Market Classroom
Market Classroom
In an attempt to create a knowledge powerhouse, we decode the finer nuances, terms, instruments used on the Dalal Street to help you become an informed player in the market.
Mastering margins — a guide to gross, net and processing margins
What is total shareholder return?- A complete investor guide on efficiency ratios
- What are the components of options premium?
- Direct equity vs equity funds: 4 key differences
- You, Me and Trading: Discussion of trading strategies using the ATR indicator
- Understanding investment options; trading instruments
- Funds from operations (FFO), an important metric to analyse REITs
- ETFs vs Mutual funds: 5 key differences
Planning to start your journey into options trading? Here’s a quick guide
In stock markets, we can pay a small premium and protect ourselves from losses in our portfolio, and hence options are also called as insurance of stocks. Since market moves both up and down, we need to have insurance for both Bulls and Bears and hence we have 2 types of Options.
Want to understand price trends? Here are 6 key techniques
Nevertheless, Tara faced a new challenge of determining how to identify a trend. With a wise smile, Dev replied that there were several techniques to identify trends in the financial markets.
Diversified Portfolio: Understanding different asset classes
Dev continued elaborating further: “The stock price can fluctuate based on various factors like financial performance, industry trends, and market conditions. You can even earn dividends if the company performs well! Even if you're not interested in dividends, you can still benefit from price changes by trading stocks on the exchange or taking exposure through derivatives without owning any underlying stocks."
Discussion of trading strategies using RSI indicator
There were gains of 10, 5, and 15 points in five sessions. We are looking at a 5-day pattern, so we divide it by 5. Hence, the average gains are 6 points. Losses add up to 10-points, 5 points in two sessions. When divided by five, the average loss is 2 points.
Dow Theory - the cornerstone of technical analysis
So, the other day, Dev and Tara were chilling at a cafe, savoring their delicious coffee, when Tara expressed her eagerness to learn more about technical analysis.
What is Strike Price in options trading? All you need to know
But stock prices keep fluctuating every single second in the live market hours. Premium of Call and Put will also fluctuate every second, and this creates trading opportunities. As a trader you can buy only CE/PE or both (if needed) and can sell it when the price of these premiums goes up.
Credit Suisse vs YES Bank: All you need to know about AT1 bonds write-off
AT1 bonds are high-yielding bonds with characters of equity shares sold by banks to raise capital. These are designed to help banks meet funding needs in times of stress without reaching out to the government. These are contingent bonds in a sense that they could be converted into equity when the capital level of a bank falls below a specified threshold.
India completes transition to T+1 settlement cycle
Globally, T+2 system is still the most dominant one with most of the developed markets such as the US, Japan and Germany following the longer settlement cycle. Even the majority of the emerging markets follow the same standard.
How indexation helps you save taxes?
That won't happen because the value of your home has increased due to growing inflation. As a result, it would be unfair if the government demanded that you pay taxes on the entire capital gain.
Why buy individual stocks when you can choose index funds
An index fund largely means investing in a basket of stocks that represents a particular index. So, giving an example; if an investor chooses to invest in an index fund of Nifty 50, then the amount will get invested amongst all the 50 stocks in Nifty, in the same proportion.
How does share buyback affect your portfolio?
Another motive behind buyback is to refrain from showing idle cash on their balance sheet. Cash with no purpose to solve is similar to keeping money in a bank account with zero risk.
What are the advantages of investing in bonds?
Bonds offer high liquidity compared to FDs as it helps you buy or sell them with great ease in the secondary market. It is known to provide the advantage of selling bonds without a substantial change in price.
Top 5 ways retail investors can avoid value traps
Every company's management declares its short-and-long-term goals. However, they often fail to live up to their promises. Over-promising and under-delivering are key indicators that the investment is a value trap.
Why the universal mantra for wealth creation is nothing but asset allocation
On average, there is a difference of 15% between the performance of the top 25% and bottom 25% asset classes each year. In other words, the difference between getting your asset allocation right and getting it wrong is 15% per annum. Admittedly, that's a significant number. Nevertheless, it allows you to maximize your wealth over the long term.
What is a dollar index and where is it headed?
The six currencies which are included in the US dollar index are America’s major trading partners. The index has been replaced only once when the Euro replaced German Mark, French Franc, Italian Lira, Dutch Guilder and the Belgian Franc.
