Intraday Trading App: How to Trade Stocks Like a Pro 📈

Our economy is still recovering from the impact of Covid-19. Our country is going through the 2nd  wave of the pandemic and is still trying to overcome the losses that happened due to the serious issue of Covid-19.

Recently the GDP data arrived which shows some relief for us, But still, we are facing the serious issues of Inflation across the necessity items.

One of the major is Crude Oil/ Petroleum the prices in India are crossing the mark of Rs.100/ltr which directly affects the economy. The foremost impact is on the transportation & logistics, which somehow leads to rising in the prices of many essential items & products.

But with the advancement in technologies now we are shifting towards the easiest way of transportation which can work with the help of electricity in the most efficient manner.

The Indian market will soon see a new turnaround in this segment as the market will grow up to USD 47 billion by the end of 2026.

These vehicles are more cost-efficient, will have zero pollution and are more in demand in the USA and other countries. Everyone is looking at Electronic Vehicles as the future and which is soon going to happen.

Even the Government of India has announced a PLI scheme of Rs.57000 Cr for the manufacturing of auto parts which will boost it further.

Here is a list of some important auto-ancillary companies which are benefited:

Exide Industries:

The company manufactures lead-acid storage batteries from 2.5 ampere-hours to 20,600 ampere-hours. The company manufactures automotive batteries, industrial batteries, and submarine batteries.

Amara Raja Batteries:

The company is one of the largest manufacturers of lead-acid batteries for both industrial and automotive applications in the Indian battery industry.

Jamna Auto Industries:

This company is engaged in manufacturing and selling Tapered Leaf, Parabolic Springs, and Lift Axles. It was the first company to introduce parabolic springs in India.

Lumax Industries:

The company is a leading supplier of lighting systems in an automobile which includes Head & Tail Lamps, Sundry and Auxiliary Lamps & other accessories for two and four wheeler, Buses & trucks, Tractors, and earthmovers.

Minda Industries:

They are engaged in the manufacturing of auto components which includes auto electrical parts & their relative accessories.

Asahi India:

This company is a glass manufacturing company in India which is manufactured laminated windshield, antenna printed back lite, solar control glass, Glass antennas, etc. It also manufactures floating glass-like reflective glass.

Gabriel India:

The company offers a wide range of ride control products and also enjoys a monopoly position in the market.

Bharat Seats:

The company manufacture completes seating & interior components for the automobile. This includes Two & Four wheeler seating, Mould Carpets, Mainframe for a two-wheeler, & Railways Seats.

Motherson Sumi:

The company engaged in the manufacturing of automotive wiring, Harnesses, Mirror for passenger vehicles. Mother-son Sumi is also a leading supplier of plastic components & modules in the industry.

Furthermore, companies which are engaged in Tire manufacturing, Power Generation, and supplying will be beneficial. Moreover, the EV segment will bring a positive change in the automobile segment.

Note: Details shared here are only for educational purposes.

Just think what if you bought Sensex in 1980 and held on to it now? The answer is: you would have multiplied your wealth nearly by 370 times. There are similar cases as well.

For instance, an investment of Rs 10,000 in Wipro in 1980 would be worth Rs 450 crore today. Also, the investment of Rs 1 Lakh in Eicher Motors in 2002 would be 20 crores today.

Still don't understand the concept? The examples that we have explained above are real case studies and many stocks have given huge returns in 2021.

There is a story about the company Infosys. In 1995, the company had launched its SME IPO and the one who invested a little amount of Rs 10,000 in Infosys IPO, is now enjoying a huge profit of $1 million.

In 2009, the share price of Eicher Motors was Rs 597.4, now the share price of the same stock is Rs 2,635.

Now the question arises, why do buy and hold stocks work in Indian equities? Buying an emerging stock and holding it for the long term will give you outstanding stock market trading returns in the future.

The Logic of Buy and Hold Strategy

There is no set definition for the term buy and hold but yes the meaning of buy and hold is quite straightforward. Needless to say, investments in equities are riskier than other financial securities. Due to inadequate knowledge about the stock market, worst advisory services, many people have lost a huge amount by investing in equity.

In addition, some people invest in equities for a short time and as a result, they suffer from a loss. However, if people concentrate on buy and hold strategies for stocks, they will eventually achieve greater returns in the future.

