facility.

3-in-1 means that you can open your saving, demat and trading account all at once. So, while opening your savings account with ICICI bank you can apply for the other two accounts as well.

I was happy with the services offered until I realized that I was paying too much brokerage charges and a chunk of my profit was paid unnecessarily to ICICI direct. Then, I started researching other stockbrokers where I can save these charges. Finally, I switched to Zerodha, the discount broker and I’m happy with the trading platform and services that it offers.

Note: You can read my complete review on Zerodha stockbroker here.

Further, if you’re interested to open your account with Zerodha, here’s the direct link to fill account opening application!

Closing Thoughts

In this online era, buying and selling stocks is as fast as the click of your fingers. All thanks to the online stockbrokers.

There are many stockbrokers available in India and through this post, I tried to help you how to choose a broker for trading in stocks. If you still have any queries regarding where to open your demat and trading account, feel free to comment below. I’ll be happy to help you out.

Have a great day and happy investing!

Kritesh Abhishek

www.linkedin.com/in/kriteshrules/

October 24, 2019 Kritesh Abhishek Online Brokers 10 comments

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

#12 companies with highest share price in India (Updated- October 2019):

Hi Investors. In this post, 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 price at which they are trading in the share 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. Let’s get started.

#12 Companies with Highest Share Price in India

1. MRF (Rs 62,896)

Market Capitalisation = Rs 26,628 Cr

Madras Rubber Factory (MRF) is a Tyre manufacturer that produces a wide range of tyres. It specializes in Car & bike tyres, trucks/buses tires etc.   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 81,426. The stock is currently trading at a standalone PE of 24.14.

MRF has never split its share and has a face value of Rs 1o. Noticeably, this company was trading at a price of Rs 10,000, in November 2012.

2. Honeywell Automation (Rs 28,564)

Market Capitalisation = Rs 25,250 Cr

Honeywell 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 +440% in the last 5 years. It is currently trading at a PE of 66.24.

3. Page Industries (Rs 20,816)

Market Capitalisation = Rs 23,210 Cr

One of the famous company under Page Industries is Jockey (Underwear and inner wears company). Page industries is in readymade apparels (garment) industries. It has turned out to be a multi-bagger stock in the last couple of years and has given a return of over +135% in last 5 years.

Page industries is currently trading at a PE of 61.05.

4. 3M India (Rs 20,610)

Market Capitalisation = Rs 23,227 Cr

3M India has a diversified portfolio of products in dental cement, health care, cleaning, etc. This stock is currently trading at a PE of 75.35.

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

5. Eicher Motors (Rs 19,220)

Market Capitalisation = Rs 52,452 Cr

The parent company of Royal Enfield (Bullet bikes) and Eicher trucks. This is in the automobile sector.

This stock has given a negative return of -35% in the last two years since October 2017.   Eicher motor was trading at a price of Rs 2,500 in November 2012 and a high of Rs 31,600 in April 2018. The current PE of Eicher Motors is 25.24.

Also read: 8 Best Discount Brokers in India – Stockbrokers List 2019

6. Shree Cements (Rs 18,373)

Market Capitalisation = Rs 64,787 Cr

Shree Cement is an Indian cement manufacturer headquartered in Kolkata. It is the biggest cement maker in northern India.   Shree cements is currently trading at a PE of 54.85. (52-week high- Rs 22,399)

7. Nestle India (Rs 14,351)

Market Capitalisation = Rs 138,377 Cr

Nestle India is in the food processing industry with a wide variety of products like Maggi, Kit-Kat, Nescafe, Every day, etc.   This stock is currently trading at a PE of 81.93.

8. Bosch (Rs 14,128)

Market Capitalisation = Rs 41,671 Cr

Bosch ranks eighth in the list of companies with 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 and currently trading at a PE of 27.73 (52-week high- Rs 20,500).

9. Bombay Oxygen (Rs 13,247)

Market Capitalisation = Rs 198 Cr

This is one of the lesser-known companies on the list of companies with highest share price in India. Incorporated in 1960, Bombay Oxygen is an Industrial gases company.

The stock is currently trading at a standalone PE of 25.28 with a 52-weeks high price of Rs 26,995 in October 2018.

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

10. Procter & Gamble (Rs 11,582)

Market Capitalisation = Rs 37,598 Cr

P & G is in the personal care industry with products in hygiene and health care. Few famous products of Procter & Gamble group are Ariel, Duracell, Gillette, Head & Shoulder, etc.

