Indian Electricity & Power Sector theme

Indian Electricity & Power Sector – Key Companies in 2020!

An analysis of a list of companies in Indian Electricity & Power Sector: The first electric street light in Asia was lit in Bangalore on 5th August 1905. Despite what seems like a headstart the electrification of India seemed like an uphill battle in the last for almost a century. However, in the last decade, India has begun to make strides not only in extending electrification throughout the country but also introducing greener alternatives.

Today, we take a look at the possible future prospect on the Indian electricity & power sector and top players that are present in the current environment.

future prospect on the Indian electricity & power sector

Indian Electricity & Power Sector

India is the third-largest producer and second-largest consumer of electricity in the world. India had an installed power capacity of 371.97 gigawatts (GW) as of July 2020. When we take a look at the growth opportunities in this sector their prospects can be viewed in the two plans already put forward by the government. The first being the governments’ vision of ensuring 24×7 affordable and quality power for all.

According to the Ministry of Power, the Saubhagya mission which had begun in 2017 where 100% of households in 25 states would be electrified has already been achieved. The only states left out were Assam, Rajasthan, Meghalaya, and Chhattisgarh.

100% electrification, however, does not mean that going forward there will be limited opportunities isolated only to the remaining four states. India’s energy demand is expected to double by 2040 and also has the potential to triple. This is mainly because of the rising Indian temperatures and increased appliance ownership among consumers. This would require India to add massive amounts of power generation capacity in order to meet the demand from the 1 billion airconditioning units the country is expected to have by 2050.

indian power industry

Another government initiative that offers growth potential in the sector is its plan to double the electricity generation capacity of renewable energy. As of 2018, India ranked fourth in wind power, fifth in solar power, and fifth in renewable power installed capacity. If government plans are successful the shared electricity generated through renewable would increase to 40% by 2030. Currently, the electricity sector is dominated by fossil fuels like coal. In the 2018-19 fiscal these fossil fuels produced about three-quarters of the country’s electricity.

Quick Fact: Did you know that Bhadla Solar Park is located in Bhadla village, in Rajasthan’s Jodhpur district is claimed to be the largest solar power plant in the world. Spanning 14,000 acres, the fully operational power plant has been installed with a capacity of nearly 2,250 megawatts (MW).

Top companies in Indian Electricity & Power Sector

1. Power Grid Corporation Of India Ltd.

Power Grid Corporation Of India Ltd.

Power Grid Corporation of India Limited (POWERGRID) was incorporated on 23 October 1989 as a public limited company, wholly owned by the Government of India. The company is engaged in the power transmission business with responsibility for planning, implementation, operation, and maintenance of inter-state transmission system and operation of national and regional load dispatch centers.

Its transmission network consists of roughly 164,511 ckm Transmission Lines and 243 EHVAC and HVDC substations, which provides a total transformation capacity of 3,67,097 MVA. POWERGRID transmits about 50% of the total power generated in India on its transmission network. The government of India currently holds a 51.34% stake in the company and the balance 48.66% is held by the public.

2. NTPC Ltd.

NTPC India

NTPC Limited is an Indian Public Sector Undertaking company, which is engaged in the generation and sale of electricity. The company generates electric power using coal-based thermal power plants and is headquartered in New Delhi. The company has also ventured into oil and gas exploration and coal mining activities. It is the largest power company in India with an electric power generating capacity of 62,086 MW. It contributes over 25% of the total power generation of the country. 

The company has approximately nine joint venture stations, which are coal-based. It also holds approximately nine renewable energy projects. The company’s subsidiaries include NTPC Electric Supply Company Limited, NTPC Vidyut Vyapar Nigam Limited, Kanti Bijlee Utpadan Nigam Limited, Bhartiya Rail Bijlee Company Limited, and Patratu Vidyut Utpadan Nigam Limited.

3. Adani Transmission Ltd.

adani transmission

Adani Transmission Limited is a holding company. The Company operates as a power transmission company. It is engaged in the transmission of electric energy. Despite only being incorporated in just 2013 it is already one of the top companies in the sector. The company owns, operates, and maintains approximately 5,050 ckm of transmission lines.

4. NHPC Ltd.

NHPC Ltd

NHPC Limited ( National Hydroelectric Power Corporation) is a Public Limited Company and was incorporated in the year 1975. It was created with the objective to generate hydroelectric power. The government of India and State Governments holds a 74.51% stake within the Company while the remaining 25.49% is public.

Over the years the company has diversified into other sources of energy like Solar, Geothermal, Tidal, Wind, etc.

5. Tata Power Company Ltd.

Tata Power

Tata Power Company Ltd is India`s largest private sector power utility with an installed generation capacity of over 10,577 MW. The core business of the company is to generate, transmit, and distribute electricity. Tata is one of the few companies that are present in all segments of the power sector viz Generation (thermal, hydro, solar, wind, and liquid fuel), transmission, and distribution.

6. Adani Green Energy Ltd.

Adani green

Adani Green Energy Limited (AGEL) is one of the largest renewable companies in India. The company was incorporated in 2015 and is part of the Adani Group. In 2017, the company took complete control of the overall solar energy portfolio of Adani Enterprises.

The Company operates and maintains utility-scale grid-connected solar and wind farm projects. AGEL broke into the news in September 2020 when the stock price of the company grew 1300% in one year and they posted a profit in the year 2019-20.

Also read:

Closing Thoughts

The power sector has immense opportunities in a country like India. But before investing it is also important that the investors inspect other aspects of the industry. For a long, time the power sector has found itself debt-ridden. This was primarily because of the lack of trickle-down of payments from the DISCOMS( Power Distribution companies) to the GENCOMS( Power Generation Companies). Another aspect that the investors must take caution is the viability of renewable energy companies.

Although they are marketed as a safer future, it is important to note that they too come at environmental costs and significantly higher economic costs all the while producing only a fraction of the energy in comparison to other fossils fuels. This affects both the motive i.e greener earth and the profitability prospect of the company.

Indian Auto Ancillary Industry - Top Companies in 2020

Indian Auto Ancillary Industry – Top Companies in 2020!

A Study on top companies in Indian Auto Ancillary Industry: The Auto Ancilliary Industry includes companies that provide supporting equipment to the primary products of a vehicle company. This support may be in the form of Tyres, Battery, Brakes, Suspension, etc.

Such industries enable vehicle companies to focus on their core competencies while they are able to produce quality parts they specialize in. The high growth prospects of the Auto Ancillary Industry makes it one of the sunrise industries in the Indian markets. Today, we take a look at the Auto Ancillary Industry in India and its top players. Let’s get started.

top companies in Indian Auto Ancillary Industry

The Auto Ancilliary Industry in India

The Auto Ancilliary sector from India is mainly focussed domestically and does not play a large role globally. But this tips the scale in its favor when we look at the strides it can make in terms of growth. An Auto Ancilliary Industry is heavily dependent on the Automobile Industry. Luckily enough the Indian Automobile industry is the world’s fourth-largest, with the country currently being the world’s fifth-largest manufacturer of cars and seventh-largest manufacturer of commercial vehicles in 2019.

The Auto Component Manufacturers account for 2.3% of India’s Gross Domestic Product (GDP) and employs as many as 1.5 million people directly and indirectly each. Currently, the turnover of the industry stood at Rs 1.79 lakh crore (US$ 25.61 billion) in FY20 (till September 2019) and the export of auto components grew 2.7 percent to reach Rs 51,397 crore (US$ 7.35 billion) during the same time.

As per Automobile Component Manufacturers Association (ACMA), automobile components export from India is expected to reach US$ 80 billion by 2026. The Indian auto components industry aims to achieve US$ 200 billion in revenue by 2026.

Top Auto Ancilliary Companies in India

A. Tyre Segment

1. MRF Limited

MRF LimitedMRF Limited is India’s Largest Tyre Company in terms of total sales and MCAP. The company initially started off in Madras as a balloon factory.  It was in 1952 that the company decided to enter rubber manufacturing.

MRF today has come a long way to not only have a quarter of the market share but also has extended its presence to 65 countries. MRF makes and sells tyres not just for passenger cars and motorcycles, but also for trucks and buses, farm machinery, Pickup, 3-Wheeler, etc. The company also manufactures other rubber products such as conveyor belts and toys.

2. Balkrishna Industries Limited (BKT)

Balkrishna Industries Limited (BKT)

Balkrishna Industries Limited (BKT) is a leading manufacturer that specializes in the Off-Highway tire market. This includes specialist segments like mining, earthmoving, agriculture, construction, and other industrial tyre segments.

The company was founded in 1987 and since then has achieved the status of one of the best quality tyre brands in India. BKT has developed into a global player in the Off-Highway tire industry with a 6% global market share. Balkrishna Industries predominantly caters to the replacement market in North America and Europe. The  Italian football second division, Serie B is known as Serie BKT after Balkrishna Industries purchased naming rights.

3. Apollo Tyres

Apollo Tyres

Apollo Tyres was founded in 1972 and is headquartered in Gurgaon, India. Since then it has become one of the leading global suppliers of tyres and boasts a presence in over 100 countries. The company markets its products under two brands Apollo and Vredestein.

If tyres that come as original fitment with new vehicles are considered then Apollo Tyres takes the top spot. The company currently makes radials for cars, bikes, and a host of other commercial vehicles.

4. CEAT Ltd

CEAT ltd

CEAT is one of India’s leading tyre manufacturers today and has a strong global dominance. It was founded in 1958 and is now headquartered in Mumbai. CEAT, however, was not originally an Indian company. It was originally founded in Italy(1924) and the name CEAT was an abbreviation for ‘Cavi Elettrici e Affini Torino’. It was in 1982 that the RPG Group acquired the company.

Today, it makes tyres for cars, bikes, trucks, SUVs, Auto-rickshaws, buses, tractors, and various other vehicles. CEAT produces over 165 million tyres every year and offers the widest range of tyres to all segments and manufacturers.

5. Goodyear India

Good year IndiaGoodyear is one of the world’s oldest and largest tyre companies. It was established in the year 1898 and is one of the most recognizable brands in today’s age. Goodyear has been in the Indian markets since 1960 and since then has developed a good understanding of what the Indian consumer wants and delivers accordingly.

Its products in the Indian markets include value offerings, high-performance radials, and rugged, off-road-ready tyres. Apart from this, Goodyear is known for supplying radials to Formula One cars and also serves airplanes.

B. Battery Segment

1. Exide Industries

exide industries

Indian company Exide is one of the biggest manufacturers of batteries in the whole world. The company as old as independent India itself was incorporated as  Associated Battery Makers (Eastern) Ltd. The company was renamed Chloride Electric Storage Co (India) Ltd and then again in 1995 the name was changed to Exide Industries.

Exide today forms a large portion of India’s battery exports. The company supplies automotive and industrial lead-acid batteries ranging from 2.5Ah to as high as 20,500Ah.

2. Amara Raja Batteries

amara raja batteries

Amara Raja Batteries is one of the largest manufacturers of lead acid batteries for both industrial and automotive applications. It sells its products under the brand Amaron and Powerzone. Amaron is the second-largest selling automotive battery brand in India. Powerzone on the offers a wide range of inverters, home UPS and inverter batteries.

The company not only makes batteries for distribution in India, but exports its products Africa, Asia Pacific, and the Middle East.

3. HBL Power Systems LTD

HBL Power Systems LTD offers specialized batteries and finds its biggest buyers in the aviation industry. The company was founded in 1997 and successfully developed its first product i.e an aircraft battery. Over the years the company also began manufacturing custom-designed, high-quality, cost-effective batteries to meet the needs of various core industries.

Apart from airways, the firm distributes its batteries to other sectors like railways, defense, and other heavy industries.

C. Other Auto Ancillary Industry Companies

1. Bosch Ltd

bosch ltd

Bosch is originally a German engineering and technology MNC founded in 1886. The company entered India in 1922 but ventured into the auto ancillary only in 1951 after purchasing a 49% stake in Motor Industries Company Ltd (MICO).  In 2008 MICO was renamed to Bosch Ltd.

Although the company functions in areas like Mobility Solutions, Industrial Technology, Consumer Goods, and Energy and Building Technology 84% of its revenues from India come from its automotive business. Bosch currently has a turnover of over $3 billion and 18 manufacturing sites, and seven development and application centers.

2. Motherson Sumi Systems Limited (MSSL)

motherson sumi systems limitedMotherson Sumi Systems Limited (MSSL) was established in 1986 through a  joint partnership between Samvardhana Motherson Group and Sumitomo Wiring Systems of Japan. MSSL is one of the leading auto component manufacturers. They specialize in automotive wiring harnesses, dashboards, door trims, bumpers, mirrors for passenger cars, and is also a leading supplier of plastic components and modules to the automotive industry.

The company recently acquired 80% of the stock of a German-based company called Peguform Group.

3. Endurance Technologies

endurance technologies

Endurance Technologies Limited was incorporated on December 27, 1999. The company is one of India’s leading automotive component manufacturing companies. The company manufactures and supplies a diverse range of components.

Its products include aluminum Die–Casting Products, two-wheeler aluminum alloy wheels, shock absorbers, front forks for motorcycles and hydraulic and gas-charged dampers, struts, gas springs clutches, friction plates, hydraulic disc brakes, rotary brake discs, hydraulic drum brakes, and tandem master cylinders. The company has 16 manufacturing plants within India 2 in Germany.

4. WABCO India Limited

wabcoWABCO India Limited is a leading supplier engaged in manufacturing automotive components and related services. The Company provides safety and vehicle control solutions to the commercial vehicle segment of the automotive industry.

WABCO is also engaged in the manufacture of air brake actuation systems for commercial vehicles. The Company is also involved in various other segments, such as off-highway, defense, luxury bus, car, and trailers.

