The Stock market is intriguing if you can dedicate your time and devotion to learning and applying it practically. It is rightly said that “Practice makes you perfect”, and that is exactly what we need to apply here as well. Even Spider-Man had to learn how to use his power and figure out the best possible way to apply it while fighting the bad guys. So, what makes us any different when it comes to learning about the stock market?

People have different opinions on how one should initiate this journey. However, I am sharing the top 5 things you can do as a beginner to learn about Stock Market below. Let us find out, without further ado.

1. The first step is to track news related to the stock market daily. You can watch news channels like CNBC, Zee Business before 9 am and/or after 3.30 pm wherein you can watch shows parting knowledge on the subject. If you watch these channels between 9 am to 3.30 pm (which is market hours) you might get overwhelmed with all the information being telecasted about the market throughout the day. So, remember one day at a time. You can also download media apps like Economic Times, Livemint, moneycontrol, etc. which will further add to your knowledge basket.

2. For my reader folks, you can subscribe to market-related magazines like Dalal Street Investment Journal, Money life, Business Today, Outlook Money, etc. Apart from this, you can also read books related to investments and trading to understand the market in depth. You can check out my book suggestions here.

3.You can also use your Google skills to read about the market via various websites available on the internet. Blogs on Investopedia, Groww, Zerodha Varsity provide good content which a beginner can easily comprehend. You can also check out my Blogs here for easy reference.

4. If you are not a reader, no worries, I got you covered. There are so many YouTube channels that can help you understand basic concepts in the stock market. You can check out my YouTube channel where I have explained numerous concepts right from the ‘Basics of the Stock market’ in the most simplified manner that even a non-finance person can understand, that too ‘FOR FREE!’

5. If you are keen on learning about the market in a detailed and structured format, you can check out my readily available courses here. I have designed all of my courses from beginner level with ‘Basics of Stock Market’, ‘Basics of Technical Analysis’, ‘Magic of Mutual Funds’ to advance level with ‘Art of Value Investing’. I am sure you won’t be disappointed.

Now you are all geared up and eager to invest. But wait, to participate in the market, you need to open a Demat A/c with a SEBI registered broker. This process is very simple and completely online. Click on the image below to know more.

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How to start learning stock market in India?

If you are from a typical Indian household, you might have hated your results day during your school days. The reason obviously was being compared to, “Sharmaji ka beta” a class topper. This Sharmaji ka beta was a perfect representation of how an ideal kid should be at that age. Well, in stock market terms we have a market index called “NIFTY50” that depicts similar things as this “Sharmaji ka beta” did in our school. Nifty is used by many investors and fund managers as a means to measure the performance of the Indian capital markets and our economy at large. Read ahead to understand more interesting things about Nifty50.

What is Nifty 50?

Nifty or Nifty50, is a flagship index by National Stock Exchange (NSE), representing the top 50 companies being traded on NSE from 13 major sectors. This index gives investors a bird’ eye view of the market sentiments and performance. Hence, it is known to be a true reflection of the Indian stock market and economy at large. Due to this, many consider the performance of this index as a benchmark against their portfolios’ performance over a period.

It was launched on April 22nd, 1996, which means it turned 25 this year! What an amazing journey it has seen from 1,107 on April 22nd, 1996 to a new record high of 15,901.60 on 15th June 2021.

Who manages Nifty?

All Nifty indices are managed and owned by NSE Indices LTD (formerly known as India Index Services & Products Limited-IISL). It is an NSE group company that was set up in May 1998 to develop, construct and maintain indices on Indian equities. NSE Indices Ltd came up with 14 broad market indices that represent large, mid, and small-cap segments listed on NSE efficiently. Below is the structure of the same.

What are the inclusion and exclusion/replacement criteria for Nifty?

Nifty is reviewed semi-annually based on the data for six months ending January and July every year. The exchange will give us a notice about the same four weeks before the date of the change.

To be included in the 50 stocks index, the following criteria must be met:

The company must be domiciled (based) in India and traded on NSE.
It should form a part of the Nifty 100 Index and be available for trading in NSE’s F&O segment.
It should have traded at an average impact cost of 0.50% or less during the last 6 months for 90% of the observations (trades) for a portfolio of Rs. 10 Crores. To put it simply, impact cost is the percentage change in buying/selling price for the desired quantity compared to its ideal price (calculated as [best buy + best sell]/2)
Its average free-float market capitalization is at least 1.5 times the average free-float market capitalization of the smallest constituent in the index.
Its trading frequency should be 100% for the past six months.
For a company that has recently launched its IPO the period for fulfilling the above criteria is reduced to 3 months instead of 6 months.