This stock is currently trading at a PE of 89.71.

Quick Tip: If you are new to the share market, you’ll need to open your demat account to start investing/trading. We’ll highly recommend opening an account with Zerodha, No 1 stockbroker in India. Here’s a detailed post on how to open Zerodha account step-by-step.

11. Abbott India (Rs 10,949)

Market Capitalisation = Rs 23,267 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 47.99.

12. Tasty Bite Eatables (Rs 10,104)

Market Capitalisation = Rs 2,592 Cr

This company operates in the food processing industry with products like tasty bite rice, noodles, entrees, etc. This stock is currently trading at a PE of 81.05.

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.

Disclaimer: The list of 12 Companies with Highest Share Price in India is till date October 2019. 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.

Further, do comment below which other stocks can find a place in this list of companies with highest share price in India by next year (October 2020)? And which ones will be thrown out of the list, according to you? Happy Investing!

Kritesh Abhishek

www.linkedin.com/in/kriteshrules/

October 15, 2019 Kritesh Abhishek Market, Stocks 14 comments

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

7 Best Stock Market Apps that makes Stock Research 10x Easier– 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 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 you the 7 Best Stock Market Apps that will make your stock research easier in India. Moreover, all the apps listed here are free. So be with me for the next 5-8 minutes to learn best stock market apps for Indian stock research.

7 Best Stock Market Apps –

1. MoneyControl

Play store rating: 4.0/5 Stars (308k 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. Money control app is simple, yet have 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.

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 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

Download here

Source: Money Control

2. Stock Edge

Play store rating: 4.6/5 Stars (24k Reviews)
Downloads: +1 Million
Available on: Android, iOS

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

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.

Download Here

3. Economic Times(ET) Markets

Play store rating: 4.1/5 Stars (26k 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.

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

Download here

4. Yahoo Finance

Play store rating: 4.2/5 Stars (163k reviews)
Downloads: +5 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 the updates about the Indian stock market. The simple yet dynamic user interface makes it one of the best stock market apps for stock research.

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

Download here

5. NSE Mobile Trading

Play store rating: 3.4/5 Stars (14k Reviews)
Downloads: +1 Million
Available on: Android, IoS, Windows

Another one of the best stock market apps in India. This app provides the freedom to trade hassle free anywhere and at any time. After downloading the app, you can get the User ID and Password by your NSE registered Trading Member. Further, you can call 1800 266 0052 (Toll-Free) for assistance

Features:

Real-time streaming quotes, with a simple and user-friendly interface for all types of users.
Comprehensive trading and market monitoring platform.

Download here.

6. Investar

Play store rating: 4.0/5 Stars (1k Reviews)
Downloads: +100,000
Available on: Android, IoS

The simple navigation and interactive charts with zoom features make it one of the best stock market apps. It is a great app for technical analysis on your smartphone or tablet.

Features:

Live intraday candlestick chart updates (Stocks/FO) (1-min or 5-min, depending on the subscription type)
Live NSE Stocks/F&O updates.
Unlimited watch-lists.
Technical indicators like (EMA, SMA, MACD, RSI, STOCHASTICS, VOLUME, OPEN INTEREST, ADX, BOLLINGER-BANDS)
Pivot-point based resistance & support levels.
Push Notifications

Download here

Also read: 7 Best Mutual Fund Apps for Direct Investment

7. Market Mojo

Play store rating: 3.9/5 Stars (1k 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.

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

Download Here

BONUS App

1. Trade Brains -Learn to Invest

Play store rating: 4.6/5 Stars
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.

Features:

Pocket guide for stock market Investment
Step-by-step stock investing lessons.
Easy to understand the contents of various investment concepts and strategies.
Best Investment quotes.
Any content can be shared with a simple click.
Bookmark your favorite content to read/revise later
Topic requests by the users.

DOWNLOAD HERE

Quick note: 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!

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

Kritesh Abhishek

www.linkedin.com/in/kriteshrules/

October 2, 2019 Kritesh Abhishek Investment Basics, Market 53 comments

How to apply for an IPO with Zerodha Account?

In this article, you’ll find out the exact process to apply for an IPO with Zerodha account. However, before we begin, let me tell you my experience of applying to an IPO’s through Zerodha Account.

I’ve been using Zerodha for over four years now and been a happy customer. This discount broker has helped me save a lot of un-necessary brokerage charges if I had used any other full-service broker instead.

