Investing in an Equity Mutual Fund Here are the things to Consider!

Investing in an Equity Mutual Fund? Here are the things to Consider!

List of things to consider before investing in an Equity Mutual Fund: In the last decade, Mutual Funds have become one of the most popular investment alternatives. The idea of having your funds taken care of by a legit expert in the field for a nominal fee while you can sit back and relax is attractive. But how do you further select the best fund available?

In this article, we cover some factors that a prospective investor must look into before investing in an equity mutual fund. By the end of this post, you’ll have a good idea of important factors while investing in equity mutual funds. Let’s get started.

What is an Equity Mutual Fund?

An Equity Fund is one that mainly invests in the shares of various companies. To be classified as an equity fund the scheme will have to have at least 60% of its total assets in the shares of companies. The remaining amount can be invested in other securities available like Debt securities, money market instruments, etc. as per the objectives of the fund.

Funds are further classified in the equity fund category based on the type of equity shares held. They are done on the basis of market cap i.e. large-cap, mid-cap or small-cap funds. Equity funds can also be sectoral or thematic. 

According to AMFI, the Assets Under Management (AUM) have been increased from Rs. 34,000 crores in March 2000 to Rs. 650,000 crores in March 2020. In addition to that equity funds have offered a CAGR of 16% for 2 decades ending March 2020. It is important to note that equity funds are considered to be riskier than debt alternatives available in the markets. 

Factors To Consider Before Investing In An Equity Mutual Fund

What to Consider Before Investing In An Equity Mutual Fund cover

The factors to consider before investing in an equity fund can be divided into two categories. The first includes drawing your own financial roadmap. The second list of factors helps you select the best funds to meet your needs.    

A) Drawing your own Financial Roadmap

1. What is Your Investment GOAL?

The very first factor to consider when investing in equity funds is understanding what you want to get out of this investment. And then creating a strategy or selecting investment alternatives accordingly. These goals could vary from simply looking for a good savings scheme, tax reduction, saving for a daughter’s marriage, saving for retirement, etc. Once this aim is set it becomes clear about how much time you have in your hands and the returns to expect to meet these goals.

If you have never considered this before it is best to spend a few hours setting your goals and then looking at where you stand financially. Here you can actually calculate your expenses and then arrive at what you can afford to invest. 

2.  Time Availability

Once your financial goals are set the next step is to set a timeline by which you want these goals to be achieved. This is important as this further will help you select a fund that meets your needs. Say for example you are trying to save up for a vacation down the line.

In this case, investment options like liquid or short-duration funds would best suit your goals. On the other hand Equity, Linked Savings Scheme funds would best suit you if you are saving for your long-term goals as they already have a 3-year lock-in period. 

Perfect time to invest?

When investing in funds investors often get carried away by trying to find the most optimal investment price. Although this holds true when investing in stocks. But what’s the point of going for a mutual fund when you also have to compute the optimal period as well.

The whole point of investing in mutual funds is to have someone else take the trouble of ensuring you get the best returns. The answer to this problem is Rupee Cost Averaging (RCA) and Systematic Investment Plan (SIP). 

RCA suggests that buying a fixed amount of a particular investment consistently on a regular schedule over a long period of time, regardless of price produces better results. This means that simply by using SIP regardless of the bullish or bearish markets one can still come out on top.

3. What is your Risk Appetite?

The risk appetite varies greatly from individual to individual. Hence there is no single formula that will work for everyone. The risk appetite depends greatly on an individual’s financial condition, age, needs, attitude, etc.

Take for example it wouldn’t be ideal for some in their late 40’s saving for their retirement to put all their savings in a Small Cap Fund which comes with increased risk. On the other hand, it also wouldn’t be optimal for a 20-year-old to put all his savings in a debt fund. Hence it is very important to be realistic and invest in options that suit your goals.

Here is a list of the available fund types and the risk involved in them.

Comparison of different types of investment in Mutual Funds

(Source: Paisa Bazaar)

B) Find Funds that Match Your Goals

4. Performance of the Fund

At the end of the day, the performance of the fund holds the most leverage when making investing decisions. The performance of the fund gives you an idea of how well your money will be managed in the years to come. If you take a look at the returns offered by the fund you may observe returns of 7%, 8%, 15%, etc.

But how do you determine based on these numbers you are investing in the best fund to meet your goals. The following standards will help you assess this:

a. Comparison with the benchmark

 Every fund sets a benchmark index to track and compare their fund. These benchmark indexes track the performance of a collection of top securities in the market. The basis of grouping these securities is done mostly on Mcap. Say for eg. if you consider investing in a large-cap fund. The fund managers will have set a benchmark since the inception of the fund. In this case, the benchmark would most likely be the Nifty50 or the Sensex 30 index. 

The logic behind this is the benchmark represents a collection of securities in the market. A comparison with the benchmark would show us if the manager of an actively managed fund is at least able to beat the returns offered by passively investing in the market. If the investment manager is not able to beat this benchmark then it is better to invest in a fund that simply tracks the Nifty 50 and invests in the same securities that exist in the benchmark.

b. Comparison with its peers

The next comparison that an investor can look into before investing is with the other funds in that category. Say you are investing in Large Cap there are many fund houses that provide similar funds. Here one can observe if the fund an investor is considering performing well enough or the best among its peers.

c. Consistency of these performances

Finally, the fund is worth investing in only if it has maintained its results consistently for a period of time. Hence the above comparisons must be done also for 3, 5,10 year periods. The fund consistently beating the benchmark set and performing well among its competitors is a healthy sign of a good fund. 

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How to Buy Mutual Funds Online in India?

5. Size and Type of the Fund

By size of the fund, we refer to the total assets under management (AUM). The assets under management refer to the subscriptions that the respective fund has received from investors. A fund with a huge AUM shows that it is highly in demand and increased investor trust in the fund. A larger AUM is also seen to be beneficial when it comes to liquidity. Smaller AUM’s are generally seen in newly set up funds. 

However, having a large AuM is not always favorable as funds with huge AUM will find it harder to move around in the market. 

There are many different types of Equity Funds. Looking into this is important as these funds hold different levels of risk. They may be classified based on the 

  • Market Capitalization: Large Cap, Medium Cap, Small Cap, Multi-Cap Funds, etc.
  • Region: Domestic or Global based on whether the fund invests only in domestic securities or in global markets as well.
  • Sectoral: these funds only invest in specific sectors like IT, Pharmaceutical, etc.
  • Focused: These funds invest in a maximum of 30 securities.

6. Expense Ratio

Another factor that equity investors must closely look at are the Expense Ratios of funds. The expense ratio includes the administration, management, promotion, and distribution expenses of a mutual fund.

Funds that are actively managed by the fund managers have a higher expense ratio than funds that are passively managed. Also, funds that generate high returns consistently charge higher fees than their counterparts. These expenses however have been capped at 2.25% by the SEBI (Securities and Exchange Board of India)

Generally, the management fee is charged as a percentage of the total AUM. But funds also levy performance fees which are variable depending upon the performance. Since these come out of the returns your capital makes it is best to keep track of them. 2% charged over the long-term compounds to huge amounts!

It is also important to consider the means available for you to invest in an equity fund. Directly investing through the equity fund offers the lowest expenses in comparison to using other intermediaries.

7. Tax Benefits

Different funds have their own unique set of features. ELSS (Equity Linked Savings Scheme) a type of equity fund that offers tax exemption up to Rs. 150,000 from your annual income each financial year under Section 80C of the Income Tax Act, 1961. Hence it is best to look into the tax benefits while investing in a fund. 

Taxes also play a role while moving out of a fund. Mutual funds in India levy capital gain taxes at the following rates:

LTCG: 10% (No tax if the amount invested is below Rs.1 lakh and held for more than one year)

STCG: 15% (Applicable on funds invested for less than one year)

8. Experience of the fund manager

Before making any investment decision it is also important to look into the background of the fund manager. An experienced fund manager who has previously also delivered results is more preferred in comparison to other alternatives available. Because at the end of the day it is the managers’ expertise and experience that will help navigate the markets to produce the best returns.

9. AMC’s Background 

The Asset Management Company (AMC) or the Fund House is a company that manages these funds. It is important to check how well AMC’s funds have performed in the past and managed its schemes. Examples in India include SBI Mutual Fund, HDFC Mutual Fund, Nippon Mutual Fund, Axis Mutual Fund, Mirae Asset Mutual Fund, ICICI Prudential Mutual Fund, etc.

10. Exit Load and Lock-In

Finding out about the Lock-in period of the Equity funds goes a long way in your financial planning. The Lock-in refers to the period for which the investor is restricted from making redemption of his units from the fund. One example we have seen earlier is ELSSs that have a lock period of 3 years.

Although a part of expenses the Exit Load charges are often overlooked at the time of investing. Exit Loads are charged at the time you exit your fund before a given period. 

ALSO READ

A Beginner’s Guide to Debt Mutual Funds

Closing Thoughts

Looking into the above factors will go a long way before investing in an equity mutual fund. But it is also important to remember your investments in a mutuals fund will be subject to market risks. You should also keep in mind the common mistakes people make while investing.

Let us know what other factors you look into and feel are important to consider before investing in an equity fund below. Happy Investing!

Stock Market Basics - A Complete Guide to Share Market for Beginners!

Stock Market Basics for Dummies – What Beginner Need to Know?

Understanding the Stock Market Basics for Beginners: Are you feeling caught up in the stock market frenzy where literally everyone you know has begun speaking in market jargon? This is a position I too found myself in a few years back.

Don’t worry as we have decided to cover some basics in order to get your foot in the door. This article covers the stock market basic topics like What are shares, why are they issued, why are they bought by us, and more. Keep Reading!

