Investment Tips – Stock Market investment Tips in India

Investment Tips – Stock Market investment Tips in India

The desire of making huge money has always lured investors to the stock market. However, making money in equities is not all that easy. Investing in the stock market requires skills, knowledge, patience and discipline. Apart from these four important factors, you also need to do a great amount of research and hold a sound understanding of the market.

The stock market is the only place which holds the potential to double your money or even more in a few years. For that to happen, you must invest smartly. In this article, we will give a lowdown on some of the money investment tips for making an investment in the stock market. These investment tips will not only help you in taking good investment decisions but also in building a good portfolio of investment.

Stock Market Investment Tips

The stock market investment tips are as follows:

• Keep a Check on Emotions
One of the common mistakes that investors make in the stock market is that they are unable to control their emotions. Often they take decisions on the basis of short term price movements especially during an adverse event. Controlling your emotions in a volatile market will not only help in holding the investments but also in not taking any illogical decisions. Therefore, controlling emotions is an important investment tip because it protects you from selling the shares when the price movement is adverse. Adopting a practical approach in the stock market will help your investments to grow and save you from unnecessary losses.

• Invest After Understanding Fundamentals
One of the important smart investment tips is to invest in the company only after conducting a good analysis. Always remember that you are not just investing in the stock, you are investing in the business model of the company. Before making an investment, always do your research about the fundamentals of the company. You must look at its current valuation, balance sheet, expected future growth, quality of management, P/E multiples, etc. By doing the right analysis, you can find good stocks for long term investment.

• Diversification
Diversification is one of the key investment tips while building a portfolio. The very famous saying, “never put all your eggs in one basket” holds true in the stock market as well. You must never invest all or most of your money in a single stock. Diversification is the best possible way to manage risk in the stock market. You should invest in stocks of different companies in different industries or sectors so that any negative news or event in one industry or sector does not dent the value of your portfolio. Diversification allows you to recover your losses even when one sector or industry underperforms. Therefore, it would not be wrong to say that diversification of the portfolio is one of the most important things to do while building a portfolio for the long term.

• Know Your Risk Appetite
The next investment tip while making an investment in the stock market is to understand your risk tolerance. It is a known fact that the stock market is subject to certain risks and you must be prepared to take them because the percentage of returns that can be made here are unmatched. Managing and knowing the risk in the stock market is essential because it is a volatile place and you must stay firm during times of panic or adverse events. You will be able to better manage your risks if you stay cool during the times of financial uncertainty and take decisions analytically.

• Avoid Leverage
Another important investment tip is to avoid leverage to execute your stock market strategy. Leverage means borrowed money and it should never be used to trade or invest in the stock market. Trading or investment done with leveraged money looks great when the stock goes up or you make a profit but it can prove to be fatal when the situation is opposite. When you borrow the money, you have to pay the interest along with the principal amount. In addition, if you make losses, the liability further increases. Therefore, if you are looking to invest for the long term, smart investment tip would be to avoid leverage.

The above-mentioned share market investment tips will help you in investing money for the long term. These tried-and-true investment tips can help you boost your chances for long-term success.

Apart from the above tips, there are a few more things that you as a trader or investor in the stock market should take care of. These are:

• It is very important to make informed decisions before investing in any stock. Do proper research about the company, its management, past revenues, future prospects, etc. Conducting sufficient due-diligence before investing will help you better understand the future.
• Another important thing is to educate yourself about the stock market. Learn about the different kinds of trading strategies, risks involved, market movements, trends, how to read charts among other things. Once you know the basics of the stock market, you will be in a better position to take investment decisions.
• Never be greedy with your expectations. Don’t expect the market to always work in your favour. The stock market is unpredictable and highly volatile. So, determine your entry and exit points before investing. It is also advisable to put a stop loss in place which can help you avoid unnecessary losses.
• Avoid herd mentality in the stock market. Meaning, don’t be influenced by the actions of others. If everybody around you is investing in a particular stock, it is not necessary that you also follow the same. Invest only if you are convinced that the company you are investing in is good and will fetch you returns.
• It is important to regularly monitor your portfolio. Since the stock market is highly volatile, any news or major economic event can impact the prices of your shares. If you cannot personally review your portfolio due to time constraint or lack of knowledge, you may seek help from professionals.