Anyways, there was one ‘cons’ of using Zerodha as a broker which bugged me in the past. And it was not having the facility for the customers to directly invest in Initial public offerings (IPOs) through the Zerodha dashboard.

Prior to this recently launched facility, the Zerodha customers have to use ASBA (Application Supported by blocked account) on their net banking portal to apply for IPOs. However, this was not a simple one-click process unlike what most of the other traditional big brokers like ICICI direct, HDFC sec, etc offered.

Although I am not a regular investor in IPO’s and only invest if I find the new offer a lot appealing. Nonetheless, having a simple process to invest gives flexibility whenever the opportunity arrives. Nonetheless, investors can apply for IPO’s directly within Zerodha console. And the best part is that the process is really simple.

Before you apply for an IPO:

Obviously, you’ll need a Zerodha account if you want to apply to IPO’s with Zerodha. If you haven’t opened your account with Zerodha yet, here’s a detailed blog post on how to open your Zerodha Demat and trading account. Else, you can use this direct link to open your account.

Next, you need is a UPI account. And this is nothing new. These days everyone uses UPI to make fast and secure payments. For example, you can use apps like Phonepe, Bhip app, iMobile by ICICI, etc. Here is the link to the UPI apps and banks that allow IPO payment.

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

Steps to apply for an IPO with Zerodha Account:

1. Login to Zerodha Console. Here’s the quick link.

2. On the top menu bar, go to Portfolio → IPO.

3. On this page, you can find the list of the active IPO’s.

4. Select the IPO that you wish to apply from the list of active IPOs and click on ‘Place bid’.

5. A pop-up screen will launch with IPO information. Here you can find details like issue date, issue price, market lot, discount (if any), minimum order quantity, etc.

6. Next, enter your UPI id. Make sure to select the correct bank account.

7. Place your bid by entering the ‘Quantity’ and ‘Bid price’.

For the quantity, it should be minimum order quantity or the multiple of the lot size. For the ‘bid price’ you can enter any price between the offered issue price range. Anyways, for the maximum chances to get an allotment, it is recommended to use the ‘Cut-off’ price.

8. After filling the details, click on the ‘checkbox’ stating that you’ve read the prospectus and you’re are an eligible UPI bidder as per the applicable provisions of the SEBI.

9. Finally, recheck the details and click on ‘Submit’.

10. Besides, if you want to make any changes if the bidding later, simply click on ‘Bid details’ on the IPO page and make the changes.

Once submitted, you’ll receive the request to complete the “UPI Mandate” on your UPI app.

Please note that sometimes it may take a few hours to receive the UPI mandate request. Anyways, in my case, it was instantaneous and I received payment request on my imobile ICICI app as soon as I submitted the application on the Zerodha Console. Accept the request once you receive it to complete the process.

On accepting the payment request, your UPI app will block the IPO funds in your bank account till the date of allotment. You’ll receive an SMS from exchange once your application is placed successfully.

If you’re allotted the IPO shares, the amount will get debited from your account and shares will be credited in your demat account. On the contrary, if shares are not allotted, then blocked funds are released on the date of the payment. You can read more about the process of IPO share allotment to retail investors here.

That’s all. This is the exact step-by-step process to apply for an IPO with Zerodha Account.

Closing Thoughts:

Zerodha is continuously innovating to provide a better investing and trading facility to its customer. The procedure to apply for IPO is a lot simpler now. You should definitely check it out. Further, comment below if you face any difficulty in applying for IPO using Zerodha account. Happy Investing!

Kritesh Abhishek

www.linkedin.com/in/kriteshrules/

September 30, 2019 Kritesh Abhishek Online Brokers No comments yet

things to do before you start investing cover-min

7 Things to do Before You Start Investing

So, you’re thinking to start investing. But before you enter, are you prepared? Do you actually meet all the requirements that will make your investment journey smoother? In this post, we’ll discuss seven such things that you should do before you start investing.

1. Build an Emergency Fund

As the name suggests, an emergency fund is money that you put aside for emergencies. It is the money that you can reach out to during your hour of need and pay for those unforeseen and unexpected expenses such loss of a primary job, medical emergency, personal emergencies or even a car breakdown.

As a thumb rule, before you start making investments for your long-term goals, first you should build an emergency fund which should be greater than at least three times your monthly expenses. Keep this money aside in a separate account. You can read more about how to build an emergency fund here.

