Indian Stock Market Blog » Mutual Funds http://www.indiansharemarket.net/blog Just another WordPress weblog Fri, 27 Jan 2012 04:17:13 +0000 en hourly 1 http://wordpress.org/?v=3.0.1 Individual’s Rules for investing in mutual funds http://www.indiansharemarket.net/blog/individuals-rules-for-investing-in-mutual-funds-5 http://www.indiansharemarket.net/blog/individuals-rules-for-investing-in-mutual-funds-5#comments Mon, 16 Jan 2012 08:18:54 +0000 vcode http://www.indiansharemarket.net/blog/?p=982 mutual funds
Investing is a quite a complex exercise. But when it comes to the basic principles, they are amazingly simple. Anyone can become good investor and reach your goals just by following those simple and easy rules. Here is the list of few rules for making investment in mutual funds:

Be a long-term investor:
You should have a long term horizon. Short-term trading will make brokers rich and not investors and the income tax department will also be happy. Mutual funds are diversified and therefore, their gains and losses are likely to be lower than what it would be in case you are investing in an individual security. However, major fluctuations are highly uncommon in mutual funds. So what make sense is to leave your capital in a mutual fund for a long time and let it compound. So the key point is Buy and Hold. It also requires to you do a reality check on yourselves so that you can define your goals and priorities before entering the market.
Start Early:
When you invest in the market is more important than the market timing. Always enter the market with long term thinking. Do proper researches before investing set your priorities and goals, ascertain your risk profile. Also very importantly you should keep yourself abreast with the daily market news. One should not do impulsive purchase allowing emotions overpowering the sense of reason.

Know yourself and then What You Are Buying:
The first step towards achieving your goals would be to know yourself, your risk appetite and accordingly make the investments. Once you have discovered yourself, explore the market and find out the kind of funds available in the market. Firstly, get a hang on the style and strategy followed by a fund by reading the available material. This will help in diversifying the portfolio and also in assessing potential risks. In general, large-cap value funds are less risky than small-cap growth funds.

]]> http://www.indiansharemarket.net/blog/individuals-rules-for-investing-in-mutual-funds-5/feed 0 Indian economy slides into danger zone; Investments plunge to 5 year low http://www.indiansharemarket.net/blog/indian-economy-slides-into-danger-zone-investments-plunge-to-5-year-low http://www.indiansharemarket.net/blog/indian-economy-slides-into-danger-zone-investments-plunge-to-5-year-low#comments Wed, 11 Jan 2012 05:03:01 +0000 vcode http://www.indiansharemarket.net/blog/?p=973 MUMBAI: Investment proposals plunged to a five-year low in 2011 as companies such as GMR and Reliance Power halted projects due to administrative hassles, threatening to amplify the economic slowdown in 2012 and delay recovery even with rate cuts from the central bank.

A prolonged phase of weak investments could increase loan defaults by companies or call for restructuring of debt, denting banks’ profitability.

New investment proposals in 2011 fell 45% to 10.46 lakh crore, from 18.88 lakh crore a year earlier, data from the Centre for Monitoring Indian Economy (CMIE) shows.

“If investment-led growth does not happen, we will manage to have a GDP of around 6.5% over the next 3-5 years,” said A Subba Rao, chief financial officer, GMR Group, which runs airports and utilities. “Investment is weak and if the government does not act fast, it may come to a grinding halt. The government needs to work overnight and carry forward reforms and approve policies over the next 2-3 months for things to improve.”

Companies have frozen investments as government flip-flop on policies are blurring returns, especially in the power sector that guzzles capital and needs scores of departmental approvals for smooth execution. State investments are also slowing as welfare programmes take precedence over asset creation.

With many projects stalled, banks are also reluctant to lend for fear of bad loans. The 13 rate increases by the RBI have made funds expensive.

