The Power of Compounding – Why Starting Early Matters

पिछले सप्ताह हुई ओपेक देशो की बैठक में कच्चे तेल के उत्पादन में अनुमान से धीमी गति से बढ़ोतरी करने और मांग बढ़ने के संकेत पर अमेरिकी कच्चा तेल 2 डॉलर प्रति बैरल तक तेज़ हुआ है। और ऑक्टूबर 2018 के स्तरों पर कीमते पहुंच चुकी है।

ओपेक और अन्य तेल उत्पादक देश अपनी बैठक में अगस्त और दिसंबर के बीच बाजार में लगभग 20 लाख बैरल प्रति दिन (बीपीडी) तेल जोड़ने की ओर बढ़ रहा है। उत्पादन में 50 लाख बीपीडी तक बढ़ोतरी का अनुमान था लेकिन इसको घटा देने पर कच्चे तेल के भाव में तेज़ी जारी रही। कच्चे तेल की बढ़ती हुई मांग के कारण केवल 20 लाख बैरल की आपूर्ति बढ़ाना, कीमतों को सपोर्ट कर रही है। बाजार अनुमानित उत्पादन वृद्धि को आसानी से अवशोषित कर सकता है।

अनुमान के मुताबिक 50 लाख बैरल प्रतिदिन तक भी बाजार अवशोषित कर सकता है। अनुमान है कि साल की दूसरी छमाही में तेल की मांग में तेजी आएगी क्योंकि अधिक लोगों को कोवीड-19 के खिलाफ टीका लगाया जा चुका होगा और यात्रा प्रतिबंधों में ढील दे दी जाएगी। वर्ष की पहली छमाही में, आर्थिक सुधार और तेल की मांग में वृद्धि हुई है।

पिछले सप्ताह जारी ऊर्जा सूचना प्रशासन के आंकड़ों से पता चलता है कि बढ़ती मांग के कारण संयुक्त राज्य अमेरिका में कच्चे तेल का भंडार पिछले सप्ताह भी घट गया है। एमसीएक्स जुलाई वायदा में पिछले सप्ताह 150 रुपये प्रति बैरल तक की तेज़ी देखि गई है और इसके भाव 5650 रुपये प्रति बैलर के स्तरों पर पहुंच गए है। ब्रेंट और अमेरिकी डब्लूटीआई कच्चे तेल के भाव 75 डॉलर प्रति बैरल के स्तरों पर है।‍

तकनीकी विश्लेषण:‍

एमसीएक्स कच्चे तेल के जुलाई वायदा में इस सप्ताह तेज़ी जारी रह सकती है और इसमें 5750 रुपये पर प्रतिरोध है और 5300 रुपये पर सपोर्ट है।

IPO or Initial Public Offering is a process where a private company starts to trade publicly in the stock market by issuing its shares for sale.Before issuing an IPO, a company is considered as private and as a private company, the growth is significant. Hence, to grow their business successfully, small companies decide to go public so that they can raise funds and expand their business operations.

In the year 2020, we saw some of the biggest stock IPOs such as Burger King, SBI Cards, Happiest Minds Technologies and Rossari Biotech, and in 2021, we are going to experience some of the biggest releases owing to the record high of Nifty and Sensex both. Investors are eagerly waiting for these SME IPOs as they can book a significant amount of profit once the lots are issued to them. Many investors keep an eye on the IPOs as they can get fast access to earn huge returns.

However, IPOs mainly target institutional investors as they have enough capital to invest than retail investors who invest in small amounts. Here, we found some of the companies that are likely or have already filed DRHP with SEBI to make themselves public from private. SEBI then approves the IPO for the companies after that they can go for the further IPO process. Here is a complete list of hottest IPOs that caught everyone’s attention:

1. Zomato

Zomato is one of the popular hot stocks that everyone is seeking in 2021. The online food ordering company is all set to launch its first IPO this year that allows the company to raise $1.1 billion.

