Stock market is one of the popular investment avenues where you can make huge wealth in the long run. Over the years the Indian stock market has given incredible returns to the shareholders. There are many top shares to buy for long term which have the potential to grow your money. If you make long term investment in the stocks of the right company, apart from the price appreciation, you enjoy many benefits like dividends, bonus shares, preferential shares, etc.
However, there are many aspects that you must consider before making long term investment in a stock. Some of the factors include future growth, debt to equity ratio, market’s condition in the future, etc. So, if you are planning to invest for a longer horizon, we have made a list of the few top shares to buy for long term success.
Best Shares To Buy In India For Long Term
• Aditya Birla Capital Ltd.
Aditya Birla Capital Ltd. has a diversified business model that involves life insurance, mutual funds, home finance, etc. The diversity of the business protects it from the slowdown in one particular sector. This leads to good performance in the form of consistent revenue and profitability. The wide and diverse business of the company ranks it among the best shares to buy today for the long term. At present, the company has a market capitalisation of Rs. 3,645.75 crores.
• Can Fin Homes Ltd.
Can Fin Homes Ltd. is one of the well-performing finance companies of India. The strong financial books provide a good cushion to the company even in the economic slowdown. The reliable management of the company ranks it among the best shares to buy in India for long term. The company is also not severely affected by frauds and crisis in the NBFC sector. The current market capitalisation of the company is Rs. 4,948.01 crores.
• Coal India Ltd.
Coal India Ltd. is one of the leading companies in the energy sector. The company has a market capitalisation of Rs. 125,565.59 crores. Today, this company is the single largest coal producer in the world. The company operates through 82 mining areas along with 7 wholly-owned coal producing subsidiaries in India. Numerous projects are already in the pipeline and order book is also very strong. Going ahead the company shall continue to fulfill the growing needs of the coal demand across the globe and remain the leader of the market. Therefore, when you think of shares to buy for long term, Coal India Ltd. is a good option.
• Dr Lal Pathlabs Ltd.
Dr Lal Pathlabs Ltd. is one of the good shares to buy for long term. The company functions in the healthcare sector and has a market capitalisation of Rs. 8,915.89 crores. The company owns top pathology labs in India. With quality manpower and experts, they remain one of the top players in this segment. The company has over 1,000 field executives with more than 6,000 pick up points across the country. What makes it the best shares to buy today for long term is that the company is expected to perform well and cover a good market share in the long term.
• Bharat Electronics Ltd (BEL)
Bharat Electronics Ltd (BEL) is in the consumer durables sector and has a market capitalisation of Rs. 22,964.89 crores. BEL is one of the leaders in supplying specialized electronic equipment to the Indian Defence Services. Apart from the defense sector, the company has a significant presence in the civilian market as well and supplies numerous products. The list of items produced by the company is long as it caters to many different sectors of the economy. Going ahead the demand for its products is expected to remain robust and the company shall grow well. Bharat Electronics Ltd (BEL) definitely falls in the category of good shares to buy for long term.
• NBCC (India) Ltd.
NBCC (India) Ltd. functions in the real estate sector and has a market capitialisation of 6,192 crores. Founded by the government of India, the company holds the status of Navratna CPSE. The company has a significant presence in the Project Management Consultancy (PMC), Engineering Procurement & Construction (EPC) and Real Estate Development. With the slow down in the real estate segment, the company is trading at cheaper valuations. What makes its shares to buy for long term is the expected recovery in the economy and faster execution of orders by the company.
• RBL Bank Ltd.
RBL Bank Ltd. is in the banking sector with the market capitalisation of Rs. 15,960.34 crores. This bank has been rated as one of the best mid-sized banks in India. RBL Bank is one of the fastest-growing private banks of the country and it is continuously expanding its presence across the different states. Currently, the bank has 332 branches in India. In the future, the customer base of the bank is expected to grow significantly. In addition, the reliable management of the bank makes it the best shares to buy in India for long term.
The above mentioned are few of the shares to buy for long term. Since there are many companies listed on the stock exchange, it is important to know the different criteria that you need to consider before purchasing stocks for the long term. To assist you in selecting the best shares to buy in India for long term, we have listed down certain points that you may consider.
How To Choose Stocks For The Long Run?
The first and foremost thing that you need to do before purchasing a stock for the long term is to analyse the financials of the company. You must check the company’s debt levels, the cash reserves available, provisions made, etc. By understanding the financials of the company, you would come to know if the company will be able to survive in the long run if recession hits the market.
• Future Growth
It is always good to invest in those businesses which show the signs of future growth. Future growth has a direct impact on the profitability of the company. If it is expected that the demand for a company’s products or services would grow in the coming years it would lead to higher profits. Being a shareholder in a company that shows consistent growth not only gives you returns in the form of share price appreciation but also in the form of a dividend, bonus shares, etc.
