Author: StockIsy

What is fundamental analysis in Share Market

Fundamental analysis is a method used to evaluate the intrinsic value of a financial asset, such as a stock, bond, or commodity. It involves analyzing various qualitative and quantitative factors to assess the financial health, performance, and future prospects of a company or asset. The goal of fundamental analysis is to determine whether an asset is overvalued, undervalued, or fairly valued in the market.

Fundamental analysis involves studying a company’s financial statements, such as its balance sheet, income statement, and cash flow statement, to understand its revenue, expenses, profitability, and cash flow. It also considers other relevant factors, such as the company’s industry dynamics, competitive position, management team, and macroeconomic trends.

Key elements of fundamental analysis include:

1. Financial Ratios:

Analysts use financial ratios, such as price-to-earnings (P/E) ratio, price-to-sales (P/S) ratio, return on equity (ROE), and debt-to-equity ratio, to assess a company’s financial performance, profitability, and leverage.

2. Revenue and Earnings Growth:

Analysts evaluate a company’s historical and projected revenue and earnings growth rates to gauge its growth potential and future profitability.

3. Competitive Advantage:

Fundamental analysis examines a company’s competitive position, its market share, and the strength of its products or services compared to competitors. This analysis helps determine whether the company has a sustainable competitive advantage that can lead to long-term success.

4. Industry and Market Analysis:

Understanding the dynamics and trends of the industry in which a company operates is crucial. Factors such as market size, competitive landscape, regulatory environment, and technological advancements can impact a company’s prospects and profitability.

5. Management Evaluation:

The management team plays a vital role in a company’s success. Analysts assess the track record, experience, and strategic decisions made by the management team to evaluate their ability to drive growth and create shareholder value.

6. Macroeconomic Factors:

Fundamental analysis takes into account broader macroeconomic factors, such as interest rates, inflation, GDP growth, and government policies, as they can influence the overall business environment and impact a company’s performance.

By conducting thorough fundamental analysis, investors aim to make informed investment decisions. They assess whether a company’s current stock price accurately reflects its intrinsic value, identifying opportunities for potential undervalued investments or identifying overvalued assets that may be ripe for selling or shorting.

Fundamental analysis is widely used by investors, portfolio managers, and financial analysts to assess the fundamental strengths and weaknesses of companies and assets, enabling them to make informed investment choices based on the company’s underlying fundamentals.

Also Read | TECHNICAL ANALYSIS

9 June, 2023
What is SIP

Systematic Investment Plan (SIP) is an investment strategy that allows individuals to invest a fixed amount of money at regular intervals in specific investment vehicles such as mutual funds. SIP follows the principle of disciplined investing, where investors commit to making consistent contributions towards their investment portfolio over a predetermined period.

The fundamental principles of SIP include:

1. Regular and Periodic Investing:

SIP encourages investors to contribute a fixed amount regularly, typically on a monthly basis. This consistent approach helps inculcate financial discipline and ensures a systematic allocation of funds towards investments.

2. Rupee Cost Averaging:

One of the core principles of SIP is the concept of rupee cost averaging. With regular investments, investors buy more units when prices are low and fewer units when prices are high. This strategy helps smooth out the impact of market volatility and potentially reduces the average cost of acquiring units over time.

3. Power of Compounding:

SIP leverages the power of compounding, wherein the returns generated from investments are reinvested to earn additional returns. As time progresses, compounding can significantly enhance the growth of the investment portfolio, resulting in the potential for wealth creation.

4. Flexibility and Affordability:

SIP offers investors the flexibility to start with a relatively small investment amount. This affordability factor allows individuals to initiate their investment journey with a manageable sum and gradually increase their contributions as their financial situation permits.

5. Long-Term Focus:

SIPs are designed for long-term wealth creation. By consistently investing over an extended period, investors can harness the benefits of compounding and ride out short-term market fluctuations, aligning their investment strategy with their long-term financial goals.