Purpose of Buy and Hold Strategy

Buy and hold is a long term passive strategy where investors keep a stable portfolio irrespective of short term fluctuations. As per the statistical data, buy and hold strategy is always a long term bet that will give you attractive returns in the future.

Equities are riskier instruments, but with a longer holding period, it can be turned out to be a fair investment strategy.

In other words, the market goes up more often than it goes down and compounding the returns during the good time of the stock market gives a higher yield than other financial instruments.

Below are the reasons why the buy and hold strategy has always worked for Indian equities:

1. India began its growth in 1992 after the liberalization of the economy. However, real growth has been witnessed since 2003. That’s the reason real growth has started as the economy expands.
2. As the economy started to expand, the growth of the stocks has also started which in turn increases the GDP of the country. Therefore, the stocks interlinked with the GDP growth gave outstanding returns in the 15 years. The stocks that gave the highest returns are from the sectors such as banking, automobile, consumer goods, capital goods and more.
3. In recent times, we have seen a large growth in manufacturing companies. As a result, today India has companies such as Tata Motors, L&T, TCS, Reliance Industries and more.
4. Consumer demand is directly proportional to the rise in income levels. In the last 20 years, the per capita income has increased sharply, however it is low according to the global standards. Rising per capita income increases the consumer demand which in turn increases the wealth in the market.
5. Known sectors of the country like telecom, automobile, PSU bank have shown comparatively less growth for a long time. However, for the few years, these sectors have shown a drastic growth in the market-leading to wealth creation in the stock market.
6. Many investors still invest in old companies. To experience the real growth in your wealth, you need to invest in new companies such as HDFC Bank, TCS, Adani Greens and more. We experience a similar trend in the US market also. For instance, tech-automation companies have managed to create tremendous wealth in the last 15 years. That has encouraged the US people to stock the buy and hold strategy.
7. Technology and communication created a huge wealth in India. Smartphone, the internet, the spread of smartphones, smart ERP solution and digital initiative taken by the government for the improvement of efficiency of Indian companies. This, in turn, increases the equities in the Indian stock market too.
8. Indian has consistently seen mid-cap companies converting into large-cap companies. Due to the rising economy of the country, the companies such as Lupin, Eicher Cadilla has managed to create huge wealth within a shorter life span.
9. FII’s interest in the Indian stock market is also one of the key reasons for the success of the buy and hold strategy. The participation of FII in the Indian stock market has impacted it positively. In other words, FII is capable of maintaining liquidity in Indian stocks. Also, it helps stocks to achieve potential strength.
10. Indian corporates enjoy the beautiful combination of their growth and margin mean-reversing consistently. That means, buying quality stocks and holding them for a longer period is now becoming an attractive investment option among the Indian people.

The crux of the story which we have mentioned above is that the buy and hold strategy still works in India. Many people who invested a long time back in equity stocks, now enjoying a whopping return of $1 million. For better returns, you just need to identify good quality stocks and hold them for a longer-term.

Average is a word that we all have acquainted with. We all have learnt the topic of averages in school and the moving average is considered as an additional version of it.

As we all know, calculating averages become an integral part of our lives as it is the fundamental term used to express the central or typical value in a set of data particularly the mean, median or mode.

Now, you may be interested to know that moving averages can also be used for trading. Before we take a dig deep into moving averages and how it adds a value in the stock market trading, let's get a brief of the term.

Moving Averages are trend indicators that are widely used to predict future stock price trends. They are mostly used because of their simplicity and effectiveness.

The most common moving averages are 15-, 20-, 30-, 50-, 100- and 200- day MA.

Types of Moving Averages

There are mainly two types of moving averages used in trading, which are SMA (Simple moving average) and EMA (Exponential Moving Average). The SMA is calculated as: take the closing price of a security for the relevant period, add them and divide the sum by the period number.

Where in EMA, each price in the MA is given an equal weightage. Also, the calculation of EMA is more complex than SMA as it gives more weightage to the most recent price.

Using Moving Averages:

The moving indicator records the data based on the past price trends and hence it is known as the lagging indicator. I.e the longer the moving average time period, the greater the lag. A 200-day MA is lagging more than a 20-DMA because a 200-DMA is plotted based on the past 200 days. Whereas the latter is plotted by using the latest 20 days data.