If you require more money investment tips or smart investment tips, you may contact a reputed broker like IndiaNivesh Ltd. With our years of experience in the financial market, you will certainly get many share market investment tips that can help you in building a diversified portfolio.

Disclaimer: Investment in securities market / Mutual Funds are subject to market risks, read all the related documents carefully before investing.


Bond Market in India - Meaning, Types & How to Invest in Bonds

Bond market in India Investments are classified in two types to put it simply: • Fixed return investments• Variable return investments Investments with a fixed return provide a guaranteed return in exchange for the capital invested. These investments generally have a lock in period with low liquidity. Variable return investments are subject to market forces where the exact return on the investment is not guaranteed till the time the investor exits from the investment. Equities, mutual funds, gold, real estate are variable return investments. One of the most popular types of fixed return investments are investment bonds. What are bonds? Bonds are instruments issued by a borrower to raise capital from investors or the public at large. Bonds are like loans which mature on a fixed date. In return, the borrower pays interest. Depending on the terms and conditions of the bond, the interest can be paid either at specified intervals or on maturity (deep discount bond) What are the different types of bonds? Bonds in India are generally issued by Government bodies. Having a government backing to the bonds provides security to the investor that these bonds will be repaid on maturity. However, other private institutions also issue bonds depending on their need. These are the different types of bonds available for investment in India: 1. Central Government bonds:These bonds are issued by the Central Government to raise funds. These bonds are issued by the RBI on behalf of the Government. The primary purpose of these bonds is to finance fiscal deficit and meet the shortfall of revenue in the Government budget. These bonds are the safest bonds to invest in, since they are backed by the Government and will be repaid on maturity. 2. State Government bonds:These bonds are issued by the State Government to meet their fiscal deficits. These bonds are listed on the stock exchange. These bonds are also backed by the Government, making them low risk investments. 3. Municipal and Local authority bonds:A municipal corporation or a local authority may raise finance to meet funding for specific goals such as constructing infrastructure, public water works etc. These bonds are also rated by credit rating agencies and it is best to go by the rating and past records before investing. 4. Corporate bonds:These are highly risky bonds since the maturity depends on the track record of the company. Before investing in such bonds, you must do a complete study into the company and its performance. 5. Public Sector bonds:These bonds are issued by highly rated public sector companies for meeting their growth and expansion needs. These bonds are relatively less risky since PSUs are under the Government. Generally, these bonds are issued by companies where the Central Government is the majority shareholder. 6. Tax free bonds:Companies such as the National Highways Association of India (NHAI), Indian Railways Finance Corporation, HUDCO, Rural Electrification Corporation (REC) issue these bonds. The interest earned on these bonds is completely tax free in the hands of the investor. Types of bond markets: 1. Primary market:This is the market where the borrower approaches investors to raise capital. The issue price of the bonds and the coupon rate is fixed at the time of raising capital. 