The Importance of Muhurta Trading

Posted by Mehul Kothari | Published on 06 Nov 2018
Image
The Importance of Muhurta Trading

The Importance of Muhurat Trading

It is considered auspicious to trade during muhurat trading, a special session of the stock market held on Diwali

Diwali or Deepawali is one of the most important events in the Hindu calendar. It is especially important for businessmen since it is considered the beginning of the New Year (Samvat), and is dedicated to Lakshmi, the goddess of wealth and prosperity. Conducting some business activity on this day is considered auspicious and sets the tenor for the year ahead.
For the trading community, Diwali is a time when old account books are closed and new books opened. On this day, traders worship their new account books in a ceremony called `Chopda Poojan’.

A Gujarati tradition
The tradition of ‘Muhurat’ (auspicious time) trading on the stock exchange was started by the Gujarati community, which was a pioneer of stock trading in the country and continues to dominate it today.
Muhurat trading is held for an hour on Diwali at a time specified by the stock exchanges, usually in the evening. For 2018, Muhurat trading on the NSE and BSE will be held on 7 November between 5pm and 6:40 pm. The offices of the stockbrokers are colourfully decorated, and they and their families hold pujas to pray for a prosperous future. While books used to be worshipped in an earlier age, now the honours are done to the trading terminals. A symbolic `buy’ order is also placed.

An optimistic note
Investors tend to end the trading on an optimistic note to ensure an auspicious start for the year ahead. Many consider this a good time to buy shares for their children, which are held for the long term. Considering the upbeat mood, many day traders also use the opportunity to rake in some profits.
Though the functioning of the stock market has changed by leaps and bounds in the past few decades, muhurat trading is still significant for many investors because of its religious and traditional aspect. It is also considered a good time for newbies to enter the market as it is believed to be an auspicious time, particularly, if you want to have a lifetime of success and prosperity.

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

PREVIOUS STORY

World Savings Day – What are the different ways to invest your savings?

Posted by Mehul Kothari | Published on 05 Nov 2018

World Savings Day – What are the different ways to invest your savings?The concept of saving is as old as money itself. Once, long ago, we saved our money in jars and pots, under mattresses, and hidden away in secret nooks and crannies. Today, we save it in banks, through savings accounts or recurring deposits.On World Savings Day, it is important to recognize that while savings are important, it’s just one part of the wealth-creation journey.Why savings by itself is not enough?Here’s an important fact: saving without investing actually depletes your wealth. How? The villain is inflation. The money you have today will buy you less tomorrow. If you keep your savings idle, you are actually losing money. So, save by all means. But only to invest it in ways that you can earn a better return than the rate of inflation.How to move from savings to investments?Before you plan to make investments, you should keep two important things in mind – what are your financial goals, and how much risk you are willing to take. When it comes to investing, risk and return are directly proportional – the higher the risk, the higher the probability of return.To ensure you get the returns you seek while minimizing risks, you must diversify your investments. Traditionally, Indians have had a fascination for fixed deposits. While fixed deposits are one of the safest investments, their post-tax returns are often sub-inflation. If you are looking at really long-term, reasonable and safe returns, Public Provident Fund is a good option. But if you have a bit of appetite for risk, then here are six ways to invest your savings.1. Equities – Equities are one of the most popular asset classes over the long term. There are many benefits of equities – you can start small and gradually increase your exposure; easy to invest; you can invest in a wide range of companies; it’s highly liquid so you can buy and sell at any time; it can be very tax-efficient with proper planning.2. Mutual Funds – Mutual funds offer a wide array of investment options, including equity mutual funds, debt mutual fund, exchange traded funds, tax-saving funds etc. Depending on your financial needs, return expectation and risk appetite, you can choose a mix of funds. The great thing about mutual funds is you can invest as little as Rs 500. Using the SIP route, you can create long-term wealth with regular investments of small sums.3. IPO – Initial Public Offers allow investors to buy shares of companies that are new to the stock market. Often, IPOs allow you to buy shares of a promising company at a reasonable price since many companies keep their offer price attractive.4. Derivatives: Derivatives are instruments or contracts that derive their value from an underlying asset like a stock. Seasoned investors use derivatives to hedge their risks, to benefit from arbitrage and to take leveraged positions. For example, derivatives like Options allow you to take larger positions on equities with lower exposure.5. Commodities: Commodities are pivotal to any economy. They can also act as a hedge against your equity portfolio, because many commodities have an inverse co-relation with equity. You can trade in commodities like gold, silver, metals, food grains and other agricultural produce just as you do in shares of companies.6. Currencies: Currency prices keep fluctuating offering investors an opportunity to benefit from the changes. Most traders use derivative contracts to trade in currency. Even individuals and companies use derivatives to hedge their currency risk. Regardless of where you choose to invest your money, make sure you track it closely, and regularly evaluate whether your portfolio is in line with your life goals.Keep saving. Keep investing. Happy World Savings Day! Disclaimer: Investments in the securities market are subject to market risks. Read all the related documents carefully before investing.