You can easily customize the MA indicator. The shorter the MA, the more effectively its price changes.

Below we are mentioning a few points on using moving averages:

• An upward and downward Moving averages can tell you many things. A rising MA tells a security price rising upwards, whereas the downward moving averages indicate a security price trending downwards.
• Traders use both types of Moving Averages i.e. Upward MA and downward MA.
• To track the effective time period that works best for your stock, you are required to experiment with multiple time periods of moving averages.

How Moving Average is used to spot trending directions?

When a stock trends upwards, its moving average will act as a floor price.

When a stock trend downwards, the moving average will form a resistance with the stock price which is currently going downwards.

Moving Average Convergence Divergence

You can also plot two or more MAs for stock to detect crossover i.e. the point at which Moving Average intersects each other.

This brings us to the moving average convergence divergence (MACD). The MACD is calculated as the difference between a stock’s two EMAs - the 12 periods and 26 periods EMA.

Now, explaining the MACD signal line - a nine period EMA of the MACD value. When plotted over the MACD line, it acts as a trigger to buy or sell.

It is a buy signal when the MACD crosses the above signal line, it is a sell signal when it crosses the below signal line.

Crossover Trading Strategies

Price Crossover

Price crossover is defined as a cross over above or below the Moving Average, its immediate mark a change in stock’s price trend.

MA Crossover:

Two Plotted MAs are bound to crossover at various points. A comes were the short term MA crosses above the long term MA signifies a bullish pattern.

When the short term MA crosses below the long term MA, it indicates a bearish pattern.

200 Day Moving Average Strategy

If the stock price counted above 200 days MA, it marks a buying trend whereas if a stock price comes below 200 days MA, it gives a sell indicator.

Moving Average Disadvantages

Moving averages are calculated based on the past trends and it shows nothing about prediction based on present trends. Hence, the results using moving averages can be random. There is a time where the markets support MA/resistance and trade signals, while at other times the results are different than what MA shows.

Another Problem is Price fluctuation.

If the price action changes frequently and it swings forth and back generates multiple trade signals, it confuses the MA.

At this point, it's good to seek another trading indicator to clarify the trend.

The same thing happens with MA crossovers when MA gets tangled up for a period of time which in turn results in multiple trading losses.

Moving averages work well when the trending conditions are strong but fail in choppy or ranging conditions. The best solution is to adjust the time frame that can solve this problem temporarily. However, at some point in time, these issues frequently occur regardless of the time frame chosen for the Moving Averages.

The Bottom Line

A moving average simplifies price data that can be used by monitoring past trends. It has been observed that EMA reacts quicker to price changes than SMA.

In some cases, it gives a good response to the research while in some cases it gives the wrong signal. Moving averages with a shorter lookback period (20 days) will also give a faster response to price changes than an average with a long lookback period i.e. 200 days.

Moving averages crossovers is still a popular strategy for both entries and exits. MAs can also highlight areas of potential i.e. support or resistance.

Masala bonds are something that might seem unfamiliar to many people. However, it is not unfamiliar for the people who often deal with the bonds.

Masala bonds were first introduced in 2014 by International Finance Corporation (IFC). Masala bonds are bonds issued outside India by Indian organizations or entities. However, these bonds are issued in Indian currency rather than the local currency.

Indian companies issue masala bonds outside India to raise money from foreign investors. As it is pegged into Indian currency, investors have to bear the loss as the rupee rate falls.

What is Masala Bond?

Masala Bond, the name is given by International Finance Corporation (IFC). The term Masala is an Indian word, basically used for spices, to explore the culture and cuisine of India on the international platform.

Characteristics of a Masala Bond

Masala bonds are rupee-denominated bonds that are issued outside India. They are categorized as debt instruments that help to raise money in local currency from foreign investors. These bonds can be issued by both government and private entities. Any resident of the country can take the subscription of these bonds, however, there are certain conditions are applied.

Investors can only be subscribed to the masala bonds whose security market regulator is a member of the International Organization of Security Commission.

Also, regional financial institutions and multilateral financial institutions can subscribe to these bonds.

What is the minimum maturity period of such bonds?

According to the RBI, the minimum maturity period for Masala bonds raised to the Rupee equivalent of USD 50 million in a financial year should be 5 years. However, the maturity period is five years for the bonds raised above the rupee equivalent of 50 million dollars in a financial year.