6. Diversification:

SIPs provide the opportunity to invest in a diversified portfolio of securities through mutual funds. By investing across various asset classes and sectors, SIP investors can spread their risk and potentially benefit from the growth of different sectors of the economy.

7. Convenience and Automation:

SIPs offer convenience to investors as the investment process can be automated. Through pre-authorized bank mandates, investors can set up automatic deductions from their bank accounts, ensuring a seamless and hassle-free investment experience.

Explaining the process of investing through SIP:

1. Selecting a Mutual Fund:

The first step is to choose a mutual fund that aligns with your investment objectives, risk tolerance, and financial goals. Consider factors such as fund performance, historical returns, fund manager expertise, investment philosophy, and expense ratio while making your selection.

2. Determining the Investment Amount:

Decide on the amount you wish to invest in the mutual fund through SIP. This can be a fixed amount, such as ₹5,000 per month, or any other amount that suits your budget and investment capacity.

3. Setting the SIP Duration:

Determine the duration or tenure for which you want to continue investing through SIP. It can be a few months, several years, or even an open-ended period depending on your financial goals and investment horizon.

4. Frequency of Investments:

Choose the frequency at which you want to make SIP contributions. Most commonly, SIPs offer monthly, quarterly, or bi-annual investment options. Select the frequency that suits your cash flow and investment preferences.

5. Submitting the Application:

Fill out the application form provided by the mutual fund company or its authorized distributor. Provide the necessary details, including personal information, investment amount, SIP duration, and frequency of investments.

6. Completing the Documentation:

Attach the required documents, such as Know Your Customer (KYC) compliance documents, proof of identity, address, and bank account details, as specified by the mutual fund company. Ensure that all the documents are correctly filled and submitted along with the application.

7. Bank Mandate and Auto-Debit Authorization:

Set up a bank mandate to authorize the mutual fund company to automatically deduct the SIP amount from your bank account at the chosen frequency. Provide the necessary authorization for auto-debit instructions.

8. SIP Account Creation:

Upon submission of the application and completion of the necessary documentation, the mutual fund company will create a SIP account for you. This account will reflect your SIP investments and provide periodic statements of your holdings.

9. Monitoring and Reviewing:

Regularly monitor the performance of your SIP investments. Review the statements provided by the mutual fund company to track the growth of your investment portfolio. Consider consulting with a financial advisor periodically to assess the progress of your investments and make any necessary adjustments.

10. SIP Renewal and Adjustments:

At the end of the chosen SIP duration, you have the option to renew your SIP or make any adjustments to the investment amount, duration, or frequency based on your evolving financial goals and market conditions.

Also Read | TYPES OF MUTUAL FUND

3 June, 2023
Most Expensive Shares In India

India’s stock market is home to several companies with highly valued shares. These companies represent just a few examples of the most expensive shares in India. The high valuation of these shares reflects investor confidence in the companies’ performance, market dominance, and growth potential. However, it’s important to note that share prices can fluctuate based on various factors, including market conditions, company performance, and investor sentiment.

Here is a brief description of some of the most expensive shares in India:

1. Madras Rubber Factory Limited (MRF)

Madras Rubber Factory (MRF) is India’s largest tyre manufacturer and ranked amongst the Top 20 Global Manufacturers, with 9 state-of-the-art factories across India. It is also India’s largest Original Equipment Manufacturer (OEM) tyre supplier with an expansive tyre range from two-wheelers to fighter aircrafts.ry Limited (MRF).

2. Page Industries Ltd

Page Industries Ltd. is engaged in manufacturing garments. Presently, the Company has 15 manufacturing locations. It has six Jockey Exclusive Brand Outlets in the UAE and three in Sri Lanka. The Company was incorporated in 1995 with the key objective of bringing the innerwear brand “JOCKEY” to India.

3. Honeywell Automation India Ltd

Honeywell Automation India Ltd (HAIL) is a market leader in the Electronics-Instrumentation and Process Control Equipment industry. HAIL is a leading provider of integrated automation and software solutions that improves productivity enhancing comfort and ensuring the safety and security to homes and business premises.