What are Shares?

One could say that Shares are the most popular financial instruments available for investments. A Share, also known as equity or stock, represents a unit of ownership of a particular company. The total capital of a company is divided into smaller equal units and each unit is known as a share.

The owner of the share will have a right to vote and benefit from the profits of the company and suffer the losses that the company makes. Investors who hold shares of a company are known as shareholders. The influence a shareholder will have on a vote or his profits/losses will depend on the total number of shares held.

Take for eg. ABC Ltd. has a market capitalization of Rs. 10 Lakh. Each share has a face value of Rs. 100, meaning that there are a total of 10,000 shares. A shareholder owning 1,000 shares will own 10% of the company. His vote will carry the same weight and will be entitled to the same portion of profits passed on to the shareholders as dividends. 

Let us take another example of stock from the Indian Share Market. For example, Tata Consultancy Services (TCS) has a total of 375.24 Crores of outstanding shares in the market. Out of all these shares, 72.05% are held by the promoters i.e. the Tata Group as of Jan 2021. The remaining shares are held by the Public, Domestic Institutional Investors (DII), Foreign Institutional Investors (FII), etc. If you’ve got 1,000 shares of TCS, then you own approximately (1,000/375.24 Cr)th part of the company.

As you own more shares of that company, your ownership in that company will increase and you’ll be entitled to more benefits like voting dividends, voting rights, etc. However, if the company doesn’t perform well, you’ll also be entitled to losses made by the firm as you’re also the partial owner of the company.

How many shares can be issued by a company?

There is no upper limit on the number of shares that a company can issue. They depend on the capital a company raises and the denomination it sets.

For Example, if ABC Ltd. had issued shares at a face value of Rs.10 for a total valuation of Rs 10 Lakhs, then ABC Ltd. would have a total of 100,000 shares at the same capital. However, the minimum number of shares however is 1. 

Stock market basics – How much is a share worth?

The face value or the intrinsic value of a share is set at the time when capital is raised by a company. Generally, it could be at Rs. 5, Rs. 10, Rs. 100 etc. The value of the total shares held here out of the total capital would show one’s ownership within a company. 

The market value of a share however is different. This is the value at which an investor like you and me can buy a share.

The market value of a share is dependent on the forces of demand and supply. These factors affect the price of shares just like commodities. Say the demand exceeds the supply of shares or availability of shares in the secondary market (stock exchanges) then the prices will shoot up. Vice versa and the shares will fall down.  

Once a company enters the share market, there is a share price associated with all the public companies at which investors and traders can buy and sell its stock. For example, 1 Share of TCS is currently trading at Rs 3,266.50. You can find the share price of all the public companies at any financial research websites like Trade Brains Portal.

Different Types of Shares

There however are many different types of shares. When considered on the basis of ownership:

— Preferential Shares 

These shares are preferential in nature. Investors who hold preferential shares are entitled to receive preferential treatment when it comes to profits of the company, in the event of the company winding up over equity shares. Preferential shareholders however do not have any voting rights.

— Equity Shares

In simpler terms, these are the regular shares that are available in the market. They make up most of the shares of a company. Equity Shareholders do have voting rights but are paid after preferential shareholders or in the case of the company winding up.

Also Read

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Why do companies issue shares or Why do companies go for IPO?

ipo stock market

The first time when a private company enters the stock market and offers its shares to the public, it is called an Initial Public Offering or IPO or Going Public. The basic reason why companies issue their shares or go for an IPO is to raise capital or funds. 

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

Take the example of Tesla. Once Elon Musk sold PayPal he invested his fortunes in SpaceX, Tesla, and SolarCity. The $70 million which he invested in Tesla wouldn’t even get it close to where the company is today. For Tesla to truly grow in order to compete globally it required loads of funds. This was initially met through venture capitalists, but this too isn’t enough. The company opted for an IPO in 2010 raising $226 million. This could however only be possible if Musk was willing to let go of his ownership in the form of shares issued.

Similarly in India, there are a lot of private companies like Zomato, Paytm, Flipkart, Patanjali, etc whose shares are owned only the promoters currently, If they want to raise big money, they can offer their shares to the public via an IPO and enter the Indian stock market.

Now let’s take a look at why investors buy these shares?

Stock market basics – How do people make money from the Stock Market?

The main purpose of investors buying shares of a company is to make money. In the stock market investors make money in two ways. 

— Long Term Investing

The initial investment made by an investor in a company has the potential to grow at rates exceeding interest offered by savings accounts by multi-folds. Hence it is always advisable to stay invested in a stock for the long term.

Take the example of Bajaj Finance whose shares were worth Rs. 70.36 on 31 December 2010 is worth over Rs. 5200 today in April 2021. If you would have bought 100 shares of Bajaj Finance in 2010 at an initial investment value of Rs 7,036, your current investment value would be Rs 5.2 lakhs. Anyways, these investments must only be made after careful analysis of the company’s financials and if the shares are available at a cheaper price than their actual worth.

One of the best examples of long-term investors holding stocks for many years is Warren Buffet, whose net worth briefly exceeded $100 billion this year. 

Companies also reward those who stay invested through means dividends, bonus shares, right issues, etc. A portion of the profits of a company is distributed as dividends for each share held.

— Stock Trading 

Trading basically refers to the buying and selling of shares on a regular basis in the short term to make profits. These traders set strategies to take advantage of both rising and falling markets by buying and selling shares in a short time frame. Their profits however are infrequent and smaller per trade.  

How to Start Investing in Share Market?

Step 1: Learn the Basics

Step 2: Set up your brokerage account

Step 3: Research stocks & start investing

ALSO READ

How to Invest in Share Market in India? An Ultimate Beginner’s Guide!

Closing Thoughts

Now that you have understood the stock market’s basic terms like shares and why they are issued it is time to keep taking these baby steps as the world of investing is vast. Check out our article on How To Select A Stock To Invest In Indian Stock Market For Consistent Returns?

Hope you have liked this small guide on some stock market basics. Let us know what other topics you would like us to cover. Welcome to the world of investing. All the best!

Free Float Market Capitalization Cover

What is Free Float Market Capitalization? MCap Methodology Explained!

FREE Float Market Capitalization: As a novice investor have you ever come across terms like Market Cap (MCpap) or the free float factor. In this article, we cover what is Market cap, how the MCap is computed, What is free-float market capitalization, and why it is necessary. Keep reading to find out.

What is Market Cap or MCap?

Stock Market Chart - Free Float Market Capitalization

Market Capitalisation (Mcap) gives investors the public perception of what a company is worth and is also used to further classify companies. It is calculated by multiplying all the company’s shares by the price of each stock in the market. Doing this gives us the total value of all the shares being traded in the market.

This figure gives investors an idea as to what the company is worth including its future prospects and what other investors are willing to pay for it in the present. Based on the MCap companies are further classified into

  • Large-cap companies – Rs 28,500 crore or more.
  • Mid-cap companies – above Rs 8,500 crore but less than Rs 28,500 crore.
  • Small-cap companies – less than Rs 8,500 crore

There are multiple ways to measure the market capitalization of a company. The two of the most commonly used methods are the total market capitalization method and free-float market capitalization. You can use TradeBrains’ portal to see the market capitalization of all the major Indian companies.

Let us have a look at how MCap is calculated in each of these methods along with examples. 

Free Float Market Capitalization Method

The shares can be further classified based on their ownership. Say shares may be held by retail investors or institutional investors, promoters, government, etc. What Free-float MCap does is it only includes shares that are readily available for trading in the secondary market.

Certain shares like those held by promoters are not freely traded in the market. The aim of this method is to distinguish between shares held for strategic control and others who invest based on the stock price.

According to the BSE, the following shares are to be excluded when computing MCap under free float:

  • Shares held by founders/directors/acquirers which have a control element
  • Shares held by persons/ bodies with “Controlling Interest”
  • The Shares held by the Government(s) as promoters/acquirers
  • Holdings through the FDI route
  • Strategic stakes by private corporate bodies/ individuals
  • Equity held by associate/group companies (cross-holdings)
  • Equity held by Employee Welfare Trusts
  • Locked-in shares and shares which would not be sold in the open market in the normal course

Therefore Free Float Mcap = (OUTSTANDING SHARES – Restricted Shares) * Price of shares in the market

For eg. ABC Ltd. has a total of 100,000 outstanding shares. Out of these 30,000 are held by the promoters. Apart from this, no other shares are restricted i.e. 70,000 shares are available to be freely traded in the market. If the shares are traded in the market at Rs. 50 it would mean that the MCap for the company under Free Float is Rs. 35,00,000. ( Rs. 50 * 70,000 shares)

Full Market Capitalization Method

Now let us understand the full market capitalization method which will help us better understand the difference between the two.

Under this method, the capitalization is computed using the total number of shares which include both the publicly available and the shares that are privately available. So under this method, the MCap of ABC Ltd. will be Rs. 50,00,000 ( Rs. 50 *100,000 shares).

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What is the Free Float Factor and How is calculated?

The free float factor gives us an idea of how many shares are freely available for trading in comparison to those total which also includes the privately held shares in the company. This gives traders and investors an idea of the number of shares that are available for trading.

Take once again the example of ABC ltd. the free float factor for the company will be 0.70. We arrive at this by dividing the shares available for trading to the public by the total shares outstanding i.e. 70,000 shares/ 100,000 shares. 

Why is Free Float MCap preferred over Total MCap?

The Free Float Market Capitalization is preferred mainly because it presents a valuation that shows the total number of shares that actually affect traders and investors who are participating in the market. Rather than include shares that are privately owned and cannot be accessed by anyone.