2. Have a budget & know your cash-flows

If you want to enjoy a healthy financial life, it’s really important to have a balance between your savings and your expenses. Budgeting your monthly finances and knowing your ‘cash’ inflow and outflow can help you plan how much you can afford to invest per month.

A simple profit and loss formula that you can use in your day-to-day life to understand your cash position is ‘Revenue — Expenses = Profit”.

Here, your total revenue (inflow) is the sum of all the income that you make from different sources like your job, business, interests on savings/fixed deposits, dividends, rental income, etc. And your total expenses (outflow) include your rent, groceries, transportation, bills, EMI’s, household expenses, etc.

When you deduct the total expenses from your net revenue, you’ll be able to find out how much you keep per month or year. And after calculating this, you can plan where to allocate this money and how much to invest in different investment options.

Note: If you are struggling with your personal budgeting, one of the easiest strategies that you can use to figure out how much should you save is the 50/20/30 Strategy.

50/20/30 is a really simple and straightforward budgeting strategy that can help you to define how much should you spend on your essential spendings (needs), savings and finally on your preferences (wants and choices). According to 50/20/30 strategy, you should allocate:

50% of your monthly income on ‘Needs’ (like rent, food, etc)
20% of your monthly income on ‘Savings’ (like your retirement fund, investments, etc)
And the remaining 30% of your monthly income on your ‘Wants’ (like traveling, dining out, etc)

3. Pay down high-interest debt

First of all, please note that not all loans or debts are bad. Here, we are talking about high-interest debts. For example, if you have taken a personal loan, it’s interest rate may vary from 13–18%. Similarly, a credit card company may charge you even higher interest on the outstanding amounts.

It doesn’t make much sense to invest if the profits that you make on your investments are lesser than the interests that you pay on your debts. For example, if your returns are 12% and you’re paying 14% as interest on your previous debt, then overall you’re in a loss. Here, instead of investing, it will be better to use that money to pay back and become debt-free.

Before you start investing, try to minimize or eliminate debt, especially high-interest debts and your credit card debt. These interests can kill your investment profits.

4. Take a health Insurance

When people are in the best of their physical health, an obvious question among them is why should they invest in health insurance? Paying a premium plan for ensuring health may seem an unnecessary expenditure.

However, accidents or health issues may come up anytime unexpectedly which can put a lot of financial and mental pressure. Further, it is a fact that, as you grow older, health issues come along with it. And hence, it is highly necessary to incorporate healthcare planning within the budget of your family financial planning.

Before you start investing, make sure to take health insurance first. Being medically insured can help you avoid facing financial instability in the future and enables you to get the best health treatment.

Also read: 6 Reasons Why You Should Get Health Insurance

5. Define your goals and make plans

One of the most critical things to do before you start investing is to define your investment goals/priorities and making plans to reach them. Here, you need to know why you are investing. It will keep you motivated and ‘on-track’ to achieve your goals.

Now, by definition, an investment goal is a realistic expectation to meet the returns by investing predefined money for a fixed time frame. The keywords to note here are ‘realistic expectations’ and ‘timeframe’.

Before you put your money in any investment options, set your short-term and long term goals and make plans for how you’re gonna achieve them. The goal can be person-specific like planning for children education, retirement fund, buying a new house or even financial independence. Once you’ve set your goal, you can choose the best investment options that can help you reach these goals in your defined time horizon.

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

6. Evaluate your risk tolerance profile

Everyone has a different risk tolerance level depending on their age, financial situation, priorities, etc.

If you are young and have a stable job, you might be willing to invest in more unusual ‘high risk, high return’ options. However, as you grow old/retire, you might not have a job or primary source of income and hence you might depend on your retirement fund for meeting your expenses. Here, you may not be willing to take a higher risk and choose safer investment options.

Before investing, you need to define your risk sensitivity i.e. whether you’ve are high, moderate or low-risk tolerance profile.

As different investment options have different degree of risks, you can choose your investment options depending on your profile. For example, if you have a high-risk tolerance, you may invest in stocks, mutual funds, real estate, etc. On the other hand, if risky investments keep you sleepless at nights, better to choose low-risk investment options like fixed deposits, PPF, bonds, etc.

7. Understand the investing basics

Don’t dive in deep water if you don’t know swimming basics. Similarly, do not start investing your money, if you do not understand the elementary concepts.