4. Shree Cement Ltd

Shree Cement Ltd. is one of India’s premier cement makers. The company’s manufacturing operations are spread over North and East India across six states. The company has a consolidated cement production capacity of 46.40 million tonnes per annum(MTPA) and a power generation capacity of 771 MW. The company is an energy conscious & environment friendly business organization.

5. 3M India Ltd

3M India Limited is the flagship listed company of 3M Company, USA in India. 3M Company, USA holds 75% equity stake in the company and is a diversified technology and science company with a global presence in Safety and Industrial; Transportation & Electronics; Health Care; and Consumer and is among the leading manufacturers of products for many of the markets it serves.

Most of its products involve expertise in technology, product development, manufacturing and marketing, and are subject to competition from products manufactured and sold by other technologically oriented companies.

6. Abbott India Ltd

Abbott India Ltd. is one of the leading multinational pharmaceutical companies in India and operates with an owned manufacturing facility in Goa and various independent contract/third party manufacturers based across the country.

7. Nestle India Ltd

Nestle India Ltd one of the biggest players in the FMCG segment is primarily involved in the Food business which incorporates product groups viz. Milk Products and Nutrition, Prepared dishes and Cooking aids, Powdered and Liquid Beverages and Confectionery.

Also Read | Best Stocks Under 100 rs in 2023

28 May, 2023

Trade Settlement Process in Stock Market

Trade settlement process in the stock market refers to the process of transferring securities and funds between buyers and sellers after a trade has been executed. This process ensures that the trade is completed and the ownership of the securities and funds is transferred to the correct parties.

The trade settlement process typically involves several steps the includes – trade confirmation, trade matching, clearing, and settlement.

Trade Confirmation: After a trade is executed, the broker sends a trade confirmation to both the buyer and the seller, which includes details such as the trade date, time, price, quantity, and settlement date.
Trade Matching: Once the trade confirmation is received, the buyer’s broker matches the trade details with the seller’s broker to ensure that the trade details are precise.
Clearing: After the trade has been matched, the trade details are sent to the clearinghouse, which acts as an intermediary between the buyer and the seller. The clearinghouse verifies the trade details and ensures that the buyer has sufficient funds and the seller has the securities to complete the trade.
Settlement: The final step in the trade settlement process is the actual transfer of securities and funds between the buyer and the seller. This process is typically facilitated by the Depository Participant (DP), who holds the securities on behalf of the buyer and the seller.

This process can be concluded either through a physical settlement or through a dematerialized settlement.

Physical settlement involves the transfer of physical share certificates from the seller to the buyer. However, physical settlement is time-consuming and involves a lot of paperwork, and it has largely been replaced by dematerialized settlement.

In dematerialized settlement, the securities are held in an electronic form with the Depository Participant. The buyer’s DP debits the securities from the seller’s account and credits them to the buyer’s account, while the seller’s DP credits the funds from the buyer’s account and debits them from the seller’s account.

There are 2 types of stock settlements that you will come across:

Spot Settlement	Forward Settlement
This form of settlement is done immediately after the T+1 rolling settlement principle has been applied.	This settlement is used when you agree to settle the trade at a later time, which could be T+5 or T+7.

Overall, the trade settlement process is a critical component of the stock market ecosystem, as it ensures that trades are completed and ownership of securities and funds is transferred smoothly and efficiently between buyers and sellers.

Also Read | What is Circuit Breaker in Stock Market

12 May, 2023

What is RSI in Stock Market

RSI, or Relative Strength Index, is a technical indicator that is used to measure the strength of a stock’s price action. Developed by J. Welles Wilder, RSI is a momentum oscillator that compares the magnitude of a stock’s recent gains to the magnitude of its recent losses to determine whether the stock is overbought or oversold.