‍Company Background

‍Zomato is one of the leading food services companies in India. Initially started as a restaurant, the company was founded by two students Depinder Goyal and Pankaj Chaddah in 2008. It showed strong business performance and great potential as it transformed itself into a successful food delivery platform. As of 31 December 2020, the company’s availability is 526 cities in India with 350,174 active listings. In 2020, Zomato mobile food application is one of the most downloaded food delivery companies in the last three years since 2018 on the iOS app store and Google as per Annie’s. While it has footprints outside India as of 31 December 2020. It has successfully dealt with the losses during a pandemic and successfully managed to make its ground against its competitor Swiggy which dominates the market like Zomato. As of now, Swiggy holds 47% market share and Zomato holds 45% market share.

‍Zomato IPO Details

‍As per the news sources, Zomato Limited is thinking to raise Rs 8250 Crore through IPO. Zomato filed the DRHP with SEBI in April 2021. Here, the lead managers to issue are Citigroup Global Market India, Kotak Mahindra Capital Company Limited, Morgan Stanley India Limited.

2. Paytm

Paytm is an Indian Digital Payment System and financial technology company. As per the sources, India’s biggest online payment and wallet giant has decided to raise a fund of $3 billion through fresh equity.

‍Company Background

‍Paytm is the fastest growing digital payment system that offers online use-cases such as mobile recharge, utility bill payments, event bookings at grocery stores and educational institutions with Paytm QR Code. As per the company valuation report, more than 21 million people across India use their QR code payment system to accept payment directly into their bank accounts.

‍Paytm IPO Details

‍Paytm’s competitors are Google pay and Phonepe that maintain a stronghold in the market. However, the company has reported a loss for FY 2021 and hence it goes for the IPO process. The current valuation of a Noida based company is at $16 billion. It is said that the company is all set to file a red herring prospectus to SEBI. As per the sources, an extraordinary general meeting will be held on 12 July 2021.

3. Flipkart

Company Background

‍Flipkart is one of the largest eCommerce companies after Amazon, headquartered in Bangalore, Karnataka. The company’s main product categories are consumer electronics, home essentials, fashion, groceries and lifestyle products. As of today, Flipkart has over 311 million registered users and over 151 million products in several categories. As eCommerce becomes more prominent during the pandemic, the company is looking forward to more revenues in the coming years.

‍Flipkart IPO

‍The Indian E-commerce company, which was bought by Walmart Inc, has finally decided to go public in the last year of FY21. The company’s objective is to raise a fund of about $1billion and is currently valued at $ 25 to $ 30 billion. Investing in Flipkart's share is a good bet for the investors as it will help them to gain excellent share trading returns in the coming years.

4. Nykaa

Company Background

‍Nykaa is India’s largest women-centric online marketplace with around 15 million registered users that caters to 1.5 million orders a month. Founded in 2012, the platform is specially designed to supply the beauty products and personal care segments which makes it different from other eCommerce sites such as Amazon and Flipkart.

‍Nykaa IPO Details

‍As per the report, beauty and fashion retailer Nykaa is expected to go public in 2022 with an estimated valuation of $ 4.5 billion. The expected size of Nykaa’s public offering listing is to be between $500 million and $ 700 million.Nykaa or the beauty retailer designated Morgan Stanley and Kotak Mahindra Capital co. as managers for its initial public offering (IPO).

5. Nuvoco Vistas

Company Background

‍Nuvoco Vistas is considered the fifth-largest cement company in India and the largest cement company in terms of capacity. The company’s cement production capacity constituted 4.2% of the total capacity in India. As per the CRISIL report, Nuvoco Vistas is one of the leading ready mix concrete manufacturers in India. Nuvoco Vistas Cement plants are mainly located in Bihar, Odisha, Chhattisgarh, Haryana and Rajasthan. The RMX plants are located all across India.

‍Nuvoco Vistas IPO Details

‍Nuvoco Vistas is a reputed cement brand under the household Nirma. The issue size of the IPO is around 5000 crores, out of which Rs 1500 crore will be a fresh issue. The remaining is available for sale.

Technology has been evolving over the past decades. Among all the innovations that have recently been made such as machine learning, Bitcoin, autonomous vehicles, AI or artificial intelligence is something new that has the power to change the way of world’s working.

Today, we can see some of the greatest companies have started using chatbots to provide efficient, more accurate customer services laced with deep linking capabilities and detailed algorithms. Cloud computing is another way that has completely changed the way of storage.