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]]> http://www.indiansharemarket.net/blog/indian-economy-slides-into-danger-zone-investments-plunge-to-5-year-low/feed 0 Currency http://www.indiansharemarket.net/blog/currency-3 http://www.indiansharemarket.net/blog/currency-3#comments Fri, 09 Dec 2011 09:19:13 +0000 vcode http://www.indiansharemarket.net/blog/?p=942 A currency is a unit of exchange, facilitating the transfer of goods and/or services. It is one form of money, where money is anything that serves as a medium of exchange, a store of value, and a standard of value. A currency is the dominant medium of exchange. To facilitate trade between currency zones, there are exchange rates, which are the prices at which currencies (and the goods and services of individual currency zones) can be exchanged against each other. Currencies can be classified as either floating currencies or fixed currencies based on their exchange rate regime. In common usage, currency sometimes refers to only paper money, as in coins and currency, but this is misleading. Coins and paper money are both forms of currency.
Early currency
The origin of currency is the creation of a circulating medium of exchange based on a unit of account which quickly becomes a store of value. Currency evolved from two basic innovations: the use of counters to assure that shipments arrived with the same goods that were shipped, and later with the use of silver ingots to represent stored value in the form of grain. Both of these developments had occurred by 2000 BC. Originally money was a form of receipting grain stored in temple granaries in ancient Egypt and Mesopotamia.
This first stage of currency, where metals were used to represent stored value, and symbols to represent commodities, formed the basis of trade in the Fertile Crescent for over 1500 years. However, the collapse of the Near Eastern trading system pointed to a flaw: in an era where there was no place that was safe to store value, the value of a circulating medium could only be as sound as the forces that defended that store. Trade could only reach as far as the credibility of that military. By the late Bronze Age, however, a series of international treaties had established safe passage for merchants around the Eastern Mediterranean, spreading from Minoan Crete and Mycenae in the North West to Elam and Bahrein in the South East. Although it is not known what functioned as a currency to facilitate these exchanges, it is thought that ox-hide shaped ingots of copper, produced in Cyprus may have functioned as a currency.

]]> http://www.indiansharemarket.net/blog/currency-3/feed 0 History of Stock Market of India http://www.indiansharemarket.net/blog/history-of-stock-market-of-india-4 http://www.indiansharemarket.net/blog/history-of-stock-market-of-india-4#comments Thu, 01 Dec 2011 06:27:19 +0000 vcode http://www.indiansharemarket.net/blog/?p=935 The Stock Market of India was set up in 1875. At that time there were 22 brokers who met and established the Bombay Stock Exchange. From that time onwards the Indian Stock market has grown in leaps and bounds, and has become a forceful and competent stock market in the continent. It is equal to any international market in the world. It has the same level of efficiency and organizational ability. The market caters to the huge population of India and gives them investment opportunities. It also provides the institutions and organizations with funds. The unpredictable nature of the Indian stock market has made it very difficult for the common man to understand it. So prior to investing in the stock market you have to research it properly.
When it was started the Bombay Stock Exchange had only a few hundred people taking membership in Stock Broker Association and Native Share. In 1965 BSE was recognized permanently by the Government of India, The BSE and National stock exchange are both the main stock exchange of Indian stock market. Government of India gave permanent identification to the BSE. BSE along with National Stock Exchange both are main part of Indian Share Market and are the two national stock exchanges of India. BSE has about 5000 listings at the starting.

The stock and shares are issued to the public for investing in various companies. The revenue generated from the stocks and shares is used for business expansion or any government projects. The profit of the company is then shared by the public, which has invested in the company. The share market allows for public trading of companies and has become an important source of raising fund for the companies. The government has also formed the Securities and Exchange Board of India (SEBI) which controls the functioning of stock exchanges, investment advisors, portfolio managers, brokers and sub-brokers. The sensex is made on the basis of the performance of the stocks of 30 sound financial companies.

]]> http://www.indiansharemarket.net/blog/history-of-stock-market-of-india-4/feed 0 Individual’s Rules for investing in mutual funds http://www.indiansharemarket.net/blog/individuals-rules-for-investing-in-mutual-funds-3 http://www.indiansharemarket.net/blog/individuals-rules-for-investing-in-mutual-funds-3#comments Thu, 24 Mar 2011 06:22:44 +0000 vcode http://www.indiansharemarket.net/blog/?p=706 Investing is a quite a complex exercise. But when it comes to the basic principles, they are amazingly simple. Anyone can become good investor and reach your goals just by following those simple and easy rules. Here is the list of few rules for making investment in mutual funds:

Be a long-term investor:
You should have a long term horizon. Short-term trading will make brokers rich and not investors and the income tax department will also be happy. Mutual funds are diversified and therefore, their gains and losses are likely to be lower than what it would be in case you are investing in an individual security. However, major fluctuations are highly uncommon in mutual funds. So what make sense is to leave your capital in a mutual fund for a long time and let it compound. So the key point is Buy and Hold. It also requires to you do a reality check on yourselves so that you can define your goals and priorities before entering the market.Start Early:
When you invest in the market is more important than the market timing. Always enter the market with long term thinking. Do proper researches before investing set your priorities and goals, ascertain your risk profile. Also very importantly you should keep yourself abreast with the daily market news. One should not do impulsive purchase allowing emotions overpowering the sense of reason.

