Technological advancements and digitalisation have changed the online arena for every business, and the online share trading is no exception to the trend. Over the last few years, online trading has become very popular, especially amongst the millennials and generation Y. Prevalence of smartphones, lower costs, opportunity to earn extra income, low entry barriers, ease of access, etc has had a profound impact on online trading.
Even though online stock trading today is huge, and many people are motivated to explore online trading for a rewarding career, by no figment of imagination it should be assumed that it is easy, and they can become financially self-sufficient in a short period.
Here are 5 essential online trading tips to help improve your chances of success in your endeavours as a trader-
1. Do the research and gain relevant information about the markets
The economic conditions are constantly changing and it has a significant impact on the stock markets. To be successful in online share trading you have to do your research, collect relevant information and be updated about matters relating to markets. With information being available at the click of a button, it is easy to get access to information from various sources. Keeping your eyes and ears open about the official announcements being made, reading up market-related articles and financial publications can help you ace the game of online stock trading and avoid making whimsical trade calls.
2. Get acquainted with the trading terminologies and tools
Getting yourself familiar with various terminologies and trading tools beforehand is extremely important so that you do not falter when you start trading. Clearing your basics about the important workings, different types of trades, important terms are critical. If you are not clear about the basics, then you may end up placing a wrong order.
Once you are trading online, you are investing real capital and you cannot undo the trade. So, it is essential that you must be familiar with the features and the functions of the trading platform which you are going to use. Practice trading on dummy versions to get a hang of the trading interface before you can start with online trading. Once you have enough practice you will not be flustered and confused at the time of real trading.
3. Start with small capital and practice risk management
There are infinite opportunities in the trading world and you do not want one experience to be the deciding factor for you. As online trading is risky, you should always make a small start in the beginning and invest little capital. Even the most successful traders do not put their entire investible surplus for trading but use only the capital which they have to spare after they have put aside for their long-term goals such as retirement. So, invest only the capital which you can afford to lose and which will not affect your financial planning.
Another important thing to keep in mind at the time of executing trades is that the risk associated with trading is high and hence you should take adequate measures to minimise risk. Setting a stop-loss to your order will automatically stop a trade if the losses hit a particular mark and help minimise your losses.
4. Be patient and disciplined
Online trading is a great way to make an income and many have successfully made a career out of it. If the success stories of other traders have motivated you to take the plunge, then, let’s be honest, online trading is risky and not for the light-hearted. Moreover, it is not something you can master overnight or become rich overnight on a single trade. To be successful, you need to have the right mindset and should be disciplined in your approach. Make a trade plan and stick to it. Trading out of impulse or greed will not help you become successful but following a plan and trading when you see opportunities can help you achieve the desired results.
5. Select the right broker and trading platform
Last but not least, choosing the right broker and opening the best trading account online is important, and hence you should be careful about your selection. Choose a trading platform that best meets your needs and has a user-friendly interface. You should be comfortable using their software. Your success rate would be greatly affected by the timely execution of your orders. Other aspects to consider are a level of customer service and satisfaction, market reputation and competitive fee structure.
With the above essential online trading tips, you can give your income a boost. We at IndiaNivesh have one of the best online trading platforms at the most competitive price and also offer expert advisory and research to meet your investment needs.
Disclaimer: "Investment in securities market and Mutual Funds are subject to market risks, read all the related documents carefully before investing."
Risk Management – What is Risk Management & its Process
Risk management is the process of identifying risks, analyzing them and taking adequate measures to curb these risks to achieve the desired results. The term financial risk management is most often associated with businesses; it is equally important and applicable to your investment portfolio. Risk management process in financial investments comprises of determining the risks that exist for the particular investment and implementing strategies to mitigate the risk in the way. Risk management is an important aspect of investing as it helps reduce the risk depending on your individual goals. Whenever you make investments, you try to look at the potential returns from the investment. However, just like the returns, there is also a degree of risk attached to the investment. Your choice of investment will depend upon your financial requirements and the level of risk you are willing to take for your investments. Types of risk management Longevity Risk People today are living healthier and longer, thanks to the rapid advancements in the medical world. However, living longer also means that you need to plan your investments for a longer retirement. This risk of outliving your money is known as longevity risk. You need to take adequate measures to limit this risk. Some of the ways to can mitigate this risk are by investing for retirement corpus from an early age; keeping a high savings rate in working years, look