MCX-SX Exchange : A Younger Index

MCX-SX : Born of one more equity trading exchange

MCX-SX is new entrant in trading exchange space. It trade in equity and equity derivatives segment.  Now in our country the no. of full fledged equity exchange become three. It has begun trading from yesterday with lower volume than expectation. It offer platform for trading 1,116 stocks. MCX-SX benchmark index has 40 stocks. Let us review our other trading exchange’s landmark event.

From 1979 to 1994 BSE (Bombay Stock Exchange) has been dominant player in the exchange trading. When NSE(National Stock Exchange) has commenced trading operation in the Indian share market BSE was the dominant player in the market at that time. BSE was top in the 1993-94 with Rs 84,500 crore turnover. BSE had 40% market share as the total turnover of all exchanges was around 2 lakh crore. Launch of NSE’s online trading platform was turning point for NSE. It has transformed India’s capital market with well managed institution. NSE has also won the people’s trust by providing modern technology and efficient trading platform. Till 1995-96 NSE has become the largest exchange of Indian in terms of turnover. Before launching online platform, the retail investor was not participant in equity market. But it has given the market access to everyone. Anyone can trade in India from anywhere. From 1995 to 2001 cas segment has grown over 10 times.

But from 2000-01 to till date cash segment turnover has not been very good. In fact it is declining from 2010-11. The main reason behind this decline is a new derivative segment has come in the picture from 2000. Future and options  has witnessed a huge success among traders. According to FY 2012 data the turnover size of derivative segment is 35,77,998 crore.

In spite NSE’s effort debt market segment is still waiting for success. There is almost no trading in retail debt market. We hope now MCX-SX will give new boost to the cash market in equity and debt market segment.

If you have any query about investment or financial planning feel free to ask through mail.

Regards,

Arvind Trivedi

Certified Financial Planner

arvind.trivedi79@gmail.com

Some basic rule for investment - II

How to be Successful Investor – Part II

In my previous blog we have discussed about some principle of smart investing. Today we will share some other rules about smart investing.

  1)Diversification of portfolio: It would be good if you diversify your portfolio      between equity and debt according to your age, financial goal and time horizon. No one can predict about future of the market, specific sector. It would be wise move if you have invested in a well diversified manner.

  2) Proper homework and research: Do proper research and homework before any investment. If you do not have time then take help from the experts. Remember, you are buying company business or assets. You are not buying the just number. If you expect a company to grow and prosper, you are buying future earning of the company.

  3) Stay calm and don’t panic: Don’t panic if you have not sold your stock portfolio before market crash. Don’t rush to sell the next day after huge market crash. If you can’t find more attractive stocks, hold on to what you have.

  4)Review portfolio in some interval: Review your investments time to time as no market is permanent either bull or bear. Keep get update yourself about those sectors and companies which have invested. Latest information and knowledge is the key to be successful investor.

  5) Avoid short gain or any market tip: There is no free lunch. Never invest on sentiment or on any tip. Avoid market rumor and IPO. Most of the IPOs decline after market listing . The recent example is Facebook IPO and many more. This does not mean you should never buy an IPO.

Outperforming the market is a difficult task. It would be better if you make a financial plan and accordingly fulfill the future goal. It is very difficult to implement all these discussed rules here. Everything is in a constant state of change including economic and political environment. So be careful adopting any rule of investing as the time changing investing rules also change. It would be better contact a good financial planner and expert before any investment decision.

If you have any query about investment or financial planning feel free to ask through mail.

Regards,

Arvind Trivedi

Certified Financial Planner

arvind.trivedi79@gmail.com

Some basic rule for investment - I

How to be successful investor - Part I

There are many types of material available on this subject. Everyone wants success in investment but to get success there is some basic rule. Every investor should follow some basic principles of investing. Today, I am going to share with you some rules of investing which is described by Sir John Templeton (founder and former chairman of The Templeton Funds) and very vital for any type of investors.

1)      Understand Real rate of return: It means the return on investment after taxes and inflation. Investors often fail to consider tax and inflation and at last their goal don’t get fulfill. It is vital to protect the purchasing power of your money. Inflation is the biggest enemy for your investment so keep it in mind when you go for investment.

2)   Recognize the difference between trader and investor: Do not trade or speculate. Be a sincere and patient investor. Do not treat the stock market as a casino. If you trading frequency high then you will give more brokerages and commissions to the broker and government. Avoid this habit and invest in a company after full information of company. Don’t gamble, buy some good stock and hold it till it goes up. In India there is no long term capital gain on equities so get benefited from this rule.

3)   Be open-minded about types of investment: Every asset class give return in cyclical form. It means there is no one kind of investment that is always best. Now a days, in India people are mad about gold investment and real estate investment as it has given decent return from last some year. Keep in mind, if particular industry or type of asset becomes more popular with investors, that popularity will always prove temporary and when lost may not return from many year. There are many times it is better to sit on cash and take advantage of investment opportunities.

4)   Buy at low prices: It is very simple concept but difficult in execution. Never follow the crowd. Buy when most people including experts are pessimistic, and sell when they are actively optimistic. It is extremely difficult to go against the crowd- to buy when everyone else is selling and to buy when things look darkest.

5)   Buy value, not market trends: As a wise investor, you should find the true value of stock. Ultimately it is individual stocks that determine the market. Individual stock can rise in bear market and fall in bull market. Many investor focus too much on the market trend or market outlook. The stock market and the economy do not always in lock step. Bear markets do not always coincide with recessions, and decline in corporate earnings does not always cause a decline in stock prices. So it is very important to choose a quality company. Quality may be strong management team with proven record, quality may be well capitalized company, quality may be high profit margin consumer product, quality may be famous brand. It is difficult to find 100% perfect quality stock but do your best to find value and quality stocks.

    Today we have discussed some rule for success investor. There is many     more which we will discuss further. If you have any query about investment                  and financial planning, feel free to ask.

                           

Regards,

Arvind Trivedi

Certified Financial Planner

arvind.trivedi79@gmail.com