read more

NEXT STORY

Gold Investing Made Painless

Posted by Mehul Kothari | Published on 06 Nov 2018

Gold Investing Made PainlessInstruments like ETFs, E-Gold and Sovereign Gold Bonds enable you to invest in gold in demat form The investment portfolio, of majority of Indian households, comprise of some gold. It is considered auspicious to purchase gold during festivals like Dhanteras. However, holding gold in physical form is not without its drawbacks. Some of them include the risk of theft, purity of the metal, making charges if you’re buying jewellery, and lack of liquidity. However, if you still think that gold is a good investment bet, you can still put your money in the metal -- without actually holding it in physical form. Your options include gold exchange-traded funds or ETFs, e-gold, and sovereign gold bonds. Let’s look at each of them: Gold ETFs: Gold ETFs are like open-ended mutual funds that invest in gold. When you buy units in a gold ETF, the funds are invested in gold bullion. These funds are open-ended and traded on the stock exchange. All you need to do to invest is go to your online trading account and buy them. Similarly, you can also sell them. Therefore, you enjoy the benefits of high liquidity, accurate pricing of the metal, plus safety. You can also buy them in quantities of your choosing -- even as little as a gram. There is, of course, a small charge involved in ETFs, called an expense ratio. It’s usually around 1% -- not a very high price to pay for safety, liquidity and transparency. Apart from this, you will also have to pay brokerage charges. E-Gold (Electronic Gold): This instrument is similar to ETFs and was introduced by National Spot Exchange in 2010. This enables you to buy gold in dematerialised form, just like shares and mutual funds. What’s more, you can buy the gold in small quantities. If you so choose, you can convert the dematerialised units into physical gold. Unlike ETFs, E-Gold does not involve a recurring management fee, but only a one-time charge. Sovereign Gold Bonds (SGBs): Another option for gold investing is SGBs issued by the Reserve Bank of India (RBI). These are available for a tenor of eight years in denominations of 1 gram, with a maximum limit of four kg for individuals. You can opt for early redemption after five years. On redemption, you will be paid in cash based on the average price of gold of 999 purity of the previous three business days. The bonds are available at branches of banks and selected post offices. The best part about these bonds is that they are tradable on stock exchanges, thus ensuring a high level of liquidity.Open AccountInvest Now Disclaimer: IndiaNivesh Securities Limited (CIN No.: U67120MH2006PLC158634) I SEBI Reg. No.: INZ000010132 (exchange membership no. BSE: 3130, NSE: 12566, MSEI: 51500) I Research Analyst: INH000000511 I CDSL: IN-DP-CDSL-392-2007 I NSDL: IN-DPNDSL-297-2008 I AMFI: ARN58314. Regd. Office: 601/602, “Sukh Sagar” N.S. Patkar marg, Girgaum Chowpatty, Mumbai - 400 007. Tel: 91 022 66188800. Corporate office: Lodha Supremus, 17th Floor, Senapati Bapat Marg, Lower Parel, Mumbai - 400013. Tel: 91 22 6240 6240 l Fax: 91 22 6240 6241. Disclaimer: We are only distributors of Mutual Funds, IPO, Corporate Deposits & Fixed Income Products & PMS is not offered for commodity segment. “Investment in 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

  • Financial Markets - Overview, Structure, and Types
    Posted by Rushabh H. Mehta | Published on 06 Mar 2020