out for second employment post-retirement, etc. Inflation Risk Inflation is a constant increase in the cost of goods and services in the country. Inflation reduces the purchasing power of money and higher inflation means we can buy fewer things in the future as compared to the past or present for the same amount. As an investor, you need to select assets and implement investment strategies that have potentially higher returns much above the rate of inflation. When you are investing in fixed income instruments such as a Bank FD, Corporate bonds, etc. always be watchful that the return on investment is above the inflation rate. Interest Rate Risk Change in the interest rate can affect your portfolio. When the rate of interest is high, there is a decrease in the value of corporate bonds. A higher interest rate can have impact on an industry or a sector, which in turn could affect your equity investments if they are impacted negatively by the increased rates. Diversifying your investments in different asset classes, choosing debt investments of varying maturity can help you limit the risk associated with the changing interest rate. Liquidity Risk Many people associate liquidity risk with just real estate investments. Undoubtedly real estate is one of the most illiquid assets, but many other investments to have a lock-in period and pre-mature withdrawal attracts a penalty. To protect yourself from liquidity risk, it is important that you have an emergency fund in place and also limit your exposure in assets which are difficult to liquidate or involve incurring expenses. Market Risk Market risk is the risk associated with the decline in the value of your investments due to economic or other developments, which affect the entire market. Market risks are unavoidable when you make any investment, however, you can lower the impact on your investments through adequate measures. As an investor, have a well-diversified portfolio in different asset classes such as equity, debt, gold, etc. as not all the assets would not be affected in the same way or magnitude in any development. Moreover, you can reduce the risk of wanting to time the market by buying stocks at different times to average out the cost of your investments. Credit Risk Credit risk applies to debt investments such as bonds and corporate FDs. It is the risk of the inability of the issuing entity to repay the interest and/or interest on maturity. As an investor, you can mitigate credit risk by looking at the credit ratings of the issuer. Higher the rating, the lower is the risk. AAA bonds have the lowest credit risk. Risk management process to mitigate the various types of investment risk in your portfolio Goal setting and investing as per your requirement Investments are made keeping in mind your individual goals and needs, your time frame of investment and your tolerance to risk. Once you are clear about all these things, you can allocate your savings in assets which would help you achieve your goals in the desired time frame. It is important to remember that long-term investments in growth assets may be volatile in the short-run and you should not make any hasty decisions. Portfolio Diversification Diversification is the process of distributing the investments in your portfolio in different asset classes. Diversifying your investments in different assets such as stocks, bonds, commodities, gold, etc. helps reduce the overall risk of your portfolio as the performance of all the assets is not correlated and in a given economic condition the performance of the asset classes will not be same. Diversification is one of the most crucial risk management techniques for you to mitigate the risk of your investment portfolio as it helps you to take advantage of the different price movements of different assets. Regularly monitor your investments Depending on the performance of various asset classes in your portfolio, their percentage holding in your portfolio may change from the original allocation. Thus, monitoring your portfolio regularly and rebalancing would ensure that your portfolio remains well-diversified. Take financial advice from experts Financial planning and risk mitigation of your portfolio requires knowledge, time and expertise. Taking the help of financial experts, who can guide you to select the right financial products as your risk profile and unique investment needs. Conclusion A disciplined approach to your investments and sticking to the basic principles of risk management will help you achieve your financial goals. If you are unsure on how to manage risk of associated with your investments and need guidance to help you prepare a portfolio most suited to your investment needs and minimising risk, you can consult our financial advisors at IndiaNivesh who can help guide you through your investments and also manage your portfolio risk. Disclaimer: "Investment in securities market and Mutual Funds are subject to market risks, read all the related documents carefully before investing."
IPOs for 2020 - Top 20 IPOs to watch out for in 2020
The number of IPOs last year was relatively low but, fetched high returns for the investors. Attractive valuations, global liquidity and growth in the economy are few factors that will contribute to growth of capital markets and define the fate of some of the most anticipated IPOs in 2020. Here is a tentative list of 20 upcoming IPOs in this year which can fetch good returns for investors: 1. SBI Cards and PaymentsSBI Cards and Payment Services Limited, subsidiary of India’s largest commercial bank SBI, is expected to be one of the biggest upcoming IPOs of 2020. With a market share of 18% in the Indian credit card market, it is the second-largest credit card issuer in the country. The size of the issue of the likely IPO is estimated to be around Rs 8500 crore to Rs 9500 crore. State Bank of India currently has a 74% stake in the company and will divest up to 4% through the IPO. The remaining 26% is owned by CA Rover Holdings of the Carlyle group. 