It was sixth consecutive session where the domestic markets remained stuck in a band in the absence of any fresh triggers. The index Nifty spot, oscillated in a narrow band of 50 points to close extremely flat below the 11600 mark. Meanwhile, the Nifty Bank index too ended marginally in red.
The positive market breadth turned in the favour of declining counters as the day progressed which indicates broad based selling. On the sectoral front, NIFTY AUTO (+0.53%) and NIFTY FMCG (+0.52%) stocks managed to close in green. From the losers, NIFTY METAL (-1.22%) and NIFTY IT (-0.78%) stocks remained under pressure. From the F&O space, MANAPPURAM (+6.22%), MFSL (4.73%), and ADANIPOWER (+3.85%) were the biggest gainers.
MARKET OUTLOOK
NIFTY HOURLY CHART
Previously we discussed that on the hourly chart, we are witnessing that the index Nifty is stuck inside a channel as displayed above. A breakout from the same will get confirmed above 10710. On Wednesday Nifty tried its best for a breakout but failed and that resulted in a selling towards the lower band. During yesterday’s session Nifty retested the lower band by registering low of 11550 and closed higher. Hence, we continue to mention that only a sustainable move above 11685 (earlier 11710) or below 11550 might dictate the further trend.
A sustainable move above 11685 might bring in some optimism in the markets which could result in further upside towards 11760 - 11900. However, breach of 11550 might drag the index towards 11500 - 11450 mark. Traders are advised to avoid over leveraged positions and maintain strict stop loss on positional trades since the markets are now entering the phase of general election wherein we might observe surge in volatility.
Posted by Mehul Kothari | Published on 12-APR-2019
Introduction to IPOsStock market is one of the most lucrative investment avenues in India. People invest in the stock market because it has the potential to generate handsome returns in a small span of time. Investors trade in the stock market either through the primary market or through the secondary market. The primary market involves investing in the stock market by applying to the Initial Public Offering (IPO) of a company while the secondary market involves purchasing and selling shares directly from the stock exchange. This article, will walk you through the details of what is IPO, its concept and everything related to it.Let us begin by understanding IPO meaning.Understanding Initial Public Offering / IPO DefinitionIPO stands for Initial Public Offering. It is the process by which a private company can go public by selling its shares to the public. The company bringing it can be a new company or an old company. With Initial Public Offering, the company gets its shares listed on the stock exchange.Companies float it to raise funds by issuing new shares to the public. However, the existing shareholders can also sell their holding to the public without the issue of fresh capital. Let us now learn about IPO details and understand the process through which the company brings it.Process of IPOThe first thing that a company does before bringing an IPO is to hire a merchant banker to handle the process. An underwriting agreement is entered between the merchant banker and the company to work out the various financial details of the IPO. The merchant banker underwrites the shares of the company by buying all or some part of the shares and sells it to the public. Later, both the parties file registration statement with the Securities and Exchange Board of India (SEBI) along with the underwriting agreement and necessary documents. SEBI then goes through the details of the statement submitted to it and if the information submitted is found correct, it allots a date to the company to announce its Initial Public Offering.The initial listing fee of the company is Rs. 50,000 and depending upon the paid-up share capital of the company the subsequent annual listing fee is determined. The company determines the price band of the shares and the merchant banker offers its shares to the public. Many roadshows and awareness advertisements are done to generate interest among the public to subscribe to the shares of the company.Let us now understand the various reasons why a company floats an IPO.Reasons for floating an IPO● The main purpose of floating it is to raise money. Companies are in constant need of funds to expand, upgrade or repay their loans. Depending upon the requirements, a company floats it to raise funds.● Through an Initial Public Offering, the shares of the company list on the stock exchange. This increases the liquidity of stocks which promotes various employee stock ownership plans. ● By going public, the credibility and brand value of the company increases. The name of the company being flashed on the stock exchanges is a matter of pride for the company.● When the demand in the market is more, the company can issue higher number of stocks. This opens the door for the company for mergers and acquisitions as the stocks can be issued in exchange for the deal.The above-mentioned are the reasons why a company floats an initial public offering, let us know about the various checks you must do before investing in a company’s offerings.Things To Do Before Investing in an IPO● Check Company’s BackgroundSince the company is coming up with its Initial Public Offering, often there won't be any historical data available to check your decision about investing in the company. However, the company floating it does provide a prospectus. You must carefully scrutinise and read all the details provided in it before arriving at any decision about investing in the company.