2. Secondary market:Most of the bonds are traded in the stock market. They can be sold depending on when the investor wishes to exit from the bond. However, it is to be noted that the price for the bonds depends on how close the bond is to interest payment. As the bond nears the interest payment date, the price goes up. The price and coupon rate of the bond move inversely i.e if the price goes up, the interest rate goes down. This is because the net return to the investor stays the same as when the bond was issued in the primary market. For example, if the bond is issued at Rs. 1,000 with a coupon rate of 8%, the interest will be Rs. 80. However, if the price goes up to Rs. 1,250, the interest rate goes down to 6.4%. However, the interest payment to the investor remains the same. How to invest in bonds: It is possible to invest in bonds in India using your demat account. Since these bonds open for subscription in the primary market, it is possible to apply for them online. If you do your trades through an offline broker, it is possible to fill up a form and submit it offline to your broker as well. The application will then be submitted into the issue. Once the allotments are made, you will come to know how many bonds you are allotted. The process is similar to equity shares. Bonds have a minimum issue price and you can invest in bonds in India in multiples of the specified number. For example, a corporate bond may have an issue price of Rs. 1,000 and can be purchased in multiples of 5. This means the minimum issue is for 5 x Rs. 1,000 or Rs. 5,000. Further investments can be made in multiples of 5 i.e 10,20,35 etc. Investing in the primary market is extremely simple and can also be done wholly online through the demat account. It is also possible to exit your bond investment online as well since these bonds are traded in the market. Bonds in India are listed on the stock exchange. Even though the price discovery for bonds is restricted, it offers low liquidity, which means the investor can exit these bonds ahead of their maturity should he wish. Generally, the price of bonds goes up as it nears the coupon payment date. The ideal exit strategy would be to sell bonds as it comes close to the interest payment date to get more than the payment price. However, in case of deep discount bonds, the funds may be locked in till maturity depending on terms and conditions of the bond. A deep discount bond is a bond where no interest is paid but a higher amount is paid on maturity. For example, a deep discount bond may be issued for Rs. 20,000 and maturity price may be Rs. 95,000 after 10 years. No interest will be paid in these 10 years and the maturity amount will directly be credited to the investor’s account on maturity. Deep discount bonds are available for investment through the demat account or through a broker. Another way to invest in bonds indirectly is to purchase debt mutual funds that primarily invest in bonds. These can be found out by analyzing the portfolio of the respective mutual funds. The bond market in India does not have many players. It is dominated by Government bonds and entities. This provides safety and security of capital. The bond market however is very nascent and still growing. With increasing investor interest, bonds in India can turn out to be a fast growing market.   Disclaimer: Investment in securities market / Mutual Funds are subject to market risks, read all the related documents carefully before investing.