The conversion for such bonds will happen at the market rate on the date of settlement of transactions undertaken for the issue and servicing of the bonds including its redemption.

How does Masala Bond help bond issuers?

Masala bonds are directly issued in Indian rupees. i.e. the investors need to carry the exchange rate risks. If a person issues a Masala bond, it will not directly affect the issuer if the rupee rate falls. Instead, the risk goes directly to the investors.

Who is eligible to invest in Masala Bond?

Investors that are residing outside India who want to invest in Indian assets can issue Masala bonds. Several Indian organizations such as NTPC, HDFC, Indiabulls have raised their funds through Masala Bonds.

Usage of Masala Bonds:

These bonds can be used:

In refinancing of non-convertible debentures and rupee loan.

Working capital to corporate

For the development of integrated townships and affordable housing projects.

RBI mandates the process raised from these bonds cannot be used -

In real estate activities where the development of integrated township and affordable housing projects takes place.

• Purchase of land.
• Investing in capital markets and usage for equity investments domestically.
• On-lending to other organizations for any of the other purposes.
• Activities prohibited as per the FDI guidelines.

Benefits of Masala Bonds

The benefits for the investors are as follows:

It assists in developing foreign investors’ confidence in the Indian economy.

It offers higher interest rates which in turns benefits the investors

It aids in strengthening the foreign investments in the county as it facilitates the investor’s confidence in Indian currency.

The capital gains from rupee denominations are mostly exempted by the tax.

If the rupee value increases at the time of maturity, it will provide a maximum return to the investors.

Benefits for the Borrowers

Since Masala bonds have no currency risk, it saves the borrower from currency fluctuation.

The borrower can mobilize a huge amount of funds.

It helps the Indian organization in issuing these bonds to diversify their portfolio.

Investors need not worry about rupee depreciation as the issuance of these bonds took place in Indian currency rather than foreign currency.

It helps borrowers to cut down their costs as they are issued outside India at an interest rate below 7%.

As these bonds are issued in the offshore market, it assists borrowers to cover a large number of investors.

Why Masala Bonds can be a game-changer for Indian Companies?

Needless to say, Masala bonds are issued in Rupee terms and the interest and principal repayment happens in dollar terms. It can be noted that in this case, the issuer does not bear the currency risk, but the risk is fully associated with the investor.

Earlier, this used to be a major problem for Indian companies that were issuing dollar-denominated bonds in the past. For instance, in 2008, the INR crashed sharply vs US dollars. At that time, the depreciation of INR vs US dollar forced many companies to bankrupt.

To understand the importance of Masala Bond, one needs to understand the risk associated with dollar-denominated bonds through a suitable example:

Suppose company XYZ ltd, issued dollar-denominated bonds of $200 million to its lenders at a 5% interest rate. The exchange rate at that time was Rs55/$. Hence, the company brought in Rs 1100 crores to be deployed into the Indian business. When the bonds were redeemed after 5 years, the prevailing exchange rate was Rs69/$.

As a result, XYZ company Ltd had to pay Rs 1380 crore to repay the $200 million to its lenders.

Apart from the interest rate, the company will have to give an additional Rs 280 crore due to rupee depreciation. Many Indian companies cannot afford this type of currency costs.

Now the question arises, why would foreign investors take the currency risks? There are two reasons: Firstly, investors get attracted by the higher rates of interest that Masala bonds offer. Here, the world's higher yield catches the investor’s attention.

Secondly: Investors are betting whether the INR will remain steady or move upward against the dollar, which means the investors who invest in Masala bonds will get the dual benefit.

The benefit due to higher comparative yields on Masala bonds. Also, investors stand to get more dollars from the same amount of rupees because these bonds will be settled in dollars.

The Bottom Line

Masala bonds are the rupee-denominated bonds issued outside India by an Indian entity. The bonds are issued in rupee terms and the interest and principal repayment occurs in dollars. Hence these bonds can be a game-changer for Indian companies.

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Mutual funds have emerged as one of the popular investment options among investors. This is because investors find themselves much relaxed while investing in MFs as the money is invested in lots of different sectors so that the fear of losing money has been minimized to a certain extent.

Earlier, investors used to invest in stocks or government securities. People who knew about the stock market only invest in stocks, however, people who had no idea about stocks, preferred to invest in government securities as they found it a better yet safer investment option than stocks.