5. Sundram Fasteners

sundram fasteners

Sundaram Fasteners established in 1966 is a part of the TVS Group. Over the years they have grown into global leaders, manufacturing critical, high precision components for the automotive, infrastructure, windmill, and aviation sectors.

In Auto Ancillaries the company produces iron powder, tappets, shafts and hubs, couplings and gears, gear shifters, automotive pumps, radiator caps, hot forged components, cold extruded parts, powder metal components, and high-tensile fasteners.

Also read:

Closing Thoughts

The auto ancillary industry is in the growth phase and is expected to grow at a double-digit CAGR between the period 2019-2026. Although investing in the Auto ancillary industry seems to be attractive it is important to note that all rumors to the automobile sector are also felt in the auto ancillary industry. These include impacts from festival seasons, credit crunch, bank interest rates, fuel costs, etc.

Another important factor that is expected to have a significant impact on the industry in the coming years is the push for Electric vehicles. Hence for inventors looking for long term investments selecting a company that is in tune with the changing needs into the electric segment would be optimal.

Indian Pharmaceutical Industry - Major Pharma Shares in India cover

Indian Pharmaceutical Industry – Best Pharma Shares in India!

Quick analysis of major shares in the Indian Pharmaceutical Industry: There is no other industry in the country that has achieved a global stature as that of the Indian Pharmaceutical Industry. The fact that the Indian Pharmaceutical industry has the possibility of soon being called the ‘Pharmacy to the World’, speaks volumes.

Today, we are going to discuss Indian Pharmaceutical Industry along with the major pharma shares in India. Here, we will give you an insight into the current state of the Indian Pharmaceutical Industry and the top-performing Indian companies.

Indian Pharmaceutical Industry

Role Played by the Indian Pharmaceutical Industry

The Indian Pharmaceutical Industry plays a very important role in the global pharma markets. The industry supplies over 50 percent of global demand for various vaccines, 40 percent of generic demand in the US, and 25 percent of all medicine in the UK. Presently, over 80 percent of drugs used globally to combat AIDS are sourced from India.

India also constitutes 40 to 70 percent of supply to the World Health Organization’s demand for DPT and BCG vaccines and 90 percent of the global demand for the measles vaccine. Indian drugs are exported to more than 200 countries in the world making it the largest provider of generic drugs globally.

The Indian Pharma industry has been able to achieve this because of its unique characteristics. The drugs produced by Indian companies are low priced but still maintain the high regulatory standards of markets like the US and Europe. The reason for the drugs being of low price is mainly due to the large labor pool available. This also includes scientists and engineers with potential in comparison to their counterparts abroad.

The industry also reveals a highly competitive domestic environment which keeps the prices low. The low prices are one of the reasons why although India ranks tenth globally in terms of value but third in volume. The low prices coupled with the high quality offered which fall in line with the USFDA standards make the drugs not only accepted but also demanded everywhere in the world.

Growth prospects of the Indian Pharma Industry

Growth prospects of the Indian Pharma Industry

Data from 1969 would help us better understand the growth prospects and the potential of the Indian Pharma industry. As of 1969, the Indian domestic market was dominated by foreign players holding a 95% market share. As of 2020 Indian pharma has an 85% domestic share and alone accounted for 15% of the global market. Pessimistic estimates have shown that the Indian Pharmaceutical market is expected to reach a value of between US$50 billion and US$74 billion by 2020.

This growth is mainly driven by the growth in medical infrastructure within the country. This would extend the accessibility to sections that lacked such healthcare before. The rising awareness and the ability to afford medicines will also account for a significant portion of domestic growth. India is projected to become one of the top 10 countries in terms of medical spending. 

top 10 pharma companies

By 2040, India is also predicted to be the most populated country on earth, overtaking China. Other reasons for a boost in the global growth of Indian pharma would be the increase in branded drugs becoming off-patent over time. All these reasons coupled up would account for domestic growth making India attractive to international investors.

As global developed markets slow down, emerging markets like India, Russia, China, Brazil will account for greater roles in the pharma industry both as producers and consumers.

Pharmaceutical Industry – Best Pharma Shares in India

1. Sun Pharma

Sun Pharma

Sun Pharmaceuticals is Indias largest pharmaceutical company and the fifth largest specialty generic company in the world. The MNC was established by Mr. Dilip Shanghvi in 1983 offering products to treat psychiatry ailments. 

Today the company offers its capabilities by producing branded generics, specialty, OTC products, antiretrovirals (ARVs), active pharmaceutical ingredients (APIs), etc. Its formulations treat various areas like cardiology, psychiatry, neurology, gastroenterology, and diabetology.

2. Aurobindo

Aurobindo Pharma Ltd.

Aurobindo Pharma was established in 1986 by Mr. P. V. Ramprasad Reddy, Mr. K. Nityananda Reddy, and other committed professionals. The company first began operations in a single manufacturing unit of Semi-Synthetic penicillin in Pondicherry. Today Aurobindo Pharma sells over 300 products in over 125 countries.

About 35% of sales are generated through APIs, 65% from the formulations business, of which 63% of formulation sales are from the United States. It is noteworthy that Aurobindo Pharma has one of the highest exposure to imports of APIs from China, mainly for antiretroviral and antibiotic drugs.

3. Lupin

lupin ltd

Lupin Ltd. was established in 1968 and is currently amongst the top 10 generic companies in the world.  Its businesses include formulations, Active Pharmaceutical Ingredients (API), drug delivery systems, and biotechnology. It is also known for growth therapies like Cardiology, Central Nervous System, Diabetology, Respiratory, Gynecology, Anti-Infective, Gastro-Intestinal, and Oncology.

4. Dr. Reddys Labratory

Dr. Reddy’s Laboratories was founded by Anji Reddy in 1984.  The MNC manufactures and markets a wide range of pharmaceuticals in India and oversea,s and has over 190 medications, 60 active pharmaceutical ingredients (APIs) for drug manufacture, diagnostic kits, critical care, and biotechnology products.

5. Cipla

Cipla formerly known as Chemical, Industrial & Pharmaceutical Laboratories was founded by Dr. K.A. Hamied in 1935. The company has its presence around the world and is a therapy leader in India for anti-malarial with a market share of over 34%. The company also has a vast portfolio with more than 1,500 products in the market.

Cipla is known for its key role in selling HIV medicines in sub-Saharan Africa at one–twenty-fifth of the cost of medicines sold by other manufacturers. 

Pharma Industry amidst COVID-19

The Covid-19 pandemic has exposed the reliance of the Indian pharma on China for the procurement of API (Active Pharmaceutical Ingredient). China was one of the leading countries to produce and sell APIs to the rest of the world until recently. The early effects of the coronavirus on China impacted the supply of such API throughout the world.

Pharma’s use Chinese ingredients to produce one-fifth of the world’s supply of medicines. For the number of medicines manufactured the reliance on Chinese APIs is as high as 70%. The figures in the manufacturing of antibiotics are much worse as they rely as high as 90% on Chinese imports.

Pharma Industry amidst COVID-19

Despite this Indian pharma’s have still strived to meet up to the added expectation during COVID-19. The industry has been able to also view the pandemic as an opportunity by providing drugs to many friendly countries. This was seen in situations when countries like the United States requested India to export the anti-malarial medicine — Hydroxychloroquine — in order to combat COVID-19. The industry rising up to the occasions have made global powers realize the potential of Indian pharma’s in becoming the Pharmacy to the world. 

Despite the COVID-19 impact, the domestic pharma industry will grow between 4-6 percent in FY21. Following this it is also expected to have an 8-11% compounded annual growth rate (CAGR) in the FY 2020-2023 period.

Also read:

Closing Thoughts

As seen above, the Indian pharma industry has unlimited potential especially in the post corona environment as global powers become skeptical towards China. In order for the industry to take advantage of the global scenario, the government’s role is of paramount importance.

It is important that the government raises its healthcare spending to 3% of GDP YoY. The lack of focus on directing adequate spending towards healthcare was seen in the shortages of healthcare personnel, equipment, and infrastructure. It is also necessary that both the increase and reduction in prices are regulated.

Extremely low prices have the possibility of making Indian pharma’s an unattractive investment opportunity. This may wipe out up to a $20 billion market opportunity. Another aspect that requires attention is the increased focus required in the AatmaNirbhartha of API. COVID-19 has shown both the cracks and the possibilities that the Indian pharma industry possesses.

With the right policies ensuring growth and guiding the industry it is entirely possible that India becomes the “Pharmacy to the World” in the future. 

Investing in Incredible India thematic investments trade brains

Investing in Incredible India – Companies to Look Out!

An analysis of Investing in Incredible India thematic stocks: India is one of the known tourist destinations in the world, thanks to the magnificent monuments, rich cultural heritage, and history. An added advantage has been the diversity offered in every aspect by different states that leaves tourists wondering if they even are visiting the same country.

This tourism is not only limited to options of sightseeing but also includes religious attractions and other medical/wellness tourism that involve Ayurvedic and spa therapy. Today, we have a look at the tourism industry from the perspective of an investor in order to provide insights into what picture it has to offer.

incredible india Taj mahal

An Overview of the Tourism Sector in India 

The tourism sector in India attracts close to 11 million foreign tourists every year. The Taj Mahal alone attracts nearly 6 million people. The domestic tourism industry brings in a huge contribution to the industry The Kumbh Mela saw a whopping 150 million visitors in 2019.

This has resulted in the Indian tourism industry growing at a fast pace (nearly 10% YoY). As of 2018 Tourism industry was one of the major growth drivers of India’s economy contributing close to $250 billion or 10% of the country’s gross GDP.

— What forms part of the tourism sector?

tourism industry in indiaThe sectors that form part of tourism include the following

1) Tours and Travel Agencies

These include tour operators, travel agents, online travel agencies, etc. They offer tours and travel services packages in a single product. These packages include travel, accommodation, and guides These services and packages are also provided online. For eg. Thomas Cook, Cox and Kings, Goibibo, Makemytrip.

2) Transportation

transportation in indiaThe transport sector connects tourists and destinations around the world. This sector is comprised of the Airline Industry, Car Rentals, Water Transport, Railways, etc. If we look into the aviation industry in India, a few of the leading companies are Indigo, Spice jet & Jet Airways. Further, in the railway, the only publically listed company in India is IRCTC.

3) Accommodation and catering

The Accommodation sector forms one of the most integral parts of the tourism industry. This is because tourists need a place to stay and rest. These may range from top-class hotels, camping, or rented accommodations. Taj Vivanta, Club Mahindra, Airbnb, etc. If we look into affordable housings, OYO has made a remarkable presence in this sector.

4) Food and Beverages

Apart from being one of the basic needs, it is also safe to say that this sector alone attracts a portion of tourists both domestic and foreign. This includes restaurants, bars, cafes, nightclubs, etc.

5) Other Connected Sectors

These include attractions, financial services (currency exchange), the entertainment sector( casino, shopping malls, theme parks), etc. For Example Goan Beaches, Imagica waterpark, UB city.

Why should you invest in the Indian tourism sector?

— General Scenario while Investing in Incredible India

Apart from the potential already mentioned above, there are multiple reasons why one should invest in the tourism sector. The most important being the government support. The government has brought forward many schemes like Incredible India in order to market and boost tourism. The government has also allocated funds and introduced policies that are aimed at preserving tourist sites.

In 2014, the government introduced the e-tourist visa which enabled tourists to get an Indian visa quickly online. The government in order to gain tourist confidence also introduced a Tourist police task force specifically established to ensure the safety and security of tourists.

In order to boost the domestic acceptance of tourists, the government also officially introduced slogans like ‘ Athithi Devo Bhava’. It is rare to find another industry where the government has taken the initiative of marketing and maintaining the assets and resources.

Why should you invest in the Indian tourism sector?

— Investing in Incredible India during COVID-19

It may come as a surprise if you were told that there may be a ray of opportunity in investing in the tourism-related sectors during the pandemic we are in. This is because of all the sectors it is tourism that is the worst hit. This has sent the stocks of most tourism dependant companies tumbling.

But it is also important to foresee that the pandemic will end one day with the introduction of a vaccine. This, in turn, has the possibility of leading to an explosion of tourism after people have spent months cooped up in their homes due to fear of traveling.

If not the normalization will also lead to the tourism sector reaching pre-COVID levels. This provides investors the opportunity to buy stocks in a distressed sector that have the ability to weather the storm at cheaper rates increasing the probability of booking returns in the short-term.

Below are some of the companies associated with the tourism industry along. The table includes companies along with the MCAP, Debt to Equity ratio along with their respective promoters pledge.

Name of the CompanyMCAP (In cr.)DEBT/EQUITYPledged Shares
India Tourism Development Corporation Ltd1909.2300
Mahindra Holidays & Resorts India Ltd.2317.8300
EIH Ltd3826.660.090
Thomas Cook1,182.110.250
BLS Internation957.9100
Chalet Hotels Ltd3,239.381.0332.12
Westlife Devolopment5,565.150.320
VRL Logistics1346.120.310
The Indian Hotels Company Ltd.9329.730.420
Spicejet Ltd.2793.49(-0.55)44.01
Interglobe Aviation46,544.960.060
Lemon Tree Hotels Ltd1893.470.3134.14

Closing  Thoughts

While Investing in Incredible India theme, one should remember that the tourism industry although distressed currently will not always remain so. The major assets i.e. monuments, cultures, traditions remain despite the pandemic. Selecting stocks that have the ability to weather the storm provides investors with the opportunity to ride the profits in the short term.

5 Top FMCG companies in India in 2020 - Best FMCG Shares cover

5 Top FMCG companies in India in 2020 – Best FMCG Shares

List of the best FMCG companies in India 2020: All our lives depend on FMCG (Fast Moving Consumer Goods) products that satisfy our basic needs. FMCG products are those that have a short shelf life that is produced in high volumes with low cost and are made for rapid consumption.