Hence, investing in companies that work on AI are uncommon as you may imagine. Investing in AI stocks help individuals to foster their wealth creation and build a strong yet better strong portfolio management.

Stocks of these companies experience drastic growth these years. If investors seek trading in these stocks, they would earn significant benefits in the long term.

Today many Indian startups include AI packed solutions in numerous sectors such as education, financial sectors, health etc. to attenuate social issues people are facing these days.

If you are thinking about investing in AI stocks, you may be able to make a significant amount of profit in the long run.

Here, we mention some of the companies that are primarily focused on AI businesses in India. Also, these companies are holding excellent business and technical fundamentals, have little debt and are offering better investment returns.

What is AI?

Artificial Intelligence or AI is the simulation of human intelligence processes in robots that are trained enough to ponder and behave exactly like humans. AI itself has the potential to add US $ 977 billion or 15% of India's present GDP.

The combination of technology, skill and data enables intelligent systems propelling AI investments to new heights.

1. Tata Elxsi

Over the last two decades, Tata Elxsi has been accelerating technology-based advancements. It enables a wide spectrum of breakthroughs powered by AI along with analytics including self-driving cars and video analytics solutions.

Tata Elxsi Artificial Intelligence Centre of Excellence addresses the increasing demand for intelligent systems.

Tata Elxsi allows its customers to use cloud-based integrated data analytics frameworks that feature patent-pending technology to get actionable insights and outstanding returns.

If we talk about the performance of Tata Elxsi In the last three years, then the stock returned 174.89%, while Nifty IT provided investors 106.55% returns.

In the fiscal year ending 31 March 2021, the company spent less than 1% of its operating revenues.

2 . Bosch

Bosch centre for AI started in 2017, where cutting edge AI technology is used in Bosch products and services that leads to new innovative solutions.

Bosch created the technological groundwork for AI that has a huge impact in the real world. Its research produces differentiation in six areas with a focus mainly on core AI technology.

If we talk about the performance of Bosch, then you will be surprised to know that only 1.08% of trading sessions had intraday drops of more than 5%.

The stock earned a negative return of -15.94% over a three year period, compared to 44.16% for the NIfty 100 Index.

3. Zensar Technologies

Zensar technologies go to market strategy is now pivoting away from digital and towards disruptive. The company’s R&D department has filed for 100 patents in the last few years. Now, the company’s entire focus is on AI technologies.

Zensar announced the initial set of platforms including IT, supply chain, marketing, sales, HR, projects and programs that help customers to create value.

In the past three years, stock provided a 15.63% return as compared to Nifty IT that returned 106.55% returns to the investors.

4. Persistent Systems

Persistent made machine learning and AI dreams into reality with solutions that help at every stage of AI and machine learning development.

With a methodology that prioritizes scale model development, use case, architecture, and operationalise models across the country, our solutions ensure that you realize successful outcomes from AI and machine learning investments.

The annual sales growth of Persistent is 16.16% that surpassed the company’s three-year CAGR of 10.75%.

In the last three years, the stock gave returns of 208.41% which is more than Nifty IT which was 106.55%.

5. Oracle Financials

Oracle helps you in implementing AI in your company and IT processes.

Oracle Cloud Application and platform and Oracle Autonomous database, you can speed up the automation, reduce human errors and achieve powerful business insights. If we talk about the performance, then the company gave intraday gains which are more than 5%.

6. Cyient

Cyient is an Indian multinational conglomerate primarily focused on manufacturing, engineering, data analytics and network and operations. Cyient’s primary objective is to achieve business objectives first than new tools and technologies.

It uses AI for secondary purposes, as AI detects changes in the real environment and updates maps in real-time.

Proper navigations help vehicles to take appropriate actions so that they can successfully avoid collisions.

As said earlier, Cyient focuses on business in attaining their goals.

If we talk about its stock performance, then the stock gave returns 24.4% over a three year period while Nifty IT gave a whooping return of 106.55% to the investors.

7. Saksoft

Saksoft mainly focuses on getting transformations through efficiency, productivity, enhanced customer decisions and service innovations by increasing the combination of AI and automation.