• Government Policy
The policies of the government have a direct effect on a company. If any sector is expected to receive boost and support from the government then the shares of companies functioning in that sector can be considered for long term investment. While on the other hand, if any sector is going to face many hardships from the government then investment in such companies must be completely avoided.
• Competent Management/ Corporate Governance
When you are looking for shares to buy for long term, it is always advisable to look at the quality of the management. A company with good management must be the first choice for any investor. This is because good management always ensures that ethical practices are followed in the company and there is no fraud. Therefore, invest for the long term in those companies where no one can question the credibility of the management.
The above mentioned are a few things to consider before purchasing stock for the long term. In India, you can invest in the stock market only if you have a demat account. If you are a beginner and want to invest for the long term in the stock market, you may consider opening a demat account with IndiaNivesh Ltd. Our in-house experts and analysts help beginners and seasoned investors by recommending the long term shares to buy in India.
Futures & Options - 4 Things to Avoid while Trading in Futures and Options
For many investors, the next gradual step after mastering the stock markets is venturing into the derivatives segment. Derivatives consist of two key products in India – Futures and Options. However, trading in these can be a tricky business and one can go wrong on many counts. But before we warn you of the pitfalls that you need to be careful of, it is important to know what are futures and options. Correct understanding of futures and options plays an important role in making the best out of investments in this segment. Read on to understand the nuances of the F&O segment and how to trade in futures and options. Similarities between futures and options Both futures and options belong to the family of derivatives. For the uninitiated, derivatives are financial contracts whose value is derived from an underlying asset (such as securities) or a group of assets (benchmarks such as indexes). Other examples of underlying instruments are bonds, commodities, interest rates, stocks, etc. They are trading products which offer the investor a chance to make profits and hedge their current investments Both futures and options trading happens in the stock market. Difference between futures and options The major difference between futures and options lies in the obligations or rights of the involved parties. In the case of options, the holder of the contract has the right to purchase (or sell) the underlying financial instrument or asset at the pre-determined price. However, he or she is not obligated to do so. The seller, on the other hand, needs to compulsorily perform their part if the holder chooses to exercise his or her option. In simple words, the holder has an “option”. In the case of a futures contract, both parties have an obligation to fulfill their part of the contract on a specified date in the future at a pre-determined price. In terms of risk, futures are riskier than options. The holder of the futures contract is obligated to buy on the future date at the fixed price even if the security moves against him or her. However, in an options contract, the holder can choose not to no go through if the security price does not move as per his/her expectation. There is an advance payment involved with options contract. The holder of the contract has to pay an amount or premium to get the right to buy or pass in the future. In case the contract holder chooses not to exercise the right, he/she will lose this upfront payment amount. No such charges are there in a futures contract as both the parties need to honor their obligations on a certain date. In the case of a futures contract, the transaction takes place on a pre-determined date. Futures and options may be conceptually different but their core principle is the same. They provide a chance to make a profit from an index, stock or any other underlying asset without investing the entire sum. Understanding future and options Now that you know the difference between futures and options, you might think that you are all set to venture into this segment. However, before you do that it is important to understand some important facts about futures and options Futures and options are traded on the stock market. The F&O segment contributes to the maximum trading volume across stock exchanges in the country. The calculation of profits (or losses) is done daily till the time of sale or contract expiry. Unlike the equity market, derivatives come with an expiration date. There are hidden costs involved in the F&O segment. These include brokerage, stamp duty, GST, STT, etc. Options contracts are asymmetrical. In case the price of a stock goes down, the buyer's loss is restricted to the amount of premium paid. However, the seller's loss is limitless potentially. Trading in options is possible even when one is unsure about the market’s direction. One can combine futures and options to trade markets in such situations. One of the USP of the F&O market is the flexibility to choose a non-directional strategy. Things to avoid while trading in futures and options If you wish to trade in futures and options, there are some mistakes you need to steer clear of. Futures Trading Use futures as a trading proxy: This is one of the biggest (and most common) mistakes made by investors in the F&0 segment. The power of leveraging works both ways – in your favor and against it. Futures have the potential for unlimited profits as well as losses. So, one should not get lured by the possibility of exponential profits without considering the impact of losses. Ignore the stop/loss feature: Many people do not make effective use of this important feature. The stop/loss feature is a great risk management tool. One must remember that leverage is a double-edged weapon. It can help as well as hurt. It is important to maintain a disciplined and rigid stop/loss target at the time of trading. On earning the set or desired profit, one must use this feature to exit from the futures position. Sell if another institution is doing so: A big part of the future trading is to create a cash-future arbitrage. Hence, do not start selling your future contracts just because some other institution is doing so. It might be trying to create a position of arbitrage. Following the herd is not a wise way of trading in the F&O segment. Options Trading Get attracted by cheaper-priced options: Naturally one would prefer low-priced options as the advance premium payment would also be lesser. However, in such cases, it is important to assess the intrinsic value of that particular option to determine if it is truly underpriced. Holding longs closer to the date of expiration: There are two factors that impact the valuation of options – intrinsic value and time value. As the date of expiry comes nearer, there is a sharp dip in the option price (if it is going to expire at zero value). Hence, timing your exit and setting the target return are crucial aspects to be considered in options trading. Else, one might end up making losses. How to trade in futures and options Once you have a thorough understanding of futures and options, it is time to choose an intermediary for your trading purposes. This is a crucial step as the right partner can help you select the right investment opportunities and make the most out of your hard-earned money. IndiaNivesh is a great choice for all your financial needs. With a rich experience of more than a decade, it offers best-in-class and customized services to its customers. Its in-depth understanding of the market combined with cutting-edge technological tools enables them to support customers holistically. Their long list of recognitions stands testimony to the passion and excellence they display in the financial world. So, make the right choice of partner and keep it simple. Futures and options are not rocket science once you understand their nuances. Disclaimer: Investment in securities market / Mutual Funds are subject to market risks, read all the related documents carefully before investing.
