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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 fact...
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Why are crypto markets down?

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From last one year one market that has been in the news for its very large bull rally is the cryptocurrency. Especially in the last few months the bull rally has been out of expectation. But recently the market saw almost a loss of 60% last week. While a correction in any market could be common after such a large bull run in any market let us have a look at the main reason behind the fall. The digital currency market has plummeted from $2.2 trillion to just $1 trillion in the past few days. Well while social influence could be one of the factors the main reason behind the vast fall are as follows:- The strengthening crypto regulation in China leading to it's ban in the country has been one of the major factors in consideration to this crash. In response to the recent warnings from Chinese regulators, cryptocurrency exchange Huboi told  CoinDesk Sunday that it has halted its miner-hosting services in mainland  China. It’s unclear how much that could impact mining, but cryp...
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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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P/E Ratio in stock analysis

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 P/E ratio or the Price to earnings ratio is the criteria which is used to compare with various other factors or is itself observed to understand weather a stock is undervalued or overvalued based on its share price. It can be calculated by simply dividing the price of the stock by the earnings per share of a stock.                                 P/E=  Share price / Earnings per share  The P/E ratio  helps investors determine the market value of a stock as compared to the company's earnings. In short, the P/E shows what the market is willing to pay today for a stock based on its past or future earnings. A high P/E could mean that a stock's price is high relative to earnings and possibly overvalued. Conversely, a low P/E might indicate that the current stock price is low relative to earnings or undervalued. However P/E ratio always individually can't be used to d...
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What are ETFs? How is it different from mutual funds?

Guru Prasad -
 What are ETFs:- An exchange traded fund (ETF) is a type of security that tracks an index , sector, commodity, or other asset, but which can be purchased or sold on a stock exchange the same as a regular stock. An ETF can be structured to track anything from the price of an individual commodity to a large and diverse collection of securities. ETFs can even be structured to track specific investment strategies.  ETFs generally offer low expense ratios and fewer broker commissions than buying the stocks individually.  An ETF is called an  exchange traded  fund since it's listed and traded on an exchange just like stocks. The price of an ETF’s shares will change throughout the trading day as the shares are bought and sold on the market. There could be various types of ETFs such as Bond ETFs, Industry ETFs, Commodity ETFs, Currency ETFs, Inverse ETFs.  How is it different from a mutual fund or index funds:- ETF prices keep fluctuating throughout the trading hou...
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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 thes...
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Replacement cost theory

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  Yes, he is none other than Harshad Mehta the well known market manipulator. You all must have seen the series scam 1992, the series which has blown everyone's mind in the last one year. If not no problem. But, what is this replacement cost theory that was propogated by him. Harshad Mehtha proclaimed that the rise of ACC stock was just due to the philosophy of  'Replacement Cost Theory'.  Replacement cost is a cost   that is required to replace any existing asset having similar characteristics or the cash outlay  that firm has to pay in order to replace  an old asset at the current market price . An organization often chooses to replace its assets when the repair and maintenance costs increase beyond an acceptable level over a period of time. It is found out by calculating the present value  of the asset, followed by its useful life. The insurance company’s primary function is to evaluate whether the decision of replacement is better than repair and m...
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Share holdings of a strong large cap stock

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 Share holding of a company could be a really good criteria to understand the strength of any company and make your investment more secure. But what do I mean by share holdings? Yes, obviously it does relate to the percentage of holding the promoters have in the share. A very less holdings from the promoters could always be dangerous. Moreover this most importantly the decrease in promoter share holding could be a symbol of the companies reducing assets or funds. The year on year share holding pattern hence plays an very important role in the analysis of a stock. In this blog let us have a look at the pattern of share holding and its survivable capacity of few large cap stocks in particular.  Given below is the share holdings pattern of one of the most well known stocks in India:- The following stock is a large cap stock which has a 72.19% holdings by its promoters even after such a long period of time and hence it shows that the company is in safe hands and hence it has been ...
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Mistakes that you should never make in stock market

Guru Prasad -
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 People often think stock market is like gambling. But why? There are few such mistakes that people often do here that puts them in loss. What could those be :- 1. Investing on others words:- Stock market is a place to execute your passion and just satisfy your greed. Hence investing by trusting someone's words without any kind of self analysis is one of the biggest blunder you could do. You should gain knowledge and understand the strength of your stock before investing. Stocks require being updated with news as it works on the funda that "knowledge is wealth".The market doesn't have place for emotions like trust and believe on someone. 2. Taking loans to invest:- Taking loans to invest in stocks is always a risky thing and hence is never suggestible. Stock markets could change their trend at any time due to even small news as stock market runs on sentiments. Investing in such a place often ends up in the door to suicide or death for many people. 3. Investing all you...
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What is cash flow from operating profits?

Guru Prasad -
  Cash flow from operating activities (CFO) indicates the amount of money a company brings in from its ongoing, regular business activities, such as manufacturing and selling goods or providing a service to customers. Cash flow from operating activities does not include long-term capital expenditures  or investment revenue and expense. CFO focuses only on the core business, and is also known as operating cash flow (OCF) or net cash from operating activities. Some essential points about operating cash flows are:- 1. It is the total amount of money being transferred into and out of regular business activities.  2. It shows companies liquidity, necessary for operational efficiency. 3.  It typically includes net income  from the income statement  and adjustments to modify net income from an accrual accounting  basis to a cash accounting  basis. 4.It shows the capacity of a company to generate immediate cash flows to repay liabilities if requ...
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3 things to first see while choosing a stock for fundamental analysis

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 When choosing a stock to invest there are obviously many things to look for, but what are those essential things that you should see while shortlisting at the first sight? It is obviously impossible to fundamentally analyse every stock at the first glance and waste time. So let us have a look at how to make it simple:- 1. The market capitalization of the company:- How big company are you looking for to invest? A large cap, medium cap or small cap. Generally a large cap which means a market capitalization over 50,000-60,000 crores is safer to invest comparatively. Smaller companies obviously do give better returns but the risk is also usually that high. Therefore a large cap or a mid cap would do better while choosing the stock. The market cap shows how much the company has expanded over years and how large the company is while investing. Hence this could be set as our first and for most factor. 2. The five year graph of the company:-  Have a look at these images. Looking at t...
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Best Blogs

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 fact...
Read more

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 ...
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Monetary and Fiscal policy

Guru Prasad -
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Everyone knows that our economic is supported by the different policies and reformations made by the government and the banking sector which is headed by the governing body Reserve Bank of India. But what are the various types of economic policies that are opted by these two to improve our countries economy and meet the financial needs. The policies could mainly differ to be of two types and they are:- 1. Monetary policies 2. Fiscal policies The Monetary policy involves changing the interest rate and influencing the money supply by the RBI or the central bank of any other country and regulating of repo rates or moratorium periods. While the Fiscal policy involves the government changing tax rates and levels of government spending to influence aggregate demand in the economy. How monetary policy works:- The Central Bank may have an inflation target of 5%. If they feel inflation is going to go above the inflation target, due to economic growth being too quick, then they will increase int...
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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...
Read more

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