Adani Power ₹4,194 Cr Stake - Should You Buy or Hold in Your Portfolio?

Failing to plan is planning to fail. The global pandemic has taught us all a valuable lesson of the ages, that there can be unforeseen circumstances that can’t just be a rainy day, but the rainy season of unfortunate events that can be capable of derailing or breaking your life. At such times, just having an annual financial plan just doesn’t work; you need to have an Ideal Financial Plan.

An Ideal Financial Planner is the immunity booster to your financial health. Not only does it help you manage your short-term and long-term financial situation, but also helps you make sound financial decisions on your goals, and determine the methods to achieve them.

Creating an ideal financial plan includes taking into consideration all your assets (how much you get paid, what's in your savings and checking accounts, how much is in your retirement fund), as well as your liabilities, including loans, credit cards, and other personal debts.

Now that your resolve to make a debt plan is strong, here are some key highlights that you need to include as part of your financial inventory:

1. A list of assets, including items like your emergency fund, retirement accounts, other investment and savings accounts, real estate equity, education savings, etc. (any valuable jewellery, such as an engagement ring, belongs here, too).
2. A list of debts, including your mortgage, student loans, credit cards, and other loans.
3. A calculation of your credit utilization ratio, which is the amount of debt you have versus your total credit limit.
4. Your credit report and score.
5. Tax Assessment Information

Review Your Investments

It’s important for investors to take stock of where their investments are during the annual financial planning process. This is especially true when the economy undergoes a shift, as is happening now.

• Check your asset allocation. If stocks are taking a dive, for example, you may consider adding real estate investments into your portfolio mix to offset some of the volatility.
• Then identify your risk tolerance based on your risk appetite, mark the investment opportunities that suit your risk profile, set them towards a calculated goal and direct your asset allocation goals towards it. If in case your current investment does not do justice to your risk profile, it will be time for you to rethink.

Increase Your Contribution to Ongoing Investments

Proportionally increase your contribution towards your long-term investments so that the inflation rate doesn’t catch up with you and your money starts making money for you. For instance, if currently, you are contributing 20% of your income towards investments, consider making it 25% to 30% depending on your family's requirements. Let your increments become your investment in due course.

Pay off your Credit Card Debt

If you have any outstanding credit card debt, make it your first priority to pay that off. Interest rates charged by credit cards are exorbitant and can go up to 40-50% per annum (compared to 15% for a personal loan). It is even worth borrowing some amount from your friend or parents and pay off your credit card debt immediately and then slowly return them the money from your savings

Max out your tax-saving investments

Every year you can invest up to Rs 1.5 lakh in certain tax savings instruments like PPF, Tax Saver FDs, Tax Saver Mutual Funds, etc which are tax-exempt under section 80C. Make sure you are maxing out on these. Consult your financial advisor on which 80C investments to make as per your risk profile.

1. How much of your portfolio should be in stocks?

There is no set-in-stone rule, but generally speaking, as you get older and closer to retirement, you should reduce your exposure to stocks in order to preserve your capital. As a rule of thumb, take your age and subtract it from 110 to find the percentage of your portfolio that should be invested in stocks, and adjust this up or down based on your particular appetite for risk.

2. Index funds vs. individual stocks

An index fund allows you to invest in many stocks by purchasing one investment. For example, an index fund gives you exposure to all 500 stocks in that index.

Index funds can be an excellent tool to diversify your portfolio and reduce your risk. After all, if your money is spread across hundreds of stocks and one crashes, the impact on your overall portfolio is minimal.

3. How many different stocks should you buy?

If you only want to buy individual stocks, I suggest buying at least 15 different stocks across several different industries in order to properly diversify your portfolio. However, this may not be practical when you're just starting out.

An alternative to buying lots of individual stocks is to invest the bulk of your money in index funds and buy one or two stocks with the rest. This takes most of the guesswork out of investing, while still allowing you to get some experience with evaluating stocks.

4. Dividends or no dividends?

Many stocks choose to distribute their profits to shareholders in the form of dividends, while others choose to use their profits to reinvest in the growth of the company. In general (but not always), dividend stocks tend to be less volatile and more defensive than non-dividend stocks. It's important to note that just because a company pays a high dividend doesn't necessarily mean that it's a better investment.

Over the past 80 years, dividends have been responsible for 44% of the total return of the S&P 500 index, and dividend reinvestment can be an extremely powerful tool for creating long-term wealth.