The RSI is calculated by dividing the average gain of the stock over a certain time period by the average loss over the same period of time. The result is then plotted on a scale from 0 to 100. If the RSI is above 70, the stock is considered overbought, and if it is below 30, it is considered oversold.

Relative Strength Index is typically calculated over a 14-day time period, but the time period can be adjusted to suit the needs of the trader. This can be used in conjunction with other technical indicators and chart patterns to make trading decisions.

One of the main advantages of using RSI is that it helps traders to identify potential trend reversals. When the RSI is above 70, it indicates that the stock is overbought, and there may be a price correction in the near future. Conversely, when the RSI is below 30, it indicates that the stock is oversold, and there may be a buying opportunity.

Another advantage of Relative Strength Index is that it can be used to confirm or refute other technical indicators. For example, if a stock is showing a bullish chart pattern, such as a double bottom, the trader can use RSI to confirm that the stock is indeed oversold and that there is a buying opportunity.

However, there are also some limitations to it. One of the main limitations is that RSI is a lagging indicator, which means that it does not predict future price movements. Instead, it provides information on past price movements.

Additionally, Relative Strength Index can give false signals in certain market conditions. For example, if a stock is in a strong uptrend, the RSI may remain above 70 for an extended period of time, indicating that the stock is overbought. However, in a strong uptrend, the stock may continue to rise despite being overbought.

In conclusion, RSI is a useful technical indicator that can help traders identify potential trend reversals and confirm other technical indicators. However, it is important to use RSI in conjunction with other technical indicators and to understand its limitations. Traders should also use risk management strategies to minimize potential losses.

Also Read | Common Mistakes by Traders

1 May, 2023
Best Stocks Under 100 rs in 2023
When looking for stocks under 100 rupees, it is very important to conduct thorough research and analysis of the company’s financials, management, and competitive position in the market. It is important to note that investing in the stock market always carries a certain level of risk, and it is important to diversify your portfolio to reduce risk. Before making any investment decisions, it is recommended to consult with a financial advisor or conduct your own research to make informed decisions.

1. GEE LIMITED

GEE Ltd(formerly General Electrodes & Equipments Ltd),has been engaged in manufacture of welding electrodes. In spite of the adverse situation in the industry, company’s turnover for the year 2002-03 looked very impressive as it was increased about 50% compared to the previous year.

Fundamental Analysis
- Market Cap ₹ 173 Cr.
- Debt ₹ 91.3 Cr.
- ROE 8.48 %
- Sales growth 27.0 %
- EPS ₹ 6.38
- Stock P/E 10.4
- Industry PE 20.6
- ROCE 10.3 %
- Promoter holding 73.6 %
- Pledged percentage 0.00 %
2. Shipping Corporation of India Ltd

Shipping Corporation of India Ltd (SCI) is one of India’s largest shipping in terms of Indian flagged tonnage. The company is involved in the business of transporting goods.

Fundamental Analysis
- Market Cap ₹ 4,422 Cr.
- Debt ₹ 2,912 Cr.
- ROE 9.53 %
- Sales growth 25.1 %
- EPS ₹ 12.9
- Industry PE 5.32
- Stock P/E 7.38
- ROCE 8.47 %
- Promoter holding 63.8 %
- Pledged percentage 0.00 %
3. Calcutta Energy Supply Corporation

CESC Ltd (CESC) is India’s first fully integrated electrical utility company ever since 1899, engaged in generating and distributing power. It serve 3.5 million customers within 567 square kilometers in Kolkata, Howrah, Hooghly, North and South 24 Parganas, delivering safe, cost-effective and reliable energy to the consumers. The Company is primarily engaged in generation and distribution of electricity.

Fundamental Analysis
- Market Cap ₹ 9,073 Cr
- Debt ₹ 14,305 Cr.
- ROE 13.4 %
- Sales growth 13.9 %
- EPS ₹ 10.1
- Industry PE 18.6
- Stock P/E 6.80
- ROCE 12.8 %
- Promoter holding 52.1 %
- Pledged percentage 0.00 %
4. L T Foods Ltd

LT Foods Ltd is an India-based company. The company is engaged in the manufacture and sale of rice under the brand DAAWAT. They also manufacture and market parboiled rice. Their product is marketed in more than 50 countries.