This industry include household items, over the counter medicines, food, personal care items, and stationery and consumer electronics, etc. The fast-moving consumer goods (FMCG) sector is India’s fourth-largest sector and has created employment for more than three million people.

Today, we take a look at the top 5 FMCG companies in India that are responsible for keeping over 1.3 billion Indians on their feet every day.

Top 5 FMCG companies in India in 2020

1. Hindustan Unilever Limited (HUL)

Market cap: Rs 521,882 Cr / PE : 71.20

Hindustan Unilever best FMCG Shares

HUL is one of India’s oldest FMCG companies. It is a subsidiary of Unilever, a British-dutch company. The company was established in 1933 and has headquarters in Mumbai. HUL has served over 2 billion customers for over 87 years.

HUL has over 35 brands across 20 categories such as soaps, detergent, skincare, cosmetics, tea, toothpaste. The brand includes famous names like Surf, Excel, Dove, Lux, Lifebuoy, Clinic Plus, Wheel, Sunsilk, Knorr, Axe, etc.

hul company infographic

2. ITC Limited

Market Cap: Rs 240,076 Cr/ PE : 15.84

itc top fmcg share in indiaITC Ltd. has flourished in the Indian markets for over 110 years giving them a deep understanding of the Indian Consumer. The ITC is known to guarantee a certain standard in production and packaging. They have broad distribution channels in India. This has allowed them to penetrate into even the most rural areas through several retail shops.

Their products include Bingo, Sunfeast, Aashirvaad, Fiama Di Wills, Vivel, Savlon soaps and handwash, Papercraft, and Classmate. ITC sells 81% of the tobacco products in Asia including brands like Wills Navy Cut, Gold Flake Kings, Silk Cut, India Kings, Bristol, Gold Flake Super Star, Gold Flake Premium Lights, Classic Menthol, etc.

ITC company infographic

3. Nestlé India

Market Cap: Rs 159,330 Cr / PE : 80.90

Nestle India top fmcg companies in India

Nestle is a transnational food and beverage company headquartered in Switzerland. Globally the company has been around for more than 150 years. In India, Nestle dates back to 1912 when it began operating as Nestle Anglo-Swiss Condensed Milk Company. They cater to the nutritional and wellness requirements of Indian consumers. In 2016, they were rated 33 in Forbes list of largest public companies.

Nestle sells a plethora of products including beverages, bottled water, milkshakes, breakfast cereals, instant foods, performance, and health care nutrition, etc. A few of the 2000 brands they currently own are Nescafe, Maggi, Milky Bar, Kit Kat, Bar One, Milkmaid, Nestea, etc.  How Nestle India Makes Money(1)

Quick Note: If you want to look into the financials and fundamentals of these companies, you can find it on our stock research and analysis portal here.

4. Britannia Industries

Market cap: Rs 93,866 Cr / PE : 63.18

britannia industries fmcg companies in India

Britannia Industries is one of the oldest food-producing companies in the country. It was established in 1892 in Kolkata with an initial investment of merely Rs. 295. Their products are available in more than 5 million retail outlets. More than 50% of Indian households are proud users of their range of food items. The FMCG is known as the first Zero Trans Fat Business in the country. They have an extensive distribution network in India and 60 other countries. 

how britannia ind makes money

Their products include Good Day, Tiger, Milk Bikis, Bourbon, Marie Gold, Cake, Cheese, Milk, and Yogurt. The company is the largest brand in the organized bread market.

5. Marico

Marketcap: Rs 46911 Cr / PE : 41.40

marico fmcg company

Marico was established in 1990 in Mumbai. It began as a brand for coconut and refined edible oil and later expanded into various kinds of consumer goods. It is currently operating in 25 countries in the emerging markets of Asia and Africa. They maintain their innovation in manufacturing and packaging to preserve the tagline “Make a difference”.  

how marico makes money

Marico’s household brand includes Parachute, Saffola, Nihar, Livon, Set Wet, Mediker. Its global products include Parachute, Haircode, Caivil, Black Chic, Isoplus, Code 10, and X-men.

Closing Thoughts

With the ever-growing needs and constantly improving standards of living the FMCG’s play an even larger role. In order to fulfill these requirements, there are several other FMCG’s too that compete for a significant spot in this market. They include Colgate Palmolive, Parle Agro, P&G, The Godrej Group, Amul, Patanjali, Dabur, etc.

how dabur india makes money

In this highly competitive environment, the FMCG’s have managed to keep customers satisfied by reaching out to every nook and corner of the country making each and every FMCG an integral part of the economy.

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.

best blue chip stocks for long term investment

— 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.

how reliance industries makes money 2020

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.

hul company infographic

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.

ITC company infographic

Eicher Motors

Eicher Motors is an automobile manufacturer and parent company of Royal Enfield, a manufacturer of luxury motorcycles. Royal Enfield has made its distinctive motorcycles since 1901 which makes it the world’s oldest motorcycle brand in continuous production. Royal Enfield operates in over 40 countries around the world.

The Eicher Group has diversified business interests in design and development, manufacturing, and local and international marketing of trucks, buses, motorcycles, automotive gears, and components.

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

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!!

Investing in Foreign Stocks -Advantages and Risks cover

Investing in Foreign Stocks: Advantages and Risks

Understanding the pros and cons of Investing in Foreign Stocks: Indian investors have always been known to be inward-looking. That is, they would prefer to invest in the Indian markets over foreign ones. This has been the case even though it’s been over 15 years since they were first permitted to invest in foreign equities.

One of the major reasons for this has been the fact that India being a developing nation has an economy that grows faster than many developed countries. Today we discuss the possible benefits that an investor may receive while investing in foreign markets and also the limitations of doing so.

largest stock exchanges by region

Benefits of Investing in Foreign Stocks /International markets

1. Diversification

Generally, when we talk about diversification we generally refer to investing across various industries and different MCAP’s. But by investing in foreign markets we can receive the same benefits of diversification even if the companies that we include in our portfolio already exist in the same industry or MCAP. The main purpose of diversification is to protect the portfolio. By investing abroad the portfolio is safeguarded from any domestic risks that might affect the domestic markets as a whole.

2. Market rebound rate 

market rebound rate

We earlier mentioned that that Indian investors prefer to invest in Indian securities as they provide a better growth rate. Markets around the world at times undergo crises at the same time. Rare as this should be this has already occurred twice post 2000. Keeping the growth rate aside let us try and notice the performance of markets post such crisis.

The Recession of 2008 saw economies stagnating all around the world. Even though they were first triggered by problems in the US, the Indian economy too suffered from the crash. The Indian markets suffered a fall of 55% compared to the heights it touched at the end of 2007. It can be noticed that the period of December 2007 to December 2013 the Indian markets gained only 4.3% after rebounding. Let us compare this to the US markets. During the recession, the US markets fell by about 50%. But during the same period from December 2007 to December 2013, the US market provided close to 50% returns after rebounding to previous levels. 

Let us also take the 2nd instance where we have seen markets all around the world contract. This has been due to the pandemic that we are still suffering through. If we notice the US markets since their heights in February we can see that the markets fell 30% by March but have already rebounded and touched new heights gaining 15% returns. The Indian markets, on the other hand, suffered a fall of over 35% and have still not previous levels.

3. Exposure

Another added advantage of investing in foreign markets is the exposure an investor will receive in terms of securities available to him. Let us dial back time to the early 2000s and observe the options available to Indian investors when it comes to technology-driven securities. They are limited to TCS, Infosys, and Wipro.

On the other hand, foreign markets provided the likes of Apple. Microsoft, Google. At times even legal jurisdictions bar from certain companies to operate in a country. Investors, however, have the option to simply invest in foreign countries.

Risks involved while Investing in Foreign Stocks

1. Currency Exchange

currency exchange problems while investing in foreign stocks

One of the major problems investors face is due to the changing exchange rates. International stocks are priced in the currency of the country they are based in. For an Indian investor, this causes is a problem because he is now not only exposed to the uncertainty of the stock but also the uncertainty of the currency.

Take for example the shares of ABC Ltd. in the US are worth $100. After the purchase is made the stock rises to $110. But at the same time, the dollar weakens by 15%. If a domestic investor sells off his position and converts it to rupees he would not only forgo the 10% gain but also suffer an additional 5% loss due to the exchange rate. But with the added risk there also exists the added opportunity of making gains during the exchange. If the rupee weakens in the above case, the investor would walk away with a 25% gain.

2. Taxability

The gains that an individual makes from foreign investments can be taxed twice. First when the shares are sold in a foreign country. And secondly in India. This, however, depends on whether the individual is considered as a resident or any other status. The rates applicable here will depend on whether the gains are considered as Long term capital gain or Short term capital gain depending on the period the asset was held. This is known as Double taxation.

This can be avoided if there exists a tax agreement between the foreign country and India. This tax agreement is known as the Double Tax Avoidance Agreement. India currently has DTAA with more than 80 countries, including the US, the UK, France, Greece, Brazil, Canada, Germany, Israel, Italy, Mauritius, Thailand, Spain, Malaysia, Russia, China, Bangladesh, and Australia. 

3. Political Unrest

political factors while investing in foreign stocks

When investing in a foreign country the investor must be aware of the potential political risk. This makes it necessary that the investors follow up on major political events such as elections, trade agreements, tax changes, and civil unrest. A country with unfavorable factors makes investing there not worthwhile even if the company is a good performer.

4. Lack of regulation

Investors looking to invest in foreign markets must be aware that foreign governments may not have the same level of regulations that are followed in India. They may have different disclosure and accounting rules followed respectively. This makes it harder and time-consuming for investors to keep up with the inconsistencies that of regulations in different countries.

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

Closing Thoughts

There exist numerous advantages and risks that exist while investing in foreign stocks. The existence of risks does not mean one should turn a blind eye to over half of the investment opportunities available to an investor. This is because a majority of such opportunities exist in foreign markets.

Investors should, however, pick an opportunity where the risks are considered and assessed and still remains attractive as an investment.

Understanding Volume Profile for Technical Analysis

How to use Volume Profile while Trading? – Technical Analysis Basics

Understanding Volume Profile for Technical Analysis: In today’s day and age, the success of any movie depends on the number of people viewing it. If the movie has a large audience anticipating it, then we can be assured that it will have a large audience watching it and which in turn garners success for the movie. Here, the number/volume of the audience plays a very key role in the success of the movie.

Further, if we were to take the example of television series or any online series, its success is measured by the number of viewers. Game of Thrones (GoT) is a classic example of it. It has one of the largest numbers of viewership in online content history. Therefore, eventually, it all boils down to the volume or number of people watching.

Similarly, in trading also, the volume is the number of shares traded on a day to day basis. If there is no volume, then the price of shares won’t move. In short, volume plays a key role in deciding the movement. In this article, we are going to discuss what is Volume Profile, how is volume calculated, the correlation between volume and price, and the Correlation between Candlesticks, Supports & Resistances with Volume. Let’s get started.

What is Volume Profile?

In simple terms, volume simply signifies the quantity of shares traded of a particular company within a specified time. If a move in prices of shares happens with high volume then, it is considered to be more reliable. And the move can be expected to continue. But if the move happens on low volume, then the authenticity of the move is always questionable.

To confirm any pattern or to apply any technical indicator on the market, the Volume profile plays the most critical role. It plays an important role in confirming the trends or patterns in the market. It also plays a very big role in understanding the buyers’ or the seller’s perspectives. Without sizable volume, even the strongest of technical indicator or pattern might not hold much significance.

Quick note: Market Profile or MKTP is the synonym for volume profile. They are used interchangeably.

How is Volume calculated?

From the above explanation, we understood that Volume simply signifies the number of shares bought or sold within a specified time-frame. The more active the share is, the higher the volume and vice-versa.

For example, in the case of RIL, if for the price of Rs. 1,900, a total of 50 share been bought and 50 share being sold, then the volume here is 50 (and not 100). For the correct volume calculation, there has to be a buyer for every seller to complete a transaction. We should not consider the volume to be 100 (50 buys + 50 sell). Let us understand it with the help of an example:

How is Volume calculated?

So, from the table above, we can notice different buying and selling activities for the security for the different levels of time. The buyers and sellers meet to create volume for the share. And the cumulative volume is a summation of all the volume traded for the day.

The following tables show the volume change in the market for the most active securities on NSE with a time gap of 40 minutes.

The following tables show the volume change in the market for the most active securities on NSE with a time gap of 40 minutes.

Figure 1: Most active share at 11.42 am (21/07/2020, NSE India)

Figure 2: Most active share at 12.22 pm (21/07/2020, NSE India)

Now, if we were to compare to the tables above, we can see the volume table of most active security and the change in them with a gap of 40 minutes.

If we take the example of Bajaj Finance from Table, we see the change in price by Rs 8 (reduced) and the volume has increased by nearly 50% in 40 minutes. So, the move with this volume can be said to be genuine and not artificial. Any move with sizable volume helps the technical charts and indicators to take shape.

Correlation between Volume and Price

While trading with keeping volume in mind, the prior price and volume trend is of high significance. If the move happens, with the volume near its average volume or more than average volume, then that move holds more significance, than the move with thin or low volume.

Now, let us understand the correlation between volume and price with the help of the following table:

Correlation between Volume and Price

If the price increases with an increase in volume, then the expectation from the market is that the bullishness or strength is expected to continue. And if the same move were to happen with low volume, we can say that one needs to be cautious and be careful about forecasting the next move.

Similarly, if the price of the share reduces, with increased volume, we can expect the bearishness to sustain and continue. And if the same move happens on less volume, we need to be careful with the next leg of this move. And similar interpretation can be done for Rangy markets.