In addition, these restricted shares don’t play a role among the demand and supply factors for setting the price in the market. This allows the free float MCap to represent the sentiments of the market more accurately. This would not be possible in the case of Total MCap where a promoter or government holding a majority can have any influence.

Free Float is considered the best method globally in all stock exchanges. In India, both the NSE and the BSE use free float for their indexes i.e. Nifty and Sensex.

Does the Free Float Market Capitalization Matter?

The Free Float Market Capitalization allows investors to differentiate companies with the smaller free-float size and those with medium and large. It is important to note that the free float MCap is inversely proportional to the volatility of the shares in the market.

Companies with a lower free float factor would mean that it is easier for traders to influence the price. Companies having a higher free float factor would show a more stable stock as it is harder for a few large trades to influence the price.

The free float factor helps investors weed out the stocks to include only those that help meet their goals. Some investors may only prefer stocks with a large free float factor as they represent less volatile stocks.  

Closing Thoughts

The MCap and the free float factor are important criteria to look at while investing. In addition to this, they also have become exceptional instruments to ensure balance in investors’ portfolios and to weed out stocks. One must however carefully evaluate these factors before investing in a company.

Let us know your views about the post in the comments section below. If you are looking for a beginner’s guide on how to invest in the share market in India, you should check the article on our website. Happy Investing!

Why Investing in Stocks is NOT Gambling Myth Simplified cover

Why Investing in Stocks is NOT Gambling? Myth Simplified!

Myth Solved – Why Investing in Stocks is NOT Gambling: How many times have you been discouraged from investing by being told that it is just another name for “Gambling”? For some of us if we had a dollar every time we heard that we’d have to classify it as a source of income. In this article, we take a closer look at the century-old myth and debunk why investing in stocks is NOT gambling.

But before jumping into their differences let us understand what the two words investing and gambling mean.

What is Investing?

The basic purpose of investing is directing your liquid capital towards companies that need it. This however is done with the intention of generating income or profit. But along with this while investing one’s money into a company one also boosts the wealth of the economy as it helps them commit that capital to assets to increase productivity, aid growth, hire more people, etc.

This leads to an increase in the value of the company and an increased value of our investment in it. Investing is not devoid of risk which depends on the factors like the level of research, the period of investment, etc.

Also read: How to Invest in Share Market in India? An Ultimate Beginner’s Guide!

What is Gambling?

What is Gambling?

Gambling, also known as betting is wagering money or something of value on an event whose outcome is uncertain. This is done with the aim of winning the prize money. Some examples of gambling are Lotteries, Card games(poker, blackjack), Slot machines, etc. 

Differences between Investing in Stocks and Gambling

Although both of them include a series of decisions, risks and are done with the aim of profitability they have a lot of key differences.

1. Level of Control

Investors and gamblers have varying possibilities of mitigating their losses. After deciding how much they want to invest, investors can choose the asset class they want to invest in which have varying levels of risk. For example assets like bonds have low-risk low returns whereas stocks have a high risk with the possibility of a higher return.

In addition, the size of the companies also offers varying risks, eg. blue-chip stocks have lower risk in comparison to small-cap stocks. In addition, investors also have the option to save their capital. If they find out that their investment has begun making losses they can always decide to sell their investments.

Gambling on the other hand is a sum-zero game. Out of all the money pooled it is only a few or in some cases only one person who wins big at the expense of others. It also diminishes the possibility of you winning your capital back or limiting losses. Take the lottery ticket for eg. if you do not win the lottery you have lost the complete Rs.1000 capital you poured into the ticket.

2. Environment

The environment differs massively between the two. Investing has been made so accessible that one can pursue a career in trading from the luxuries of their homes and investing can simply be done through smartphones. 

Gambling on the other hand is a completely different ball game. Although there are online means and lotteries casinos still occupy the greater share. Casinos bring shows, food, drinks, and a lot more to the table. Most casinos are designed in order to play on the weaknesses of human psychology. These include glittering lights, music, and free drinks, all these set at dulling your senses, weaken your decisions, and most importantly keep you there all night long.

3. Stock Exchange vs. The House

For investors stock exchanges simply serve as a medium or platform for investing to take place. They charge minimal amounts for every trade and strive for increased efficiency.

 The house in gambling refers to casinos, bookmakers, slot machines, etc. It is a common term in gambling that the house always wins. The games generally have different varied edge over the players with benefits going to the house. In card games, the advantage for the casino might only be 0.5%, but certain types of slot machines might have a 35% edge over a player—other games fall somewhere in between.

4. Time Factor

In investing the longer you stay the lower your odds become of making losses. This is the exact opposite of gambling. it does mean that the more you play, the more the math works against you. There are greater chances of you walking out of the casino with less money than when you came in. Take the examples of slot machines, they have odds ranging from one in 5,000 to one in about 34 million chance of winning the top prize when using the maximum coin play.

The period of participation also differs here, when investing your participation can actually span decades. At the same time even if the shares may not increase significantly in value investors are still rewarded for staying invested in the form of dividends. When it comes to gambling once the game or race or hand is over, your opportunity to profit has gone.

5. Information

Knowledge is power! Information is important for both investing and gambling but it is available in varying amounts. Investing is abundant with information that is ready to use. Company earnings, financial ratios, research analyst reports, can be easily found online before investing. When it comes to gambling the information available is extremely limited and worse it is not always quantifiable.

ALSO READ: How To Select A Stock To Invest In Indian Stock Market For Consistent Returns?

Closing Thoughts

In this post, we discussed why investing in stocks is NOT gambling. Despite a number of differences stock market investing can still become a gamble for many. This is because of investing without research, speculation, investing all your money ina single stock, etc.

Investing after doing a thorough study is rewarding in the long term whereas flipping a coin to select a stock makes it a gamble. Although the stock market is hard to understand it sure does make much more sense than a casino.

Moat Companies in India Cover

Top Moat Companies in India – Warren Buffett Style of Stocks!

List of Top Moat Companies in India: Have you ever wondered, if the greatest investor existed in the Indian stock markets, “What stocks would he pick?”. This question got us wondering about Warren Buffet too. Hence we have created a list of Buffets favourite type of stocks existing in the Indian stock market.

In this article, we’ll cover the list of top moat companies in India, which is the Warren Buffett style of stocks for investing. Keep Reading!

Warren Buffett Photo | Moat Companies in India

What are Moats?

The term Moat was popularised by Warren Buffet in the world of investing.

A simple dictionary definition of a moat would be – a deep, wide ditch surrounding a castle or fort, typically filled with water and intended as a defence against attack. These moats were created in medieval times in order to ensure that in the case of an attack it would make it as hard as possible for an enemy to breach the castle.

However, even modern companies have moats too in their businesses.

History of Moat | Moat Companies in India

Now picture the company as a castle and the attackers as new entrants or competitors. Business moats are generally put up by the company as some sort of competitive advantage that would act as a barrier to entry for new entrants. These could be in the form of brand identity, patents, size or market share, low-cost production, etc.

Warren Buffet has time and again expressed his love for these Moats stocks. 

“The most important thing [is] trying to find a business with a wide and long-lasting moat around it … protecting a terrific economic castle with an honest lord in charge of the castle,” – Warren Buffet

Top Moat Companies in India

Here we have compiled a list of Moats existing in the Indian markets. Possibly answering the question, “If Warren Buffet participated in the Indian markets, whats stocks would he invest in?”

1. Asian Paints

Asian Paints Logo

Asian Paints is one of the most obvious stocks on this list. The company was founded in 1942 and is engaged in the manufacturing, selling and distribution of paints, coatings, products related to home decor, bath fittings and providing of related services.

Over the years the company was successful in converting the paint commodity into an Asian Paints brand. They currently are India’s largest with a market share of almost 40%. It is also Asia’s 3rd largest paint company. In addition, the company has also maintained a good track record for consistent growth.

2. Shree Cements

Shree Cements limited logo

The next one on the list of moat companies in India is Shree Cements. The shares of Shree Cements are one of the most expensive cement stocks in the world. The company was formed in 1979 and is currently one of the biggest cement manufacturers in the country.

They recently joined an elite list of companies with Rs. 1 trillion Mcap. One of the biggest moats the company has set for itself has been its low production cost in the cement industry. The company has an EBITDA/tonne of Rs. 933/tonne whereas the industry average stands at only Rs 692/tonne.

3. TCS

TCS logo

Tata Consultancy Services recently surpassed Accenture to become the worlds largest IT firm by Mcap. TCS is a subsidiary of the Tata Group. The company is specialized in information technology (IT) services and consulting. They currently operate in 46 countries.

One of the biggest advantages was being the first software and services company in India in 1968 and also being the first Indian software company to set up operations in the US. They were also the first Indian company to develop an offshore delivery model giving them a cost edge.

Apart from its size being a significant moat they also benefit hugely from switching costs their clients may face. They still benefit from the first-mover advantage in the US as 95% of their new businesses come from their existing clients.

What we’re trying to find is a business that, for one reason or another — it can be because it’s the low-cost producer in some area, it can be because it has a natural franchise because of surface capabilities, it could be because of its position in the consumers’ mind, it can be because of technological advantage, or any kind of reason at all, that it has this moat around it.” – Warren Buffet.

4. Avenue Supermarts

DMart (Avenue Supermarts) Owner RK Damani

Avenue Supermarts Ltd. better known as DMart is an Indian chain of hypermarkets founded by Radhakishan Damani in 2002. They are spread across the country with 196 stores in 72 cities.