Saksoft gives a boost to digital transformation and applies intelligent automation to solve major business problems with the assistance of modern technology like IoT, AI, machine learning and automation.

Saksoft gave a return of 118.06%, while Nifty IT provided investors with a 106.55% return for more than three years.

Final Words

Artificial intelligence has reached almost every sector. It can be easily seen around you through various devices. Smart TV, cellphone, smart home technology are some of the devices that can be surrounded in your home.

This technology is changing the way of living such as working out, running a business, connecting with others and more.

This year people are more interested in energy stocks, high tech stocks such as AI. That’s the reason, such stocks are demandable as they will see outstanding returns in the future.

Many people think that doing investment is a challenging job as it requires a lot of hard work, patience and a little bit of research. This can be true to some extent but not fully. Investments can give you outstanding results if done properly.

Make sure that all the investment that you have made or will make should be under control with your investment profile that includes income, expenditure risk profile and financial goals.

You can select an investment option that depends on your affordability such as lump sum amount or SIP.

The investment mode can make a difference in one’s portfolio. To learn more, let’s understand the difference between the duo.

Understanding SIP and Lump Sum Amount

SIP and lump sum investment allow investors to benefit from huge wealth creation. However, the primary difference between lump sum and SIP is the frequency of investment.

SIP refers to the Systematic Investment Plan that allows you to invest a fixed amount periodically.

Many schemes declared the minimum SIP amount is ₹500. Investors are required to submit the NACH mandate at the starting of SIP that enables the fund houses to debit the SIP amount from the bank account of the investors on a fixed date every month.

With a lump sum option, investors are required to invest a lump sum amount in a mutual fund scheme depending completely on their choice.

You are free to select any amount and then withdraw the same anytime if you have invested in an open-ended scheme. However, ELSS has a lock-in period.

When Should Choose to Select To Invest Through SIP

A regular income person always prefers SIP over Lumpsum in SIP. But why is SIP better? This eliminates the burden to invest a huge amount at once. A salaried person who invests in equity funds and seeking long-term investment, SIP is highly recommended.

Also, investing in SIP always works when the market falls. It happens because investors can accumulate a large number of mutual fund units when the price is low.

If we break down the monthly SIP of ₹5,000/month in the same returns for the five years, you will receive a return that would be close to ₹4,10,000 at the end of 5 years.

Comparison of Lumpsum and SIP Investment

1. Investors Don’t Necessarily Require to Monitor the Market Closely

Lump-sum investments mean bulk commitments that investors must have known when they enter the stock market. It is suggested to do investment in lumpsum investment only if you invest when the stock market is low.

In the case of SIP, you can enter the market during different stock market cycles. Investors don't require to watch market movements as closely as they would for lump sum investments.

2. Low Investment Requirements

You can begin investments with as little as ₹500 per month. However, lump-sum investments require at least ₹1000 although mutual funds in India set a lower limit as ₹5000. To calculate the estimated returns, investors can use SIP calculators.

3. Power of Compounding

SIP works on the power of compounding. In this, the interest earned on SIP investments is reinvested in the scheme.

4. Averaged Costs

As SIP leads to mutual fund purchases during different market cycles, the cost per unit is averaged out over the overall investment horizon.

More units are purchased during a market low, compensating for purchases made during a market high. This can help tide over market fluctuations and even out the cost. Units can then be sold when the market is performing well.

5. Inculcate Financial Discipline

SIPs improve your financial discipline as it automatically puts you in the habit of saving frequently.

Crucial Factors to Consider Before Investing

The following factors help you to identify the right investment route:

1. Amount

If you have a huge amount in your bank, a lump sum investment may be a good strategy for you as it saves you from spending a huge amount of money. If you are a salaried person, then SIP would be a good option for you.

2. Market Timing

When a stock market becomes low, lump-sum investments will generate high returns. If you are not comfortable with the stock market cycle, SIP will help you as it can minimize your market risks.

3. Fund Type

Market volatility plays a crucial role when it comes to stock market returns. In the case of equity funds, market volatility highly matters. Debt funds are less affected by the market trends and give higher returns for SIP and lump sum investments.

Benefits of SIP

Highly Affordable

SIP helps you to start your investment with a minimum amount of ₹500.