Participants on Low and High Volume days

If the market is trading with low volume, we can say that there is a lot of retail player’s participation in the market.

However, if the market is trading on high volume, we can say that there is a lot of institutional buying and selling in the market. Higher volume moves have better conviction and a higher chance of a continuation of the move, in the near future.

Correlation between Candlesticks, S&R and Volume

If the candlestick pattern gives certain trade patterns and if the signal were to come near the supports and Resistances and to top it off if the volume profile were aligned with the technical signals, then the trade can be said to have a very high probability of being successful.

In other words, a marriage of technical factors along with volume goes a long way in generating strong trading signals. Traders can benefit significantly from it if spotted at the right time.

Also read: Introduction to Candlesticks – Single Candlestick Patterns

Conclusion

Let us quickly conclude what we discussed in this article:

  • Volume is one of the most important indicators in understanding the trend of the market.
  • It provides a very strong impetus to our technical view on the market.
  • If the market is trading on low volume, we can say that retail traders are participating in the move.
  • If the price increases with an increase in volume, we can expect the bullishness or strength to continue (and vice versa).
  • And, if the market trades on high volume, it generally is a signal that institutional players are participating in the market

That’s all for this post on Volume Profile. I hope it was useful for you. If you have any doubts regarding volume while trading in stocks, feel free to comment below. I’ll be happy to help. Happy trading.

Why Ruchi Soya Share is Increasing_ +8,000% Within Six Months!

Why Ruchi Soya Share is Increasing? +8,000% Within Six Months!

Since the start of this year, the Ruchi Soya share is rising continuously. And this resulted in most of the share market investors asking the same question: Is there a Secret Sauce due to which Ruchi’s shares increased +8,000% within 6 months? Before diving deeper into this topic, let’s try to understand the scenario of Ruchi Soya’s current share price with the help of a few examples. 

All the four graphs depicting share price movements shown below are from various leading stocks trading across different industries in the Indian stock markets. Can you find any anomaly in the share price movement of the below-shown shares?

ruchi soya share vs different stock returns

Further, even if we look into the different companies in the FMCF sector, you can find one stock that is performing particularly irregular compared to others.

ruchi soya share vs FMCG stocks performance

It takes only seconds for our eye to catch the outlier in both, the share of Ruchi Soya Industries Ltd. But what is even more surprising is that the smooth and slick 8000% upward price movement of the stock is during the times of corona. Today, we have a closer look at Ruchi Soya Industries Ltd in order to provide an insight into what actually has led to the 8000% price increase.

Ruchi Soya Story till 2019

Ruchi Soya Industries Ltd. has been around for 34 years and is one of the largest manufacturers of edible oil in India. The shares of Ruchi Soya would be a dream stock prior to 2015 for any investor looking for dividends. This is because the company gave out dividends for 15 years consistently from 2001-2015.

Ruchi’s run, however, was cut short post-2015. The company made continuous losses in 2016,2017 and 2018. An extremely unhealthy sign for a company that has accumulated huge debt in its expansion goals. The huge debt of 12,000 crores forced Ruchi to enter the insolvency proceedings in December 2017.

— Post-Insolvency Performance of Ruchi Soya

The insolvency proceedings saw Ruchi being bid for. Here a portion of the amount bid would be used to pay off the debts and the remaining infused into Ruchi. Patanjali eventually won the bidding war against Adani. In December 2019 Patanjali completed the acquisition of Ruchi Soya with an Rs. 4350 crore resolution plan.

ruchi soya's financial performance

You may be wondering why would players take part in an aggressive bid war for a company that now had further deteriorated its sales and market grip by 2019. The answer to this lies in the already set up distribution channels and 3.3. Million tonnes per annum edible oil refining capacity in the 13 refining plants across the country. Five of these plants are port-based. The port-based refining plants are of huge significance as 70% of edible oil consumed in India is imported.

— Ruchi Soya’s Situation Post “Acquisition”

The shares of Ruchi Soya were delisted from November 2019 to 27th January 2020 due to the restructuring process. The restructuring process saw the dilution of the stake held by existing shareholders. Their shares were reduced 100:1. This can be described as a reverse stock split to understand better, where 100 shares held are now reduced to 1, but there was no Corporate Action. This was done in order to make way for Patanjali which now has an ownership of 99%.

Out of Patanjali’s total equity infusion, Rs450 crore was invested in exchange of preferential shares. Interestingly enough shares were also allotted to Ashav Advisory on a preferential basis in April. April was also the month where the shares of Ruchi Soya kept increasing from Rs.180 to Rs.413. The preference shares were allotted to Ashav Advisory at Rs.7 a piece in exchange for an Rs.1.87 crore investment after the company’s board approval.

Current Scenario of Ruchi Soya

Current Scenario of Ruchi Soya share

The shares of Ruchi Ltd. were relisted on January 27th. The shares opened at Rs.17 but since then have been a nightmare for investors trying to get in on the action. Shares of Ruchi saw a continuous 5% increase every day. This has triggered the circuit breakers every day leading to the trading suspension of the shares on a daily basis.

This carried on for over a 100 day period until the shares touched Rs. 706.95. This was followed by a steady fall to Rs 519.80 which seemed like a market correction in order to touch an equilibrium price. But post-May 27th the 5% per day rally began once again. As of 24th June, the shares of Ruchi Ltd. have touched Rs. 1378.40, an 8008% increase in the value since January.

“ RSIL’s liquidity position also remains adequate as on 9MFY20, considering the absence of fixed debt obligations during FY21, a low average collection period, and the availability of unencumbered liquid 1 assets of over Rs. 380 Cr for meeting its required working capital needs.”  Brickworth rating

Brickworth Rating agency assigned a stable outlook to the companies long term and short term borrowings this year.

Although the Preferential Shares allotment to Ashav Advisory is still pending due to Covid-19 they are still one of the biggest winners in the COVID-19 environment. Their 13 crore investment in April is now worth Rs.2577 crores 

Reasons behind the 8,000% increase

The parade of Ruchi Soya has investors wishing they could somehow be a part of. The following reasons give an insight as to what were the reasons for the 8000% price increase. They would also help an observing investor take a better stand when it comes to the shares of Ruchi Soya.

— Baba Ramdev’s Vision in FMCG Industry

Patanjali first disrupted the FMCG segment when they bought their ayurvedic alternatives to the shelf. The Ayurvedic product giant now aims at completely dominating the FMCG segment in India. This would mean that Patanjali would have to take other giants like HUL head-on.

HUL in the year 2018-19 has had sales crossing over 37000 crores. Ruchi would play a crucial role in achieving this. But Patanjali however does not only aim at beating current FMCG market leaders but is aimed at per annum sales of Rs. 100,000 crores in the next two years. Current market leaders like HUL, Nestle, Procter and Gamble, Britannia, and ITC in the 320,000 crore FMCG market get over 75% of their sales from the conventional distribution channels. Whereas Patanjali, on the other hand, receives 70% of its sales from its branded franchise outlets.

Patanjali has set a target of increasing the current 5000 distributors to 25000 distributors in the next 2 years in order to achieve their sales goals. Analysts have predicted that Patanjali can achieve their 1 lakh crore sales targets by expanding their retail reach alone. In addition, Ruchi, which is part of these goals has been debt-free ever since its acquisition by Patanjali. 

— Minuscule Public Shareholding and Lack of Share Supply.Ruchi Soya latest Public Shareholding and Lack of Share Supply

(Source: Latest Shareholding Pattern of Ruchi Soya)

Post the restructuring that took place after Patanjali’s acquisition reduced the shareholding with the public shareholders by 99%. Patanjali currently owns up to 99% of the equity shares with less than 1% remaining with the public shareholders. This means that only 28.59 lakh of the 29.59 crore shares of Patanjali are held by the public. This has created a situation where there is a huge demand for investors but the supply available of shareholders willing to sell is too low.shows the trading volumes of the shares of Ruchi Soya Industries Ltd

(The graph above shows the trading volumes of the shares of Ruchi Soya Industries Ltd. This shows the lack of significant trading volumes post-February 2020: Source

The huge increase in the share price has caused the market cap. of Ruchi to increase from Rs. 4350 crore when Patanjali bought it to 40,447.38 crores as of 24th July. Putting it at par with other giants like PNB, DLF, Cipla, etc.

This, however, raises the question as to how has Patanjali been able to legally hold 99% of the shareholding. This is because as per market regulations any majority stakeholder of a listed company cannot hold more than the permissible limit of 75%. Patanjali, however, is part of an exception as Ruchi Soya has just come out of the bankruptcy courts. Patanjali, however, has announced that they will be selling off 20-25% of their stake within the company over the next two years.

Closing Thoughts

The stocks of Ruchi Soya have been one of the biggest silver linings present in the Indian stock markets in the COVID-19 environment. But the question remains whether Ruchi will continue to be the diamond with demand exceeding the supply in the coming years. Investors after conclusively making a decision to get in will also have to decide the right time to do so.

The periods lie in either the current rally in order to be part of the Ramdev vision of which Ruchi is a part. Or to invest when Patanjali finally lets go of the 20-25% over the next 2 years when the supply will also be increased which in turn will affect the price. At the same time get an insight into role played and performance of Ruchi under Patanjali. Happy Investing!

What are Penny stocks? And should you buy it?

What are Penny Stocks? And Should You Invest in them?

A complete overview of Penny stocks in India: Hello Investors! Penny stocks are the darlings of new investors. The low market price of these stocks makes them quite attractive to beginners. However, there are a number of things that an investor should know before investing in penny stocks. In this post, we are going to discuss penny stocks, their pros and cons, and whether an investor should buy it or not. Let’s get started.

What are Penny stocks?

Penny stocks are those stocks that trade at a very low market price, generally with a share price less than Rs 10. These stocks have a very low market capitalization and typically under Rs five hundred crores.  Further, penny stocks in Indian stock market have low liquidity and are speculative in nature.

Being smaller than Small-cap companies, these stocks belong to the microcap category. However, you can find a number of penny stocks in India listed on both the Bombay stock exchange (BSE) and National stock exchange (NSE). Here are a few examples of penny stocks in India:

Company NameLast Price (Rs)Market Cap (Rs Cr)
Andrew Yule & Co9.88483.08
Bajaj Hindusthan4.15470.43
Future Enterp.9.2459.88
M T N L6.95437.85
GTL Infra.0.35431.17
GVK Power Infra.2.6410.59
Electrost.Cast.9.3402.65
JP Associates1.6389.19
CG Power & Indu.6.2388.58
Unitech1.4366.28
Jain Irrigation6.95358.19
Media Matrix3.13354.54
Welspun Special.6.72328.61
Mishtann Foods5.73286.5
Shriram EPC2.75267.17
3i Infotech1.65266.75
Subex4.7264.14
Zee Media5.45256.58
Dhanlaxmi Bank9.9250.48
HLV3.8239.61
Brightcom Group5238.13
Rel. Comm.0.85235.07
Nagarjuna Fert.3.8227.26
RattanIndia Infr1.6221.16
Sanwaria Consum.2.9213.47
SREI Infra. Fin.4.05203.75
HCL Infosystems5.75189.3
Reliance Capital7.45188.27
Lloyds Metals7.75174.51
Jayaswal Neco2.7172.43
Shiva Cement8.51165.95
Vikas Proppant3.2161.98
D B Realty6.6160.55
MSP Steel & Pow.4154.17
Orient Green2150.14
Siti Networks1.7148.25
Sakuma Exports6.95148.22
Essar Shipping7.05145.92
Opto Circuits4.85145.8
Sh.Global Trad.1.25142.44
Vascon Engineers7.85139.84
Vikas Multicorp2132.7
Uttam Value Ste.0.2132.16
Bombay Rayon3.95125.4
Moschip Tech.8.2123.9
Setco Automotive9.1121.73
JCT1.45121.57
JMT Auto2.4120.92
Nila Infrastruct3.05120.14
Vaarad Vent.4.74118.45

Quick Note: In the United States, penny stocks used to be those stocks who trade below one dollar ($1) i.e. the stock worth pennies. However, nowadays, even the stocks trading below five-dollar are considered penny stocks there.

PROS of Penny stocks

Penny stocks have a high potential of rewarding its shareholder. The returns are quite high if you are able to get a good penny stock. Many penny stocks have turned out to be multi-baggers for their investors.

These stocks are able to make explosive moves. There are a number of penny stocks that have given multiple times returns in just a few months. Moreover, due to the low market price of these stocks, investors are able to buy large quantities of penny stocks.

Generally, penny stocks are not known to many as retail investors do not have information about these stocks and the institutional investors do not invest in these companies because of their low market capitalization. Therefore, if you are able to find one such stock before the market does, then it can turn out to be a great wealth creator for you.

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

CONS of Penny stocks

The cons list of penny stocks is too large compared to its pros. Here are few of common disadvantages of buying penny stocks:

  1. High Risk: These stocks are quite risky as the percentage of a number of penny stocks outperforming the market are quite less. Many of the penny stocks become bankrupt and go out of the business.
  2. These stocks have very low liquidity. Therefore there will be troubles on both ends of transactions i.e. buying and selling. While buying these stocks, you might not be able to find a seller. In case you bought the stock, and the stock price starts falling, then you won’t be able to find a buyer to sell the stock.
  3. There is a large bid-ask spread in these stocks.
  4. Limited information is available to the public about the company.
  5. Price manipulations: There have been a number of cases of price manipulations in penny stocks where the insiders try to inflate the share price. Further, one can easily manipulate the penny stocks by buying large quantities of these stocks.
  6. Sudden delisting and regulatory scrutiny: There are multiple cases where penny stocks have been delisted from the stock exchanges. Further, these stocks are regularly under the scrutiny by SEBI.
  7. Prone to scams: There are a number of past scams in penny stocks (Ex- pump and dump).