Again one of the biggest advantages the hypermarket has is its size. This helped it set up a moat by providing one of the lowest costs to its consumers. Due to their size, they are able to generate huge volumes of sales which allows them to negotiate the price of products at a cheaper rate from suppliers when buying in bulk. This results in products sold at lower costs in their stores in comparison to other competitors.

Also Read

10 Indian Companies with Monopoly in Their Industry!

5. Titan

Titan products | Moat Companies in India

Titan has been one of the greatest wealth creators in modern times. It is also responsible for creating a major chunk of the Big Bull- Rakesh Jhunjhunwala’s wealth. Titan, founded in 1984 is part of the Tata Group.

They are a lifestyle company engaged in the manufacture and sale of fashion accessories such as watches, jewellery and eyewear. They also introduced the Fastrack brand in the Indian markets and own over 60% of the domestic market share in the organized watch market. Titan is also the fifth-largest watch manufacturer in the world.

They sell jewellery through their Tanishq brand which is the largest branded jewellery maker in India. Titans brands like Tanishq enjoy strong customer loyalty giving them added advantages over their competitors.

6. Dr Lal Pathlabs

Dr Lal Path Labs Logo | Moat Companies in India

Dr Lal PathLabs Limited was founded in 1949 by Dr S. K. Lal. They perform diagnosis and testing on blood, urine and other human body viscera. The company operates on a hub and spoke distribution model which allows it to have greater flexibility and further extending its network.

The company has over 200 clinical labs across the country with 2,569 Patient Service Centers (PSC) and 6,426 Pick-up Points (PUP). This model puts it at an advantage in comparison to other standalone chains.

They also have a strong franchisee network furthering their reach and at the same time reducing their capital expenditure. The company has achieved good growth over the years and at the same time maintaining good financials.

“But we are trying to figure out what is keeping — why is that castle still standing? And what’s going to keep it standing or cause it not to be standing five, 10, 20 years from now. What are the key factors? And how permanent are they? How much do they depend on the genius of the lord in the castle?” – Warren Buffet.

7. Bajaj Finance

Bajaj Finance Limited Logo

 

Bajaj Finance has been one of the greatest wealth creators in the Indian markets in the last decade. It also makes it the most expensive NBFC stock. The company is a subsidiary of Bajaj Finserv and is one of the moat companies in India.

The company deals in consumer finance, wealth management and loans to SMEs. It has 294 consumer branches and 497 rural locations with over 33,000+ distribution points. Its attractive car, housing, small business loans and other commercial loan products have helped it achieve a customer base of 34.5 million in 2019.

One of their biggest loans has been cross-selling. Here Bajaj Finance has the ability to offer products to its existing customers. Cross-selling has helped it achieve to acquire 19.7 million customers.

8. Pidilite

Pidilite Products | Moat Companies in India

Founded in 1959, Pidilite Industries Limited is an Indian adhesives manufacturing company. Their brands include FeviKwik, Dr Fixit, M-seal, Acron etc.

Their leading brands have a 70% market share in the Indian adhesive and industrial chemical market. There are very little competitors can do when accompany owns such a large portion of the market.

And then if we feel good about the moat, then we try to figure out whether, you know, the lord is going to try to take it all for himself, whether he’s likely to do something stupid with the proceeds, et cetera.” – Warren Buffet.

9. Maruti Suzuki 

Maruti Suzuki Products | Moat Companies in India

Maruti Suzuki India Limited is the subsidiary of the Japanese auto manufacturer Suzuki Motor Corporation. The company has successfully maintained a market share of 50% for many years now in the Indian markets.

Other companies have been able to do very little over the years to capture a significant portion of the market. The runner up Hyundai only holds a market share of 17%.

10. SBI

State Bank of India (SBI) Logo

The State Bank of India (SBI) is India’s largest bank. The government-owned company holds a market share of 23% in terms of assets and 25% market share for total loans and deposits.

SBI is the biggest bank in India in terms of total assets. One of the biggest moats for the company has been the salary accounts being opened for all government employees. This also further allows them to cross-sell their products to their existing customer base. Another private equivalent to SBI has been HDFC. Recently Kotak Mahindra too signed an MoU with the Indian army to handle salary accounts. 

Closing Thoughts 

Investors like Warren Buffet make it seem too easy to find high-quality companies with wide moats. But identifying these moat stocks before they erupt and buying them at a fair price is challenging. Companies with moats can provide huge returns to their shareholders in the long run but it is very important to thoroughly research the stocks before investing as there are no guarantees.

We hope you have liked the list of best Moat companies in India. You may read about an economic moat and get more insights. Do let us know in which company you have invested or would like to invest in the comment section below. Happy Investing!

7 Must Know Websites for Indian Stock Market Investors cover

7 Must Know Websites for Indian Stock Market Investors

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

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

7 Must-Know Websites for Indian Stock Market Investors

1. NSE India

nse india website

Website: https://www.nseindia.com/

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

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

2. BSE India

bse india website

Website: http://www.bseindia.com/

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

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

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

3. Money Control

moneycontrol stock research

Website: http://www.moneycontrol.com/

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

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

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

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

4. Screener

screener dot in stock website

Website: https://www.screener.in/

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

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

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

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

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

5. Investing.com

investing.com stock research website

Website: https://in.investing.com/

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

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

6. Economic Times Market

ET Market

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

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

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

7. Live Mint

live mint website

Website: http://www.livemint.com/

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

Bonuses Stock Market Website (As promised)

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

Popular stock research websites that you should know:

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

Important Links on NSE/BSE:

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

Securities and Exchange Board of India (SEBI)

  1. SEBI: https://www.sebi.gov.in/

Websites to read the financial news:

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

Stock Screeners that you should know:

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

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

Summary

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

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

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

10 Reasons To Start Investing In Stock Market Today cover

10 Reasons To Start Investing In Stock Market in 2021!

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

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

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

Top 10 Reasons to Start Investing in Stock Market.

1. To keep pace with inflation

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

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

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

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

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

inflation in india yearwise tradingeconomics

(Source: Tradingeconomics)

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

2. Most Capital Growth Potential

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

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

3. Investing Makes Your Money Work for You

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

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

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

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

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

ALSO READ:

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

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

peter lynch quote investing - Reasons To Start Investing In Stock

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

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

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

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

6. Investing in Stocks is lot easier ‘Now’

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

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

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

7. Tax benefits from Government on Stock Investing

taxes - Reasons To Start Investing In Stock Market in 2021

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

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

hul share price stocks

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

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

9. To create a Alternate source of income

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

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

10. The Power of Compounding through Long-term Investments

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

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

Closing Thoughts

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

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

Debenture Explained What is Debenture Definition, Meaning, Types & more cover

Debenture Explained: What is Debenture? Definition, Types & more!

Understanding what is Debenture: Investors are always on the lookout for financial instruments to enhance their portfolios. One such instrument is Debentures. In this article, we will answer the questions like – what is debenture, what kind of investments they are, and how they work. Let’s get started.

What is Debenture?

Man holding money | What is a debenture

Debentures are debt instruments used by corporations to secure long-term debt. These instruments pay an interest rate (coupon rate) to the investors. At the same time, they exist for a limited period post which the capital is redeemed or repaid to the investors (debenture holders).

Corporations prefer to issue debentures as their features can be adjusted to the requirements of the company. For eg., they generally have a lower interest rate and longer repayment periods in comparison to traditional loans. 

The interest paid to debenture holders is paid out of the profits made by the company. Debenture holders are given priority over the shareholders for the interest payment. The interest due to debenture holders is paid to the debenture holders first from the profits and the remaining may be utilized for dividends etc. Also in the case of liquidation of a company,  debentures have priority over preferential and equity shares.   

These securities do not have any collateral, hence are unsecured. As debentures are unsecured investors buy these securities based on the creditworthiness, financials, reputation, and faith an investor has in the entity issuing it. 

However, it is also important to note that the word Debenture may have different meanings in different parts of the world. What we have seen so far represents debentures in India and countries like the US. In the UK however, debentures are unsecured. They represent documents that grant the lenders a charge over the asset. This gives the lenders a means of collecting their money back in the case of a default.

Components to look before investing in a Debenture

Debentures have 3 basic components and they should be looked into carefully before investing in:

1. Credit Worthiness

Credit rating agencies | Debentures

Since debentures are unsecured instruments it is very important to find out whether the company issuing them will actually be able to repay the debt. One must carefully look into the financials and the track record of the company before investing in them.

Investors can also make use of the credit ratings of the company. These are provided by credit rating agencies like Standard and Poor’s, Moody’s, and Fitch Ratings. Ratings are given to the companies based on a scale set by these agencies based on the creditworthiness of the borrower. Companies receiving the excellent rating are good investment option over companies receiving rating lower on the scale

2. Coupon Rate

Another important factor is what returns will the debenture be providing to investors. The coupon rate represents the yield or payment made by fixed income securities on their face or par value. This rate is either fixed or floating i.e. it can be fixed or constant at one rate or set as floating which changes.   

3. Maturity Date

The date of maturity is very important when it comes to debentures. It represents the date on or before which the company must pay back the debenture holders. The company may pay back the capital amount raised by debentures on this date which is generally the case. Or the company may pay a specific amount each year until the date of maturity.

ALSO READ

The Fundamentals of Stock Market- Must Know Terms

Risks Associated with a Debenture

As with every financial instrument, there are also few risks involved with debentures. Since debentures are unsecured they carry the risk of default. Debentures also carry interest rate risks.

Further, as debentures are issued over long periods debenture holders might find themselves receiving lesser returns from debentures over time in comparison to other investment options. It is also possible that the interest rate provided may be overtaken by the inflation rate.  

What are the types of debentures?