read more


Forex Trading: A Beginner’s Guide for 2019

Trading in foreign currency is very easy and convenient in today’s time. Its popularity can be seen from the fact that forex trading has become a source of regular income for many people. However, forex trading for beginners can be tricky as they do not have sufficient experience of how does forex trading work. To assist the beginners, this article will highlight the basics of the forex trading, forex trading strategies, forex trading tips and much more. Firstly, let us understand the meaning of forex.Meaning of ForexForex, also termed as foreign exchange is a market place where currencies of various countries are traded. Currency trading takes place in pairs and the currency pair movement determines the value of one currency against another. For example, INR/USD currency pair measures the value of the Indian Rupee against the US Dollar. The first currency of the currency pair is termed as the “base currency” and the second currency is termed as the “quote currency”. After understanding the meaning of Forex, let us now learn about how does forex trading work.How Does Forex Trading WorkWhen you start trading in foreign currency, you will notice that “Bid” and “Ask” prices are quoted. The price at which you can buy the currency is called the bid price and the price at which you can sell it is called the ask price. In foreign currency trading, you can take two types of trade; long trade and short trade.• Long TradeWhen you purchase currency in the trade, you expect the currency pair to increase in its value so that you can make the profit by selling it at a higher price. This is known as a long trade. • Short TradeWhen you sell currency in the trade, you expect the currency pair to decline in its value so that you can make the profit by selling it at a lower price. This is known as a short trade.Let us now understand how to start forex trading.How to Start Forex TradingTo start forex trading, you must open an account with a registered broker like IndiaNivesh Ltd. Only with the help of a trading account, you can take the long and short trades. In order to open a trading account, you will need basic documents like account opening form, address proof, identity proof, income proof, passport size photograph, cancelled cheque or bank statement, PAN card, etc.Since you now know about how to start trading in forex, it is important that you know about the right strategies also. Let us learn about forex trading strategies.Forex Trading StrategiesForex trading for beginners can be fruitful if they follow certain trading strategies. The trading strategies can help the beginner to make good returns. Some of the trading strategies are as follows:• Day Trading StrategyAs the name suggests, the day trading strategy is meant for the same day trading. In this strategy, you will have to exit the trade before the end of the day (trading session). The main advantage of this trading strategy is that you are protected against adverse events that may happen overnight when the forex market is closed. • Swing TradingSwing trading involves making short term profits on the trade by holding the position for a few days. Monitoring the price movement on the bars after every half an hour or hour is helpful in this strategy. • ScalpingScalping is a trading strategy that uses tick charts. This trading strategy involves quick trades that last for just a few minutes. One can make profits in this strategy by playing for a few points by quickly beating the bid/offer spread. • Positional TradingPositional trading strategy involves maximising profits from a major shift in the price. This trading strategy requires a good amount of patience, discipline and knowledge about the market fundamentals.After learning about forex trading strategies, let us learn some quick tips that can prove to be very helpful in forex trading for beginners.Forex Trading Tips• Before taking a trade, always understand the trend of the market. • Avoid taking a trade against the market trend.• Preserving capital is most important in forex trading. So stay focused and trade only when the opportunity for you arises in the market.• Try to avoid trading in a foreign currency using borrowed money.• Do not take a trade without putting a stop loss in place. • Emotions have no place in forex trading.• Always choose a methodology while trading and stay consistent with that. • Always know your entry and exit points when you go long or short.• Avoid being greedy in forex trading. Timely booking profits will help your capital to grow at a rapid pace. The above mentioned forex trading tips shall help the beginners to become successful in the market. To encourage forex trading for beginners, we list down certain advantages of forex trading.Advantages of Forex Trading• It is a highly liquid market.• It allows a wide range of currency pairs to be traded.• Forex is a good hedging tool.• Large profits can be made from the volatility in the forex market.• It provides easy to enter and exit positions.If you are a beginner in the forex market, IndiaNivesh Ltd. holds the expertise to guide you on the various topics regarding forex trading for beginners. You may get in touch with us to know how to start forex trading and much more.   Disclaimer: Investment in securities market / Mutual Funds are subject to market risks, read all the related documents carefully before investing.

read more

Are you Investment ready?