    What is Financial Market? A market is defined as a place where goods and services are bought and sold. Along similar lines, a financial market is one where financial products and services are bought and sold regularly. Financial markets deal in the purchase and sale of different types of investments, loans, financial services, etc. The demand and supply of financial instruments determine their price, and the price is, therefore, quite dynamic. Financial markets form a bridge between investors and borrowers. It brings together individuals and entities that have surplus funds and those who are in a deficit of funds so that funds can be transferred between them. This transfer of funds is done through different types of financial instruments that operate in the financial markets. Structure of the Indian financial market The Indian financial market is divided into two main types – the money market and capital market. The capital market is further sub-divided into different types of financial markets. Let's understand –   Let’s understand each type of financial market in details – Money market The money market is a marketplace for short-term borrowing and lending. Securities that have a maturity period of less than a year are traded on money markets. The assets traded in money markets are usually risk-free and are very liquid. Since the maturity period is low, the risk of volatility is low, and the returns are also low. Money market instruments are debt oriented instruments with fixed returns. Some common examples of money market instruments include Treasury Bills, Certificates of Deposits, Commercial Papers, etc. Capital market Contrary to the money market is the capital market, which deals in long-term securities. Securities whose maturity period is more than a year are traded on the capital market. Capital market trades in both debt and equity-oriented securities. Individuals, companies, financial institutions, NRIs, foreign institutional investors, etc. are participants of the capital market. The capital market is divided into two sub-categories which are as follows – Primary market Also called the New Issue Market, the primary market is that part of the capital market, which is engaged in the issuance of new securities. The newly issued securities are then purchased from the issuer of such securities directly. For instance, if a company offers an IPO (Initial Public Offering) and sells its shares to the public, it forms a part of the primary capital market. Investors directly buy the shares from the company, and no middlemen are involved. Similarly, if an already listed company issues more shares, called Follow-on Public Offerings (FPO), such shares can be bought by investors directly from the company. Secondary market The secondary capital market is where the securities bought in the primary capital market are traded between buyers and sellers. Stock trading is a very common example of a secondary capital market wherein investors sell their owned stocks to interested buyers for a profit. A secondary market is characterised by an intermediary and the trading of securities takes place with the help of such intermediary. While securities in the primary market can be traded only once, securities in the secondary market can be traded any number of times. The stock exchange is a part of the secondary market wherein you can trade in stocks of different companies that have already been offered by the company at an earlier date. Other types of financial markets Besides the above-mentioned types of financial markets, there are other types of financial markets operating in India. These include the following – Commodity market This market deals in the trading of a commodity like gold, silver, metals, grains, pulses, oil, etc. Derivatives market Derivative markets are those where futures and options are traded. Foreign exchange market Under a foreign exchange market, currencies of different countries are traded. This is the most liquid financial market since currencies can be easily sold and bought. The rate fluctuations of currencies make them favourable for traders who look to book profits by buying at a lower rate and selling at a higher one. Bond market Bond market deals in trading of Government and corporate bonds, which are offered by Governments and companies to raise capital. Bonds are debt instruments that have a fixed rate of return. Moreover, bonds also have a specific tenure, and the bond market is, thus, not very liquid. Banking market The banking market consists of banks and non-banking financial companies which provide banking services to individuals like the collection of deposits, the opening of bank accounts, offering loans, etc. Financial market and services The services offered by financial markets today are as follows – They provide a platform for buyers and sellers to trade on financial products The financial market determines the price of financial instruments traded on it. This price is based on the demand and supply mechanism of the instrument and can move up and down frequently The market provides liquidity to investors when they need to sell off their investments for funds The market provides funds to borrowers when they need financial assistance The Indian financial market is influential in the economic growth of India as a whole The financial market helps in mobilization of funds from investors to borrowers Thus, the financial market and its services are varied, and that makes the financial market an important component of the Indian economy. Regulators of financial markets Financial markets and services offered by them should be regulated so that the participants of the market follow the laws of trading. As such, there are different regulators of the market that ensure that all participants trade fairly. These regulators are as follows – Reserve Bank of India RBI is the regulator for banks and non-banking financial companies. It is the central bank of India entrusted with the formulation of monetary policies, credit policies, and foreign exchange policies, among others. Banks and financial institutions have to abide by RBI's rules and regulations to work in the financial market. Securities and Exchange Board of India SEBI is the primary regulator of the capital market, which consists of both the primary as well as the secondary capital market. Trading done in the capital market is governed under SEBI's rules and laws. Insurance Regulatory and Development Authority IRDA governs the rules and regulations which are to be followed by insurance companies and their intermediaries. Thus, IRDA is a regulator of the insurance market, both life, and general insurance market. Financial markets today have evolved and have become quite competitive with the participation of multiple players. They directly play a part in the growth of India's economy and allows investors and borrowers to trade in financial products and services in an easy and smooth manner. To take advantage of the Financial markets and varied investing opportunities, consider the team at IndiaNivesh, which is well-versed with types of markets and regulatory bodies.   Disclaimer: Investment in securities market / Mutual Funds are subject to market risks, read all the related documents carefully before investing.

    read more
  • SIP – Different Types of Systematic Investment Plans in India
    Posted by Mehul Kothari | Published on 15 Jan 2020