Debentures can be classified into 2 categories based on their convertibility

1. Convertible Debentures

Convertible Debentures are those which can convert into equity shares of the issuing corporation after a specific period. Here the debenture holders have the option to either hold the debentures until maturity and receive the interest payments on them. Or they can convert the debentures into equity shares.

2. Non-convertible Debentures

Non-convertible debentures (NCD) or traditional debentures are those which cannot be converted into shares or equities. NCD interest rates depend on the company issuing the NCD.

What is the difference between Debenture and bond?

A debenture is an unsecured type of debt issued by a company. They are issued simply based on the creditworthiness of the company.

A bond similar to a debenture is meant for companies and countries to raise capital providing interest in return. Bonds however are secured and backed by a specific asset of the issuer.  

ALSO READ

What are Bonds? And How to Invest in them in India?

Closing Thoughts

In this article, we explained what is debenture. In a nutshell, debentures are an important source of funds for companies. In addition to this, they also have become exceptional instruments used to balance the portfolios of investors.

One however must invest in debentures only after careful evaluation of the creditworthiness of the company and other aspects like coupon rate, expiry date, etc. Hopefully, we were able to answer – what is Debentures. Happy Investing!

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

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

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

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

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

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

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

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

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

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

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

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

3. Finally, click ‘submit’.

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

bse india all stocks list

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

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

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

ALSO READ

7 Must Know Websites for Indian Stock Market Investors

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

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

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

1. Go to the NSE India Website.

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

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

3. Click on ‘Securities available for Trading’

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

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

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

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

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

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

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

2. Select ‘Screener’ on the top Menu Bar

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

trade brains screener all stocks

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

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

Conclusion

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

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

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

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

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

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

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

Word of Advice: Picking your first Stockbroker

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

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

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

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

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

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

How to Choose a Stockbroker? – Factors to Consider

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

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

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

– Background & Reputation of the broker

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

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

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

– Brokerage and Other Key Charges

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

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

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

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

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

Brokerage Charges for different brokers:

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

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

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

— Customer Services

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

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

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

— Trading Platforms Offered

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

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

zerodha kite app

— Advisory & Research Facilities

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

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

– Range of Facilities Offered

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

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

— Hidden Charges

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

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

— Fund Transfer

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

— Tools for Education/Learning

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

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

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

A few other points to know while Choosing Stockbroker

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

– Discounts and low-commission are not always good:

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

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

— Offline/Local Branches Availability

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

— Look for Extras/Add-ons

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

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

Value investing in india a complete guide

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

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

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

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

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

What is value investing?

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

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

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

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

A brief history of value investing:

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

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

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

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

chapter 1 the intelligent investor

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

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

Three Fundamental philosophies of Value investing

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

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

1. Look for the True/Intrinsic Value

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

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

2. Avoid following the Herd

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

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

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

charlie munger quote value investing

3. Always have a “Margin of Safety”

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

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

Does value investing in India works?

Yes, Definitely!!

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

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

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

Best books to learn value investing in India

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

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

7 Best Value Investing Books That You Cannot Afford to Miss

Closing Thoughts

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Ideal Amount for Beginners to Start Investing or Trading

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

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

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

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

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

A Few Other Points to Know

— Your First investment will teach you a lot

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

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

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

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

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

Also read: How to create your Stock Portfolio?

minimum money I need to start stock trading-4

 

— Basic Charges and One-time Payments

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

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

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— 100 Minus your age rule

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

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

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

— The X/3 Rule of Investing

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

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

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

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

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

minimum money I need to start stock trading-3

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

Closing Thoughts

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

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

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

Top 10 Warren Buffett Quotes on Investing and Famous Lines!

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

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

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

Top 10 Warren Buffett Quotes on Investing.

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

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

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

gain required to break even a loss

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

top 10 warren buffett quotes on investing

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

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

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

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

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

7 Best Stock Market Apps in India 2021

1. MoneyControl

best stock market apps money control

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

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

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

Key Features:

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

You can download from google playstore here

(Source: Money Control)

2. Stock Edge

stock edge

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

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

Key Features

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

You can download StockEdge App here!

3. Economic Times(ET) Markets

best stock market apps et market

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

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

Key Features:

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

You can download ET Markets app here

4. Tickertape

tickertape app android

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

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

Key Features:

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

You can download Tickertape app here

5. Yahoo Finance

best stock market apps yahoo finance

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

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

Key Features:

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

You can download Yahoo Finance app here!

Also read: 7 Best Mutual Fund Apps for Direct Investment

6. Market Mojo

best stock market apps market mojo

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

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

Key Features:

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

You can download Marketsmojo app here!

7. Investing.com

investing com mobile app

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

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

Key Features:

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

You can download Investing.com app here!


BONUS App to Check: Best Stock Market Apps in India

1. Trade Brains -Learn to Invest

trade brains learning app Feature Page 2

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

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

Key Features:

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

You can DOWNLOAD TradeBrains App here!

2. Trendlyne

trendlyne mobile app

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

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

Key Features:

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

You can download the Trendlyne App here for Android!

3. Intrinsic Value Calculator

trade brains learning app Feature Page 2

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

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

Key Calculators and Features:

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

You can DOWNLOAD IV Calculator App here!

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

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

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

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

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

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

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

1. What is Virtual Stock Trading?

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

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

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

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

2. How do virtual stock trading platforms work?

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

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

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

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

— Advantages of using Virtual stock trading platforms

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

— Disadvantages of using virtual stock trading platforms

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

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

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

1. Moneybhai

moneybhai virtual stock trading website

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

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

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

2. Trading View

tradingview - virtual stock trading app india

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

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

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

3. TrakInvest

TRAK INVEST - Virtual Stock Trading in India

Website— http://www.trakinvest.com/

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

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

Bonus: Other Popular Virtual Stock Trading Platforms

Bonus #1: Dalal Street

DSIJ Virtual Stock Trading in India

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

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

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

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

Bonus #2: Investopedia stock simulator

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

This is my favorite stock simulator.

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

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

Closing Thoughts on Virtual Trading

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

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

The Intelligent Investor by Benjamin Graham Book Review

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

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

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

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

Why You Should Read “The Intelligent Investor”?

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

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

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

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

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

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

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

Intelligent Investor Book Review: The Three Main Concepts

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

1. Investing vs. Speculating

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

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

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

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

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

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

Here is the quote about Speculators by Benjamin Graham:

the intelligent investor summary 5

2. The margin of Safety

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

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

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

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

The Intelligent Investor by Benjamin Graham

3. Mr. Market – The Pathetic Emotional Fool

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

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

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

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

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

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

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

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

Benjamin Graham on Mr. Market

Intelligent Investor Book Review: Other key points

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

Warren Buffett Quote on Ben Grahab

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

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

10 Best Blue Chip Companies in India that You Should Know

10 Best Blue Chip Companies in India that You Should Know!

List of Best Blue Chip Companies in India: If you start counting the numbers, you’ll find that the stocks can be categorized into many groups. Based on market capitalization, they can be defined as small-cap, mid-cap, and large-cap companies. Based on the stock characteristics, there are categorized as growth stocks, value stocks, and dividends (income) stocks.

However, there is one particular type of stock that gets a lot of attention from every kind of investor (beginners to the seasoned players)- and they are the BLUE CHIP stocks. Moreover, when most newbies enter the exciting world of the stock market, they are suggested to look into blue chip stocks as safer investment options. However, being new to investing, most of them are simply confused and are not able to understand what other means when they say blue chip companies.

In this post, we are going to look into what exactly are blue chip stocks and then cover ten of the best blue chip companies in India that every investor should know. Please note that this is going to be a long post, but I promise that it will be worth reading. Therefore, without wasting any further time, let us understand the blue chip companies in India.

A Quick Introductory Story

… but blue chip companies are boring. It’s better to invest in growth stocks with huge upside potentials.”, Gaurav argued energetically.

Yes, blue chips are not the ‘hot’ stocks in the market. However, they are a good option for the investors who are looking for low-risk investments with decent returns.”, I replied.

Gaurav has been investing in the stock market for the last two years and he likes to discuss his investment strategies with me. Nevertheless, his investment style is totally different from that of mine. Gaurav loves to invest majorly in mid-caps and small-cap companies (including penny stocks) which can grow at a fast pace. On the other hand, I like investing in a diversified portfolio.

That’s true, dude. But most of these blue chip companies have already reached a saturation point. They can not continue to grow at the same pace and hence can’t similar returns as they used to give in the past. Once a company has sold a billion products, it’s difficult to find the next billion customers.”, Gaurav challenged me with his witty reply. 

I know the rule of large numbers, Gaurav. Thank you for reminding me. Moreover, I agree that the large-cap companies cannot maintain the same pace of growth forever. But bro, it doesn’t mean that they won’t be profitable in future or can’t give good returns to their shareholders… They have already established their brand. If they use their resources efficiently, they can make huge fortunes for themselves as well as for their shareholders… 

For example- take the case of Reliance Industries. Reliance is a market leader in its industry and has a lot of customers. But they are also using their capital efficiently to grow their business. Two years back, they entered a new market- Telecommunication Industries, and now they are also a leader in that industry.

Because of their strong financials- they were able to bring the latest 4G technology to the Indian market and hence were able to quickly acquire a lot of customers. As the initial set-up cost in this industry is very high, they have created an entry barrier for the small and mid-cap companies. This is what a blue-chip company can do if they use their resources properly.

Gaurav looked a little mind-boggled. That’s why I thought better to give him another example to make him understand the capabilities of blue chip companies.