*All fields are mandatory

related stories view all

  • What is a Unit Linked Insurance Plan, Types & Benefits

    What is ULIP? Insurance plans are meant to provide financial security to you so that in case of premature demise, your family does not face any financial trouble. Though insurance plans provide unmatched financial security, many individuals also seek good investment returns on their premiums. Keeping this sentiment in mind, ULIPs were launched in the year 2000 when private life insurers were also allowed to operate in the insurance domain. Today, ULIPs have become quite popular, and insurance companies are offering different types of ULIPs to their customers. Let’s understand ULIP meaning in detail and its benefits – What is a ULIP plan? ULIP’s full form is Unit Linked Insurance Plan. A ULIP is an investment-oriented life insurance plan. The plan gives you the dual benefits of investment returns and insurance coverage. The premiums that you pay for the plan are invested in market-linked investment funds, which offer attractive growth. Returns under ULIPs are, therefore, not guaranteed but can be attractive if given time. How do ULIPs work? ULIPs are considered to be a transparent insurance plan as the premiums you pay, and the growth can be easily monitored. When you buy a ULIP, you can decide the amount of premium you wish to pay (provided it is at least the minimum required premium under the plan). The sum assured is then calculated based on the amount of premium paid. ULIPs have different kinds of investment funds which include the following – Equity fund wherein at least 65% of the portfolio is invested in equity-oriented securities Debt fund wherein at least 65% of the portfolio is invested in debt-oriented securities Balanced fund which combines both equity and debt investments for moderate risks and moderate returns You can choose one or more of these investment funds as per your risk appetite. After that, relevant charges are deducted from the premium, and the premium is directed towards the selected fund. As the value of the underlying assets grows, the value of the fund grows. Your investment in the fund also grows, and you get market-linked returns. ULIPs also provide you with various flexible benefits which are as follows – Switching – under switching, you can change the investment funds if your investment preference has changed Partial withdrawal – you are allowed the flexibility of withdrawing from your fund value partially after the first five years of the policy have expired Top-ups – additional investments can be done towards the plan through top-up premiums Premium redirection – you can choose to redirect your subsequent premiums to another fund from the next policy year under this facility Surrender of the plan – if the first five years of the policy have been completed, you can surrender your policy to terminate the coverage before the chosen term. When the policy is surrendered, the available fund value is paid as surrender value, and the plan is terminated. Benefits payable under ULIPs Under most unit-linked plans, you get either a death benefit or a maturity benefit. These benefits are as follows – Death benefit – the death benefit is higher of the available fund value as on the date of death or the sum assured. If the fund value is higher than the sum assured, the fund value is paid otherwise, the sum assured is paid. Maturity benefit – when the term of the plan comes to an end, the fund value is paid as maturity benefit. The maturity benefit can be taken in a lump sum, or you can also avail the benefit in instalments over the next five years through the settlement option feature, which is available under most unit-linked plans. Types of ULIPs Though ULIPs are aimed at creating wealth, there are different types of ULIPs based on the financial goal that they fulfil. These types include the following – Investment ULIPs Investment ULIPs are the most common unit-linked plans which aim to create wealth over the term of the policy. Child ULIPs Child ULIPs are especially designed unit-linked plans for the financial security of the child if the parent is not around. Under these plans, the parent is insured while the child is the beneficiary. These plans have an inbuilt premium waiver rider. If the parent dies during the policy tenure, the death benefit is paid. However, the plan does not terminate. The policy continues, and future premiums are paid by the company on behalf of the insured parent. On maturity of the policy, the fund value is again paid as the maturity benefit which provides the child with the financial corpus needed to pursue his/her dreams. Pension ULIPs These are other specific unit-linked plans which help in creating a retirement fund. Pension ULIPs are deferred annuity plans wherein you pay premiums during the policy tenure to build up a retirement corpus. In case of death, the death benefit is paid. However, if the policy matures, pension ULIPs allow you to receive annuity pay-outs from the corpus created or defer the vesting age from which you would receive an annuity, or withdraw 1/3rd of the corpus in cash and use the remaining fund value to receive annuity payments. Thus, pension ULIPs create a source of income after retirement and are suitable for individuals looking to fulfil their retirement planning needs. Benefits of ULIP A ULIP is popular because of the following benefits it provides – It allows you to avail insurance coverage as well as investment returns in a single product The premiums paid and the benefits received under ULIPs are completely tax-free in nature helping you save tax The flexible benefits of ULIPs allow you to manage your investments as per your investment strategy The different types of ULIPs help you fulfil the various financial goals that you might have Switching and partial withdrawals do not attract any tax making ULIPs tax efficient Since the returns are market-linked, you get inflation-adjusted returns from ULIP ULIPs are attractive insurance policies that give you coverage as well as returns. Now that you understand ULIP meaning, its types and advantages, use our IndiaNivesh platform to invest in a plan as per your insurance and investment needs and enjoy all the benefits that the plan has to offer.   Disclaimer: Investment in securities market / Mutual Funds are subject to market risks, read all the related documents carefully before investing.

    read more
  • What is CAGR & How to Calculate it?