Before starting your investment journey, make sure that you understand what is meant by stocks, bonds, mutual funds, diversification, liquidity, volatility, and other investing basics. Here, you do not need to become a finance geek or an accountant. However, you should have good enough knowledge of the industry to make intelligent decisions.

That’s all for this post. I hope it was useful for you. Besides, if you are ready to get an education, here’s an amazing course on stock market investing for beginners that you should check out. Happy Investing.

Kritesh Abhishek

www.linkedin.com/in/kriteshrules/

September 25, 2019 Kritesh Abhishek Personal Finance 3 comments

Excusing ‘No time to invest’ has become a National Problem!

It’s a known fact that the majority of the Indian population do not invest their money. Apart from little allocation in a few traditional investment options like gold, savings, fixed deposits or LICs, the involvement of Indians in the higher-rewarding investment opportunities like Stocks, mutual funds, ETFs is quite minimal. If we look into the equity market, hardly 2.5% of Indians are actively involved.

Now, according to the non-investing population, the two biggest reasons that stop them from investing are ‘lack of education’ and ‘lack of time’.

For the first part i.e. the lack of education, it might be a little fault of our education system, somewhat of the parents but mostly of the individuals. Investing is not a rocket-science that only people with high-IQ can pursue. Anyone can learn and start investing. People should not always blame others if they are not ready to learn. There are a lot of free resources available online and offline, which is enough to get adequate investing knowledge.

Anyways, the other common excuse that most people make for not investing is that they don’t have enough time to invest. “No time to research where to invest!”. A few may even argue that setting up a trading account and making investments takes a lot of time which prevents them from investing.

However, all these are just excuses. In this online era, setting up demat and trading account is very fast, paperless and hassle-free. In fact, you can set up your trading account with online brokers like Zerodha, within 10 minutes. The problem is that you never researched where to open your trading account or how to get started.

It all depends on your priority…

“It takes too long to invest” — This is just another myth among beginners. However, it does not take as much time as every newbie assumes and investing habit can be easily adjusted in your day to day life.

If you can make time to go to the gym everyday, dining out every other day, partying on weekends, or going on vacations every three months, then stop saying you don’t have time. As a matter of fact, if you are ready to spend 2–4 hours every week, it is good enough to start and monitor your investments.

Further, even if you have a very hectic routine, you can steal a few minutes here and there. Like while traveling in your cab/metro, during your lunchtime, or even while having your coffee. At these time, instead of scrolling on facebook, you can do your investment research using mobile apps, which are super easy, fast and provides with all the facilities that you need.

Moreover, even if you are not ready to put a lot of efforts or time, there are still many easier routes to start investing. For example– investing in mutual funds or investing through Robo-advisors. If you believe that you won’t even be able to spend 2–4 hours per week for your investments, then pick a fund and start a monthly SIP. All these investment options do not take a lot of time.

Having no time to invest in a lame excuse for non-investors. The thing is these people never prioritize investing. They always keep procrastinating to invest for later, arguing that they do not have enough income/savings. Here, people are not investing because of the lack of priority, not the lack of time!

You are losing ‘Time’…

“Start investing early” — this is the best advice that anyone can give you.

When you begin investing early, time is in your favor and so is the power of compounding. You will be way ahead of your peers towards building your investment corpus if you start investing even just a few years prior to them.

When you are excusing not enough time to invest, you are losing time that could have been your biggest ally. Remember, time can help or hurt you.

Also read: Bunty and Babli: A financial story of how Bunty lost Rs 1,29,94,044!

Sometimes later becomes never…

Every week, I receive dozens of emails from people in their 50s or 60s who have never invested in the equity market and now planning to enter.

Now, by no means, I am saying that people in their 50s or 60s cannot invest. As a matter of fact, it’s never too late to get started. However, these people kept excusing ‘no time to invest’ during their adulthood, which later resulted in them not to invest at all.

If you are young, you have a great advantage. Instead of throwing it away by making a lame excuse, take the best out of it.

Besides, you do not need to have a high paying job or large savings to start investing. Even people with medium to low salary range can invest smartly to reach their goals. If you are not sure how much, then a monthly SIP of Rs 5,000 is good enough to begin. That doesn’t sound too much to invest, does it?

No one cares about your financial goals except you…

Your friends will encourage you to party harder. You relatives will emotionally charge you to buy a fancy car/house to impress them. Your neighbors will challenge you to live above your standards to match them. But no one will motivate you to save more or to invest more.