● Check the UnderwritersThe success of the IPO depends upon the big broker who is endorsing the new issue. If the underwriters are well established then you may look at investing in such offerings.
● Lock-in PeriodBefore applying for an IPO, you must read the contractual obligation of the company’s executives and investors about the lock-in period of their shareholding. Often, the prices of shares drop drastically after the company completes the offerings as the shareholders of the company sell their shares in the open market once the lock-in period ends.The above points will help you in taking the right decision about investing in an IPO. Let us now read about the points that you must be aware of before investing in them.Points to Remember Before Investing in an IPO● When you invest in an IPO, you invest in the business of the company. The long term returns on the shares allotted to you will depend on the fortune and performance of the company.● The stock market is subject to volatility. Investing in Initial Public Offering can reward you with unbelievably high returns but at the same time, they also have the potential to erode the invested capital so be vigilant while investing.● While applying for it, you must be aware of the fact that the company is not liable to public investors to reimburse the capital.Therefore, while investing, you must be aware of the potential risks and rewards. Let us now read about the advantages and disadvantages of an IPO.Advantages of an IPO● The biggest advantage of an IPO is that it fulfills the financial needs of the company. It is an easy option to acquire capital for its growth and fund a massive expansion. With it, the company can invest in infrastructure and acquire new equipment. It also helps in paying off its debts.● With Initial Public Offering, the shares of the companies are available for mergers and acquisitions. Also if the company wants to acquire any other company, the shares of the company can act as a means of payment.● It attracts talented employees because the company can offer them many stock options and hire them at relatively lower wages.● The owners of the company get the reward of their hard work by listing their company on the stock exchange. In the IPO, they can get for themselves a certain percentage of shares in the company and enjoy the prestige of being a listed company.Disadvantages of an IPO● IPO is a long process and it requires a lot of legal compliances. This distracts the company from its core business and can dent the company's profits. Also, companies are required to hire merchant bankers to ease the process of IPO and in return, they charge hefty fees.● In many cases, the business owners are not able to take as many shares for themselves. Many a times they may not be able to sell their shares in the market due to the lock-in period. Therefore, the business owners are sometimes at a loss when they float an IPO.● Securities and Exchange Board of India (SEBI) conducts many checks before a company floats an Initial Public Offering. This process can be time consuming and requires huge disclosures. Besides, the promoters are required to submit details that may be used by competition and can hamper their business.
ConclusionThe above mentioned article will help you learn about IPO right from what it means to how to invest in them and what are the risks and benefits associated with investing in them. Investing in newly launched public companies can be extremely rewarding. However, you must also know that it can be risky and at the same time profits are not guaranteed. Having said that, over the years, Initial Public Offerings have offered good returns to investors. You may consider investing in it after researching about the company and its management. Every month a lot of IPOs list on the stock exchange, all you have to do is find the companies with higher potential and invest in them. Remember, an informed investor always performs better than one who is not.
Disclaimer: Investment in securities market / Mutual Funds are subject to market risks, read all the related documents carefully before investing.)
Posted by Mehul Kothari | Published on 18-APR-2019
If one wishes to invest or trade in the stock market, there are two types of accounts that need to be opened. These accounts are demat and trading account. These two accounts are different in their uses but both are necessary for investing in the stock market.
What is trading account?
In earlier times, trades used to take place between brokers who acted on behalf of their clients. These trades used to happen on an open floor and brokers used to call out the prices of their orders. When two brokers found the right price for their orders, they would transfer the share certificates and the funds and the transaction would get complete. With the digital revolution and online trading, the open outcry method for transacting has become completely obsolete. With all the stock exchanges going completely online, these manual trades by brokers has been replaced by online trading through the trading account. Read more about online share trading here.
The trading account is an account used to purchase and sell –
1. Equity shares2. Equity, Debt and Hybrid mutual funds3. Bonds4. Government securities5. Derivatives6. Commodities7. Currencies8. ETFs9. Other instruments traded on the stock exchange
Using a trading account to buy and sell is extremely simple. Each broker offers their own trading system through their website or mobile application. These trading systems are connected to the stock market’s proprietary online systems. This offers a price matching system. An investor or trader just has to put in his order request and when the system matches the price and quantity for the order, the order gets executed. This order matching system provides seamless execution of transactions without any human intervention.