5. How much profit can you expect?

I'd advise new investors to take a long-term view of the markets. In any given year, the market could gain or lose a substantial portion of its value. However, over long periods of time, the markets are surprisingly consistent. Over any recent 25-year period, the S&P 500 produced average annual total returns of at least 9.28%, so it's fair to expect this level of performance over the long run -- even though over any shorter stretch it can vary significantly.

6. Only buy What you Know

One investment rule I never break is that if I can't clearly explain what a company does in a sentence or two, I won't invest in it. For example, I really don't understand most biotech companies (nor have I really tried to), so I'm not going to invest in their stocks. On the other hand, the business models of my largest stock holdings such as Realty Income, FedEx, and Google are rather straightforward. It's important to only invest in businesses that are easy for you to understand, especially while you're just starting out. Watch out for red flags.

There are several red flags to watch for when choosing stocks. Just to name a few, beginners should avoid the following types of stocks:

• Companies that don't earn any profits
• Stocks whose share prices seem to always drop (look at the three- or five-year chart)
• Companies that are under investigation
• Companies with lots of debt
• Stocks with recent dividend cuts, or an unstable dividend history

8. Know how volatile your stocks are

Before you buy a stock, it helps to know how volatile you can expect it to be, which you can determine by looking at its beta (included in virtually any stock quote). A stock's beta essentially compares its volatility to that of the overall S&P 500 index. If the beta is less than one, the stock can be expected to react less to market swings, and if it's greater than one it is more reactive. For example, if a stock's beta is 2.0 and the S&P 500 drops by 5%, its share price could be expected to drop 10%.

9. History tends to repeat itself

Although past performance doesn't guarantee future results, there are some historical patterns that tend to continue. Specifically, stocks with a history of profitability and consistent earnings growth tend to keep up. And stocks with a strong history of dividend increases are extremely likely to increase their dividends in the future. Do a little research and compare the historical behavior of the stocks you're considering.

10. Rookie mistakes to avoid

Finally, there are some dangerous traps rookie investors should avoid. This is not an exhaustive list, but these are among the costliest:

• Buying penny stocks: Avoid "penny stocks," which I define as any stock that doesn't trade on BSE, NSE, MCX, or any other regulated market. Of course, there are exceptions, but it's probably a good idea for beginners to steer clear of these.
• Buying stocks on "rumours": Never buy a stock because it's "about to" do anything. Always do thorough research and make a well-informed decision with the long-term mind.
• Using margin: There are some valid reasons to use margin (borrowed money), but beginners shouldn't touch it. Investing on margin can amplify your returns, but it can also increase your losses.

Stocks are the only investment asset class in the world that have the capacity to grow the invested amount more than 10k times, and yet the myths surrounding the stock market make people wonder if or not stocks are worth investing in. At the same time, it's equally essential to have realistic expectations from the market. Regardless of the real problems, common myths about the stock market often arise. Here are five of those myths.

1. Investing in Stocks Is Just Like Gambling.

Unfortunately, in our society, Risk and Gamble have become synonymous. People talk about the Stock Markets being risky or akin to gambling in the same vein, and this is the main reasoning that causes many people to shy away from the stock market. To understand why investing in stocks is inherently different from gambling, we need to review what it means to buy stocks.

A share of common stock is ownership in a company. It entitles the holder to a claim on assets as well as a fraction of the profits that the company generates. Too often, investors think of shares as simply a trading vehicle, and they forget that stock represents the ownership of a company.

In the financial exchange, speculators are continually attempting to survey the benefits that will be left over for investors. This is the reason stock costs vary. The viewpoint for business conditions is continually changing, as is the future income of an organization.

Assessing the estimation of an organization isn't a simple practice. There are endless factors including that the momentary value developments have all the earmarks of being irregular (scholastics call this the Random Walk Theory); in any case, over the long haul, an organization should be worth the present value of the benefits it will make.

For the time being, an organization can get by without benefits in view of the desire for future profit, yet no organization can trick speculators perpetually—inevitably, an organization's stock cost can be relied upon to show the genuine estimation of the firm.

When you gamble, you can initiate your action, but then you are helpless about the outcome! Obviously, specialists can help you a tad in making the probable estimation, but it will be exactly that: simply a round of possibility, by the day's end.

Trading has a collection of information and science that upholds. You have a key methodology where you take a gander at information and news streams prior to making an informed investment.

2. The Stock Market Is an Exclusive Club for Brokers and Rich People.

Many market guides guarantee the option to call the business all sectors' turns. The truth of the matter is that pretty much every examination done at this point has refuted that these cases are.