Related post: Market Capitalization Basics: Large cap, Mid cap & Small cap companies

Who should buy penny stocks?

Penny stocks are suitable for those investors who are ready to take high risks in expectations to get high returns. If you have a low-risk appetite, do not invest in these stocks.

Rules for investing in penny stocks

Here are the few guidelines that can help you to invest in penny stocks.

  1. Look for value, not just the price: Even for penny stocks, you need to look at the value the company is giving. Understand the company’s business, product, services, etc. Investing in penny stock is not buying a lottery ticket.
  2. Study the company’s fundamentals: Look at the company’s financials, management, debt, growth rate, etc
  3. Check the liquidity: Buy stocks that have reasonably high trading volumes so that there is ample liquidity.
  4. Promoter’s share and pledge: Check the promoter’s shareholding patterns and stock pledge if any.
  5. Technical factors: If you know technical analysis, then also check the penny stock’s technicals. Moreover, if you’re purchasing penny stocks just for quick returns, do not ignore looking into factors like momentum, technical indicators like moving averages, RSI, etc.
  6. Invest only a small portion of your investment in penny stocks: As these stocks have a high risk, you should only invest a small amount, less than 10% of your total investment amount in penny stocks.
  7. Monitor continuously: Penny stocks are very volatile. As these stocks are known to make explosive moves, therefore monitor these stocks continuously. If the stocks are performing well, buy more. If they are continuously performing poorly, get rid of it.
  8. Do not diversify: As you are only investing a small proportion of the amount in these stocks, diversifying will make the net investment even smaller. Select only 2 or 3 penny stocks and invest in them.
  9. Be disciplined: Do not invest all in if your penny stocks start performing tremendously good. Similarly, do not quit if one or two of your penny stocks failed to give satisfactory returns.
  10. Do not believe ‘it cannot go down any further’ myth. If the prices of the stock are falling, try to find the reason behind it.

Conclusion

While there are a number of peoples who have created huge wealth by investing in penny stocks, however for many penny stocks are wealth destroyers. If you are going to invest in penny stocks, do your research carefully and do not speculate about the stock. Moreover, there are high risks involved in these stocks. So, be ready for it.

Finally, here’s a short video to summarize what are penny stocks in India and how to research and analyze them.

 

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

That’s all for today on penny stocks. I hope this post was useful to you. If you have any doubts/queries, feel free to comment below. I’ll be glad to help. Happy Investing and Trading. Take care!

10 Best Dividend Stocks in India That Will Make Your Portfolio Rich 2018

10 Best Dividend Stocks in India That Will Make Your Portfolio Rich.

Best Dividend Stocks in India for Income Investors (Updated: April 2020): Whenever a regular retail investor, like you and me, buys a stock, then their main aim is to make money through their investment. There are basically two ways by which anyone can earn money by investing in stocks. They are 1) Capital Appreciation & 2) Dividends.

The first one, capital appreciation, is quite simple and hugely famous among investors. Everyone knows this secret to earn in the stock market. Buy low and sell high. The difference is your buying and selling price is capital appreciation or profit.

For example, suppose you bought 200 stocks of a company at Rs 100 and two years hence, the price of the stock has increased to Rs 240. Here, capital appreciation is Rs 240- Rs 100 = Rs 140 per share or 140%. The overall profit that you made on your investments will be Rs 140*200 i.e. or Rs 28,000.

Almost everyone who enters the market knows this method of earning by stocks. It can also be concluded that most people enter the market hoping that their investment will be doubled or quadrupled and will make them a millionaire one day through capital appreciation.

Now, let us discuss the second method of making money through your investment in stocks- DIVIDENDS.

What are Dividends?

“Do you know the only thing that gives me pleasure? It’s to see my dividends coming in.” – John D Rockefeller

Whenever a company is for profit, it can use this profit amount in different ways. First, it can use the profit amount in its expansion like acquiring a new property, starting a new venture/project, etc. This strategy is generally used by fast-growing companies. Second, it can distribute the majority of the profit among its owners and shareholders. Third and final, it can distribute some portion of the profit to the shareholders and use the remaining in carrying out its expansion work.

Basically, this amount distributed by the company (from its profit) among the shareholders is called DIVIDEND.

What is a dividend? “A dividend is a distribution of a portion of a company’s earnings, decided by the board of directors, to a class of its shareholders. Dividends can be issued as cash payments, as shares of stock, or other property.”

Typically, most big and well-established companies give decent dividends to their shareholders. They may offer dividends two times a year, namelyInterim dividend and final dividend. However, this is not a hard and fast rule. A few companies, like MRF, give dividends three times a year. If you’re holding a stock of these companies and the company announces a dividend, then you’re eligible to receive the dividends as you’re a legal shareholder.

Read more: Dividend Dates Explained – Must Know Dates for Investors

Why are dividends good?

Suppose you are a long-term investor. You have invested in the stocks of a company for the next 15-20 years. Now, if the company does not give any dividends, there is no way for you to make money until you sell the stocks. On the other hand, even though your investments might be growing, however, you won’t receive any cash in the hand unless you sell.

Nonetheless, if the company gives a regular dividend, say 3-4% a year, then you can are receiving some returns from your investments. Here, your capital is growing as you’ve not sold your stocks. Along with it, you’re also receiving some dividends being a loyal shareholder of the company.

In addition, a regular dividend is also a sign of a healthy company. An entity that has given a consistent (moreover growing) dividend to its shareholders for the last 5-10 consecutive years, can be considered a financially strong company. On the contrary, the companies that give irregular dividends (or skips dividends in a bad economy or market crashes) can not be considered as a financially sound company. Therefore, big dividend yields can be an incredibly attractive feature of stock for the long term value investors.

Now that we have understood the basics of dividends, let us learn a few of the important financial terms that are frequently used while analyzing dividends (before we look into the best dividend stocks in India).

Must know financial terms regarding Dividends

Here are a few terms that every dividend investor should know. These key terms are frequently used while discussing dividend stocks.

1. Dividend yield: A stock’s dividend yield is calculated as the company’s annual cash dividend per share divided by the current share price. It is expressed in annual percentage.

Dividend Yield = (Dividend per Share) / (Price per Share)*100

For example, if the share price of a company is Rs 100 and it gave a dividend of Rs 5 this year, then the dividend yield will be 5%. Please note that a high dividend yield doesn’t always mean a g good dividend stock.

2. Dividend %: This is the ratio of the dividend given by the company to the face value of the share.

3. Payout ratio: It is the ratio of earnings paid out as dividends to shareholders divided by the total earnings by the company in that year. Dividend payout ratio typically expressed as a percentage and is calculated as follows:

Payout Ratio = Dividends per Share (DPS) / Earnings per Share (EPS)

As a thumb rule, avoid investing in companies with a very high dividend payout ratio. This is because a high payout ratio means the company is not retaining enough money for its expansion or growth. In other words, be cautionary if the payout ratio is greater than 70%.

Overall, if you are looking for a good dividend stock to invest, search for companies with growing dividends, steady dividend yield, and consistent payout ratio. Now, let us move further and discuss the list of ten Best Dividend Stocks in India.

Quick Tip: The fast growing companies/small businesses/startups give less dividend yield to their shareholders as they use the profit amount in their expansion. On the other hand, the Blue Chip stocks, which are large and established company and has already reached a saturation point, gives good regular dividends. Further, the public sector unit (PSU) companies are generally known for giving good dividends. Some industries like Oil and petroleum, Grid, Utility etc give decent dividends to their shareholders.

Best Dividend Stocks in India (Updated April 2020)

Here are the ten best dividend stocks in India with a history of consistent dividends over the years. They are worth investigating by intelligent dividend investors.

Company NameLast Price (Rs)Market Cap (Rs Cr)Dividend (5 Yr Avg)Div Payout (5 Yr Avg)Div Yield (5 Yr Avg)
Hindustan Petroleum190.129,386.9224.3837.94.58
Indial Oil Corp75.8571,594.6813.9749.164.12
Power Grid166.6587,184.444.3731.162.4
Rural Electrification102.8519,828.1811.2227.65.08
Oil India85.459,266.2410.3533.543.22
Power Finance88.623,655.138.7232.624.8
National Aluminum Co.28.655,344.993.5635.62
Hindustan Zinc187.2577,851.5017.9291.688.4
NTPC9392,019.384.28235.542.8
BPCL316.668,678.5425.239.384.24

Additional Top Dividend Stocks in India

Company NameLast Price (Rs)Market Cap (Rs Cr)Dividend (5 Yr Avg)Div Payout (5 Yr Avg)Div Yield (5 Yr Avg)
ONGC77.6198,377.788.13639.643.88
Coal India130.780,546.8619.52108.286.16
Hero MotoCorp2177.6943,768.8979.849.182.54
GAIL Ltd86.6540,549.696.16232.521.84
Tata Steel Ltd271.4531,181.239.847.582.22
Infosys693.92,95,531.4934.951.43.04
Bajaj Auto2683.777,648.755640.482.12
JSW Steel179.1543,304.505.816.31.24
Castrol India120.2212,062.357.980.322.26
NMDC75.122,994.496.90470.025.9

Quick Note: If you are interested to know more about other high dividend yield stocks, then you can find it here: BSE TOP DIVIDEND STOCKS

Where to find dividend information of a stock?

You can find the details regarding the dividend of stocks on any of the major financial websites in India. Here are a few reliable financial websites to get these pieces of information in India:

  1. Money Control: http://www.moneycontrol.com/
  2. Economic times- Market: http://economictimes.indiatimes.com/markets
  3. Screener: https://www.screener.in/
  4. Investing.com: https://in.investing.com/
  5. Market Mojo: https://www.marketsmojo.com/markets

Further, you can also watch this quick video to understand how exactly to use these websites to find the best dividend stocks in India. Watch here –>

Note: Are you new to stock market investing 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

“It is an extra dividend when you like the girl you’ve fallen in love with.” – Clark Gable

An intelligent dividend investor looks for a company that can provide consistent dividends for many long years without any dividend cuts. He/She is not interested in those companies giving high dividends just for one year and not able to sustain giving similar dividends in the future. That’s why it is really important that the fundamentals of the company should be strong, along with the dividend history. A bad market, slowdown, or recession should not stop good dividend companies from giving dividends to their shareholders.

That’s all for this article. I hope this post on ‘Ten Best Dividend Stocks in Indiais useful to the readers. Further, I will highly recommend not investing in stocks based on the list mentioned above. Do your independent research and invest only when you’ve studied the company enough and confident about its fundamentals. Besides, if you have any queries, feel free to comment below. I will be happy to help. #HappyInvesting.

Nifty 50 Stocks - 7 Stocks crashed over 50% since Coronavirus Outbrea cover

Nifty 50 Stocks – 7 Stocks crashed over 50% since Coronavirus Outbreak

The coronavirus outbreak has resulted in a huge crash in the stock market in India and the world. As the number of cases and casualties are rapidly increasing, there seems no stoppage in tanking the stock prices. In the last 30 days, the Indian benchmark Indexes ‘Sensex’ and ‘nifty’ fell over 30%. This is one of the fastest crashes ever seen in the stock market history.

Moreover, the month of March 2020 also witnessed two lower circuits where the exchanges were forced to stop trading for 45 minutes as the market fell over 10% within a day trading session.

Anyways, as the indexes and stock prices are down significantly since the outbreak, there may be some silver lining for the investors to pick good stocks at a huge bargain. Here is a quick study of the Nifty 50 constituent stocks and how they performed in the month of Feb-March 2020.

Nifty 50 Stocks – Feb March 2020 Performance

SYMBOLCOMPANY NAMEPrice as of 1st Feb 2020Current Price (24 March 2020)Change (%)
INFYInfosys Ltd767.4600-21.81%
ADANIPORTSAdani Ports and Special Economic Zone Ld367.35236.5-35.62%
BRITANNIABritannia Industries Ltd3230.052390-26.01%
BAJFINANCEBajaj Finance Ltd4359.352511-42.40%
MARUTIMaruti Suzuki India Ltd7011.34545-35.18%
HCLTECHHCL Technologies Ltd579.1449-22.47%
HINDUNILVRHindustan Unilever Ltd2178.952011-7.71%
KOTAKBANKKotak Mahindra Bank Ltd1676.251178.65-29.69%
RELIANCEReliance Industries Limited1385.5946-31.72%
NESTLEINDNestle India Limited1630113639.95-16.32%
ICICIBANKICICI Bank Ltd515.55298.55-42.09%
WIPROWipro Limited237.4178.25-24.92%
TATAMOTORSTata Motors Limited Fully Paid Ord. Shrs163.8568.95-57.92%
DRREDDYDr.Reddy's Laboratories Ltd3144.152880-8.40%
ONGCOil & Natural Gas Corporation Limited103.4562.7-39.39%
TITANTitan Company Ltd1186.4828-30.21%
NSE:UPLUPL Ltd Fully Paid Ord. Shrs513.3263-48.76%
EICHERMOTEicher Motors Ltd19883.4514150-28.84%
SUNPHARMASun Pharmaceutical Industries Limited417.55334-20.01%
NTPCNTPC Limited110.2578.4-28.89%
ASIANPAINTAsian Paints Ltd1867.651536-17.76%
JSWSTEELJSW Steel Limited Fully Paid Ord. Shrs251.5148-41.15%
TECHMTech Mahindra Ltd793.15498-37.21%
SBINState Bank of India298.1185.4-37.81%
TCSContainer Store Group Inc4.192.81-32.94%
BAJAJ-AUTOBajaj Auto Ltd3284.51969.1-40.05%
VEDLVedanta Ltd7.713.44-55.38%
HINDALCOHindalco Industries Ltd181.889-51.05%
CIPLACipla Ltd444.55379.5-14.63%
BHARTIARTLBharti Airtel Limited510.05411.55-19.31%
COALINDIACoal India Ltd178.65129-27.79%
SHREECEMShree Cement Limited23267.517030-26.81%
HDFCBANKHDFC Bank Limited1192.8774.8-35.04%
TATASTEELTata Steel Limited Fully Paid Ord. Shrs436.05271.9-37.64%
HEROMOTOCOHero Motocorp Ltd2376.151618-31.91%
GAILGAIL (India) Limited114.577.7-32.14%
BAJAJFINSVBajaj Finserv Ltd9086.154600-49.37%
BPCLBharat Petroleum Corp Ltd460.3268-41.78%
LTLarsen & Toubro Limited1286.65710-44.82%
ULTRACEMCOUltraTech Cement Ltd4370.653030-30.67%
HDFCHousing Development Finance Corp Ltd2259.751504.35-33.43%
IOCIndian Oil Corporation Ltd108.0579.75-26.19%
AXISBANKAxis Bank Ltd708.95304.8-57.01%
ZEELZee Entertainment Enterprises Limited Fully Paid Ord. Shrs256.6119.6-53.39%
ITCITC Ltd207.6151-27.26%
INFRATELBharti Infratel Ltd229.3140-38.94%
POWERGRIDPower Grid Corporation of India Limited187.35148.8-20.58%
INDUSINDBKIndusind Bank Ltd1263.1313.6-75.17%
GRASIMGrasim Industries Ltd780.4400-48.74%
M&MMahindra & Mahindra Limited558.7270-51.67%

As you can notice from the above table, none of the constituents of Nifty 50 has given positive returns from 01 Feb 2020 till 24th March 2020. All of these stocks have given negative returns. However, the magnitude of the hammering in their prices varies from stocks to stocks.