The trading account is basically a link between your demat account and the exchange’s order matching system. Once the trades get cleared at the exchange, the shares or other instruments are debited and credited from the respective demat accounts.
The trading account makes it extremely simple to buy and sell any investment. Since most of the investments are listed on the exchange, price discovery is easy and transparent. All you need to do is select the instrument you want to purchase and the price, and the exchange’s order matching system will ensure the transaction goes through.
Brokers charge brokerage for transactions executed through the trading account. Along with that, there are exchange fees and securities transaction tax that is levied on each transaction.
What is demat account?
A demat account is an electronic record or repository of the financial instruments owned by an investor or trader. It shows the different investments made, the date of purchase, the price at which it was purchased and the current market price. This account allows the investor to hold shares and securities in an online form. Physical securities held by a person can be dematerialised into their electronic form and held in the demat account. One of the primary advantage of a demat account is that your shares are safe. Shares in their physical form can get damaged or lost. But shares in your demat account are safe and you don’t need to fear losing them.
A demat account, like any other account, lets you easily scan all the transactions. A demat account will show the current market value of all investments held in that account as on a particular date. It also shows whether a share is partly paid up or fully paid up, thus providing clarity to the investor. However, unlike a bank account, a demat account can have zero shares or securities and still be functional.
A demat account is a very convenient way to handle all investments. Unlike earlier times where all securities were in physical form, a demat account holds everything in electronic form. This makes it very convenient to handle and operate.
A demat account offers all facilities like a normal bank account such as nomination facility, joint accounts, change in name and address etc. A bank account is usually linked to a demat account, which makes it easy for dividends and interest to get credited to the investor’s account directly. Read more about a Demat account here.
Trading account vs demat account
The difference between trading account and demat account is simple, a demat account is an online account for storing shares and securities. A trading account is an account for purchases and sales of investments.
A trading account inherently has no balance. It draws from the demat account once the purchase or sale transaction has gone through from the exchange’s side. A trading account also cannot exist in isolation. It has to be linked to a demat account from which the required shares or securities can be debited or credited.
A demat account can exist without having a trading account. An investor can just invest in IPOs or Mutual Funds through a broker and hold these units in his demat account. However, to sell these units, a trading account will be needed.
The difference between demat and trading account is very fine. However, it is essential to know how these two accounts operate and what their nature is. This understanding will help you open these accounts and get started with your investments.
How to open a trading account:
1. Select a broker of your choice like IndiaNivesh Securities Ltd. Bear in mind that each transaction requires a certain brokerage so be sure to research about the different brokerage rates for both delivery based trades and intraday trades. 2. Check the services offered by each broker. Make sure you choose a broker who provides extensive customer support, especially if you are a beginner. A good broker who provides detailed research reports could be the difference between earning profits and earning wealth. 3. Fill in the account opening form and provide the mandatory KYC details. If you have a demat account with the same broker, the KYC details may be exempted, but that depends on the broker. Some of the KYC documents required are:a. Identity proof (Aadhar Card, Passport, Voter ID, Driving License, PAN card)b. Address proof (Aadhar Card, Passport, Voter Id, Driving License, Electricity bill, Gas bill, Telephone bill, Rental agreement, Loan agreement)You will need to submit a proof of income i.e bank statements, income tax returns, Form 16 etc.
4. You will also need to submit passport size photographs. 5. Some brokers request a verification check and witnesses while filling up the account opening form6. Once the broker processes your application, you will get details about your trading account7. You also need to link your bank account to your trading account so that funds received from a sale can be credited into the bank account. 8. Once you receive these details, you can start trading.
However, before you execute any trades, you must know where you are investing and what your investment strategy is. Without knowing this, it is very easy to lose money in the stock market, especially while engaging in intraday trades which is susceptible to price fluctuations. Now that you know the difference between these accounts, why not open a demat and trading account with a reputed broker like IndiaNivesh Securities Ltd.Disclaimer: Investment in securities market / Mutual Funds are subject to market risks, read all the related documents carefully before investing.)