    Mutual funds now are a household name and building a mutual fund portfolio is synonymous with wealth creation. As the mutual fund industry continues to grow leaps and bounds, SIPs are considered one of the key growth drivers for this industry. SIPs help the investors to invest in a systematic and disciplined manners. Online SIP investments starting with Rs 500 per month (for few schemes min SIP amount is as low as Rs. 100 per month); digital distribution and hassle-free onboarding of investors, all have resulted in making an investment for SIPs most favoured investment option. To stay relevant with times and improvise their offerings, AMCs now offer many different types of SIP so that investors can choose the most suitable type of SIP for investment best suited to their individual needs and profile. Here are the different types of SIP investment available for investors- 1. Regular SIP One of the simplest and easiest forms of SIP investment is a regular SIP, wherein you invest a fixed amount at regular intervals. The time interval can be monthly, bi-monthly, quarterly or semi-annually. You can also choose daily or weekly SIPs, though it is not recommended in most cases. When you make your first SIP payment, you are required to choose your desired time interval, amount of the SIP and the tenure of the SIP. In a regular SIP, you cannot change the amount during the tenure of the investment. If you are a salaried employee, choosing a monthly SIP, usually in the first ten days of the month, once your salary is credited to your bank account is highly recommended. 2. Step-up SIP Without a doubt, SIPs help brings about financial discipline in your life. Over time, as your earnings increase, it is important to increase your investments as well so as to keep them aligned with your income level and financial goals. A step-up SIP, also termed as a top-up SIP, is an automated solution to increase your SIP contribution either by a fixed amount or a fixed percentage after a specific time. Using Step-up SIPs will help you reach achieve your goals faster and also help in long-term wealth creation. 3. Flexible SIP For investors with irregular income, even after being well aware of the benefits of SIPs, the biggest reason for not starting a SIP is not being able to keep up with the fixed periodic investments. A flexible SIP is a perfect solution for such investors as it gives the flexibility to start, pause, decrease or increase your SIP. Depending on your flow of funds, you can change the SIP amount seven days before the SIP date. In case, there is no intimation of change, then the default amount entered is deducted for the SIP. 4. Perpetual SIP Normally, when you choose a regular SIP, it has a fixed tenure, with a starting date and an end date. But, if you are unsure about how long you want to continue the SIP, you can opt for a perpetual SIP. In case of a perpetual SIP, you leave the end date column blank and you can redeem your SIP once you have reached your financial goal. If you opt for a perpetual SIP, then it is important that you monitor the returns of your investment, to keep a track of the fund’s performance over time. 5. Trigger SIP A trigger SIP is for seasoned investors, who have sound knowledge of the financial markets and are accustomed to tracking the market performance daily. Using a trigger SIP, an investor can choose an index level, a particular event or NAV to start the SIP. An investor can set trigger points for upside and downside conditions and can redeem the amount on achieving the pre-specified target. Investors can oscillate their investments between debt and equity schemes within the same fund house. A trigger SIP is recommended only for investors who have a thorough understanding of financial markets. 6. SIP with Insurance Insurance is an important part of financial planning. In order to make mutual fund offerings more lucrative, certain fund houses offer free insurance cover if you opt for SIPs with a longer duration. The initial cover is usually ten times the first SIP and gradually increases over time. This feature is only for equity mutual fund schemes. The term insurance offered is just an add-on feature and does not impact the performance of the fund. 7. Multi SIP The multi-SIP enables starting SIP investment in multiple schemes of a fund house through a single instrument. This facility can help investors to build a diversified portfolio. Investors can start SIP in various schemes using a single form and payment instruction, thereby reducing the paperwork involved.   CONCLUSION Over the last few years, SIP returns have earned investor confidence and are the most preferred investment option of retail investors. If you are unsure on how to choose the right SIP for you and want correct guidance, then consult our expert financial advisors at IndiaNivesh for best-suited SIPs for investments.

    read more
  • Know What is Pre-Market Trading & How it Works in Share Market
    Posted by Mehul Kothari | Published on 21 Nov 2019