Most market prognosticators are famously incorrect; moreover, the appearance of the web has made the market considerably more open to people in general than at any other time. All the information and exploration apparatuses beforehand accessible just to financiers are presently accessible for people to utilize.

In addition, discount brokerages and Robo-advisors can permit speculators to get to the market with a genuinely negligible investment.

3. Fallen Angels Will Go Back up, Eventually.

Whatever the reason for this myth's allure, nothing is more damaging to novice speculators than the feeling that a stock exchange at almost a 52-week low is a decent purchase. Think about this regarding the old Wall Street maxim, "The individuals who attempt to get a falling blade just get injured."

Suppose you are looking at two stocks:

• X made an all-time high last year around ₹5000 but has since fallen to ₹1000 per share.
• Y is a smaller company but has recently gone from ₹500 to ₹1000 per share.

Which stock would you purchase? In all honesty, taking everything into account, a larger part of financial specialists pick the stock that has tumbled from ₹5000 in light of the fact that they trust it will, in the end, make it back up to those levels once more. Thinking this way is a cardinal sin in contributing.

Cost is just a single piece of the contributing condition (which is unique in relation to exchanging, which utilizes specialized examination). The objective is to purchase acceptable organizations at a sensible cost.

Purchasing organizations exclusively in light of the fact that their market costs have fallen will waste your time. Ensure you don't mistake this training for esteem contribution, which is purchasing top-notch organizations that are underestimated by the market.

4. Stocks That Go up Must Come Down.

The laws of physics do not apply to the stock market. This makes a difference to the securities exchange. There's no gravitational power to pull stocks back to even. More than 20 years prior, Berkshire Hathaway's stock cost went from $7,455 to $17,250 per share in somewhat more than a five-year time span.

Had you felt that this stock planned to re-visitation of its lower starting position, you would have passed up the ensuing ascent to over $303,000 per share toward the start of 2018.

We're making an effort not to reveal to you that stocks never go through an adjustment. The fact is that the stock cost is an impression of the organization. On the off chance that you locate an extraordinary firm run by amazing supervisors, there is no explanation the stock won't continue going up.

5. A Little Knowledge Is Better Than None

Realizing something is commonly a way that is better than nothing, yet it is vital in the securities exchange that singular speculators have an away from what they are doing with their cash. Speculators who get their work done are the ones that succeed.

In the event that you don't have the opportunity to completely comprehend how to deal with your cash, at that point having counsel is certainly not an awful thing. The expense of putting resources into something that you don't completely comprehend far exceeds the expense of utilizing a speculation guide.

Bottom Line

Forgive us for ending with more investing clichés, but there's another adage worth repeating: "What's obvious is obviously wrong."

Like anything worth anything, effective contributing requires difficult work and exertion. Consider a somewhat educated speculator a halfway educated specialist; the mix-up could be seriously harmful to your monetary well-being.

Algo trading, algorithmic trading, or automated trading is to trading that artificial intelligence is to computing: the next big thing. With the promise of being fast, accurate, and large; this blog discovers and discusses the unlimited opportunities and possibilities of what Swastika’s Algo Trading has to offer.

The Definition of Algo Trading: An Overview of its Significance

By definition, in Algo trading, computer-generated algorithms are used to execute trades, where machines oversee the tasks (called program sets) that would otherwise be done manually by a trader. In simplest words, Algo trading is a computer program that determines and executes the manual steps in trading as a defined set of instructions. These sets are notably based on timing, price, quantity, or any mathematical model. According to research by The Cost of Algorithmic Trading: A First Look at Comparative Performance, algorithmic trading is especially beneficial for large order sizes that may comprise as much as 10% of the overall trading volume.

In India, algorithmic trading is still less than 50%, and firms are relatively small in size. A significant amount of Algo-trading volumes is in pure arbitrage (trading between the National Stock Exchange or NSE and BSE, for instance).

But complex Algos will, at some point, take over the Indian stock market. Given the rapidly growing trend and demand of HFT and Algorithmic Trading in developing economies & emerging markets, there have been efforts by various exchanges to educate their members and develop the skill sets required for this technology-driven field.

The Benefits: How is it better?

Making the trade process automated helps in tracking even the smallest changes in price and execute the trades on-the-go, faster than the trader can. That helps in improving the order entry speed, diversifying trading systems by permitting the user to trade multiple accounts or various strategies at one time by optimizing the potential to spread risk over various instruments while creating a hedge against losing positions

Also, an algorithm such as ours is able to scan for trading opportunities across a range of markets, generate orders and monitor trades. Since a system can respond immediately to changing market conditions, our Algo trading systems are able to generate orders as soon as trade criteria are met.