Let’s discuss another example- Hindustan Unilever. If you think that HUL cannot grow any further because it is a large-cap company, then you might need to reconsider it. HUL already have popular products in the market like Lux, Lifebuoy, Surf Excel etc which are generating them a good revenue from those products. But, they still have a large rural area to cover. They are not so popular in the village areas, are they? So, they can definitely grow in the rural areas…”

…besides, as they have enough resources and financials, they are also continuously working on new product development in their Research & development (R&D) department. If they can make another great product, their profits will add-up in the future….

Finally, when Gaurav didn’t argue further, I concluded-

…a good blue chip company is like Rahul Dravid. If you want fast scorers (or T-20 players), then you may not like his batting style. However, if you are looking for dependable players, then you will definitely appreciate Rahul Dravid’s consistency.”

What are Blue Chip companies?

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, HUL, ITC, Asian Paints, Maruti Suzuki etc.

— Signature Characteristics of Blue Chip Companies

Here are a few signature characteristics which you can look forward while researching blue chip companies—

  1. They are large reputed companies.
  2. They have widely used products/services.
  3. Most of these companies are listed in the market for a very long time.
  4. Blue chip companies have survived a number of bear phases, market crises, financial troubles, etc. But they are still going strong.
  5. Blue chip companies have a strong balance sheet (a large number of assets compared to liabilities) and a healthy income statement (revenues and profits continuously growing for the last few decades).
  6. These companies have a good past track record of stable growth.

Almost all blue chip stocks are older companies. You might already know many of the blue chip companies in India and have been using their products/services in your day-to-day life.

For example-  Lux, Lifebuoy, Surf Excel, Rin, Wheel, Fair & Lovely, Pond’s, Vaseline, Lakmé, Dove, Clinic Plus, Sunsilk, Pepsodent, Closeup, Axe, Brooke Bond, Bru, Knorr, Kissan, Kwality Wall’s and Pureit —- all these products are offered by the same blue chip company in India – Hindustan Unilever (HUL).

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

— Why are they called blue chips?

Oliver Gingold- who worked at Dow Jones, is credited to name the phrase ‘Blue Chip’ in 1923. The term ‘blue chips’ became popular after he wrote an article where he used ‘Blue chips’ to refer the stocks trading at a price of $200 or more.  

Quick Note: There are other sets of investors who believe that blue chip companies got its name from the Poker game, as in that game- blue chips are relatively more valuable. Similar to the game, the stocks which are more valuable in the market are termed blue chip stocks.

Although Oliver Gingold used the term ‘blue chips’ for high priced stocks, however, later people started using this word more often to define high-quality stocks (instead of high priced stocks).

— Financial characteristics of blue chip stocks

Apart from the signature characteristics discussed above, here are few key financial characteristics of blue chip companies –

1. Blue chip companies have a large market capitalization -As a thumb rule, the market cap of most of the blue chip companies in India is greater than Rs 20,000 Crores.

2. Good past performance: Blue chip companies have a track record of good past performance (like consistently increasing annual revenue over a long-term).

3. Low debt to equity ratio: The bluest of the blue chips are (generally) debt free stocks. However, a lower and stable debt to equity ratio can also be considered as a significant characteristic of blue chip companies.

4. Good dividend history: Blue chip companies are known to reward decent dividends to their loyal shareholders.

5. Other characteristics: Apart from the above four- few other key characteristics of blue chip companies are a high return on equity (ROE), high-interest coverage ratio, low price to sales ratio etc.

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

10 Best Blue Chip Companies in India

Now that you have understood the basic concept, here is the list of top 10 best blue chip companies in India. (Disclaimer- Please note that the companies mentioned below are based on the author’s research and personal opinion. It should not be considered as a stock recommendation.) 

Reliance Industries

reliance industriesThis company needs no introduction. Reliance Industries is an Indian conglomerate holding company and owns businesses across India engaged in energy, petrochemicals, textiles, natural resources, retail, and telecommunications.

In December 2015, Reliance Industries soft-launched Jio (Reliance Jio Infocomm Limited) and it crossed 8.3 million users as of January 2018.

Reliance is one of the most profitable companies in India and the second-largest publicly traded company in India by market capitalization. On 18 October 2007, Reliance Industries became the first Indian company to reach $100 billion market capitalization. It is also the highest income tax payer in the private sector in India.

Hindustan Unilever (HUL)

hulHUL is one of the largest Fast Moving Consumer Goods (FMCG) Company in India with a heritage of over 80 years. It is a subsidiary of Unilever, a British Dutch Company. HUL’s products include foods, beverages, cleaning agents, personal care products, and water purifiers.

Few famous products of HUL are Lux, Lifebuoy, Surf Excel, Rin, Wheel, Fair & Lovely, Pond’s, Vaseline, Lakmé, Dove, Clinic Plus, Sunsilk, Pepsodent, Closeup, Axe, Brooke Bond, Bru, Knorr, Kissan, Kwality Walls and Pureit.

HDFC BANK

hdfc bankHDFC Bank is India’s leading banking and financial service company. It is India’s largest private sector lender by assets and has 84,325 employees (as of March 2017).

HDFC Bank provides a number of products and services which includes Wholesale banking, Retail banking, Treasury, Auto (car) Loans, Two Wheeler Loans, Personal Loans, Loan Against Property and Credit Cards. It is also the largest bank in India by market capitalization and was ranked 69th in 2016 BrandZ Top 100 Most Valuable Global Brands.

Asian Paints

Asian paint is one of the largest Indian paint company and manufacturer. Since its foundation in 1942, Asian paint has come a long way to become India’s leading and Asia’s fourth-largest paint company, with a turnover of Rs 170.85 billion. It operates in 19 countries and has 26 paint manufacturing facilities in the world, servicing consumers in over 65 countries.

Asian Paints is engaged in the business of manufacturing, selling and distribution of paints, coatings, products related to home decor, bath fittings and providing of related services.

Tata Consultancy Services (TCS)

Tata Consultancy Services Limited (TCS) is an Indian multinational information technology (IT) service, consulting and business solutions company. It was established in 1968 as a division of Tata Sons Limited. As of March 31, 2018, TCS employed 394,998 professionals.

TCS is one of the largest Indian companies by market capitalization (Rs 722,700 Crores as of June 2018). It is now placed among the most valuable IT services brands worldwide. TCS alone generates 70% dividends of its parent company, Tata Sons.

Infosys

infosysInfosys Limited is an Indian multinational corporation that provides business consulting, information technology and outsourcing services. It has its headquarters in Bengaluru, Karnataka, India. Infosys is the second-largest Indian IT company by 2017 and 596th largest public company in the world in terms of revenue. On April 19, 2018, its market capitalization was $37.32 billion.

Infosys main business includes software development, maintenance, and independent validation services to companies in finance, insurance, manufacturing and other domains. It had a total of 200,364 employees at the end of March 2017.

ITC

itcIndian Tobacco Company (ITC) is one of the biggest conglomerate company in India. ITC was formed in August 1910 under the name of Imperial Tobacco Company of India Limited. It has a diversified business which includes five segments: Fast-Moving Consumer Goods (FMCG), Hotels, Paperboards & Packaging, Agri-Business & Information Technology. Currently, ITC has over 25,000 employees.

As of 2016, ITC Ltd sells 81 percent of the cigarettes in India. Few of the major cigarette brands of ITC include Wills Navy Cut, Gold Flake Kings, Gold Flake Premium lights, Gold Flake Super Star, Insignia, India Kings etc.

Apart for the cigarette industry, few other well-known businesses of ITC are Aashirvaad, Mint-o, gum-o, B natural, Sunfeast, Candyman, Bingo!, Yippee!, Wills Lifestyle, John Players, Fiama Di Wills, Vivel, Essenza Di Wills, Superia, Engage, Classmate, PaperKraft etc.

Sun Pharma

sun pharma logo

Sun Pharma Sun Pharma was established in 1983 with just 5 products to sell in only two states: Bihar and West Bengal. Eventually, the company started expanding across the nation, and currently, it is India’s biggest pharmaceutical company.

As of FY21/Q1, the company has 43 manufacturing plants across the world with more than 36,000 global employee base and the company is also ranked 9th in the US Generic Markets. As of FY20, the company has footprints in more than 100 countries across the globe and is ranked 4th among global specialty generic companies. The company is engaged in manufacturing products in the following therapy areas: Cardiology, CNS Disorders, Pain, Ophthalmology, Diabetes, Oncology, Allergy- Asthma, Gastroenterology.

Further, Caraco Pharmaceutical Labs, Sun Pharmaceutical Industries Inc., Sun Pharma (Bangladesh), and Alkaloida Chemical Company Exclusive Group Ltd. are the subsidiaries of the company.

Bajaj Auto

bajaj autoBajaj Auto is a global two-wheeler and three-wheeler Indian manufacturing company. It manufactures and sells motorcycles, scooters and auto rickshaws. Bajaj Auto was founded by Jamnalal Bajaj in Rajasthan in the 1940s. It is the world’s sixth-largest manufacturer of motorcycles and the second-largest in India. 

A few of the popular motorcycle products of Bajaj Auto are Platina, Discover, Pulsar and Avenger and CT 100. In the three-wheeler segment, it is the world’s largest manufacturer and accounts for almost 84% of India’s three-wheeler exports.

Nestle India

nestleNestle India is a subsidiary of Nestle SA of Switzerland- which is the world’s largest food and beverage company. It was incorporated in the year 1956. Nestle India Ltd has 8 manufacturing facilities and 4 branch offices in India.  The Company has continuously focused its efforts to better understand the changing lifestyles of India and anticipate consumer needs in order to provide Taste, Nutrition, Health and Wellness through its product offerings.