2. UTI AMCUnit Trust of India AMC, India’s oldest mutual fund is looking at selling up to 8.25% of the stake through an IPO. The size of the issue is expected to be around Rs 3,800–4,800 crore. The IPO will consist of the sale of shares by its five stakeholders which include State Bank of India, Bank of Baroda, LIC, Punjab National Bank and T Rowe Price.3. Burger King(India) Limited The Indian arm of the QSR chain Burger King had filed for a proposed IPO in November last year. The IPO is expected to raise approximately Rs 400 crore through fresh issue of shares. The company currently operates 202 outlets in 47 cities and intends to increase the number of outlets to 325 by the end of the year. 4. Home First FinanceHome First Finance Company (HFFC), a Mumbai-based mortgage financier, is looking to raise Rs 1500 crores from an IPO this year. In November last year, the company had filed a draft red herring prospectus with SEBI for its proposed IPO. If launched, this IPO is expected to raise Rs 1,500 crore. It would comprise of a fresh issue of Rs 400 crore and an offer for sale by promoters and investors of Rs 1,100-crore.5. HDB Financial ServicesHDB Financial Services, the NBFC subsidiary of India’s largest private sector bank HDFC is currently valued over Rs 80,000 crore. It is ranked as the fourth most valuable non-banking lender in the country. HDFC Bank which currently holds a 95.53% stake in HDB, is planning to offload a part of its holding through an initial public offer and raise around Rs 10,000 crore this year. So, if this IPO is launched this year, it would surely be one of the most anticipated IPOs of 2020.6. NSEAfter its IPO being delayed for nearly three years, India’s largest bourse NSE is likely to launch the most awaited IPO in 2020. The company aims to raise around Rs 10,000 crore from the IPO. Stakeholders are likely to offload 20%-25% of their holdings.7. Rossari BiotechRossari Biotech, a Mumbai-based speciality chemicals maker, founded by Edward Menezes and Sunil Chari in 1996, is looking at raising Rs 700 crore through an IPO. The company has an impressive clientele which includes brands like Vim, Lifebouy, IFB, Bosch, Panasonic to name a few. 8. Equitas Small Finance BankChennai-based Equitas Small Finance Bank is looking to raise fresh capital of Rs 550 crore through a fresh issue IPO and remaining via the OFS route. The total IPO size is estimated to be around Rs 1000 crore9. EaseMyTripEaseMyTrip, an online travel company has filed papers to float an IPO of Rs 510 crore in 2020 through the OFS route. The founders of the company, Nishant Pitti and Rikant Pitti would sell shares worth Rs 255 crore each in case the IPO is launched this year. 10. Energy Efficiency Services Ltd (EESL)State-run EESL, which is a part of India’s ambitious energy efficiency program, is looking to raise money through the capital markets to fund its energy efficiency plans. The company is currently valued at around Rs 5,000 crore11. Computer Age Management Services(CAMS)CAMS, a registrar and transfer agent which is leading technology-driven service provider to the growing mutual fund industry is likely to come out with an IPO of Rs 1500 to Rs 1600 crore by the end of this year. The IPO is expected to be an OFS which will see investors offloading part of their stake holdings in the company.12. Integrated Renewable Energy Development Agency(IREDA)IREDA, a 100% government-owned entity, which is registered as a non-banking financial company, received approval from SEBI last year for an IPO. The government is looking at offloading a part of its stake worth Rs 700 crore. The company will also issue fresh shares worth Rs 13.90 crore.13. Mazgaon Dock ShipbuildersMazagon Dock Shipbuilders, the country’s leading shipyard company is likely to float an IPO this year after receiving approval from SEBI. The company is a fully owned subsidiary of the Government of India and the stake sale is a part of the divestment plan to offload 13% of government share in the company.14. SAMHI hotelsSAMHI Hotels Ltd, a Gururgram-based hotel company, owning the largest number of Marriot, IHG, and Hyatt hotels in the country, has received approval for an IPO. The company aims to raise Rs 1,100 crore of fresh capital through the IPO.15. Bajaj EnergyBajaj Energy, which is a fully owned by Bajaj Power has received capital Sebi’s approval for an IPO of Rs 5,450 crore and is expected to comprise a fresh issue of shares up to Rs 5,150 crore and an offer for sale of up to Rs 300 crore by Bajaj Power Ventures.16. Fincare Small Finance BankThe Bengaluru-based financial bank Fincare is planning an IPO of Rs 1200 crore by the mid of 2020. The IPO will be a combination of stake sale of existing shareholders and a fresh issue of shares. Incorporated in June 2017, the company is likely to come out with an IPO this year as per the new RBI guidelines which require small banks to list themselves within 3 years of commencement of operations.17. ESAF Small Finance BankThe Kerala-based ESAF Small Finance Bank has filed draft papers with SEBI for an IPO issue which would be a combination of fresh issue of Rs 800 crore and offer-for-sale of Rs 176.2 crore, after approval. The bank currently has a presence in 16 states and 1 union territory. 18. Route MobileRoute Mobile has recently received SEBI’s approval to raise capital through the IPO route and likely to raise Rs 600 crore through the IPO. The IPO will comprise a fresh issue of shares worth Rs 240 crore and the remaining Rs 360 crore through stake sale of promoters.19. Mukesh Trends Lifestyle LtdAhemdabad–based Mukesh Trends Lifestyle, in the fabric processing business, has filed draft papers with markets regulator SEBI for its proposed initial public offer. The size of the IPO is expected to be between Rs 70 crores to 90 crores, once launched.20. Angel Broking LtdAngel Broking Ltd which received SEBI’s approval for an IPO in June last year will come out with the IPO this year. The size of the IPO is expected to be Rs 600 crore.CONCLUSION 2020 could be a rewarding year for investors with some of the big IPOs likely to come out this year which have the potential to give huge returns to the investors. Reach out to our experts at IndiaNivesh to help you with your IPO investments. Disclaimer: These are only the list of IPOs that would be coming in 2020. However, whether you should invest or not should be a decision one should take on the basis of the research reports. "Investment in securities market and Mutual Funds are subject to market risks, read all the related documents carefully before investing."
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