Share Market Today - 12th April 2019
MARKET RECAP
KEY MARKET DATA POINTS
It was sixth consecutive session where the domestic markets remained stuck in a band in the absence of any fresh triggers. The index Nifty spot, oscillated in a narrow band of 50 points to close extremely flat below the 11600 mark. Meanwhile, the Nifty Bank index too ended marginally in red.
The positive market breadth turned in the favour of declining counters as the day progressed which indicates broad based selling. On the sectoral front, NIFTY AUTO (+0.53%) and NIFTY FMCG (+0.52%) stocks managed to close in green. From the losers, NIFTY METAL (-1.22%) and NIFTY IT (-0.78%) stocks remained under pressure. From the F&O space, MANAPPURAM (+6.22%), MFSL (4.73%), and ADANIPOWER (+3.85%) were the biggest gainers.
MARKET OUTLOOK
NIFTY HOURLY CHART
Previously we discussed that on the hourly chart, we are witnessing that the index Nifty is stuck inside a channel as displayed above. A breakout from the same will get confirmed above 10710. On Wednesday Nifty tried its best for a breakout but failed and that resulted in a selling towards the lower band. During yesterday’s session Nifty retested the lower band by registering low of 11550 and closed higher. Hence, we continue to mention that only a sustainable move above 11685 (earlier 11710) or below 11550 might dictate the further trend.
A sustainable move above 11685 might bring in some optimism in the markets which could result in further upside towards 11760 - 11900. However, breach of 11550 might drag the index towards 11500 - 11450 mark. Traders are advised to avoid over leveraged positions and maintain strict stop loss on positional trades since the markets are now entering the phase of general election wherein we might observe surge in volatility.
Disclaimer
Previous Story
What is IPO – Introduction, Meaning, Pros & Cons
Introduction to IPOsStock market is one of the most lucrative investment avenues in India. People invest in the stock market because it has the potential to generate handsome returns in a small span of time. Investors trade in the stock market either through the primary market or through the secondary market. The primary market involves investing in the stock market by applying to the Initial Public Offering (IPO) of a company while the secondary market involves purchasing and selling shares directly from the stock exchange. This article, will walk you through the details of what is IPO, its concept and everything related to it.Let us begin by understanding IPO meaning.Understanding Initial Public Offering / IPO DefinitionIPO stands for Initial Public Offering. It is the process by which a private company can go public by selling its shares to the public. The company bringing it can be a new company or an old company. With Initial Public Offering, the company gets its shares listed on the stock exchange.Companies float it to raise funds by issuing new shares to the public. However, the existing shareholders can also sell their holding to the public without the issue of fresh capital. Let us now learn about IPO details and understand the process through which the company brings it.Process of IPOThe first thing that a company does before bringing an IPO is to hire a merchant banker to handle the process. An underwriting agreement is entered between the merchant banker and the company to work out the various financial details of the IPO. The merchant banker underwrites the shares of the company by buying all or some part of the shares and sells it to the public. Later, both the parties file registration statement with the Securities and Exchange Board of India (SEBI) along with the underwriting agreement and necessary documents. SEBI then goes through the details of the statement submitted to it and if the information submitted is found correct, it allots a date to the company to announce its Initial Public Offering.The initial listing fee of the company is Rs. 50,000 and depending upon the paid-up share capital of the company the subsequent annual listing fee is determined. The company determines the price band of the shares and the merchant banker offers its shares to the public. Many roadshows and awareness advertisements are done to generate interest among the public to subscribe to the shares of the company.Let us now understand the various reasons why a company floats an IPO.Reasons for floating an IPO● The main purpose of floating it is to raise money. Companies are in constant need of funds to expand, upgrade or repay their loans. Depending upon the requirements, a company floats it to raise funds.● Through an Initial Public Offering, the shares of the company list on the stock exchange. This increases the liquidity of stocks which promotes various employee stock ownership plans. ● By going public, the credibility and brand value of the company increases. The name of the company being flashed on the stock exchanges is a matter of pride for the company.