Know yourself and then What You Are Buying:
The first step towards achieving your goals would be to know yourself, your risk appetite and accordingly make the investments. Once you have discovered yourself, explore the market and find out the kind of funds available in the market. Firstly, get a hang on the style and strategy followed by a fund by reading the available material. This will help in diversifying the portfolio and also in assessing potential risks. In general, large-cap value funds are less risky than small-cap growth funds.
Be A Disciplined Investor:
Once you’ve chosen some funds, you may stick with them. It is not necessary that one should always go with the tide. Even the unpopular groups tend to outperform in subsequent years. Investing a regular amount of money at regular intervals may add a good value to your portfolio. Make a systematic investment plan which in all probability likely to offer reasonable returns.

Know How Much You Pay:
There is one famous saying that Money saved is money earned. So it’s always better to pay less than it is to pay more. Expenses are very important with your larger-cap, lower-risk funds, and less critical with small-cap funds and other higher-risk categories. You can afford to be lenient with the expense of a small-cap or a sector equity fund. Actually, the strength of the mutual fund lies in its simplicity. Don’t follow the bandwagon.

]]> http://www.indiansharemarket.net/blog/individuals-rules-for-investing-in-mutual-funds-3/feed 0 How to make money from your fund http://www.indiansharemarket.net/blog/how-to-make-money-from-your-fund-4 http://www.indiansharemarket.net/blog/how-to-make-money-from-your-fund-4#comments Sat, 11 Dec 2010 09:15:37 +0000 vcode http://www.indiansharemarket.net/blog/?p=663 Examine Sector Weightings and the Fund’s Concentration:

The funds that have large stakes in just one or two sectors are expected be more volatile than the evenly diversified funds. A concentrated portfolio may also get more successful if its stocks are performing better. You may add a concentrated fund in your portfolio but mostly the concentration should be in a diversified fund which is more predictable.

Invest in a few funds and develop a Plan:

But it would not mean you should invest only in one fund. Even though the funds are diversified, many funds go though a few years of poor performance. When you invest in only one fund, you might lose heavily. On the other hand, investing in too many funds may lead to duplication of many securities and a portfolio with no focus. For the long-term financial goals, equities are the best option.

Keep It Simple:

To keep the selection of fund simple, you should stick with well diversified and well established equity funds, an index fund for equity exposure and a floating-rate bond fund for fixed income exposure. For long term perspective, equities are the best performing asset class. One should normally stay away from speciality and sector funds because they have a huge risk associated.


Know Your Portfolio & Ignore the hot stocks and funds:

Avoid going for impulsive purchase. It is wise to invest in a fund that invests in stocks that make up an index. This way, you will do no worse than the market. Since, in the long run, markets have a tendency to go up, even your investment will move the same way. But in case, you are a little more active, you can go for established `value’ funds that invest in undervalued securities.

Invest Regularly:

Investing a little bit of money each month is the surest way to reduce the risk of investing. Investing on a regular basis is the key to success. Irrespective of the fund you choose, the reality is that its value will be keep going up and down. One can expect a reasonable price in the long term by investing on a regular basis.

Diversification is suitable for many investors:

It is generally true that stocks perform better than any other liquid investment. So in case of long-term horizon and if you are comfortable with the risks associated with the stock market, you can think of investing in stock funds. But in case you are a slightly conservative, you may think of investing in different asset classes such as stocks, bonds etc. The key challenge is to choose the right fund.

Assess Performance Appropriately:

Past performance is not necessarily a good indicator of future results and this fact should be kept in mind every time one consider investing in any fund. Avoid investing in a concentrated fund and focusing on short-term returns. Generally while choosing a fund, one should look for above-average performance over a period of time.