Few famous products of Nestle India are Maggi, Nescafe, KitKat, MUNCH, MILKY BAR, BARONE, NESTLE CLASSIC, ALPINO etc. (On 8 March 2018, Nestle Indias food brand MAGGI completed 35 years of existence in India.)

Also read: Market Capitalization Basics: Large cap, Mid cap & Small cap companies

Other Popular Best Blue Chip Companies in India

CompanyIndustry Market Cap (Rs Cr)Avg Return On Equity 3 Yr
Adani Total Gas Ltd.Trading81820.3724.66
Asian Paints Ltd.Paints232380.0526.69
Aurobindo Pharma Ltd.Pharmaceuticals & Drugs49142.6716.46
Avenue Supermarts Ltd.Retailing195281.417.72
Bajaj Auto Ltd.Automobile Two & Three Wheelers103461.7323.28
Bajaj Finance Ltd.Finance - NBFC322908.4820.29
Bandhan Bank Ltd.Bank - Private54067.2820.44
Berger Paints India Ltd.Paints69374.7522.94
Bharat Petroleum Corporation Ltd.Refineries93690.0317.6
Britannia Industries Ltd.Consumer Food83524.6933.2
Cadila Healthcare Ltd.Pharmaceuticals & Drugs43908.3215.88
Cholamandalam Investment & Finance Company Ltd.Finance - NBFC43379.818.47
Coal India Ltd.Mining & Minerals86216.5773.84
Colgate-Palmolive (India) Ltd.Household & Personal Products43376.2751.48
Dabur India Ltd.Household & Personal Products93152.1529.09
Divis Laboratories Ltd.Pharmaceuticals & Drugs89681.9218.37
Eicher Motors Ltd.Automobile Two & Three Wheelers72342.4531.8
Gland Pharma Ltd.Pharmaceuticals & Drugs41420.9118.41
Godrej Consumer Products Ltd.Household & Personal Products67652.827.48
Havells India Ltd.Electric Equipment66429.3719.14
HCL Technologies Ltd.IT - Software267974.4327.41
HDFC Asset Management Company Ltd.Finance - Asset Management62032.7436.5
HDFC Bank Ltd.Bank - Private824225.6616.92
HDFC Life Insurance Co Ltd.Insurance139265.3423.71
Hero MotoCorp Ltd.Automobile Two & Three Wheelers63769.8529.42
Hindustan Unilever Ltd.Household & Personal Products523764.9581.97
Hindustan Zinc Ltd.Metal - Non Ferrous124625.7823.03
Honeywell Automation India Ltd.Consumer Durables - Electronics41542.1222.37
Housing Development Finance Corporation Ltd.Finance - Housing453377.9918.94
ICICI Lombard General Insurance Co Ltd.Insurance67026.5920.99
ICICI Prudential Life Insurance Company Ltd.Insurance61243.9119.15
Infosys Ltd.IT - Software591038.8724.32
ITC Ltd.Cigarettes/Tobacco259142.224.45
JSW Steel Ltd.Steel & Iron Products102248.4219.44
Larsen & Toubro Infotech Ltd.IT - Software70682.2134.73
Marico Ltd.Consumer Food50562.5129.28
Maruti Suzuki India Ltd.Automobiles - Passenger Cars213363.6816.26
Muthoot Finance Ltd.Finance - NBFC51229.8425.21
Nestle India Ltd.Consumer Food158681.9550.71
Pidilite Industries Ltd.Chemicals87577.6926.13
Power Grid Corporation Of India Ltd.Power Generation/Distribution115408.8721.38
Procter & Gamble Hygiene & Health Care Ltd.Household & Personal Products41731.3649.9
SBI Cards And Payment Services Ltd.Finance - NBFC91865.8230.25
SBI Life Insurance Company Ltd.Insurance88886.218.67
Tata Consultancy Services Ltd.IT - Software1168004.7938.52
Tech Mahindra Ltd.IT - Software98772.2822.1
Titan Company Ltd.Diamond & Jewellery130739.8323.99
Wipro Ltd.IT - Software229876.0817.45

Closing Thoughts

Most people invest in blue chip companies become of their long history of consistent performance and a similar expectation of standard performance in the future. Blue chip companies are low-risk high return bet for the long term.

Many blue chip companies in India like Tata, Reliance, Infosys etc are considered as ‘Too-big-to-fail’ companies as they have survived and remained profitable for a very long time. Nevertheless, this is not always true!!

Stock Market Timings in India cover

Stock Market Timings in India – NSE/BSE Trading Timings

Understanding the Stock Market Timings in India: There are two major stock exchanges in India to trade in stocks: The Bombay stock exchange (BSE) and the National stock exchange (NSE). The timing of both BSE & NSE for the trading clock is the same.

For a quick answer, the stock market timings in India for normal trading in the equity market is between 9:15 am to 03:30 pm, Monday to Friday, without any lunch or tea break. This means that you can buy or sell your stocks on BSE or NSE at any time between this trading time period.

Further, please also note that the trading timing for the commodity market is different and longer. In addition, this stock market timings in India is also divided into different segments (Opening session, normal session, and closing session) that we’ll discuss in detail in this post. Let’s get started!!

Stock Market Timings in India

First of all, you need to know that the stock market in India works only five days (Monday-Friday) and is closed on weekends i.e. Saturday and Sunday.

Further, the markets are also closed on national holidays like Republic Day, Independence Day, Gandhi Jayanti, etc. You can find the list of the holidays of the stock exchange here: NSE India

  • The normal trading time for the Equity market is between 09:15 am to 03:30 PM, Monday to Friday.
  • The trading time for the commodity (Non-Agri) market (like Gold, Silver, Crude, etc) on MCX and NCDEX exchange is between 10:00 AM to 11:30 PM, Monday to Friday.
  • The normal trading time for the commodity (Agri) like Cotton, CPO, SYOREF, etc market is between 10:00 AM to 05:00 PM, Monday to Friday. (Source: McxIndia)

Now, there is continuous trading by the traders and investors in this time period. This means that there is no lunch break or tea break in the Indian stock market timings, unlike banks or other government/private offices.

Different Segments of Stock Market Timings in India

The timings of the Indian stock market are divided into three sessions:

  1. Normal Session (also called continuous session)
  2. Pre-opening session
  3. Post-closing session

Now, let us discuss all these sessions to further understand their importance in the stock market timings in India.

— Pre-Opening Session

The duration of the Pre-opening session is between 9:00 AM to 9:15 AM i.e. before the Normal trading session. This is further divided into three sub-sessions.

  1. 9:00 AM to 9:08 AM:
    • This is the order entry session.
    • You can place an order to buy and sell stocks in this duration.
    • One can also modify or cancel his orders during this period.
  2. 9:08 AM to 9:12 AM:
    • This session is used for order matching and for calculating the opening price of the normal session.
    • You cannot modify or cancel the buy/sell order during this time.
  3. 9:12 AM to 9:15 AM:
    • This session is used as a buffer period.
    • It is used for the smooth translation of the pre-opening session to the normal session.

The opening price of the normal session is calculated using a multilateral order matching system. Earlier, a bilateral matching system was used which caused a lot of volatility when the market opened. Later, this was changed to a multilateral order matching system to reduce the volatility in the market. ALSO READ: (How Pre-Opening prices of stocks are calculated here.)

Anyways, most traders and investors do not use the pre-opening session and only use the normal session for trading. That’s why there is still huge volatility even in the normal session after the pre-opening session.

— Normal Trading Session

Basically, this is the trading session or stock market timings that everyone should know.

  1. The normal trading session is the actual time where most of the trading takes place.
  2. Its duration is between 9:15 AM to 3:30 PM.
  3. You can buy and sell stocks in this session.
  4. The normal trading session follows a bilateral matching session i.e. whenever the buying price is equal to the selling price, the transaction is complete. Here transactions are as per price and time priority.

— Closing Session/ Closing Price Calculation Session

The time between 3:30 PM to 3:40 PM is used for closing price calculation.

  1. The closing price of a stock is the weighted average of the prices between 3:00 PM to 3:30 PM.
  2. For the indexes like Sensex & nifty, its closing price is the weighted average of the constituent stocks for the last 30 minutes i.e. Between 3:00 PM to 3:30 PM.

— Post-Closing Session

Finally comes the 20 minutes session of the post-closing session.

  1. The duration of the Post-closing session is between 3:40 PM to 4:00 PM.
  2. You can place orders to buy or sell stocks in the post-closing session at the closing price. If buyers/sellers are available then your trade will be confirmed at the closing price.

NOTE: Pre-opening session and the Post-closing session is only for the cash market. There are no such sessions for the future & options trading.

In addition, you can also watch this video to further understand the stock market timings in India:

Summary of Different Session of Stock Market Timings in India

Overall, the stock market timings in India and its different sessions can be briefed as:

TimingsParticular
9:00 AM to 9:15 AMPre-Opening Session
9:15 AM to 3:30 PMNormal Trading Session
3:30 PM to 3:40 PMClosing Price Calculation Session
3:40 PM to 4:00 PMPost-Closing Session

Stock Market Timings in India

(Pic credit: BSE India)

In addition, if you are unable to trade between these time periods, you can place an AMO (Aftermarket order). There is no actual trading here but you can place your buy or sell order.

MCX Timings – Commodity Trading Timings

For the MCX and NCDEX Commodity Exchange, here are the commodity trading timings

  • The trading time for the commodity (Non-Agri) market (like Gold, Silver, Crude, etc) is between 10:00 AM to 11:30 PM, Monday to Friday.
  • The normal trading time for the commodity (Agri) like Cotton, CPO, SYOREF, etc market is between 10:00 AM to 05:00 PM, Monday to Friday. (Source: McxIndia)
ParticularsTradesTrade Start TimeTrade End Time
Non-Agri CommoditiesGold, Silver, Crude etc09.00 AM11.30 PM
Agri CommoditiesCotton, CPO, SYOREF etc09.00 AM05.00 PM

Note: Pre-open session for cancellation of orders with GTC/ GTD validity will commence 15 minutes prior to trade start time.