● When the demand in the market is more, the company can issue higher number of stocks. This opens the door for the company for mergers and acquisitions as the stocks can be issued in exchange for the deal.The above-mentioned are the reasons why a company floats an initial public offering, let us know about the various checks you must do before investing in a company’s offerings.Things To Do Before Investing in an IPO● Check Company’s BackgroundSince the company is coming up with its Initial Public Offering, often there won't be any historical data available to check your decision about investing in the company. However, the company floating it does provide a prospectus. You must carefully scrutinise and read all the details provided in it before arriving at any decision about investing in the company. ● Check the UnderwritersThe success of the IPO depends upon the big broker who is endorsing the new issue. If the underwriters are well established then you may look at investing in such offerings. ● Lock-in PeriodBefore applying for an IPO, you must read the contractual obligation of the company’s executives and investors about the lock-in period of their shareholding. Often, the prices of shares drop drastically after the company completes the offerings as the shareholders of the company sell their shares in the open market once the lock-in period ends.The above points will help you in taking the right decision about investing in an IPO. Let us now read about the points that you must be aware of before investing in them.Points to Remember Before Investing in an IPO● When you invest in an IPO, you invest in the business of the company. The long term returns on the shares allotted to you will depend on the fortune and performance of the company.● The stock market is subject to volatility. Investing in Initial Public Offering can reward you with unbelievably high returns but at the same time, they also have the potential to erode the invested capital so be vigilant while investing.● While applying for it, you must be aware of the fact that the company is not liable to public investors to reimburse the capital.Therefore, while investing, you must be aware of the potential risks and rewards. Let us now read about the advantages and disadvantages of an IPO.Advantages of an IPO● The biggest advantage of an IPO is that it fulfills the financial needs of the company. It is an easy option to acquire capital for its growth and fund a massive expansion. With it, the company can invest in infrastructure and acquire new equipment. It also helps in paying off its debts.● With Initial Public Offering, the shares of the companies are available for mergers and acquisitions. Also if the company wants to acquire any other company, the shares of the company can act as a means of payment.● It attracts talented employees because the company can offer them many stock options and hire them at relatively lower wages.● The owners of the company get the reward of their hard work by listing their company on the stock exchange. In the IPO, they can get for themselves a certain percentage of shares in the company and enjoy the prestige of being a listed company.Disadvantages of an IPO● IPO is a long process and it requires a lot of legal compliances. This distracts the company from its core business and can dent the company's profits. Also, companies are required to hire merchant bankers to ease the process of IPO and in return, they charge hefty fees.● In many cases, the business owners are not able to take as many shares for themselves. Many a times they may not be able to sell their shares in the market due to the lock-in period. Therefore, the business owners are sometimes at a loss when they float an IPO.● Securities and Exchange Board of India (SEBI) conducts many checks before a company floats an Initial Public Offering. This process can be time consuming and requires huge disclosures. Besides, the promoters are required to submit details that may be used by competition and can hamper their business. ConclusionThe above mentioned article will help you learn about IPO right from what it means to how to invest in them and what are the risks and benefits associated with investing in them. Investing in newly launched public companies can be extremely rewarding. However, you must also know that it can be risky and at the same time profits are not guaranteed. Having said that, over the years, Initial Public Offerings have offered good returns to investors. You may consider investing in it after researching about the company and its management. Every month a lot of IPOs list on the stock exchange, all you have to do is find the companies with higher potential and invest in them. Remember, an informed investor always performs better than one who is not. Disclaimer: Investment in securities market / Mutual Funds are subject to market risks, read all the related documents carefully before investing.)