No one cares whether your net worth or total asset is growing overtime or not. Everyone is dealing with their own financials/hardships and they don’t have any time for you.

The only one who cares about your financial situation is yourself. If you do not take charge of your investments, no one else is going to do it for you. The only way to secure your future and have enough money in your bank account is by becoming proactive and responsible for your financials.

Closing Thoughts

Stop excusing that you do have spare time to invest, instead start acting. Everyone has the same 24 hours in a day. If you are not investing, it’s not because you don’t have time. It’s because you do not understand the importance of investing.

And five years from now, you’ll regret why didn’t you start investing early.

Finally, as a bonus, if you are ready to take your first steps in the world of investment, here’s a free guide that can help you to get started. Good luck!

Kritesh Abhishek

www.linkedin.com/in/kriteshrules/

August 22, 2019 Kritesh Abhishek Investing Psychology, Investment Basics No comments yet

Is First Mover a competitive advantage for a firm?

Zerodha was the first mover in the discount broking industry. Unlike the traditional brokers like Sharekhan, ICICI Direct, HDFC sec, etc. who charge large brokerages for their trading services, Zerodha offers a low brokerage charge. And as of 2019, Zerodha has outranked all these big players to become the biggest broking firm in India.

While reading this incredible success of Zerodha, one obvious question among people is whether being the first mover in the discount business model, the biggest reason for the Zerodha’s success? How big is the actual competitive advantage for the first movers? In this post, we are going to discuss the same.

Who are First Movers?

First movers are those companies who are the ‘first’ in line to offer their products or services in the market. They are the ones to innovate and develop a product/service which was not available previously in the market. Further, they do not face similar competition like the ones in the established markets.

In many cases, such companies can build great brand recognition and loyal customers for their products/services during the time gap, i.e. before the competitors enter.

An important point to note is that first-mover advantage is here referred only to those companies who are able to scale and make establish a big market, not the ones who just started the idea but didn’t make it large.

I mean, Amazon might not be the first company in the online bookselling industry. A lot of small businesses might be selling books or their products online before its establishment. However, Amazon was the one who was able to capture a significant market, make an impact and hence, can be considered as an actual first mover in this industry.

A few other examples of the first movers in their respective industry can be Kindle (ebook selling), eBay (online auction), Apple (iPhone & iPads), Uber (taxi booking & ride-sharing), etc.

In India, companies like Flipkart, Oyo, Olx, Ola etc. are the ‘Regional’ first movers. Although they copied the concept from their global rivals, however, being the first mover in the Indian subcontinent region gave them an advantage.

Advantages of First Movers:

Being the first mover, a company can enjoy a lot of benefits compared to the later entrants. Here are a few of the best advantages of first movers:

Brand recognition: First movers can create a strong impression which can help them build a passionate customer fan-base and create a big brand recognition even before any competitors enter.
Price & Benchmarking: The first movers enjoy the advantage of setting up their prices for the newly offered products/services and creating their own industry standards/benchmark.
Technological advantages: Being the first mover and having no competition allows a company to give sufficient time to build a perfect product and get a head start. Further, they can also file proprietary or patent rights to continue enjoying technological advantages.
Control of resources: First movers can control the resources by doing a strategic partnership (or exclusive agreements) with vendors, supplier; renting the best locations, hiring most talented employees in their industry, etc. The later entrants may face difficulty to find similar resources.
Switching cost: If the customer has to cost a lot of money, time, efforts, or resources to switch from one product to another, it is considered as the switching cost. First movers can enjoy the benefits of switching cost by launching their products earlier. Here, even if a better product/service is available, the customer may stick with the old company, if the switching cost is high.

Also read: SWOT Analysis for Stocks: A Simple Yet Effective Study Tool.

Disadvantages of First movers:

Although being a first-mover looks a lot advantageous for a firm, however, it has its downsides too. Here are a few cons of being a first mover.

In most cases, the later entrants or competitors can reverse-engineer, copy, or even improve upon the product/services offered by the first movers.
The first movers might take a lot of time to learn and innovate. On the other hand, the following entrants generally have a lower learning curve and can build the product faster.
The first movers might find it challenging to persuade people to try new product/services. However, later entrants can reduce this education cost.
The first movers can also face a lot of competition from the free riders. As the Imitation cost < Innovation cost, a lot of copy-cats can join the expanding industry to enjoy the upwards ride and reduce the profitability of the first movers.
The second movers or the competitors can avoid the failed steps made by the first movers and hence reduce their cost/expenses.

