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Showing posts from June 13, 2021

Beta- Analyzing mutual funds

Guru Prasad -
 The risk of any investment made always depends on the volatility in the following investment. If we can have a factor that could tell us about the volatility of a investment and help us judge our risk and corelate it with our capability to take risk, how would that be? Well Beta factor is one such factor that could help us know the sensitivity of our stock or portfolio fund that we have chosen to invest. Beta ratio:- Understanding Beta:-  Beta is a metric used in fundamental analysis to determine the volatility of a stock with comparison to the overall market that has a fixed beta ratio of 1 always. Stocks or funds that are ranked with a beta ratio above 1 generally tend to fluctuate more and hence give access to more risk but yielding higher returns too at the same time if gone in favour. While the risk is slightly less in the funds with beta ratio below 1 they give less but yet stable return on investments generally. Hence, the beta factor can be said as a risk- reward factor, helpi
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Transformation in Business

Guru Prasad -
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 In stock market we often prefer investing in companies with stable growth and significant high profit yielding companies. People seem to trust these companies on along term basis and trust the capabilities of the company to improve. But, in today's fast moving world what really makes these companies long lasting and trustable. It is their capability to adapt with the fast moving technology and changing demand of the people. Life or business, change is the rule of the world and in this world only the fittest survives, even in business. Hence transformation in companies is a very important criteria for choosing any company for any kind off investment on a long term prospect.  Business transformation is a change in management strategy which can be defined as any shift, realignment or fundamental change in business operations.The vision is to cop with the requirement of the demands of the business. This transformation could be at many levels(especially in a large cap company), such as
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Financial literacy in India

Guru Prasad -
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"If you buy things you do not need, soon you will have to sell things you need." Hey guys. I hope you all must have heard this well known quote by Warren Buffet.  College graduates often spend 16 years gaining skills that help them command higher salary; yet little or no time is spent helping them save invest and grow their money. In a growing and developing nation like India where economy always remains the cause of concern, Do you all know that the financial literacy in India is just 24%, which is the least among it's well competing peers. You don't believe me! Well let me take you through a complete detailed study of the financial literacy in India. What financial literacy means? Financial Literacy is the ability to understand basic financial concepts and the possession of knowledge and skills required to make informed and effective financial planning, decisions using the available financial resources. It is about knowing how to generate, spend, invest and save mon
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Devaluation and depreciation of currency. Are they same???

Guru Prasad -
When the value of currency decreases, people often get confused between devaluation and depreciation. But what is the difference? Is the value of currency really important to be a developed nation? Devaluation:-   Devaluation is the deliberate downward adjustment of the value of a country's money relative to another currency or currency standard. It is done deliberately to reduce the export costs and shrink trade. It also helps in paying debts by printing of more notes which also decreases the value of money. Unlike depreciation, it is not the result of nongovernmental activities. This is often done to render themselves more efficient in the global market and gain better foreign investments by offering a low labour cost to the foreign companies. A export oriented country would always prefer to stay more committed towards a lower currency value as cheaper costs would attract more investors. Depreciation:-  Currency depreciation is a fall in the value of a currency in a floating exch
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SPAC and equity based crowd funding

Guru Prasad -
 SPAC( Special purpose acquisition companies) and equity based crowd funding are generally two concepts of the U.S stocks which haven't really been ruled out in India but are being analysed by SEBI if they are vulnerable for the Indian markets too. But the question in what are they? SPAC (Special purpose acquisition companies):-  These are companies  with no commercial operations that is formed strictly to raise capital through an initial public offering  (IPO ) for the purpose of acquiring an existing company. Also known as "blank check companies. " These companies are strictly asked to asked to complete their acquisition within a time frame of just 2 years or else written all the collected funds back to the public.  In 2020, as of the beginning of August, more than 50 SPACs have been formed in the U.S. which have raised some $21.5 billion. The  Investors in these SPACs can range from well-known private equity funds to the general public. Usually when these companies bri
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Are markets over rallying?

Guru Prasad -
 The sensex has touched 59k and nifty has had a strong rally giving a touch to the 17,700 mark. While the nation is leading towards a fast economic recovery there are also certain concerns over a third wave of covid that lies, but yet the bull run has seemed to have no impact. While the reformations in the telcom sector to help revive vodafone idea has been a positive news for the telcom sector there are also reformary steps being taken by the government along side. The GST collections are touching new highs being a good symbol for an economy recovery. Hence, the foreign portfolio investments also seem to be flowing well into the country. While running corrections could take place in market now there does not seem any reason for a drastic fall in the market until effected by another wave of covid. But, yes the markets are growing at a pace more than expected and hence it could be the right time for partial profit bookings in some stocks. While the market still trades at a pe ratio whic
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