In simplest words:

If you are a Mid to Long-Term Investor, you can purchase stocks in bulk when you systematically wish to invest in the market with discrete, large-volume investments

If you are a Short-Term Trader, you can create liquidity and automated trading, it helps them to make the most of the automated trade execution

The Cons? What are the trade-offs?

The algorithms also tend to have a short life span. As good as they can be for menial strategy implementation, the customizability is lost. The speed of order execution, an advantage in ordinary circumstances, can become a problem when several orders are executed simultaneously without human intervention. It is highly probable that the strategies formulated on paper may not turn out to be successful and effective during live trading. This is called over-optimization, wherein the trading plan becomes unreliable in live markets. Despite strategies being built on historical data, there is a large possibility of the strategy failing as soon as it goes live if the right methods are not employed! Not all strategies cannot be automated and converted into an algorithm. So, the use of such strategies is not possible in Algo trading.

Damage Control: How can I manage the cons and make the most of the Algo Trading

As automated as Algo trading can be, it requires constant and consistent monitoring, so Algo trading platforms are not really the wealth-makers for you, but the team of experts that can help you make the most of it.

No human is better than a machine, and no machine is better than a machine. With that said, Swastika’s team of Algo trading experts will be your kingmaker, not just because of their expertise in the algorithm or their wealth-making ability for the past 27 years, but their commitment towards their promise of सर्वे भवन्तु धनिनः

It seems foolproof – buy calls when you’re bullish; buy puts when you’re bearish. You know how much you can lose from the moment you initiate the trade.

But, more than 75% of stocks trade sideways over the long haul. That means only a quarter of stocks make a noticeable move up or down in a given time frame. What do you need when you buy options? Movement!

Sellers, on the other hand, love “stuck” stocks. Trading ranges are profitable territory for sellers. Plus, they know how much they can WIN upfront because they hit their jackpot, the moment they make their trade.

If you have better things to do than hope the underlying stocks move enough to make your long options profitable, I’ve got five rules to help you sell options for profits.

Rule 1:Use your whole account to trade, even if it’s a small one

Most buyers (even the seasoned ones) are prepared and expect to lose some of their money and are OK walking away with empty pockets. To start winning consistently, you must get out of the buyer mindset.

Sellers don’t play with Teen Patti Money or “risk capital.” That will get you blown out of the water, with no lifeboat to get back in to rescue yourself.

Your foundational portfolio is your starting point for making an income out of options. There will be stocks that you love, stocks you hate, and stocks you’ve owned for so long that you can’t bear to part with them.

The best of what you can make on these “money-hole” stocks to make them pay you for your patience … and to sell some puts on stocks you wouldn’t mind owning someday, for good measure.

Rule 2: Tell the market when, and how much, to pay you right now

It’s not about how much money you have — it’s about how you can use it to make how much money you want in any given month.

Whether you’re working with ₹25,000; ₹50,000; ₹1,00,000 or more, set a target for each month. 2% percent is very reasonable and translates to 24% a year. That’s better than the BSE, NSE, and MCX combined, most years!

With a ₹5,00,000 account, you need to make ₹10,000 a month to hit that 2% goal. Revise your goal a little higher, say to ₹15,000, to provide balance if any of your trades don’t work out.

Rule 3: Get long on profits in a short time

Most buyers pick options that require a Herculean move from the stock to make them profitable. But those out-of-the-money option values plummet as expiration nears. When the clock runs out, there’s no earning back, that cash–time is the buyer’s mortal enemy.

Selling options that expire in a couple of weeks or, at most, a couple of months is a proven strategy that provides consistent returns. Best of all, you can repeat the profit cycle every week or month to meet or even exceed your income goals.

Rule 4: Embrace your other best friend: volatility

Selling options on slumping stocks is only part of the fun. You can also profit from directional moves. Unlike the traditional buyer, who needs a big, one-way move, sellers are uniquely positioned to profit from the movement in either direction.

Many “sleep and wake” stocks have excessively volatile option chains (like Citigroup (NYSE: C)). The higher the volatility, the bigger the premiums for option sellers. We always recommend options with some windows for space i.e. volatility in the 25-35 range.

To get the most lucrative and rewarding premiums, you should sell when volatility is at the peak of expansion in that range and cash out when volatility contracts.

This is another way a buyer gets chomped – they tend to buy and watch their option value crash down and burn overnight, simply because the wind went out of their option’s sails … and blew the sellers’ way.