  1. Out of the 50 stocks in NSE Nifty, only two companies were able to limit losses within -10%. These were Hindustan Unilever (-7.71%) and Dr Reddy’s laboratory (-8.4%).
  2. Next, 17 out of 50 companies’ share price has fallen between 10-30% in this time period. This list includes companies like Kotak Mahindra Bank (-29.7%), Eicher Motors (28.84%), ITC (-27.26%), Infosys (-21.81%), Asian Paints (-17.76%), NESTLE (-16.32%), etc.
  3. For 24 companies in Nifty 50, the share price has fallen between 30-50%. This might be a good opportunity to look into these companies from an investing point of view. A few major stocks in this range are Bajaj Finserv (-49.37%), ICICI Bank (-42.09%), Bajaj Finance (-42.4%), ONGC (-39.39%), Maruti Suzuki (-35.18%), HDFC Bank (-35.04%), Reliance Industries (-31.72%) etc.
  4. For the remaining 7 stocks, the coronavirus has turned out to be a disaster. Their share prices have fallen more than 50% from Feb 1 2020 till 24 March 2020. ‘IndusInd bank’ is the biggest loser in this list with the share price falling more than 75% in this time period.
  5. Other beaten-down stocks with a decline more than 50% are Tata Motors (-57.92%), Axis Bank (-57.01%), Vedanta (-55.38%), Zee Entertainement (-53.39%), Mahindra & Mahindra (-51.67%) and Hindalco (-51.05%).

Also read: Indian Markets: A Week Against Coronavirus & Crude Oil Fall

As India and the world are still fighting the war against coronavirus, the market is expected to decline further until this pandemic is contained. However, for the bargain hunters, this might be a great opportunity to pick the biggest companies in India at an amazingly discounted price.

Take care & till next time…!

Indian Markets - A Week Against Coronavirus & Crude Oil Fall

Indian Markets: A Week Against Coronavirus & Crude Oil Fall

Indian Markets Weekly Wrapup: As investors searched desperately for sightings of a leeway from the slumping market, last Thursday provided a worse off trajectory with WHO declaring coronavirus a pandemic. This led to the chokehold on various industries being tightened as it seemed to have contributed to the perfect two-punch combo to knock the Indian markets into a bearish slump.

Investors watched on as 11 lakh crore worth of wealth vanished with Sensex crashing by 2929.26 points. It was accompanied by the Bank Nifty falling 2951.45 points along with Nifty 50 which continued slipping further with a 950.40 points loss as Foreign Portfolio Investors sold off their holdings in the Indian markets. All closing at a two year low on Thursday.

The Wreckage through the week

The Indian market has already been suffering from the jabs from the economic slowdown, with added political tremors felt throughout the country due to riots, followed by the Yes Bank fiasco. Here we look at some other major events throughout the week.

— The Oil price hook

Last week, the crude oil prices were slashed to $30 a barrel. The cause was rooted in the Russian refusal to corroborate with Saudi Arabia in their plans to increase the crude oil output due to supply chain disruptions caused by the coronavirus scare. The scare had resulted in a worldwide demand slump.

This news only added to the Monday Blues in the US where the marginal cost of production touches $40 per barrel. Also globally, as this was the biggest drop in crude oil prices since the Gulf War.

However, this came as a relief to the Indian markets. Being the third-largest oil importer even a dollar drop per barrel would eventually result in an annual reduction in the import bill by Rs 10,700 crores. The benefits are still doubted due to the impact of the falling rupee against the dollar which currently stands at over Rs 74.

Also read: The On-going Oil War (2020) – Causes & Effects

— The COVID-19 Overhand Punch

The novel coronavirus outbreak had a devastating impact on any industry based in China or majorly dependant on China. By March 2020, the novel virus spread out to 119 countries. This was followed by the existing panic being materialized which already had investors all around the world bracing themselves for further impact on the market.

On Wednesday 11th, March 2020 with cases touching over 118,000, World Health Organisation (WHO) declared COVID-19 a pandemic. This was followed by a bloodbath the following day which wiped out most of the bullish movement achieved by the Sensex and the Nifty in the last two years confirming investments in India to be locked in a bearish state. This also led to a global turmoil with Dow Jones(US) posting a 10% fall, its largest loss in history and the FTSE ( London) losing 11%.

Also read: Coronavirus- How it Infected Stock Market & Indian Economy!

Indian Stock hits after Coronavirus being declared a Pandemic

The following notable stocks touched their lowest in 52 weeks on 12th, March 2020: 

  • Reliance Industries (RIL)
  • Tata Consultancy Services (TCS)
  • HDFC Bank
  • Hero Motocorp
  • GAIL
  • Gillette

Notable Industry-wise effects

— Corona vs Healthcare Industry  

Other significant effects are also to be faced by the Healthcare industry in India as over 90% of the medical supply is sourced from China. Supply disruptions are already faced in sourcing Active Pharmaceutical Ingredients(APV) from China which are used in the manufacturing of antiretrovirals used in the treatment of HIV. These are crucial as they are also currently being tested on patients infected with COVID-19. 

— Corona vs. Airline and Tourism Industry  

With WHO declaring coronavirus a pandemic, countries affected entered a lockdown. US banned travel from Europe and travel has been discouraged by the government.

This has led to the airline industry being affected by IndiGo airlines announcing an expected fall in the quarterly earnings after noticing a 15-20% fall in their bookings on a day to day basis. The shares of Indigo fell over 12% while Spicejet fell by nearly 20%. An even more severe impact expected in the tourism industry.

— Corona vs. Agriculture Industry

The effects of COVID-19 are now being experienced even in the agriculture industry due to its dependency on pesticides. The raw materials required are imported from China. The imports range from 40%- 90% depending on the chemicals required. If the current scenario persists this will eventually affect the food industry due to a reduction in the availability of pesticides which has already been plagued by rumors on a variety of foods that may aid the spread of the virus.

— Corona vs. Sports 

Any action taken specifically to prevent the spread of the COVID-19 is laudable, but we can still note and relate to the impact that has been on entertainment and sports. 

With multiple sporting leagues being canceled or played with closed doors the 13th edition of IPL has been suspended till April 15th. Estimated losses touching Rs.10,000 crores if canceled.   

Effect of Coronavirus on Sectoral Indices 

Last week, every Indian sectoral indices faced major losses (with only BSE Telecom facing a loss at 1.35%). All the remaining sectoral indices facing losses from 7.5% to 16.03%

Biggest Losers – Nifty Indexes
Nifty Media 16.03%
Nifty IT 13.56%
Nifty Metal 12.85%
Nifty Realty 12.57%
Nifty CPSE 12.57%

Outlook by End of the Week

With Friday, 13 March 2020, came the silver lining where market movements of Thursday were not repeated. Due to the effects of COVID-19 bearish markets were realized which were also noticed during the outbreak of SARS in 2003, Bird Flu in 2004, Ebola in 2014, and Zika in 2016. Here we can learn that the markets have always recovered into bullish positions and eventually performed better than ever.

Indians have already witnessed several decisions taken by the government that have led to being financial disasters, resulting in the eventual economic slowdown in the recent past. However, when the future of India is considered, there is little that can be done by a government in such market scenarios where it is trying to make up for the lead already gained by an outbreak.

Best option being to direct its focus on the root causes which involve the prevention of the virus spread and finding a cure before its too late. We have already learned from the effects on China and Italy where such outbreaks entering a lockdown phase result in graver consequences on the economy.

Cyclical and Non-cyclical stocks How do they differ cover

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

The best offense is a good defense. Just like in military combat or football, investors also need a good offense and defense strategy. In other words, you need to use more than one strategy in order to succeed. As a serious investor, there are many different ways you can do this. You can invest in a variety of stocks, cash, and other securities, you can also diversify your portfolio by investing in securities across various sectors and markets or you can invest in stocks that are at different growth and value levels.

Implementing the right strategy requires a good knowledge of the global economy and how the markets work- if you don’t have a good understanding of this, making decisions become incredibly difficult. As we all know, the economy goes through different business cycles and while we can’t predict the outcome of the cycles we can alter our decisions to keep up with the ever-changing landscape. This changing environment also provides a great way for investors to mix up their portfolio, namely with investing in cyclical and non-cyclical industries.

What are cyclical stocks?

As the name suggests, cyclical stocks are those that move in the direction of the market. That is when the economy is doing well, the stocks go up and when there is a downturn in the economy, the value of the stock goes down too. These stocks are more closely aligned with the broader economy and are more prone to economic activity.

Investors can use various indicators to tools to judge whether a stock is cyclical or not. One such popular indicator is Beta. In simple words, beta is a measure of a stock’s volatility in relation to the overall market. If a stock moves less than the market, the stock’s beta is less than 1.0. On the other hand, a beta of 1.5 means if the market falls 10 percent, the stock is likely to fall 15 percent. Cyclicals tend to have high beta values, which are usually higher than 1.

For many investors, the movement of stock in cyclical industries provides a great opportunity to earn revenue on the stock by buying when there is a downturn and selling when there is an upward trend. For a novice investor, this may seem like a fool-proof strategy but be cautious, as it is almost impossible to tell when there will be a downturn in the market.

Cyclical industries usually may include durable goods (that last for a long time into the future), non-durable goods (that have a short shelf life) and services like an automobile, construction, and travel.

When the economy is doing good and the people are earning well, they may spend a lot of money on buying a new car, constructing their new house or even plan fancy off-shore travels. However, when there is a downturn in the economy, people may prefer to hold these expenses for another year or two.

Around 75 percent of the stocks listed in the stock exchange are cyclical and follow the market trends. A few examples include Tata Motors, Honeywell Automation India Ltd, Shree Cement Ltd, SAIL, Hindalco etc.

What are non-cyclical stocks?

While cyclical industries may seem like a good investment, every good offense needs a defense, hence, it is important to balance out your portfolio with non-cyclical or defensive stocks. During a boom, people splurge on goods and services such as travel and cars. But during a slump, people stop spending on purchases that they don’t consider a basic necessity, instead they focus their spending money on food, water, and shelter.

non cyclical industryDuring an economic recession or depression, the revenue and cash-flows and share price of non-cyclical companies continue to do well because they are industries that produce the basic needs of life that people will continue to consume.

In addition to basic needs, non-cyclical stocks also include those goods that are addictive such as tobacco or alcohol which can put ethical investors in a tricky situation as these industries do well even during a slump and reduces the number of industries that they can invest in.

Defensive stocks include goods and services in industries that are not affected by market fluctuations such as utilities, food, and medicines. It is basically any good or service that people will buy whether or not the economy is doing well. A few examples of defensive stock companies include Hindustan Unilever (HUL), Marico, HDFC Bank etc.

Bonus: The top-down strategy

There are two main investing strategies in the market, the top-down approach, and the bottom-up approach. The top-down approach involves looking at the economy as a whole and picking stocks that do well during certain economic conditions. This strategy requires the investor to have a good understanding of the macroeconomy along with its various sectors and industries to know what industry will perform well during the different business cycles. They also need to assess the inflexion points in the economy, that is when a certain stock price is expected to go up or down. For cyclical and non-cyclical stocks, top-down is the most commonly used strategy.

The bottom-up approach, on the other hand, involves looking at the stock individually and making investment decisions based on independent parameters.

When using the top-down approach, there are many indicators that investors can use to study the market. The first and most obvious metric is the GDP (Gross Domestic Product). This is the total value of all the goods and services produced in the economy and gives us a good understanding of the overall economic health.

Another great indicator is the ‘Purchasing Manager’s Index (PMI). This is a survey conducted among the purchasing managers in different sectors and industries in the economy. The PMI provides the investor with information on how the businesses are currently performing and which direction the economy is headed.

A third metric is the Consumer Price Index (CPI). This will give an investor insight into the changing price levels of goods and services in the economy and is a reflection of the state of the economy.

The top-down strategy is considered successful when the cyclical and defensive stocks are in perfect correlation with each other. A 100% correlation would mean that the stocks move in synch with each other while a -100% correlation means that the stocks are still in sync but move in the opposite direction.