]]> http://www.indiansharemarket.net/blog/how-to-make-money-from-your-fund-4/feed 0 Mutual Funds http://www.indiansharemarket.net/blog/mutual-funds-3 http://www.indiansharemarket.net/blog/mutual-funds-3#comments Fri, 12 Nov 2010 11:59:26 +0000 vcode http://www.indiansharemarket.net/blog/?p=644 Mutual funds are money-managing institutions set up to professionally invest the money pooled in from the public. These schemes are managed by Asset Management Companies (AMC), which are sponsored by different financial institutions or companies.

Each unit of these schemes reflects the share of investor in the respective fund and its appreciation is judged by the Net Asset Value (NAV) of the scheme. The NAV is directly linked to the bullish and bearish trends of the markets as the pooled money is invested either inequity shares or in debentures or treasury bills. Indian Mutual Funds unveils this multi-dimensional avenue, with its intricacies, in a fashionable manner as mutual funds up-hold ample scope of generating decent returns by some thoughtful investment.

Background of the Art
Mutual fund units and shares are purchased through a broker or directly from the mutual fund. The mutual fund and purchaser decide for themselves whether they wish to deal through brokers or deal directly without a broker. In this description, the term “portions” will be used to refer to all shares or units in a mutual fund, as those terms are defined by established practice with. For the purposes of the invention, whether a mutual fund is structured to distribute shares or units is irrelevant since the method is applied to each type of holding in the same way.

One means of providing brokers with compensation involves a mutual fund selling scheme known as “front end loaded” where the broker is given a commission based on a percentage of the total price of portions purchased. For example, if a purchaser wishes to purchase 100 portions of $10 value each, the up-front purchase price paid is $1050 of which $1000 is invested in the mutual fund and $50 commission or 5% service fee goes to the broker.

Another compensation scheme is known as “back end loaded” or “deferred sales charge”. Deferred sales operate in a manner which effectively hides the compensation to the mutual fund broker from the purchaser. Following the same example, the up-front price paid by the purchaser for the same purchase (100 portions at $10 each) is $1000. However, the broker is paid a service fee of $50 or 5% immediately by the mutual fund. To pay the broker, the mutual fund must borrow the $50 and mutual funds initially operate at a deficit for this reason until they become well established. Of course there are various provisions to penalize purchasers if they wish to sell their portions before a period after the initial sale to recoup the broker service fee, mutual fund management expenses and discourage migration of capital. For example, a penalty of 6% may be charged for sales of mutual fund portions in the first year after purchase, 5% the second year, 4% the third year and so on. The purchaser does not readily perceive the cost of the broker service fees but due to the severely reduced liquidity of their mutual fund investment and monetary penalties, this cost is incurred never-the-less.

Rules for investing in mutual funds
Be a long-term investor
You should have a long term horizon. Short-term trading will make brokers rich and not investors and the income tax department will also be happy. Mutual funds are diversified and therefore, their gains and losses are likely to be lower than what it would be in case you are investing in an individual security. However, major fluctuations are highly uncommon in mutual funds. So what make sense is to leave your capital in a mutual fund for a long time and let it compound. So the key point is Buy and Hold. It also requires to you do a reality check on yourselves so that you can define your goals and priorities before entering the market.

Start Early
When you invest in the market is more important than the market timing. Always enter the market with long term thinking. Do proper researches before investing set your priorities and goals, ascertain your risk profile. Also very importantly you should keep yourself abreast with the daily market news. One should not do impulsive purchase allowing emotions overpowering the sense of reason.

]]> http://www.indiansharemarket.net/blog/mutual-funds-3/feed 0 BSE and NSE http://www.indiansharemarket.net/blog/bse-and-nse-2 http://www.indiansharemarket.net/blog/bse-and-nse-2#comments Wed, 20 Oct 2010 07:34:50 +0000 vcode http://www.indiansharemarket.net/blog/?p=635 The main focus of stock trading in India is on the companies that are registered with the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE). The Bombay Stock Exchange located at Dalal Street, Mumbai, is the Asia’s oldest stock exchange. It is also a symbolic head of the stocks trading in India and lists over 6000 companies. It has the largest number of companies and so it is the largest stock exchange in India due to this fact. In south East Asia it is the largest stock exchange.
Another stock exchange in India the National stock exchange is also located in Mumbai and has the largest number of equity-based and derivative-based trades and the daily turnover is the largest in this exchange.