Rule 5: Run the bases for slow-motion, safer home runs

Option buyers don’t get rich from buying options. Sure, they can get the occasional big winner, but it’s usually cancelled out by a bunch of losers.

Option sellers aren’t going to get rich overnight, either. But their winning average is far-more-impressive. Over time, a few dollars earned here and there can add up to a pretty nice chunk of change over time, especially when it’s reinvested.

The secret is to keep your monthly goal in mind at all times. And to not only identify target prices on your options but also to set automatic buyback orders at 30% to 50% profitability. Buyers get caught up in guesswork and emotions, whereas sellers benefit from avoiding the fear and greed that plagues their buyer counterparts.

Bonus Rule: Don’t hope for returns — make them and keep them!

Yes, buyers know their risks before getting established, but so do sellers! Better yet, sellers are net-cash-positive from day one, and they keep that money and have it earning interest in their accounts.

The big risk to buying is that there is always a looming danger of losing all your hard-earned money in one lousy trade. Sellers are far more realistic and disciplined in their expectations and trade management. Once you’ve “won,” which you do right away, you strive to keep the bulk of those returns.

Sure, sellers can have shares “called away” or “put” to them. But if you keep your options out of the money, manage your expectations, and adhere to profit targets, you can stay ahead of the market and be safer than your “buyer” counterparts. In fact, the only real risk is that there is a profit that could have been yours!

What is Technical Analysis?

Technical analysis was first introduced by Charles Dow in the late 1800s. Over time, other researchers built on his ideas, leading to what we now call Dow Theory. Since then, many new patterns and signals have been added, making technical analysis a key tool for traders today.

Technical analysis is a popular method used by traders and investors to evaluate stocks and other securities by examining their past price movements. The core idea is to predict future prices based on historical data.

Logic Behind

The basic idea of technical analysis is that the way a security has behaved in the past can provide clues about its future price. By using the right tools and methods, often in combination with other research approaches, traders can make predictions about future price movements. In simple words, how a stock or market has performed in the past can give us clues about its future behavior.

How Does Technical Analysis Work?

Technical analysis is based on three assumptions:

1. Price Reflects Everything: The stock price includes all available information—whether it’s news, events, or expectations. This means everything that might affect a stock is already factored into its current price.
2. Price Moves in Trends: Stocks usually follow trends: they can go up (bull markets), down (bear markets), or stay flat (sideways markets). Spotting these trends early can help you make profitable trades.
3. History Repeats Itself: Market movements often reflect human behaviour and psychology, so similar patterns and trends tend to happen again and again.

Traders use charts, indicators, and patterns to predict where prices might go next based on these principles. For example, if a stock breaks out of a common chart pattern with high trading volume, a technical analyst might see this as a sign of a potential price movement and plan their trades accordingly.

But why does technical analysis work for some traders and not others?

The effectiveness can vary based on how well a trader applies these principles and adapts to changing market conditions.

‍1. Understanding and Experience

People who understand technical analysis well and have lots of experience often find it successful. They know how to read charts, recognize patterns, and use indicators effectively.

If someone is new to technical analysis or doesn’t fully grasp its tools and techniques, they might struggle to see accurate results. It takes time and practice to get good at it.

2. Market Conditions

Technical analysis works better in certain market conditions. For instance, during strong trends (either up or down), patterns and indicators can be more reliable.

3. Discipline and Patience

Some traders may find it hard to stay disciplined. They might make impulsive decisions based on short-term market moves or emotions, which can lead to inconsistent results.

Successful traders stick to their strategies and avoid emotional decisions. They follow their trading plans carefully and are patient, waiting for the right moments to trade.

4. Risk Management

Good risk management is crucial. Traders who use stop-loss orders and set clear profit targets often protect themselves from big losses and make better decisions.

Traders who don’t manage risk well may face significant losses, making it harder to see positive results from their technical analysis.

5. Adaptability

Those who can adapt their strategies based on changing market conditions and new information tend to do better. They adjust their methods as needed.

6. Use of Tools

Effective use of technical analysis tools and indicators—like moving averages, trend lines, and volume analysis—can provide clear signals and improve trading outcomes.

If someone doesn’t use these tools correctly or relies on outdated methods, their analysis may not be as effective.

Conclusion

Technical analysis can be a powerful tool, but its success depends on various factors including knowledge, experience, market conditions, discipline, risk management, adaptability, and the use of tools. By improving these areas, traders can increase their chances of making technical analysis work for them.

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