Fundamental Analysis
- Market Cap ₹ 3,698 Cr.
- Debt ₹ 1,392 Cr.
- ROE 15.6 %
- Sales growth 31.4 %
- EPS ₹ 10.8
- Industry PE 44.1
- Stock P/E 10.7
- ROCE 14.8 %
- Promoter holding 52.3 %
- Pledged percentage 0.00 %
5. Time Technoplast Ltd

Time Technoplast Ltd is an India-based company, which is engaged in manufacturing of polymer & Composite products. The company has operations in local as well as in foreign countries.

Fundamental Analysis
- Market Cap ₹ 1,939 Cr.
- Debt ₹ 892 Cr.
- ROE 9.44 %
- Sales growth 16.1 %
- EPS ₹ 9.33
- Industry PE 28.9
- Stock P/E 9.19
- ROCE 12.2 %
- Promoter holding 51.3 %
- Pledged percentage 5.42 %
Also Read | 20 Important Terms in Stock Market
22 April, 2023
What is Pivot Point in Share Market
Pivot point analysis is a popular technical analysis tool used by traders to predict potential market trends and reversals in the price of a financial asset. Pivot points are calculated using the previous period’s high, low, and close prices, and provide key levels of support and resistance for the current period.

The pivot point itself represents the average of the previous period’s high, low, and close prices. This value is used to calculate several other levels of support and resistance, including:
1. First level of support (S1) and resistance (R1): These levels are calculated by multiplying the pivot point by 2 and subtracting the previous period’s high or low, respectively.
2. Second level of support (S2) and resistance (R2): These levels are calculated by multiplying the pivot point by 3 and subtracting 2 times the previous period’s high or low, respectively.
3. Third level of support (S3) and resistance (R3): These levels are calculated by multiplying the pivot point by 4 and subtracting 3 times the previous period’s high or low, respectively.
These support and resistance levels can be used to identify potential entry and exit points for trades, as well as to set stop loss and take profit orders.

Pivot point analysis is particularly useful in short-term trading, where traders are looking to profit from quick price movements in the market. However, it is important to note that pivot point analysis is just one tool in a trader’s toolbox and should not be relied on exclusively. Other technical indicators and fundamental analysis should also be considered before making trading decisions.

Below are the importance of Pivot Point in Share Market:
1. Identifying key levels of support and resistance: Pivot point analysis provides traders with key levels of support and resistance that are important in determining potential entry and exit points for trades. These levels can help traders to identify potential price movements and set stop loss and take profit orders.
2. Predicting market trends and reversals: Pivot point analysis can be used to predict potential market trends and reversals based on the levels of support and resistance. Traders can use these levels to identify when a market is likely to reverse or continue its current trend, helping them to make profitable trading decisions.
3. Providing a simple and easy-to-use analysis tool: Pivot point analysis is a simple and easy-to-use tool that requires only basic math skills. It can be applied to a wide range of financial assets and timeframes, making it a versatile tool for traders.
4. Incorporating multiple timeframes: Pivot point analysis can be used across multiple timeframes, allowing traders to identify potential trends and reversals in both short and long-term trading. This can help traders to make more informed trading decisions and increase the accuracy of their analysis.
5. Incorporating other technical analysis tools: Pivot point analysis can be used in conjunction with other technical analysis tools, such as moving averages, trend lines, and chart patterns, to provide a more comprehensive analysis of the market.
In conclusion, pivot point analysis is a technical analysis tool used to predict potential market trends and reversals in the price of a financial asset. It provides key levels of support and resistance for the current period, which can be used to identify potential entry and exit points for trades. While it is a useful tool in short-term trading, it should be used in conjunction with other analysis methods.
13 April, 2023
What is Circuit Breaker in Stock Market
A circuit breaker is a mechanism used in the stock market to prevent large, sudden price declines or increases. It is designed to give investors time to assess market conditions, reduce panic selling, and provide stability to the market.