During the 2008 recession, luxury goods such as Ford cars faced a huge decline in the value of their stock as people stopped spending on expensive items when the economy was down but at the same time, the stock for beverages such as Coco-Cola continued to do well as people spent money on this regardless of the business cycle.

Also read:

Conclusion

It is important for every investor to have a balanced and diversified portfolio with both cyclical and non-cyclical stocks.

Cyclical stocks include more luxury goods and hence a provide a higher return than non-cyclical stocks. However, the investor needs to study the market carefully and have a good tolerance for risk. Defensive stocks are safer investments but provide lower returns but are better for investors looking for safe investments Remember low risk, low return.

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

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

Download complete list of stocks listed in the Indian stock market: There are over 5,500 publically listed stocks on 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. So 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 link to its website:  http://www.bseindia.com.

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. Search ‘BSE list of companies’ on google and click on the first link with title ‘LISTED COMPANIES | LIST OF SECURITY | BSE’ Here is the quick link: http://www.bseindia.com/corporates/List_Scrips.aspx

How to find complete list of stocks listed on BSE

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. Finally, click ‘submit’.

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

BSE list of securites

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

Here is the excel/google sheet. I’ve already downloaded it for you–> BSE list of companies

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).

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 NSE website: https://www.nseindia.com/

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.

Note: I have already downloaded the file which you can find here –> NSE list of companies

This is exactly how you can download the complete list of companies listed on the national stock exchange.

BONUS SECTION

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

1. Go to the Investing website. Here is the link: https://in.investing.com

2. Select ‘TOOLS’ on the menu bar and click on ‘stock screener’.

investing website

3. Select the exchange (NSE or BSE) to get the list of the companies on either of the exchange. Select ‘All exchange’ if you want the complete list of both the exchanges.

investing website stock screener

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

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

Conclusion

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 INVESTING 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. I hope this post is useful to the readers. If you have any questions, feel free to comment below.

New to stock market? Join our 7-day free eCourse on HOW TO INVEST IN INDIAN SHARE MARKET here. The lessons will be delivered directly in your email. Happy Investing

Footnotes:

  1. NSE: https://www.nseindia.com/corporates/content/securities_info.htm
  2. BSE: http://www.bseindia.com/corporates/List_Scrips.aspx
  3. BSE Groups: http://www.bseindia.com/markets/equity/EQReports/tra_trading.aspx
  4. INVESTING: https://in.investing.com
  5. Moneycontrol: http://www.moneycontrol.com
  6. Screener: https://www.screener.in
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Catching a falling knife stock - Is it worth it cover

Catching a falling knife stock - Is it worth it?

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

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

What are falling knife stocks?

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

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

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

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

falling knife example

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

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

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

yes bank share price sept 2019

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

dhfl share price sept 2019

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

How falling knife stocks work?

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

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

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

Reasons for the Company’s Price to fall:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Also read: 5 Psychology Traps that Investors Need to Avoid

Closing Thoughts:

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

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

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

Companies with Highest Share Price in India

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

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

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

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

#12 Companies with Highest Share Price in India

1. MRF (Rs 62,896)

mrf-tyres Companies with Highest Share Price in India

Market Capitalisation = Rs 26,628 Cr

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

 MRF has the highest share price in India among all the listed companies on BSE/NSE.

The all-time high share price of MRF is Rs 81,426. The stock is currently trading at a standalone PE of 24.14.

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

2. Honeywell Automation (Rs 28,564)

honeywell

Market Capitalisation = Rs 25,250 Cr

Honeywell is a leader in providing integrated automation and software solutions. It has a wide product portfolio in environmental and combustion controls, and sensing and control, etc.

This stock has given a return of over +440% in the last 5 years. It is currently trading at a PE of 66.24.

3. Page Industries (Rs 20,816)

page industries

Market Capitalisation = Rs 23,210 Cr

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

Page industries is currently trading at a PE of 61.05.

4. 3M India (Rs 20,610)

3m india

Market Capitalisation = Rs 23,227 Cr

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

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

5. Eicher Motors (Rs 19,220)

eicher motors

Market Capitalisation = Rs 52,452 Cr

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

This stock has given a negative return of -35% in the last two years since October 2017.

 Eicher motor was trading at a price of Rs 2,500 in November 2012 and a high of Rs 31,600 in April 2018.  The current PE of Eicher Motors is 25.24.

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

6. Shree Cements (Rs 18,373)

shree cements

Market Capitalisation = Rs 64,787 Cr

Shree Cement is an Indian cement manufacturer headquartered in Kolkata. It is the biggest cement maker in northern India. 

Shree cements is currently trading at a PE of 54.85. (52-week high- Rs 22,399)

7. Nestle India (Rs 14,351)

Nestle Products

Market Capitalisation = Rs 138,377 Cr

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

 This stock is currently trading at a PE of 81.93.

8. Bosch (Rs 14,128)

bosch

Market Capitalisation = Rs 41,671 Cr

Bosch ranks eighth in the list of companies with highest share price in India. It is a part of the German multinational company Robert Bosch (or just Bosch), headquartered in Germany.

Bosch belongs to the automobile ancillaries industry and currently trading at a PE of 27.73 (52-week high- Rs 20,500).

9. Bombay Oxygen (Rs 13,247)

Market Capitalisation = Rs 198 Cr

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

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

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

10. Procter & Gamble (Rs 11,582)

procter and gamble

Market Capitalisation = Rs 37,598 Cr

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

This stock is currently trading at a PE of 89.71.

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

11. Abbott India (Rs 10,949)

abbott india share

Market Capitalisation = Rs 23,267 Cr

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

It is currently trading at a PE of 47.99.

12. Tasty Bite Eatables (Rs 10,104)

tasty bytes

Market Capitalisation = Rs 2,592 Cr

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

That’s all for this post on ‘#12 companies with the highest share price in India’. Most of the companies on this list are trading at a high PE. If you want to buy any one of them, then please study the company carefully. Just being the costliest shares in India doesn’t make them a good pick for investment. Moreover, past performance does not guarantee future returns.

Disclaimer: The list of 12 Companies with Highest Share Price in India is till date October 2019. The stock market is dynamic and the stock prices will change in the future, which may change the list or the order of the companies listed here.

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

What is derivative trading

What is Derivative Trading? Futures & Options Explained

Hello readers. One of the most frequently asked questions by Trade Brains’ readers is what is futures and options trading. In this article, we are going to cover this topic and discuss what is derivative trading along with explaining futures and options. Let’s get started.

What are Derivatives?

A derivative is a device whose monetary value is extracted from the value of one or more primary variables called bases. Here, the bases mainly indicate underlying assets, interest rate or indexes. These underlying assets further comprise equity, foreign exchange, commodity, or any other asset.

As the value of these underlying assets keeps fluctuating, these changes in value can help traders to earn profits from derivative trading. The most common types of derivatives are futures, options, forwards and swaps.

This evolution of the market for derivative products like Forwards, Futures, and Options dates back to the compliance of risk hesitant economic advocates to shield themselves against volatilities emerging out of ups and downs in asset prices. In other words, it acts as a hedging apparatus against oscillation in commodity prices.

Post-1970, financial derivatives majorly came under the limelight due to thriving fluctuations in the markets. Ever since they seeped into the picture, these products have gained quite a popularity and have reckoned for about two-thirds of total transactions in derivative products by 1990.

In the class of equity derivatives, Future and Options have acquired more eminence than individual stocks. The trend is especially prominent among institutional investors who are frequent partakers of index-linked derivatives. Financial markets are marked by an escalated amplitude of volatility but with the utilization of derivative products, it is viable to partially or fully shift the price risks by remanding the asset prices.

As equipment of risk management, these generally do not determine the inconstancy in the underlying asset prices. However, by tapping in asset prices, derivative products reduce the influence of fluctuations in asset prices on the profitability and cash flow scenario of risk-afraid investors.

Factors driving the Growth of Derivatives

In the last thirty years, the derivatives market has seen an exemplary advancement. A huge variety of derivative contracts have been introduced at exchanges across the globe. Some of the factors which are surging the cultivation of financial derivatives are:

  1. Elevated synthesis of national financial markets with the global markets.
  2. Considerable development in communication amenities and acute declination in their costs.
  3. Growth of more sophisticated risk management devices, providing economic agents with a variety of choices.

Derivative Products

Derivative contracts have diversified variants. The most basic variants are Forwards, Futures & Options. 

1. Forward Contract :

A forward contract is a customized contract between two individuals, where settlement takes place on a definite date in the future at the current pre-compiled price. Other contract details like delivery date, price, and quantity are negotiated bilaterally by the parties. The forward contracts are generally traded outside the exchanges.

On the expiration date, the contract has to be settled by the delivery of the asset. If the party wishes to counterpole the contract, it has to imperatively go to the same counter-party, which often results in charging higher prices. In certain markets, Forward Contracts have become standardized like in the case of foreign exchanges. Such standardization reduces transaction costs and increases transaction volumes.

For example, let us consider an exporter who expects to receive payment in dollars three months later. He is exposed to the risk of exchange rate fluctuations. Thus, utilizing the currency forward market to sell dollars forward, he can clinch on to a rate today and diminish his uncertainty.

2. Futures Contract:

A futures contract is an alliance between two parties to purchase or sell an asset at a stipulated time in the future at a specific price. Futures contracts are special types of forward contracts that are traded on exchanges. Future Contracts also facilitate the elimination of risk and provide more liquidity to a market participant. The terminology of the Futures Contract consists of Spot Price, Futures Price, Contract Cycle, Expiry Date & Contract Size.

For example, if you buy/sell a crude oil futures contract, you are agreeing to buy/sell a set amount of crude oil at a specific price (the price you place an order at) at some future date. You don’t actually need to take delivery of the crude oil, rather you make or lose money based on whether the contract you bought/sold goes up or down in value relative to where you bought/sold it. You can then close out the trade at any time before it expires to lock in your profit or loss.

3. Options  Contract:

Options are of two types namely, Calls & Puts. Calls give the buyer the authority but not the obligation to purchase a given quantity of the underlying asset, at a given price on or before a given future date. Puts give the buyer the authority, but not the obligation to sell a given quantity of the underlying asset at a given price on or before a given date. Unlike, Futures Contract, the purchase of an Option requires up-front payment. 

Also read: What Drives Stock Returns? (Divergence Analysis)

Participants in the Derivative markets

There are four broad categories of participants namely Hedgers, Speculators, Margin Traders, and Arbitrageurs. Let’s discuss each of them now:

1. Hedgers: Traders who aspire to secure themselves from the risk involved price actions generally participate in the derivatives market. They have been called hedgers because they try to hedge the price of their assets by undertaking an exact opposite trade in the derivatives market. 

2. Speculators: Unlike hedgers, Speculators look for opportunities to take on risk in the hope of making returns. These stark contrast in risk figuration and market views sets apart hedgers from speculators.

3. Margin Traders: Dealing with derivative products doesn’t require payment of the total value of the upfront position. Instead,  depositing only a fraction of the total sum does the work and is known as Margin Trading. Margin Trading results in a high leverage factor in derivative trade because, with a small deposit, one is able to keep a large outstanding position.

4. Arbitrageurs: Derivative instruments are valued on the basis of the underlying asset’s value in the spot market. However, there are times when the price level of stock in the cash market is lower or higher in comparison to its price in the derivatives market. Arbitrageurs tap the opportunities and exploit these blemishes and disorganization to their favor.

Arbitrage trade is a low-risk trade, where a parallel deal in securities is done in one market and a corresponding sale is executed in another market. Such a trade is carried out when the same securities are being quoted at different prices in two different markets.

For example, in the cash market, let us consider the price is quoting at Rs. 1000 per share. On the other hand, it is at Rs. 1010 in the futures market. An arbitrageur would purchase 100 shares at Rs. 1000 in the cash market and sell 100 shares at Rs. 1010 per share in the futures market, thereby making a profit of Rs. 10 per share.

Also read: The Stock Market Cycle: 4 Stages That Every Trader Should Know!

Summary: Derivative Trading

A derivative is a device whose monetary value is extracted from the value of one or more primary variables called bases. Here, the bases mainly indicate underlying assets, interest rate or indexes. Further, the asset can be anything from stocks, commodities, currency to interest rates.

The most common types of derivatives are futures, options, forwards and swaps. In derivative trading, the traders take advantage of the fluctuating value of underlying assets to make profits.

list of 10 largest stock exchange's image

10 Largest Stock Exchanges in the World

List of Largest Stock Exchanges in the World: People who invest in stock must be familiar with the New York Stock Exchange (NYSE), NASDAQ, Tokyo stock exchange as a few biggest exchanges in the list of Largest Stock Exchanges in the world. But there are a few large stock exchanges with which they might not be familiar with. In this post, we are going to discuss the biggest and largest stock exchanges in the world.

Before we start this post, let us brief a bit about what the stock exchange is. A Stock Exchange is an organization that anchor formulated market for dealing in securities, derivatives, commodities, and other financial equipment. It is one of the powerful ingredients of the financial market. Here, buyers and sellers club together to carry out transactions. And, securities are bought and sold out according to clear-cut rules and regulations.

Stock exchange furnishes the required edifice and framework to the brokers and members who deal with asset classes. It also governs the transaction activities to certify free and fair trade. The most engaging aspect is that the Stock exchanges are also deemed as the financial measures of an economy where the industrial development and firmness is mirrored in the index. Here is the list of the ten largest Stock Exchange in the world.

10 Largest Stock Exchanges in the World

1) New York Stock Exchange

New York Stock Exchange's image

The New York Stock Exchange (NYSE) is first on the list of the largest stock exchange in the world and is a highly esteemed stock exchange in the USA which is situated at 11, Wall Street, New York City. It was established on May 17, 1792, and consists of 2,400 listed companies. It is the world’s largest stock exchange and has a market capitalization of US$ 30.1 trillion.