How to read valuations parameters
While there are many available methods to assess the same, there is no definite answer on whether a particular valuation multiple is justified or not. This is because each sector is different and no two companies are exactly the same even if they are in the same sector.
These are 4 key players in the bond market
In India, the major issuers of bonds are the corporations known to issue a wide type of bonds, the central government that issues both, dated securities and treasury bills along with bonds while the state governments issue the State Development Loans (SDLs) that include only bonds or dated securities.
Volatility is reality- Top 5 strategies to deal with it
This amount is more than what they bought between 2009 and 2021 (net purchases). Various reasons, such as the Russia-Ukraine war, lockdowns across major Chinese cities, increasing inflation across India and the US, recessionary concerns in developed countries, and hike in interest rates by the Fed, led to the stock market’s decline causing tremendous volatility in the stock market.
7 things to consider before investing in bonds
Bonds are classified in two key categories - secured/unsecured. A secured bond promises bondholders particular assets owned by the issuer to secure the raised loans.
Various nomenclatures used in bonds
Bonds - is a debt security under which an issuer owes a bondholder a debt. The issuer is obliged to pay a bondholder the predetermined interest at predefined intervals (monthly, quarterly, semi-annual, or annually) and the principal (face value) at the maturity date.
Well curated stock portfolio vs mutual funds: What is the right bet?
Regarding mutual funds, some funds, especially passive funds tracking an index, may have 100-150 stocks in the portfolio, leading to over-diversification and suboptimal returns. Concerning this factor, a stock portfolio may fare better.
4 mistakes which retail investors should avoid
To summarise, I do believe that simple, cost-efficient, and disciplined investments are the best and the only way to sustained wealth preservation and creation and investor treading any other path often leads to investment accidents and loss of capital.
How to use volatility to generate profits from short-term equity trading
However, in stark contrast to the traditional method of buying equity for the long term, short-term equity trading can be extremely beneficial for day or positional traders who use the implied volatility and associated price action to generate profits.For long-term investors, volatility-induced market dips can be used to increase allocation in beaten-down stocks, only to sell the additional shares at higher levels while still maintaining the original positions.
Beginners guide to F&O trading
Initially, earmark only 10% of your investible capital to begin trading in F&O. Why? Because F&O is a leveraging game. You may end up with the temptation of higher returns and taking higher exposure which may not suit your risk appetite.
What is reverse stock split, and how does it impact your portfolio?
Reverse stock splits are a complete opposite of a stock split. In a stock split, a big share is split into biteable pieces. Conversely, in a reverse stock split, small shares are merged to form a big share.When a company goes through a reverse stock split, the number of shares an investor holds reduces, but the final value of the shares remains the same
4 pillars of portfolio building that every retail investor should know
However, some of the broad industry growth trends which are playing out include low penetration levels as compared to the world average, shift to organized sector, government policy or initiatives and rising income levels.
Top-3 bearish patterns to trade in a falling market
A very popular reversal pattern comparatively rare to spot, usually occurs when price action gets exhausted at the upside and forms three peaks, The middle one being the higher – Sell signal occurs when close is below the neckline – Volumes are highest during the breakdown comparatively to the previous peaks which signals bears are in full control of the next move.
Beginner's guide to creating an impressive portfolio
Lastly, we have a moderate investment portfolio wherein the risk taken by investors is medium. He will want to invest in a combination of risky and safer investments. Of the total investment, 40% would be in equities and 50-60% would be in fixed income and gold. In addition, for new investors we would not suggest investing in real estate as the ticket size is large.
What are corporate bonds & how they work
On the other hand, when you buy a corporate bond, you do not get equity in the company. You become eligible to receive only a fixed rate of interest at varied intervals and a return of principal at maturity no matter how profitable the company becomes or how high the price of the stock climbs.
Types of dojis
Among dojis, dragonfly and gravestone dojis are more important, and therefore, need special mention.
What are the different types of candlesticks?
It is time to understand different types of candlesticks.
Importance of option sellers
This edition covers the role of option sellers and how their activity can help interpret prices.
What are RoE, RoNW and RoCE?
It is important to understand certain factors before applying these ratios.
What is bilateral netting?
Netting is very common in advanced economies where the settlement is based on net positions in bilateral or multilateral financial arrangements rather than by gross positions.
What are candlestick charts?
Traders prefer candlestick charts because they are visually more appealing.
Derivatives trading in commodity indices
SEBI has permitted trading in composite and sectoral indices.