Is First mover a competitive advantage for a firm?

In the investing world, the competitive advantages are the ones which are sustainable for the long term, not for a few years.

Admittedly, being the first mover is advantageous and have a lot of perks. However, over time, the later entrants can destroy this advantage through reverse-engineering, workforce mobility, technical advancement, or even by merely copying the products/service offered by the first mover.

Also read: Pat Dorsey’s Four Moats for Picking Quality Companies

Closing Thoughts:

There’s one thing sure in this competitive world. First movers will not always be the only player in any industry. As they grow, a lot of new companies will enter that industry and try to eat their profits.

Further, a lot of big successful global giants were not the first movers. For example, Google was not the first search engine. It followed the model of Yahoo or Infoseek. Similarly, Facebook was a later entrant in the social media world after Friendster and Orkut. Even Starbucks or Cafe Coffee Day (CCD) is a copied business model of the famous local coffee chains. Still, these companies were able to dominate the market and establish a big brand and customer network.

Anyways, in a few cases, if the first movers can dominate a big market and establish a loyal customer base, they may retain a healthy growth level and profitability, despite new entrants.

Kritesh Abhishek

www.linkedin.com/in/kriteshrules/

August 21, 2019 Kritesh Abhishek Economics, Investment Basics No comments yet

How To Evaluate The Cash Of A Business?

You might have heard the phrase ‘Cash is the king’.

A cash-rich business means that the company has enough cash left after paying all its expenses and debts. For the company with high cash, it simply means more liquidity and opportunities for the business.

However, very high cash is also not good for a company as it means that the company is leaving potential investment opportunities. Overall, low cash can affect business stability and high cash can reduce its efficiency.

And therefore, it is really crucial to understand the cash position of business before investing. In this post, we are going to discuss how to evaluate the cash-rich businesses to understand whether the company has low, sufficient or excess cash.

Cash and cash equivalents

When it comes to evaluating the cash position of a company, the investors look into the cash and cash equivalents (CCE) section of the balance sheet.

These are the company’s assets that are cash or can be converted into cash fast. Here, cash equivalents can be defined as the assets that can be converted into cash within 3 months like Money market funds, Short-term Government bonds, Treasury bills, Marketable securities etc.

All cash and cash equivalents are recorded in current assets segment of the balance sheet and are the most liquid asset of a company. Now, let’s understand the two common scenarios with respect to the cash level of a business.

Case 1: Low cash

When a business has low cash, it can be little worrisome for the company as it may have or will face some problems to pay short-term obligations.

In case of sufficient cash, companies can easily settle short-term debts (obligations), make an in-time purchase of new inventories/equipment, buy into lucrative investments/new technology, grab mergers and acquisition opportunities, increase dividends etc.

However, lack of adequate cash may push the company towards potential short-term problems. As a thumb rule, avoid investing in companies with low cash balance.

Case 2: High Cash

Although high cash helps a company in staying out of trouble of short-term obligations, supporting regular business operations in tough times, funding in its growth, superior performance etc. However, many times, excess cash be a little unfavorable.

Too much cash in company’s balance sheet simply means that the company is leaving potential investment opportunities to invest in the growth of its business operations or investments in other higher return instruments.

As Warren Buffett used to say- “Cash is the king. But it’s not much help if the king just sits there and does nothing.”

Too much cash reflects the inefficiency of the management to utilize it properly.

How to evaluate the cash of a business?

The cash position of a company can be evaluated using cash to current assets ratio. This ratio reflects the percentage of the total assets by cash and cash equivalents

Cash to current assets ratio = (Cash and cash equivalents)/(Current assets)

Although ideal cash and cash equivalents depend highly on the industry, however, as a thumb rule, cash to assets ratio of more than 40% can be considered to be excessive cash for the company.

Now, let us calculate the cash to current assets ratio of Hindustan Unilever (HUL) from its balance sheet.

(Source: Yahoo finance)

From the above statement, you can find the cash and cash equivalents (CCE) and total current assets of HUL over the years. For the year ending March 2018, the cash to current assets ratio turns out to be equal to 5.57%, which can be considered decent. (Quick note: You need to check this ratio over the past few years and compare with the competitors to better understand the cash position of HUL).