As time flies, new forms of investments have started to take place. One such investment option is Mutual funds.

What is a Mutual Fund?

A mutual fund is a company that collects money from different people and invests it in stocks, bonds or other securities. Mutual Funds are operated by experts which are also called fund managers who put the fund's assets into different sectors in an attempt to produce capital gain or income for the fund’s investors.

Investors now are taking a huge interest in mutual funds as they are less riskier than stocks. Also, they are actively managed by fund managers who are experts in managing a portfolio, fund allocation and more.

Although there are a lot of investing platforms available now, it's always good to take a sip of knowledge and market knowledge about how a mutual fund works and how to check the performance of a mutual fund company:

So, how do you measure the current performance of a mutual fund?

A study on mutual funds regarding the performance of a mutual fund reveals that the market share and the change in the market share are the most essential metrics to evaluate a company’s performance.

What are the Top Reasons to Track Investment Performance?

You might have known that the past performance of a mutual fund does not decide the future performance of the same fund. It simply means that you cannot expect a guarantee of ROI from these funds despite having a strong past record. Hence, you need to figure out the other factors that help you to assess the performance of a mutual fund company.

Firstly, you should keep track of your investments so that it will help you to make informed decisions that can lead to higher growth.

There is no need to say that the capital market is volatile which means it keeps fluctuating with the overall economic conditions. These conditions affect the overall asset allocation of the portfolio. For example, the market volatility and continuous changing economic conditions can change the allocation of 50:50 equity-debt to 60:40 equity-debt which can increase the risks of the fund.

Secondly, fund evaluation allows you to compare your investments with similar funds. Hence, a review and balancing may be required to keep the risk profile of the portfolio intact.

Here, we will share all the details about evaluating a mutual fund’s performance:

Evaluating the performance of a Mutual Fund

1. Set Investment Goals

The purpose of investment should be cleared before investing money into a mutual fund. Always set your investment goals before planning any mutual fund for investment. Once you finalize a mutual fund based on an investment goal, it would be better to evaluate the performance of the fund you have selected.

It may be noted that different mutual funds come with different goals. For example, if someone wants high growth in the long term, and has a high-risk appetite, then he/she can choose equity mutual funds. Therefore, it is important to find out your financial goal first and then decide your investment.

2. Shortlist the Peer Funds to Compare

It is difficult to check the performance of a mutual fund in isolation. Hence, it is suggested to make a small list of the best mutual funds in a particular category and compare them regularly among various funds.

3. Look at the Historical performance of the Data

Past performance of mutual funds gives no indicator of its future performance. Now, many mutual funds come with a disclaimer stating that past performance cannot provide the guarantee of a mutual fund’s performance.

Although the above statement is considered true to some extent; the past performance of data can provide you with other relevant information. For instance, the historical performance of a mutual fund allows you to map the fund managers’ performance across different market cycles.

If a fund can give higher returns than the benchmark even during the worst market conditions, you can get a realization about how fair it would be in the future.

4. Monitor the Fee Structure of the Fund

Needless to say, a mutual fund company charges you for its services and expertise, which is further broken down into other components. The fee changes according to your plan you invest in i.e. direct and regular.

It may be noted that a fund with a higher fee always performs better than other mutual funds.

5. Take a Tour at Risk-Adjusted Return

Markets are volatile and hence every fund is associated with certain risks. Every mutual fund sets its benchmark and therefore they have been always comparing the set benchmarks. Generating returns more than the set benchmark tells many things about a fund manager. I.e. the ability and strategy of a fund manager like how well he/she performed despite similar risks across several market cycles.

How Often Should You Evaluate a Fund's Performance?

Everyone knows that the market is highly volatile, but that doesn’t mean that you need to evaluate your performance daily. On average, you should assess a fund every six months to a year.

Evaluating a fund over a shorter period doesn’t give you accurate information about the performance of a fund.

If all this sounds too much, it’s better for you to invest in regular funds.

Takeaway

The key points mentioned in the blog above will guide you to find the right mutual fund that perfectly suits your investment goals. Do remember, always analyze a fund’s performance according to your set financial goals before you open mutual fund account online.