Next Story
Know the difference between Demat Account and Trading Account
If one wishes to invest or trade in the stock market, there are two types of accounts that need to be opened. These accounts are demat and trading account. These two accounts are different in their uses but both are necessary for investing in the stock market. What is trading account? In earlier times, trades used to take place between brokers who acted on behalf of their clients. These trades used to happen on an open floor and brokers used to call out the prices of their orders. When two brokers found the right price for their orders, they would transfer the share certificates and the funds and the transaction would get complete. With the digital revolution and online trading, the open outcry method for transacting has become completely obsolete. With all the stock exchanges going completely online, these manual trades by brokers has been replaced by online trading through the trading account. Read more about online share trading here. The trading account is an account used to purchase and sell – 1. Equity shares2. Equity, Debt and Hybrid mutual funds3. Bonds4. Government securities5. Derivatives6. Commodities7. Currencies8. ETFs9. Other instruments traded on the stock exchange Using a trading account to buy and sell is extremely simple. Each broker offers their own trading system through their website or mobile application. These trading systems are connected to the stock market’s proprietary online systems. This offers a price matching system. An investor or trader just has to put in his order request and when the system matches the price and quantity for the order, the order gets executed. This order matching system provides seamless execution of transactions without any human intervention. The trading account is basically a link between your demat account and the exchange’s order matching system. Once the trades get cleared at the exchange, the shares or other instruments are debited and credited from the respective demat accounts. The trading account makes it extremely simple to buy and sell any investment. Since most of the investments are listed on the exchange, price discovery is easy and transparent. All you need to do is select the instrument you want to purchase and the price, and the exchange’s order matching system will ensure the transaction goes through. Brokers charge brokerage for transactions executed through the trading account. Along with that, there are exchange fees and securities transaction tax that is levied on each transaction. What is demat account? A demat account is an electronic record or repository of the financial instruments owned by an investor or trader. It shows the different investments made, the date of purchase, the price at which it was purchased and the current market price. This account allows the investor to hold shares and securities in an online form. Physical securities held by a person can be dematerialised into their electronic form and held in the demat account. One of the primary advantage of a demat account is that your shares are safe. Shares in their physical form can get damaged or lost. But shares in your demat account are safe and you don’t need to fear losing them. A demat account, like any other account, lets you easily scan all the transactions. A demat account will show the current market value of all investments held in that account as on a particular date. It also shows whether a share is partly paid up or fully paid up, thus providing clarity to the investor. However, unlike a bank account, a demat account can have zero shares or securities and still be functional. A demat account is a very convenient way to handle all investments. Unlike earlier times where all securities were in physical form, a demat account holds everything in electronic form. This makes it very convenient to handle and operate. A demat account offers all facilities like a normal bank account such as nomination facility, joint accounts, change in name and address etc. A bank account is usually linked to a demat account, which makes it easy for dividends and interest to get credited to the investor’s account directly. Read more about a Demat account here. Trading account vs demat account The difference between trading account and demat account is simple, a demat account is an online account for storing shares and securities. A trading account is an account for purchases and sales of investments. A trading account inherently has no balance. It draws from the demat account once the purchase or sale transaction has gone through from the exchange’s side. A trading account also cannot exist in isolation. It has to be linked to a demat account from which the required shares or securities can be debited or credited. A demat account can exist without having a trading account. An investor can just invest in IPOs or Mutual Funds through a broker and hold these units in his demat account. However, to sell these units, a trading account will be needed. The difference between demat and trading account is very fine. However, it is essential to know how these two accounts operate and what their nature is. This understanding will help you open these accounts and get started with your investments. How to open a trading account: 1. Select a broker of your choice like IndiaNivesh Securities Ltd. Bear in mind that each transaction requires a certain brokerage so be sure to research about the different brokerage rates for both delivery based trades and intraday trades. 2. Check the services offered by each broker. Make sure you choose a broker who provides extensive customer support, especially if you are a beginner. A good broker who provides detailed research reports could be the difference between earning profits and earning wealth. 3. Fill in the account opening form and provide the mandatory KYC details. If you have a demat account with the same broker, the KYC details may be exempted, but that depends on the broker. Some of the KYC documents required are:a. Identity proof (Aadhar Card, Passport, Voter ID, Driving License, PAN card)b. Address proof (Aadhar Card, Passport, Voter Id, Driving License, Electricity bill, Gas bill, Telephone bill, Rental agreement, Loan agreement)You will need to submit a proof of income i.e bank statements, income tax returns, Form 16 etc. 4. You will also need to submit passport size photographs. 5. Some brokers request a verification check and witnesses while filling up the account opening form6. Once the broker processes your application, you will get details about your trading account7. You also need to link your bank account to your trading account so that funds received from a sale can be credited into the bank account. 8. Once you receive these details, you can start trading. However, before you execute any trades, you must know where you are investing and what your investment strategy is. Without knowing this, it is very easy to lose money in the stock market, especially while engaging in intraday trades which is susceptible to price fluctuations. Now that you know the difference between these accounts, why not open a demat and trading account with a reputed broker like IndiaNivesh Securities Ltd.Disclaimer: Investment in securities market / Mutual Funds are subject to market risks, read all the related documents carefully before investing.)