    Most of us are aware that trading takes place on the stock exchange between 9.15am and 3.30pm. But what if we told you that it is only partially correct. Some trading (though low in volume) also takes place during the extended trading hour periods. Read on to know about more about this additional trading window and its significance. What is Pre-Market Trading Pre-market Trading is a global phenomenon and refers to trading that takes place before the usual trading hours. The usual trading hours for Indian stock markets is 9:15 am to 3:30 pm. Pre-open market stock trading is a special trading window of 15 minutes prior to the start of the working hours for the stock markets. Hence, the time frame between 9:00 am and 9:15 am is considered as the pre-open market session. This feature was first introduced by NSE and BSE in October 2010. The objective behind a pre-market trading It was observed that there was tremendous volatility in the first couple of minutes of trading hours. The core objective behind having a pre-market trading session is to stabilise the market especially when heavy volatility is expected due to some overnight major events or corporate announcements. These could be election results, reforms or new economic policies, declaration of mergers and acquisitions, delisting of shares, open offers, change (especially downgrading) in credit ratings, debt-restructuring, market rumours etc. The additional 15 minutes allows the stock markets to arrive at the right premarket stock price and not get carried away by external events or announcements. In India, premarket future or options trading is not permitted. Pre-market Trading Session – Breakdown of the 15 minutes The premarket trading period can be further bifurcated into three slots:Order Entry or CollectionThe Order Entry session starts at 9:00 am and lasts for eight minutes. The following activities are undertaken during this timeframe Placing of orders for purchase or selling of stocks Changes or modification in orders Cancellation of orders After 9:08am (i.e. completion of order entry session), orders are not accepted by the stock markets Order MatchThe Order Matching session starts at 9:08am and continues for the next four minutes. The following activities are undertaken during this timeframe Confirmation of orders placed during the Order Entry session Order Matching Calculation of stock opening price for the regular session that starts at 9:15am During the Order Match session, one cannot buy, modify, cancel or sell their orders. Limit orders (i.e. order quantity and price is specified) are given priority over the market orders (order quantity and price are not specified) during the execution time. Buffer TimeThe last three minutes of the premarket trading session (i.e. 9:12 am to 9:15 am) is considered as buffer time. This period is used to ensure a seamless transition to regular trading hours. Any abnormalities from the previous two slots are addressed during this time.   Calculation of Opening price during the pre-market stock trading session The opening price of the stock during this session is determined during the second phase i.e. Order Match session. It is done with the help of a specific methodology. This calculation method is referred to as the call auction methodology or the equilibrium price. The stock price which corresponds to the maximum quantity of tradable shares is known as the equilibrium price. It is a factor of demand and supply. The orders placed during the first eight minutes are matched at the equilibrium price and then traded accordingly. Some scenarios: If the highest tradable quantity corresponds to two different stock prices, then the stock price with the lower unmatched orders is taken as the equilibrium price. For example:   Stock Price Order (Buy) Order (Sell) Demand Supply Max Tradable Quantity Size Unmatched Orders (Demand minus supply) 105 1275 1160 25000 20000 20000 5000 99 2000 8000 20000 30000 20000 -10000   Though the maximum tradable quantity is same in both the cases, the equilibrium price will be considered as 105 as it has a minimum unmatched order size If the values of the highest tradable quantity and unmatched orders are same or equidistant, but they correspond to two different stock price, then the above methodology cannot be applied. In this case, the equilibrium price is taken as the stock price which is closer in value to the closing price of the previous day. For example, Stock Price Order (Buy) Order (Sell) Demand Supply Max Tradable Quantity Size Unmatched Orders (Demand minus supply) 105 1275 1160 25000 20000 20000 5000 99 2000 8000 20000 25000 20000 -5000 Assuming the closing price on the previous day was Rs. 110, then the equilibrium price in the above example will be Rs. 105.   What about orders that remain unmatched or are not traded in the pre-open session? Orders that are not traded or remain unmatched are carried forward to the general trading session. The opening price of these orders is determined in the following manner: Limit Orders i.e. orders wherein the price and quantity are already specified are carried forward at the same mentioned price Market Orders i.e. orders wherein the price and quantity are not specified are carried forward at: If the opening price was ascertained during the pre-open trading session but order not traded, then at the determined price If the opening price was not discovered, then they are carried forward at the previous day’s closing price   Stock Markets tend to be overwhelming for many investors. The concept of premarket trading can further compound the complexity level. However, as an investor, you should always remember that help is just around the corner. Professional experts like IndiaNivesh can help to simplify and demystify the entire process. The team at IndiaNivesh keeps a close eye on this Pre-market session to comprehend the mood and strength of the stock market. They track the pre-market stock prices and take the best decisions for your portfolio basis the market sentiments. Moreover, since they offer a wide range of services (broking, mutual funds, institutional equities, private equity, strategic investments, corporate advisory, etc.) they have a holistic view of the market and the economy. Their expert opinion can help you to amp up your investment game. You can read more about their offerings, vision and accomplishments on their website https://www.indianivesh.in/Disclaimer: "Investment in securities market and Mutual Funds are subject to market risks, read all the related documents carefully before investing."

    read more