A word of caution:

Although having high cash is good for businesses, but it is equally important to understand the source of that cash i.e. where that cash is coming from?

There are different ways for a company to pile up cash. Apart from the profitability of the business operations, a few other ways to build cash is by taking debt or selling its assets. And both of the later two ways to generate cash is not favorable for a company as a high debt means greater interest obligations. Further, selling the assets to pile up cash may affect the future profitability of the company.

Therefore, you should always check the source of cash for the cash-rich businesses. You can find out this by looking at the cash-flow statement of a company.

In the cash flow statement, check the cash from operating activities. If this is consistently increasing, it’s a positive sign and means that the company is able to generate profits from its core businesses operations. Further, also check the cash from investing activities to find out purchase or sale of assets. Finally, also look into the debt obligations of the company for the long-term and find out its trend over years.

Note: If you are new to the financial world and want to learn how to effectively read the financial statements of companies, feel free to check out this awesome online course on Introduction to Financial Statements & Ratio Analysis.

Bottom line

The cash of a business can be roughly evaluated by navigating the cash and cash equivalent section in the company’s balance sheet. Here, cash to current assets ratio is used to check the cash level of a company.

A company should have sufficient cash to effectively run its short-term operations. However, huge cash can also be little troublesome for a company as it reflects the management’s inefficiency to use the cash productively.

That’s all. I hope this post is useful to you. Happy Investing!!

Kritesh Abhishek

www.linkedin.com/in/kriteshrules/

June 6, 2019 Kritesh Abhishek Investment Basics 1 comment

7 Must Know Websites for Indian Stock Market Investors

7 Must-Know Websites for Indian Stock Market Investors

1. Money Control

2. Screener

3. Investing.com

4. Economic Times Market

5. Live Mint

6. NSE India

7. BSE India

Bonuses (As promised)

Seven more popular stock research websites that you should know:

Important Links on NSE/BSE:

Securities and Exchange Board of India (SEBI)

Websites to read the financial news:

Stock Screeners that you should know:

Summary

Catching a falling knife stock - Is it worth it?

What are falling knife stocks?

A few recent examples of falling knife stocks in the Indian market

How falling knife stocks work?

Reasons for the Company’s Price to fall:

Why investors are so much interested in catching falling knife stocks?

A few points to consider which catching a falling knife stock:

Closing Thoughts:

10 Questions to Ask Before Purchasing a Stock - Investment Checklist!

10 Questions to ask before purchasing a stock.

1. What does the company do?

2. Who runs the company?

3. Is the company profitable?

4. Does the company have a sustainable competitive advantage?

5. How was the past performance of the company?

6. How strong is the company’s balance sheet?

7. Was the management involved in past fraud or scams?

8. Who are the key competitors?

9. How much debt the company has?

10. How is the stock valued?

Closing Thoughts:

Zerodha Review 2020 – Is Free Investing Legit? [Pros and Cons]

Zerodha Review –Brokerage, Charges, Trading Platforms & More

1. Introduction

2. Zerodha Brokerage Charges

– Free equity delivery

– ₹20 intraday equity and F&O trades

3. Zerodha Account Opening Charges & AMC

4. Zerodha Products & Features

— Kite 3.0

— Kite mobile

— Coin

Other Partner Products

5. Pros and cons of Zerodha Discount broker

Pros of Opening Account with Zerodha

Cons of Opening Account with Zerodha

6. Is Zerodha a Reliable Stockbroker? And is Free investing legit?

7. My experience of using Zerodha

8. How to open your trading & demat account with Zerodha?

9. Closing Thoughts

21 Do’s and Don’ts of Stock Market Investing for Beginners

21 Do’s and Don’ts of Stock Market Investing for beginners.

Do’s of Stock Market Investing

1. Get an education

2. Start small

3. Get started early

4. Research before investing

5. Only invest what is surplus:

6. Have an investment goal

7. Build a stock portfolio

8. Average out:

9. Diversify

10. Invest for the long-term

11. Hold the winners, cut the losers

12. Invest consistently

13. Have Patience

Don’ts of Stock Market Investing:

14. Don’t take investing as gambling

15. Don’t invest blindly on free tips/recommendations

16. Don’t have unrealistic expectations:

17. Don’t over trade

18. Don’t follow the herd

19. Avoid psychological biases/traps

20. Don’t take unnecessary risks

**Sustainable Growth Rate (SGR) = ROE * Retention Rate (RR)**