Special Trading Session – Muhurat Trading

The Indian stock market also opens a special trading session during Diwali, the festival of light which marks the start of a new Samvat. This is known as Mahurat Tradingor ‘Samvat trading’. Its exactly trading time is declared a few days before Diwali.

However, Mahurat Trading timings is not similar to normal trading and is traded in the evening and only for an hour. For the rest day, the market is closed.

Bonus Section for Stock Market Beginners

By the way, if you are new to investing and want to learn how to start investing in the Indian stock market, check out this video for beginners. Here I have explained the step-by-step process for beginners to start investing in stocks. And I’m sure it will be helpful to you!

Quick Note: Looking for the best Demat and Trading account to start your investing journey? Click here to open your account with the No 1 Stockbroker in India — Zero Brokerage on Equity Delivery/ Long term investments in stocks and mutual funds, Paperless online account opening. Start Now!!

That’s all. I hope this post on the ‘Stock Market Timings in India‘ is helpful to the readers.

If you have any doubts regarding the Indian stock market timings, feel free to comment below. I will be happy to help you. Happy Trading & Investing!

3 Easy Ways to Invest in Foreign Stocks From India cover

3 Easy Ways to Invest in Foreign Stocks From India!

A Quick Guide on how to invest in Foreign Stocks from India: Apple, Google (Alphabet), Facebook, Amazon, Netflix, Microsoft, Samsung, Tesla, Twitter… These are some well-known companies in the world. We all have grown up using the products/services offered by these companies. Moreover, these companies are global leaders in their respective businesses, as well as innovators, who are likely to benefit in the future. But along with using their products, can we also own some shares of these companies?

Wait, these are not Indian companies, right? Therefore, they won’t be listed on the Indian stock exchanges. Even if you’ve a demat and trading account in India, you can trade/invest only in companies listed on Indian stock exchanges (BSE/NSE). But these companies will be listed in their respective country’s stock exchanges like US stock exchanges. Then, how to buy shares of a company that are not registered in India, but trades in the foreign stock exchanges?

Don’t worry, if you really want to buy these stocks- you’ll get it. In this post, we are going to discuss three simple ways through which you can invest in foreign stocks. Let’s get started.

Why should you invest in foreign stocks?

Before we start this post, let us first discuss why should you invest in foreign stocks? Are they better than Indian companies? Here, you need to make up your mind why you want to invest in foreign companies. There are over 5,500 listed companies in the Indian stock market. Aren’t they enough? Why do you need to invest in alternative stocks? Further, which one is better to invest in- Indian companies or foreign companies?

Well, I’m really not in a position to answer the second question. It won’t do justice if a guy in his 20s sitting on the comfort of his couch judges these Indian vs MNC companies and choose which one is better. These are giant multi-billionaire companies that we are talking about here. Google, Apple, Facebook, Amazon, Samsung, Cisco, Tesla, etc are too big companies to comment upon. These companies have lots of cash, highly qualified professionals, employees in their management team and they are big innovators in their industry. Anyways, there are even many big Indian companies that can give competitions to many foreign companies.

Now, let me answer the first question i.e. why invest in foreign stocks. Here are my personal learnings on this question.

Top reasons why many Indian invests in the US

Here are my top reasons why many Indian invests in the US or other foreign stock exchanges:

1. People want to invest in their favorite companies

Apple, Google, Twitter, Facebook, Amazon, Tesla etc. are the darlings of this generation. And of course, many people want to invest in these companies.

Invest in Foreign Stocks From India

2. Diversification with Global Investments

Investing in foreign stocks helps in diversification. Let’s assume that the Indian equity market starts falling due to some local region. However, investing in foreign stocks can mitigate the risk in your portfolio as the local reason may not have a significant effect on the international markets.

3. To seize bigger opportunities

Once you start to invest in foreign stocks, there are no boundaries anymore. You can hunt for better (profitable) opportunities in the international markets.

Besides the above-mentioned points, few investors believe that foreign companies have better resources, facilities, government cooperation, and standards. That’s why they invest in these foreign companies, compared to Indian companies. Nevertheless, while deciding to invest in foreign stocks, you should also remember that India is one of the fastest-growing economies in the world. On the other hand, most of the international markets are a little saturated. Therefore, growth-wise, India has better potential.

Overall, it totally depends on your preference regarding where and how much to invest. As already discussed, there are both pros and cons to trade in international stocks.

Cons of Investing in Foreign Stocks

There are two sides to every coin. Here are a few critical points to know before you invest in foreign stocks:

1. Be ready for the high charges

While investing in international stocks, you’ll be transacting in foreign currencies. For example, if you are trading in the US stock market, you have to pay the brokerages in the US dollar. And hence, the stock brokerages may be a little higher compared to the charges in the Indian stock market. Similarly, the annual/monthly maintenance charges may also be higher compared to domestic accounts.

2. Profits are subjected to the currency exchange rate

When you invest in foreign stocks, there’s always currency risk involved. Let us understand this with the help of an example.

Let’s assume that you are investing in the US stock market. When you bought the US stock, the currency exchange rate was $1= Rs 68. However, next year- when you sold the US stock, let say the Indian currency got stronger, and the currency exchange rate becomes $1 = Rs 62. In such a case, you have already lost 8.8% due to the change in the exchange rate. That’s why when you invest in foreign stocks, profits are always subjected to the currency exchange rate.

3. Up to $250,000 can be invested overseas by the Indian residents

As per the RBI notification in the Liberalised Remittance Scheme (LRS), an Indian resident individual can only invest up to $250,000 overseas per year. With the current exchange rate of ($1= Rs 68), this amount turns out to be over 1.7 Crores. Anyways, if you have a family of four, you can invest 4 x $250,000 = $ 1 Million. That’s enough money to invest, right?

Quick Note: Besides the above factors, you also need to keep in mind the foreign stock risks. As these stocks will be listed on foreign stock exchanges – the environment and the factors (like local government policies, local trends, etc) will affect the share price of those companies.

How to invest in foreign stocks?

Now that you have learned the basic concept of investing in the international stock exchanges, here are three simple ways to invest in foreign stocks—

1. An account with Indian Brokers having a tie-up with a foreign broker

Many full-service Indian brokers like ICICI Direct, HDFC Securities, Kotak Sec, Axis Securities, Reliance money, etc has a tie-up with the foreign brokers. They have made it very simple to open your overseas trading account with their partner (foreign) brokers. You can invest in foreign stocks using these full-service brokers. 

For example, if you have an account with ICICI direct, you can invest in global markets using their broker partner Interactive Brokers LLC.

ICICI direct - invest in foreign stocks from India

(Source: ICICI Direct)

2. Open an account with the foreign brokers

A few international brokerage firms like Interactive BrokersTD AmeritradeCharles Schwab International Account, etc permits Indian citizens to set up an account and trade in US stocks, mutual funds, etc. In fact, US-based brokerage like ‘Interactive brokers’ also has an office in India where you can visit, get your queries answered, and open your overseas trading account.

3. Investing in Foreign stocks through new startups Apps

In the past few years, many new starts have been launched in India and abroad that helps Indians to invest in foreign stocks. For example, GROWW, Vested Finance, Webull app, etc helps Indians to invest in US stocks.

groww us stock investments

Startups like Vested Finance are a US Securities and Exchange Commission (SEC) registered investment advisor. Similarly, you can also invest in foreign stocks using the Webull app, another popular startup company that is also committed to building the best investing and trading experience for India and Global stock markets.

Extra: Buying Indian MF/ETFs with global equities

There are a number of mutual funds/ETFs that invest in international markets (global market, emerging market, etc). You can invest in those mutual funds/ETFs to indirectly invest in foreign equities. 

This is the easiest approach to invest in foreign stocks. An advantage of investing through mutual funds is that you won’t need to open any overseas trading account. Further, you won’t also require to invest a hefty amount. Compared to direct investing in foreign stocks (where you might be asked to maintain a minimum of $10,000 deposit), investing in mutual funds/ETFs are cheap.

For example, Motilal Oswal recently started its subscription for its Motilal Oswal S&P 500 Index Fund. It is an open-ended scheme replicating the S&P 500 Index, which consists of leading 500 companies listed in the US. A few of the popular of popular mutual funds that trade in global equities are—

(Source: Moneycontrol)

Quick Note: Many other Indian stockbrokers are also planning to offer their clients a facility to invest in the US and foreign stocks. For example, Zerodha is planning to offer option to invest in US stocks with no minimum investment. However, these features are yet to be launched. Nevertheless, these stockbrokers internally working on these features is a good sign for the Indian retail investors who are enthusiastic about investing in foreign companies.

Closing Thoughts

In this article, we discussed three easy ways to invest in foreign stocks from India, along with the fourth way of mutual funds route. We also covered the advantages and disadvantages of investing in foreign stocks.

Investing in the foreign market will help you widen your investment horizon. Here, you can invest without boundaries in your favorite companies. Moreover, in the era of the internet- it’s not much difficult to invest in the international market. The most significant advantage is that it helps in diversifying your portfolio. However, the obstacles are higher expense charges and currency exchange rates.

That’s all for this article on different ways to invest in foreign stocks. Let me know what you think about investing in international stocks in the comment section below. Further, if you’ve got any questions on this topic, feel free to mention them below. Have a great day and Happy investing.