Disciplined Investing

SIP helps you to maintain disciplined investing as with SIP

Power of Rupee Cost Averaging

Rupee Cost Averaging helps in reducing the average price of the purchased units.

Less Stressful

SIPs minimize the requirement for you to time the market. You can invest a fixed amount every month throughout the life cycle.

Benefits of Lump Sum Investments

Power of Compounding

If you make a lump sum investment of ₹3,00,000 in an equity fund for 5 years that gives 12% returns per year, the estimated returns would be around ₹5,25,000.

Better Control on Investments

Lump-sum investments allow you to switch between the schemes that are based on the market conditions and you can earn higher returns. However, this requires considerable investment experience.

Conclusion

Investment via SIP or Lumpsum always offers you better returns than other investment types. If you are a beginner who wants to start investing with less risk, always go for SIP as it may provide you with good returns. Also, with SIP you get the returns that are heavily based on compounding effects.

सोने और चांदी मे ब्याज दरें बढ़ोतरी के निर्णय के बाद आई मंदी आगे तक जारी रहने की सम्भावना नजर नहीं आ रही है। निचले स्तरों पर सोना और चांदी के भाव पिछले सप्ताह सपोर्ट लेते दिखे और कीमते सीमित दायरे में रहने के बाद हल्का सुधार दर्ज किया गया है। चांदी के भाव में भी पिछले सप्ताह सकारात्मक कारोबार रहा। सोने के विपरीत दिशा में चलने वाला डॉलर इंडेक्स में ऊपरी स्तरों पर दबाव बना है।

और 10 साल अमेरिकी बॉन्ड यील्ड में सामान्य तेज़ी रही। क्रिप्टो करेंसी बिटकॉइन मे पिछले सप्ताह दबाव बना रहा। अमेरिकी फेड के अन्य सदस्यों के अनुसार मुद्रास्फीति छोटी अवधि में  मुद्रा नीति निर्धारकों के अनुमान से ज्यादा हो सकती है। जबकि फेड प्रमुख जेरोम पॉवेल ने पिछले सप्ताह ब्याज दर वृद्धि को धीमी गति से बढ़ाने पर जोर दिया है।

जिससे कीमती धातुओं में हुई गिरावट थम गई है। डॉलर इंडेक्स मे सप्ताह में 0.5 प्रतिशत की गिरावट रही जबकि कॉमेक्स में सोना पिछले सप्ताह 0.7 प्रतिशत तेज़ हुआ और 1800 डॉलर प्रति औंस से 1770 डॉलर के दायरे मे कारोबार किया। एमसीएक्स में सोना 0.7 प्रतिशत और चांदी 1 प्रतिशत तेज़ी रही। अगस्त वायदा सोना 47050 रुपये प्रति दस ग्राम और जुलाई वायदा चांदी के भाव 68300 रुपये प्रति किलो पर रहे।

तकनीकी विश्लेषण

इस सप्ताह सोने और चांदी मे तेज़ी रहने की सम्भावना है। इसमें 46600 रुपये पर सपोर्ट है तथा 47400 रुपये पर प्रतिरोध है। चांदी में 67000 रुपये पर सपोर्ट और 69000 रुपये पर प्रतिरोध है।

The pandemic of 2020 has completely changed the outlook of everyone’s life. Stuck to the confines of their homes, many people have tried to find some solace in other activities to avoid boredom.

As the government from every country continues to grapple with the economic and health activities, a different scenario of the stock market has come out.

After the significant drop of 45% across major stock indices in the stock market, the market witnessed a speedy recovery after 3-4 months. All thanks to the retail investors who did an outstanding job by maintaining the liquidity in the stock market.

These things have put a major impact on global thematic funds. As per the research report of Morning star; the assets under management in thematic investment grew nearly three times from 75 billion dollars to around 195 billion dollars worldwide.

Let’s understand what is a thematic investment, how does it work and what are the benefits of investing in thematic investment:

What is Thematic Investment

Thematic investments are open-ended equity schemes that are directly linked to distinct yet predetermined investment themes. The themes are mostly linked to the major trends which are emerging in the world at large.