    There are different types of investment avenues in the market and each of these avenues promises you a compounded rate of growth if you remain invested. Compounding of return means earning a return on the return earlier generated. So, if you invest INR 100 and earn a return of 10% in the first year, the amount would become INR 110. Thereafter, in the second year, you would earn 10% on INR 110 giving you a return of INR 11. This compounding helps grow and multiply your wealth considerably over a period of time. In the case of market-linked investments, the rate of return is not guaranteed. It varies over the investment period. To know the average rate of return on your investments, the concept of CAGR is used. Let’s understand what CAGR is and how it helps you find the growth of your market-linked investments. What is CAGR? CAGR’s full-form is Compound Annual Growth Rate. The Compound Annual Growth Rate, in simple terms, is the average rate of return of an investment over a one year period. CAGR takes into account two important factors - the time period of the investment and the fluctuations in the return. Since the returns vary depending on the market fluctuation, finding the return over a specific time period becomes difficult. CAGR gives you the average growth rate offered by the investment over the said time period. CAGR shows the approximate growth rate considering that there is no market fluctuation and that the returns earned are reinvested into the investment. How to calculate CAGR? It is very easy to calculate CAGR. There is a CAGR formula which you can use to find the Compound Annual Growth Rate of your investment. The CAGR formula needs three important details which are as follows – Value of the investment made initially (VI) Term of investment (T) Value of the investment at the end of the term (VE) Using these three inputs, the CAGR formula becomes – CAGR = (VE / VI) ^ (1/T) – 1 Let’s understand with an example – Mr. A invested INR 10,000 in a market-linked investment avenue. After 3 years, the value of his investments stands at INR 13,500. The CAGR for Mr.A’s investment could be calculated as below – VI – INR 10,000 T = 3 years VE = INR 13,500 CAGR = (13500/10000) ^ (1/3) – 1 = 10.52% How CAGR helps understand the mutual fund growth rate? Mutual funds are market-linked investment avenues which do not offer a guaranteed rate of return. Since the returns are subject to market fluctuations, CAGR becomes an accurate tool to measure the performance of the fund over a specified period. Investors can check the annual CAGR of mutual fund schemes and use the rate to find out which scheme offers better returns than others. The fact sheet offered by the mutual fund house contains returns generated by the fund over different time frames. These returns can prove to be confusing and so CAGR is an easier alternative to understand the performance of the fund. CAGR acts as a ready reckoner for investors to assess returns from a mutual fund scheme and also highlights the compounding of returns on mutual fund investments. Important points to know about CAGR The investment risk inherent in the scheme is not highlighted by CAGR. CAGR is merely a yardstick to measure the growth rate CAGR proves to be a good measure of growth for a short-term period, i.e. up to 6 or 7 years. If you are considering long-term investments, the growth trends over a short-term period would be averaged out. In such cases, CAGR would give an average rate even if the fund performed excessively well in a two or three year period and then the returns fell in later years. CAGR changes every year since the investment period changes CAGR for two investment funds can match one another even if the funds are different. This might happen if one fund performed well initially and the other one performed well in the last few years. As a result, the performance is averaged out and the CAGR Other modes of calculating returns from investments Besides CAGR, there are other ways to calculate the returns generated by market-linked investments. These ways are as follows – Returns since launch Under this model, the return earned by the fund ever since it was launched and till the present date is calculated. Trailing returns Under the trailing returns approach, you measure the performance of your fund daily, weekly, bi-weekly, monthly or annually. Annualised returns Annualised returns are calculated as the geometric average of the return yielded by the fund over a given period of time. CAGR v/s Absolute returns Absolute returns measure the total return yielded by an investment. The time period is not considered. CAGR, on the other hand, measures the return over a specific time period. For instance, in the previous example, INR 10,000 grew to INR 13,500 over a 3-year period. The absolute return would be 35% since it measures the total return earned on the investment. However, when CAGR is considered, the time period of investments is also taken into consideration thereby considering the time value of money. As such, CAGR comes to 10.52% which is a more realistic figure. While absolute returns show the returns generated, the time period is missing. You cannot figure out how many years it took the investment to generate this return. But CAGR shows you the annual return making it easier to make a judgement on the performance of the fund. The next time you invest in mutual funds, stocks or other market-linked investment avenues, consider their CAGR to choose the fund or investment which has better returns over its peers. So, visit IndiaNivesh and find out a mutual fund scheme of your choice and then compare the scheme’s CAGR with its peers to choose the best performing fund.   Disclaimer: Investment in securities market / Mutual Funds are subject to market risks, read all the related documents carefully before investing. 