Many other stock exchanges are also there in India, but they are small fish compared to these two large stock exchange. The BSE and NSE have the largest number of trading enlisted. India having such a large population and more and more people are investing in the demat account opened by the broker makes it possible for the investor not to actually visit the stock exchange, All the latest updates are given in the news and is also available online. The share certificates are now in form of virtual share certificates, these share certificates exist in actual database and not in physically. Those who are interested in buying and selling of the shares do so with the help of these demat accounts. They can buy and sell shares online sitting in their homes.

Many important companies have taken a plunge in this type of brokerage. It has made possible for ordinary Indians to buy stocks and sell stocks without actually having to visit the stock exchanges. The process offered by them is simple and transparent those who have little extra money also can invest through this type of account.

]]> http://www.indiansharemarket.net/blog/bse-and-nse-2/feed 0 Indian Share Market http://www.indiansharemarket.net/blog/indian-share-market-3 http://www.indiansharemarket.net/blog/indian-share-market-3#comments Mon, 18 Oct 2010 08:57:12 +0000 vcode http://www.indiansharemarket.net/blog/?p=629 The Indian share market needs special contemplation. The readily available liquid assets that can be sold or bought easily during business needs are known as stock. And the number of shares you have decides your stake in the company. The stockholders determine the company’s policies. If there is a majority of stock holders who are against a particular policy of the company, then the policy is rejected.
To know about the latest trend of the stock market, you have to be updated about the latest share market news. It gives them the latest news about the financial market and makes one aware of the company’s market values and its capacity to weather difficult times.

Those who are interested in Indian share market, have to be aware of the latest trend. To be aware of the market trend will make you aware of the future economic trend. The Indian share market makes you aware of the many mergers or acquisitions that are going on in the market. It helps you to know about the important information about these stocks as well. It showcases the future trends or activities of any particular company. The swing in the share prices will help you make a wise decision. The internet is asl0e a powerful media to get all the latest news of the Indian share market.

The Indian share market has seen many ups and downs, but has weathered all odds and is still going strong. Though there was a time when there was quite a crash in the market, but it has regained its upward swing and the investors have started investing in it again. Then, sensex is going upward in the past few days and the trend is that it will retain its upward trend. The market is high and will remain so with gold prices on a higher scale than ever.

]]> http://www.indiansharemarket.net/blog/indian-share-market-3/feed 0 Scenario of Indian Stock market http://www.indiansharemarket.net/blog/scenario-of-indian-stock-market-3 http://www.indiansharemarket.net/blog/scenario-of-indian-stock-market-3#comments Fri, 15 Oct 2010 08:02:18 +0000 vcode http://www.indiansharemarket.net/blog/?p=624 The financial scene is worldwide. The crisis had left the stock market in a deep crisis. It is slowly regaining its breath and there are now investments made all through the world. Stock brokers as well as general public are making money out of investing in shares and stocks. The financial trauma that all of us faced are over and the recovery of the market is now being witnessed. Throughout the world the market is limping back to its normal trading life, as compared to other financial markets all over the world, the Indian stock market came back to life quite fast.

The Indian Stock Market is the undisputed leader in the Asia’s market. It has a reputation among the foreign institutions. During the past few years from the time of crash in 2004 there have been many swings in the Indian stock market. But, the gains from the market have been quite modest. The traders have made money by investing in Indian share market and stock market and have made handsome profits. The rate of inflation in India is high so the brokers are more interested in selling than in buying stocks. The FDIs have also reduced considerably and the market has seen a rigorous financial critical condition.

Now the financial scenario of Indian stock market is on the road to recovery and is getting back its lost sight. In recent times market is gaining and has reached 17000 points and so is now looking towards a ray of hope. Take your investment seriously and don’t treat yourself to ups and downs as the bad part has gone. However, be ready for the good and bad points of the stock market investment.

You should have proper investment guidance as it will work like magic for you if you are trading shares in share market. You should have all the latest information ready with you. You need stock quotes, stock updates, daily stock alerts and every other information related to stock/stocks within your reach. The platform you use should be definitive in every part. Proficient stock advice from the brokers and the stock professionals is the information that is must for you.

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