With thematic investment, investors park their money so that they can become a part of various investment themes which impact the world.

Thematic investment enables you to invest in long term trends or themes in an attempt to capitalize on major technological, societal and other trends that keep a huge impact on the world.

The Mindset of a Thematic Investor Pursuing Megatrends

While pursuing megatrends, the mindset of thematic investors roams around transport, technology, robotics, energy, fuel etc. Before investing in megatrends, a thematic investor asks himself the following questions: Concerning transport as a megatrend, should I only invest in auto stocks if the auto company has planned to build electric cars?

Similarly, if a thematic investor seeking a megatrend called the older population, the first thing he asks himself is: should I invest in pharma stocks as the senior citizen depends more on medication and pills for their overall wellbeing. What old fashioned companies will robots disrupt?

Asking such questions will help investors to move to a trend early and achieve bountiful benefits to earn good returns.

What are the Mega Trends Someone Looks at?

Here are the megatrends that investors might consider pursuing:

1. Clean Energy
2. Gig Economy
3. Digital Economy
4. Nutrition
5. Agribusiness

How Do Thematic Funds Work?

All the mutual funds have underlying assets which bring them adequate stock trading returns. If we talk about large-cap funds, the underlying assets are stocks of renowned companies with a huge market capitalization.

Same things about thematic investments: thematic funds have a company’s stocks as underlying assets that are united by predetermined themes.

Let’s understand it with an example:

If a fund has an SG fund, it will invest in the companies that are based on environmental, social and corporate governance factors from different sectors such as technology and financial services.

This is what makes thematic investment different from other investment approaches which are based on value and growth, market cap, sectoral based (pharma, technology, infrastructure).

As per the SEBI guidelines, the minimum investment in equity and equity-related instruments of a particular theme shall be 80% of total assets.

What Sort of Cautions One Need to Take Before Investing in Thematic Investing:

While putting money in thematic investing, one needs to do a lot of stock market research on the companies you want to invest in and constantly monitor the themes that are working well in the world. The frequent changes in the trends will give you an idea of which companies will increase your ROI.

It is good to invest in the companies that are actually on a boom but one thing to keep remember is that’s exactly what people were doing when they invested in useless companies in the 80s.

Carefully invest in the companies that have published and have strong financial records. Hence, it is recommended to carefully invest in the trends of the companies that you can understand and track.

Also, keep in mind the fact that there is a huge difference between investing in a company that is currently in business and delivering good returns and investing in the new-fangled business.

To successfully invest in a good company, one should have the ability to see foresight and evaluate the financial performance of a company.

Portfolio diversification is imperative when investing in thematic investment because diversifying your money in different sectors mitigate the risk of losing money.

Benefits of Investing in Thematic Funds

1. Helps you to Create a High Powered Portfolio

Global investors like Warren Buffet and Peter Lynch once said that the successful way to create wealth for a long duration is only through focused themes that possess a strong profit generation potential.

2. Enables you to Leverage on a Particular Theme

If you measure the performance of thematic stocks vs indexes over a fixed duration, then you may see a lot of difference in the performance of these stocks. Here, the former outperformed the other.

3. Sustainable themes can outperform the equity funds

It's a fact that the themes that are sustainable for a longer period can outperform the equity funds. Hence, if you shift 10-15% of your portfolio into specific themes can bring a huge difference in your portfolio returns.

4. Specific themes can be added to mitigate the portfolio risks

In order to reduce the portfolio risk, you can add specific thematic stocks to your portfolio. When you add multiple themes to your portfolio, it not only diversifies it but also reduces the risks associated with certain stocks, which in turn improves the share trading returns.

5. It can multiply your amounts in the coming years

You have all heard of how an investment of Rs 10,000 in Wipro in 1980, costs around Rs 450 Crore today. Also, a minimum investment in Eicher motors in 2001 would give you a maximum profit today. That’s the power of a thematic investment.

Takeaway

Thematic investing requires a full understanding of the business models and market prospects and hence many people seek advice from experts who have in-depth knowledge about it.

Thematic investment is a lot more complicated than just investing your money in a diversified equity fund. It may be noted that not all themes will give you big returns. Hence you are required to carefully choose thematic funds.