Circuit breakers are triggered when the stock market experiences sharp price movements within a short period of time. The circuit breaker system is designed to halt trading temporarily to allow investors to take stock of the situation, assess market conditions, and reposition themselves accordingly. This mechanism is put in place to prevent large, sudden losses and to protect investors from panic selling.

In India, the Securities and Exchange Board of India (SEBI) has put in place a circuit breaker system that applies to both the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE). The circuit breaker system has three levels of trigger points based on the movement of the benchmark indices – Sensex and Nifty.

The First level of circuit breaker is triggered if the Sensex or Nifty moves up or down by 10% from its previous close. If this happens, trading is halted for 45 minutes. This is called the Level 1 circuit breaker.

The Second level of circuit breaker is triggered if the Sensex or Nifty moves up or down by 15% from its previous close. If this happens, trading is halted for two hours. This is called the Level 2 circuit breaker.

The Third level of circuit breaker is triggered if the Sensex or Nifty moves up or down by 20% from its previous close. If this happens, trading is halted for the remainder of the day. This is called the Level 3 circuit breaker.

It is important to note that circuit breakers are only activated during trading hours. If a sharp movement occurs before trading hours, the circuit breaker system will not be activated.

The circuit breaker system is intended to give investors a chance to reassess their positions and make informed decisions based on market conditions. It also helps to prevent panic selling and buying that can lead to sharp price movements.

However, it is not foolproof and cannot guarantee complete protection against losses. Investors should always be aware of the risks associated with investing in the stock market and should have a diversified portfolio to mitigate risks.

Benefits of circuit breaker in stock market:

1. Reducing panic selling

The circuit breaker system is designed to halt trading temporarily when there is a sharp movement in stock prices. This gives investors time to assess market conditions and make informed decisions, reducing the likelihood of panic selling.

2. Preventing large losses

Circuit breakers are activated when stock prices move up or down by a certain percentage within a short period of time. This mechanism helps to prevent large losses by giving investors time to reassess their positions and make informed decisions.

3. Promoting market stability

The circuit breaker system promotes market stability by preventing large, sudden price movements that can disrupt the market. This helps to maintain investor confidence in the market.

4. Providing time for information dissemination

Circuit breakers provide time for information dissemination. When trading is halted, news and information can be disseminated to investors, allowing them to make informed decisions.

5. Preventing market manipulation

The circuit breaker system can prevent market manipulation by preventing sudden, large price movements that can be caused by manipulation.

6. Encouraging long-term investing

The circuit breaker system encourages long-term investing by reducing the likelihood of panic selling and providing a stable market environment.

Disadvantages of circuit breaker in stock market:

1. Reduced liquidity

When trading is halted due to the circuit breaker system, it can reduce liquidity in the market, making it harder for investors to buy and sell stocks. This can lead to increased volatility and wider bid-ask spreads.

2. Market inefficiencies

The circuit breaker system can lead to market inefficiencies, particularly if trading is halted for an extended period of time. This can result in price distortions and may prevent the market from reflecting accurate prices.

3. Uncertainty

Circuit breakers can create uncertainty among investors, particularly if they are triggered frequently. This can lead to increased volatility and decreased investor confidence.

4. Unintended consequences

Circuit breakers can have unintended consequences, particularly if they do not function as intended. For example, they may fail to prevent large losses or may be triggered too frequently, leading to increased volatility.

5. Time delay

The circuit breaker system introduces a time delay into trading, which can be problematic for investors who need to make quick decisions. This delay can also prevent the market from reacting quickly to news or events.
In conclusion, circuit breakers are a mechanism put in place by stock exchanges to prevent large, sudden price movements and to protect investors. They help to provide stability to the market, reduce panic selling, and give investors time to assess market conditions.

Also Read | List of Stock Exchange in India
1 April, 2023