Balanced Mutual Funds – Best Balanced Mutual Funds to invest in 2019
Investment in equity and mutual funds have shown incredible growth in the past few years. One can make handsome returns by investing in the stocks and mutual funds schemes. Since mutual fund schemes have a diversified portfolio, it is an ideal investment avenue for investors who want to play safe. There are numerous types of mutual funds and one such type of mutual fund is balanced mutual funds. A balanced mutual fund offers the benefit of diversification by allowing you to invest in multiple asset classes i.e. debt and equity. This combination of investment not only helps you earn short term income but also build long term wealth. In this article, we will walk you through the list of best balanced mutual funds that you may consider investing in. We will also learn the meaning and advantages of investing in balanced mutual funds. Let us first learn the meaning of a balanced mutual fund.What is a Balanced Mutual Fund?A balanced mutual fund is also called hybrid mutual fund. These mutual funds invest its assets in debt instruments and equities to generate good returns and reduce investor’s risk. These mutual funds are good for investors who have a conservative approach and are looking for fixed returns. Balanced mutual funds typically invest 50% to 70% of their portfolio in the stock and the remaining is invested in bonds and other instruments. Before investing in top balanced mutual funds you must be very careful. Below is the list of best balanced mutual funds 2019 that you may consider for investing for long term.List of Best Balanced Mutual Funds 2019Let us now learn the advantage of investing in the top balanced mutual funds.Advantage of Investing In The Top Balanced Mutual FundsThe biggest advantage of top balanced mutual funds schemes is that they offer diversification. The combination of debt and equity makes them less vulnerable and risky to market volatility. The debt part of the fund ensures that the investor will get an assured fixed return while the equity part is for continuous capital appreciation. Therefore, while making an investment in top balanced mutual funds, the investor must consider the combination that is offered in the scheme. Another benefit of investing in balanced mutual funds is that it offers the benefit of rebalancing. In situations where the equity markets are overvalued as compared to debt markets or otherwise, the fund manager has the freedom to shift between the asset classes. Since mutual funds offer many tax benefits, let us now learn about the tax implications in the case of balanced mutual funds.Tax Implications for Equity-Oriented Balanced FundsThe balanced mutual funds which have an exposure to equity of 65% or more fall under the equity asset class for taxation purpose. For the gains that are booked within a year of the purchase of equity-oriented balanced fund, short term capital gain tax at the rate of 15% is applicable. When these funds are held for long term i.e. more than 12 months, tax at the rate of 10% is applicable on the gains exceeding Rs. 1 lakh. Tax Implications for Debt-Oriented Balanced FundsThe debt-oriented balanced funds are taxable just like any other debt funds. If the debt-oriented balanced funds are held for a period of 36 months or more, long term capital gain tax is applicable. On the other hand, if these funds are sold with short term capital gains, it is taxable at 20% with the benefits of indexation. From the above taxation implications, it is clear that the equity-oriented balanced funds have a tax advantage over the debt funds. Investing in one of the top 5 balanced mutual funds will reap you handsome returns in the long run along with tax benefits. The Bottom LineSince balanced mutual funds invest in both debt and equity, they are an ideal investment option for people looking for the best of both worlds. Investing in balanced mutual funds ensure capital appreciation as well as minimise potential risks. Therefore, retirees and low-risk tolerant investors especially invest in balanced mutual funds. These mutual funds help to fight inflation and generate income to supplement current needs. Whether you are a beginner or a seasoned investor, you can contact IndiaNivesh Ltd. for assistance in investing in the top 5 balanced mutual funds. Disclaimer: Investment in securities market / Mutual Funds are subject to market risks, read all the related documents carefully before investing.
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