    read more
  • Capital Market – Meaning, Types & Functions of Capital Market

    We all know how various companies and industries raise funds for their short term requirement through the money market. However, when they need funds for long term, capital market is their source. The capital market is just like the money market but with a difference that funds raised in the capital market can be used only for long term. In this article, you will learn about the concept of capital market in detail. Let us first understand what is the capital market? Understanding Capital Market Capital market in simple words means the market for long term investments. These investments have a lock-in period of more than one year. Here, the buyers and sellers transact in capital market instruments like bonds, debt instruments, debentures, shares, derivative market instruments like swaps, ETFs, futures, options, etc. Let us now understand the types of capital market. Types of Capital Market The capital market is of two types i.e. Primary Market and Secondary Market. Primary Market The primary market is also called “New Issue Market” where a company brings Initial Public Offer (IPO) to get itself listed on the stock exchange for the first time. In the primary market, the mobilisation of funds is done through right issue, private placement and prospectus. The funds collected by the company in the IPO is used for its future expansion and growth. Primary markets help the investors to put their savings into companies that are looking to expand their enterprises.  Secondary Market The secondary market is a type of capital market where the securities that are already listed on the exchange are traded. The trading done on the stock exchange and over the counter falls under the secondary market. Examples of secondary markets in India are National Stock Exchange (NSE) and Bombay Stock Exchange (BSE). After learning about the types of capital market, let us now learn about the capital market instruments through which money is raised. Ways of Raising Funds Offer through Prospectus In the primary market, the prospectus is used to raise funds. The company invites the investors and the general public through an advertisement known as the prospectus to subscribe to the shares of the company. The shares or debentures are allotted to the public on the basis of subscription. If the company receives a high subscription then allotment is done to them on pro-rata basis. The company hires merchant bankers, brokers or underwriters to sell the shares to the public.  Private Placement Some companies try to avoid the IPO route to raise funds as it is very costly. Instead, they give investment opportunity to few individuals via private placement. Here the companies can offer their shares for sale to select individuals, financial institutions, insurance companies and banks. This way they can raise funds quickly and economically. Rights Issue The structure of capital market allows the companies in need of additional funds to first approach their current investors before looking at the other sources for finance. The right issue gives the current investors the first opportunity to make additional investments in the company. The allotment of right shares is done on pro-rata basis. However, if the current shareholders of the company do not want to exercise their rights, the shares can be offered to the public. e-IPO e-IPO means Electronic Initial Public Offer. e-IPO is an agreement between the stock exchange and the company to offer its shares to the public through online mode. It is a fast and speedy process. The company here needs to appoint registrar to the issue and brokers to accept the application received from the public. The above mentioned are the ways of raising funds through the capital market. Let us now learn about the various functions of the capital market. Functions of the Capital Market Helps in the movement of capital from the people who save money to the people who are in need of it. Assists in the financing of long term projects of the companies. Encourages investors to own the range of productive assets. Minimises the transaction cost. Helps in the faster valuation of financial securities like debentures and shares. Creates liquidity in the market by facilitating the trading of securities in the secondary market. Offers cover against price or market risks through the trading of derivative instruments. Helps in efficient capital allocation by way of competitive price mechanism. Helps in liquidity creation and regulation of funds. The above mentioned are the functions of the capital market. The capital market performs its functions with the help of buyers and sellers who interact and transact. The structure of the Indian capital market is well regulated and highly organised. The capital markets may be sometimes termed risky because they do not give fixed returns annually. But when looked from a long term perspective, their performance has always been good and rewarding for the investors. If you want to learn more about the capital market or put your savings in the capital market, you can contact IndiaNivesh Ltd.Disclaimer: "Investment in securities market and Mutual Funds are subject to market risks, read all the related documents carefully before investing."

    read more