Gold, a precious metal, has been an integral part of ancient India. For years, Gold has been considered a symbol of wealth, status and an important part of many Indian rituals. Thanks to the metal’s affluence and its usage, gold has shown a great shielding effect against uncertain market conditions i.e. pandemic.As the 2021 quarter comes to an end, gold hasn’t made a great hit. The precious metal has tumbled 19% from its last August and is back where it was in February last year before the pandemic hit the developed world. However, as the quarter-end and the pandemic began, the price of gold has subsequently increased. Gold’s price has suddenly increased and it touched an over a three-month peak on Tuesday as the investors have shown a great interest in the yellow metal. Another important cause behind the sudden rise of gold prices is the second wave of the pandemic, rising inflation, and a weekend US dollar that marks investors to make Gold a hedge option. Also, recently, it has been seen that the gold prices are rising with a decent amount and due to the occasion of Akshay Tritiya, the prices are further increased. The second wave of pandemic gold prices had faced a slight drop but post-Akshay Tritiya occasion, it is again in the spotlight. That means, the prices have recovered and experts say that it will cross the mark of 50000 in July 2021.Even though businesses are suffering and the economy is struggling to come to its normal pace, many people are perplexed as to why gold prices are rising during the weak condition of the economy. Below are the factors that influence gold prices to a greater extent: A lot of things has been said about the factors that influence financial markets, many investors are unaware of the rising prices of gold:

Demand and Supply

The demand and supply of gold play a crucial role in rising gold’s price. The inadequate availability of gold increases the demand for gold and hence the prices rise as well as the supply is limited.

Rate of Interest

Gold prices and interest rates are inversely proportional to each other. As interest rates decline, people don’t get good returns. Hence, people are required to split their deposits and buy gold which in turn increases the demand and the price.

Reserves Held by the Government

RBI plays an important role in affecting gold prices. Indian’s government maintains gold reserves. By doing this, the Indian government can buy and sell gold through the Reserve bank of India. If they purchase or sell more gold, the prices would affect the gold.

The market for Indian Jewellery

Many people buy gold jewellery in India and hence the gold price rises during festivals and wedding seasons.

Import Taxes

India’s contribution to global output is observed as less than 1%. Although the country is the second-largest consumer of gold, to meet its metal demand, India also imports a lot of gold from other countries.

Market For Indian Jewelry

The demand for gold rises during the festive and wedding seasons in India as many people wear gold jewelry on occasions. Such things increase the demand for gold which will eventually rise in its prices.

Why are gold prices rising? Key things to know:

The sudden rise in gold prices makes many investors worried. They fail to recognize the real reasons for rising gold prices. Why are gold prices rising? At what time does the gold price rise? Can they invest in gold now or they have to wait for some months?

Investors now, seeking the safest instrument to invest:

Since March 2020, many countries have adopted nationwide lockdown to prevent the spread of Covid 19 infections. It has helped several countries to minimize the spread of coronavirus among people, however, it also caused a lot of economic damage as all the production was closed and imports and exports were cancelled. To get rid of the tough times of the pandemic, people are finding gold as the safest instrument to invest.

Understanding the relation between lockdown and gold price:

When the lockdown had ended in June 2020, many people would think that the businesses would grow faster and the economy would soon recover. Hence, a large number of investors had started investing in high-quality stocks. However, as the myths of economic recovery have faded, people have started to invest in safer options. As a result, gold prices are rising day by day as the people see it as a natural shield or safeguard against inflation and economic instability.

Should You Invest in Gold Now?

Although increasing demand for gold prices indicates strong demand for gold jewelry, experts believe that the gold prices will reach up to 65000 per 10 gram in the upcoming years. The reason behind the rising demand for gold depends on a lot of factors such as low interest rates, liquidity and availability. Is it a good time to invest in gold? Well, the answer heavily depends on how you see the market. If you think that the economy will take a long time to recover and the interest rates will remain low for a long duration; investing in gold is considered a good option. However, if you think the economy will soon recover and the industries will receive a heavy boom, then you need to look for other investment options i.e. stocks.

The Bottom Line

As the gold prices are rising day by day, it catches investors' attention. As a result, many investors have started to invest in gold considering it as the safest instrument. However, it is also crucial to think of all the other investment options before making any decision. Hence, before jumping on board, please make sure that your investments flow parallelly with your portfolio, investment strategy and risk tolerance.