Back to the back of mergers has aided the New York Stock Exchange to gain its colossal size and global footprint. The blue-chip companies which are listed under NYSE are Berkshire Hathaway Inc, Coca-Cola, Walt Disney Company, Mc Donald’s Corporation, etc.

 2) NASDAQ

nasdaq exchange

Second on the list of the largest stock exchange in the world is NASDAQ which was primarily an abbreviation and stage for the National Association of Securities Dealers Automated Quotations. It is an American stock exchange and is headquartered at 151 W, 42nd Street, New York City.

The NASDAQ commenced its business on February 8, 1971, and is sighted as the world’s first electronically traded stock market. NASDAQ has a combined market capitalization of $10.8 trillion and is ranked second in the list of largest stock exchanges.  It consists of more than 3,000 stocks listed under it and comprises of the world’s humongous tech giants such as Apple, Microsoft, Google, Facebook, Amazon, Tesla, and Intel. 

Also Read: 31 Hand-Picked Best Quotes on Investing: Buffett, Munger, Graham & More.

3) Tokyo Stock Exchange

The Tokyo Stock Exchange (TSE) which is also known as Tōshō is located in TokyoJapan. It was validated on May 15, 1878, and is also the third-largest stock exchange in the world.

TSE  has close to 3,500 listed companies with a syndicated market capitalization surpassing the US$ 5.67 trillion. The TSE’s metric indicator is Nikkei 225 and it is home to some of the voluminous  Japanese giants with international exposure, including Toyota, Suzuki, Honda, and Mitsubishi and Sony. 

4) Shanghai Stock Exchange

The Shanghai Stock Exchange (SSE) is located in the city of ShanghaiChina and is one of the two stock exchanges plying autonomously in the People’s Republic of China. Although its foundation traces back to 1866, it was adjourned after the Chinese Revolution in 1949. However, The Shanghai Exchange in its contemporary outlook was laid down in 1990.

Currently, Shanghai SSE is the world’s fourth-largest stock exchange with a combined market capitalization f  US$ 5.01 trillion. The most interesting fact is that the absolute market cap of the SSE is constructed out of formerly state-run insurance companies  & commercial banks. 

5) Honk Kong Stock Exchange

The  Hong Kong Stock Exchange (SEHK)  is located in Hong Kong and is the world’s fifth-largest stock exchange on the basis of market capitalization.  It consists of 2,315 listed companies with a wholesome market capitalization of HK$29.9 trillion.

Its origin can be traced back to the mid-1800s and since then it has gone through a series of mergers and agglomeration with other exchanges. Some of the gigantic and eminent companies listed under the Hong Kong Stock Exchange are China Mobile, and HSBC Holdings & Petro China.

Also Read: Top 10 Stock Market Movies to Watch for Finance Geeks

6) London Stock Exchange

london stock exchange image

The London Stock Exchange (LSE) is based in London and is the sixth-largest stock exchange in the world. It was established in 1571 and is the oldest stock exchange in the world.  It has more than 3,000 listed companies with a combined market capitalization of $4.59 trillion.

LSE is also the maiden source of benchmark prices, equity-market liquidity and market data in Europe. Some of the massive companies listed under the LSE are Barclays, British Petroleum and GlaxoSmithKline.

7) EURONEXT

The Word EURONEXT is an acronym for European New Exchange Technology and has its corporate address at La Défense in Greater Paris. EURONEXT was established in 2000 by the consolidation of the exchanges in Amsterdam, Paris, and Brussels.

Over the years, it amalgamated with multiple exchanges, most particularly the New York Stock Exchange. It steers financial markets in Amsterdam, London, Brussels, Lisbon, Oslo, Dublin,  and Paris. It has around 1,500 listed companies leading to a market capitalization worth €4.1 trillion. EURONEXT provided the segments which are equities, warrants, exchange-traded, bonds, commodities, funds and certificates, derivatives, indices, and foreign exchange trading platforms.

8) Shenzen Stock Exchange

The Shenzhen Stock Exchange (SZSE) is oriented in the city of ShenzhenChina and was founded on  December 1, 1990. It is the 8th largest stock exchange in the world and has approximately 1,300 listed companies with a combined market capitalization of $3.92 trillion.

Most of the companies under this SZSE are corporate firms of companies in which the Government Of China has a controlling interest. The Shenzhen Stock Exchange had introduced the “ChiNext Board” in 2009 comprising of high-tech & high-growth startups, quite similar to NASDAQ.

9) Toronto Stock Exchange

The Toronto Stock Exchange (TSX) is situated in Toronto, Canada. It was introduced in 1852 and is held and wielded as a subsidiary of the TMX Group. It is the ninth-largest exchange in the world and has 2,207 listed companies with a combined market capitalization of $2.3 trillion.

The financial instruments include equities, investment trusts, exchange-traded funds, bonds, commodities, futures, options, and other products. It is also to be noted that mining and oil and gas companies are listed in more numbers under the Toronto Stock Exchange compared to other stock exchanges around the world.

10) Bombay Stock Exchange

The Bombay Stock Exchange  (BSE) is an Indian stock exchange located at the high-wheeled Dalal Street in  Mumbai. It was established in 1875 and is Asia’s first-ever stock exchange. It is also the world’s 10th largest stock exchange with a total market capitalization of more than $2.2 trillion.

The BSE has approximately 5,000 listed companies and has assisted in the growth of the country’s corporate sector and financial markets. Securities listed under BSE comprises of stocks,  futures, options, index futures, index options, and weekly options. However, the BSE’s benchmark is measured by the Sensex which nearly covers all the sectors of the Indian economy.

Also read: A Complete List of Stock Exchanges in India

That’s all for this article on the ten largest stock exchanges in the world. I hope this post is useful to you. Comment below which one is your favorite stock exchange in the world to trade. Happy trading!

Top 10 Companies in India by Market Capitalization

Top 10 Companies in India by Market Capitalization

Top 10 Companies in India by Market Capitalization (Updated Sept’19):

As per the International Monetary Fund (IMF), India is the seventh-largest economy in the world in terms of nominal Gross Domestic Product (GDP),  which is valued to be worth US$ 2.308 trillion. This is mainly due to business various Indian companies have been doing in India and overseas. 

Every company operating in India works extremely hard to get better in terms of the quality and customer satisfaction that they provide through its products or services. An organization is generally evaluated on different parameters such as assets, profits, sales, market value, share price, etc. and is ranked accordingly. However, when we talk about the size of a company, one of the biggest factors to look at is its market capitalization.

In this post, we are going to discuss the ten biggest public companies in India based on their latest market capitalization.

What is market capitalization?

Market capitalization is the aggregate valuation of the company based on its current share price and the total number of outstanding stocks. It is calculated by

Market capitalization = (Current market price of 1 share)*(total number of outstanding shares)

It helps to classify the companies in different types like large cap, mid cap, and small cap companies. The companies with a market cap of Rs 29,000 crore or more are large-cap stocks. Company stocks with a market cap between Rs 8,500 crore and 29,000 crores are mid-cap stocks and those less than Rs 8,500 crore market cap are small-cap stocks.

Related post: Basics of Market Capitalization in Indian Stock Market.

Example: 

Just by looking at the share price, you cannot judge the size of a company. For example, here are the share price of two companies from the automobile sector.

  1. Maruti Suzuki – Rs 5987.70
  2. Eicher Motors – Rs 15750.00

Which company is bigger?

If you just look at the share prices, you might think that Eicher Motors share price is quite large compared to Maruti Suzuki, and hence, it may be bigger.

However, the total number of outstanding shares of Maruti Suzuki is much large compared to Eicher Motors. Maruti Suzuki have around 30.2 Crore shares while Eicher motors have 2.72 crores shares. Therefore, the market capitalization of Maruti Suzuki is Rs 180,828.54 Crores while the market capitalization of Eicher Motors is Rs 42,840 Crores.

Therefore, Maruti Suzuki is a bigger company compared to Eicher motors.

Top 10 Companies in India by Market Capitalization

Here is the list of the top 10 companies in India by market capitalization:

1. Tata Consultancy Services (TCS)

TCS building

Tata Consultancy Services Limited (TCS) is an Indian multinational information technology (IT) service and consulting company headquartered in Mumbai, Maharashtra, India. It is a subsidiary of Tata Group and operates in 149 locations across 46 countries.

TCS is the largest Indian company by market capitalization. TCS is now placed among the most valuable IT services brands worldwide. The market capitalization value of TCS is Rs. 802466.23 Crores with a current price of Rs.2138.55.

2. Reliance Industries

Reliance Industries Limited

Reliance Industries Limited (RIL) is an Indian multinational company headquartered in Mumbai. The company was co-founded by Dhirubhai Ambani and Champaklal Damani in the 1960s as Reliance Commercial Corporation.

Reliance owns businesses across India engaged in energy, petrochemicals, textiles, natural resources, retail, and telecommunications. Reliance is one of the most profitable companies in India. The market capitalization value of RIL is Rs.764308.09 Crores with a current price of Rs.1205.70.

3. HDFC Bank

HDFC Bank

HDFC Bank is an Indian banking and financial services company that was incorporated in 1994, with its registered office in Mumbai, India. Its first corporate office at Sandoz House, Worli was inaugurated by the then Union Finance Minister, Manmohan Singh.

As of  June 2019, it had a base of 1,04,154 permanent employees with 5,130 branches across 2,764 cities. It is India’s largest private sector lender by assets and market capitalization. It has a market capitalization value of Rs.598433.19 Crores with a current price of Rs.2187.75.

4. Hindustan Unilever

Hindustan Unilever
Hindustan Unilever Limited (HUL) was established in 1933. It is a British-Dutch manufacturing company headquartered in Mumbai, India. Its products include foods, beverages, cleaning agents, personal care products, water purifiers, and consumer goods.

As of 2019 Hindustan Unilever portfolio had 35 product brands in 20 categories with 18,000 employees and sales of Rs. 34,619 crores in 2017-18. The market capitalization value of Hindustan Unilever is Rs.395987.42 Crores with a current price of Rs.1829.20.

5. Infosys

Infosys building

Infosys Limited is an Indian multinational corporation that provides business consulting, information technology and outsourcing services.

It is the second-largest Indian IT company after Tata Consultancy Services with its headquarters in Bangalore, Karnataka, India. The market capitalization value of Infosys is Rs.354285.41 Crores with a current price of Rs.829.85.

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

6. H D F C

HDFC Limited

Housing Development Finance Corporation Limited (HDFC) is an Indian financial services company founded in 1977 as the first specialized mortgage company in India based in Mumbai. It is a major provider of finance for housing in India.

HDFC also has a presence in banking, life and general insurance, asset management, venture capital, realty, education, deposits, and education loans. The market capitalization value of HDFC is Rs.343110.50 Crores with a current price of Rs.1988.30.

7. ITC

ITC Limited Logo

ITC Limited is an Indian multinational conglomerate company headquartered in Kolkata, India.

It was Established in 1910 as the ‘Imperial Tobacco Company of India Limited’, the company was renamed as the ‘India Tobacco Company Limited’ in 1970 and later to ‘I.T.C. Limited’ in 1974. The dots in the name were removed in September 2001 for the company to be renamed as ‘ITC Limited’. It has a market capitalization value of Rs. 293918.22 crores with current price of Rs.239.25.

8. Kotak Mahindra Bank

Kotak Mahindra Bank

Kotak Mahindra Bank is an Indian private sector bank headquartered in Mumbai, India. Established in 1985  by Uday Kotak.

In February 2003, Kotak Mahindra Finance Ltd. (KMFL), the group’s flagship company, received a banking license from the RBI. It offers banking products and financial services in the areas of personal finance, investment banking, general insurance, life insurance, and wealth management. It is the 2nd largest Indian private sector bank by market capitalization value of Rs. 279739.96 crores with current price of Rs.1464.75.

9. ICICI Bank

ICICI bank building

It is an Indian multinational banking and financial services company headquartered in Mumbai and its registered office in Vadodara, Gujarat. It offers a wide range of banking products and financial services  in the areas of investment banking, life, non-life insurance, venture capital, and asset management.

ICICI Bank has 4867 branches and 14367 ATMs across India and has a presence in 17 countries including India as on March 31, 2018. The market capitalization value of ICICI bank is Rs.257904.55 crores with a current price of Rs.399.35.

10. State Bank of India

State Bank of India

The State Bank of India (SBI) is an Indian multinational, public sector banking and financial services statutory body with its headquarters in Mumbai.

SBI descends from the Bank of Calcutta, founded in 1806, via the Imperial Bank of India which in turn became the SBI in 1955, making it the oldest commercial bank in the Indian subcontinent. It is the largest bank in India with a 23% market share, besides a share of 1/4th of the total loan and deposits market. Market capitalization value of SBI is Rs. 250246.11 crores with a current price of Rs. 280.40.

Also Read :

Summary: Top 10 Companies in India by Market-cap

S. NoCompany NameIndustryLast PriceMarket Cap (In Cr)
1TCSIT/Software company2138.55802466.23
2RelianceRefineries, Oil & Gas1205.7764308.09
3HDFC BankNon-public sector banking2187.75598433.19
4HULConsumer products1829.2395987.42
5InfosysIT/Software company829.85354285.41
6HDFCFinancial company1988.3343110.5
7ITCCigarette, Hotels, Consumer products239.25293918.22
8Kotak Mah. BankPrivate bank1464.75279739.96
9ICICI BankPrivate Bank399.35257904.55
10St Bank of IndiaPublic Sector Bank280.4250246.11

Disclaimer: This data is updated on September 19, 2019. As the stock price changes in the future, the market capitalization will also change. Hence, the list of top 10 companies in India by market capitalization can also change in the future.

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