Replacements, if any, takes place from the last trading day of March, June, September, and December with four weeks prior notice. Stock/s will be excluded/replaced from Nifty if:

It's undergoing demerger, spinoff, delisting, etc.
It’s withdrawn from trading in the F&O segment
It’s suspended from trading in Capital markets

How is it calculated?

Since June 26th, 2009, Nifty has been calculated using the Free-float Market Capitalization weighted method. Before that, it was calculated using the full market capitalization-weighted method. So, what brought this change? For that, we first need to understand what free float mcap means. It’s quite simple, free float mcap will include public holding in the company only. This means that the promoter and promoter group holding and any other strategic investments by entities/ promoters (Government, FDI, Employee trust, ADR/GDRs, etc.) are excluded from the total mcap of the company. By excluding these holdings, the index can reflect the true market sentiment better for the 50 stocks and ultimately overall capital market. Hence, the index calculation method was changed to Free-float Market Capitalization weighted method.
Now, let’s have a look at how Nifty is calculated in 3 simple steps :
Formula:
Index value = (Current Market Value (CMV)/Base Market Capital) * Base value
Step 1: Calculation of CMVCMV is nothing but the sum of all 50 stocks’ free-float weighted mcap.
Step 2: Divide CMV by Base market capital
For Nifty50, the base date is November 3rd, 1995. Hence, the base capital is the closing mcap of the index as of this date which was Rs.2.06 trillion. This divisor is adjusted from time to time considering the corporate actions of the constituents as they take place.
Step 3: The result is then multiplied by the Base value.
The base value is the closing price of Nifty as on the base date - November 3rd, 1995, which was 1000. Hence, the result will be multiplied by 1000 to derive the Nifty value.
Nifty is calculated on a real-time basis as the market price of the constituents keeps changing. The closing price of the index is calculated by taking a weighted average of the closing prices of its constituents during the last 30 mins of the trading session.

Why is rebalancing Nifty important?

Over the past 3 decades, India has shifted from manufacturing to services. With the rise of the private sector along with the IT revolution, our market index needed to adapt accordingly and replicate what’s happening in our economy. If you check the table given below for sectoral representation in Nifty50, you will observe that there was no weightage for the IT and telecom sector during its inception. However, now that India has become more technologically evolved with adequate government measures, the IT sector has earned 16.16% weightage whereas the telecom sector enjoys 1.92% weightage in the index as of May 2021. Financial services still have the highest weightage in the index, almost twice as during inception.
Interestingly, 13 stocks namely- HDFC Bank, RIL, HDFC, ITC, HUL, L&T, SBI, Tata Motors, Dr. Reddy’s Labs, Tata Steel, Grasim, Hero, and Hindalco have been a part of the index’s journey since its inception (Source: CNBCTV18) Back in 1996, the State Bank of India (SBI) had the highest weightage at nearly 8.6%, followed by Tata Motors at 6.9%. As of May 2021, RIL (10.36%), HDFC Bank (9.79%), and Infosys (7.66%) held the highest weightage in Nifty50.
As a part of its semi-annual review, stocks that have fallen in terms of market cap criteria would be replaced with emerging stocks fitting into eligibility criteria mentioned above thereby increasing the exposure of the index to emerging stocks and sectors. This way Nifty has reflected the changing trends in the equity market with increasing/ introducing representation of emerging sectors in the economy.

Bottom line:

The Nifty 50 index covering 13 sectors, represents 66.8% of the free-float market capitalization of the stocks listed on NSE as of March 29, 2019. The total traded value of NIFTY 50 index constituents for the last six months ending March 2019 was approximately 53.4% of the traded value of all stocks on the NSE. No wonder why it represents our capital markets worldwide. If you want to know the daily movement in nifty and its constituents, just click here and if you want to know about the current constituents and their weightage in the index, click here.
I hope you enjoyed this extensive yet unique blog on Nifty 50. If you wish to level up a little, you can check out my course on “Basics of Stock Market” wherein I have explained everything you need to know before starting your investment journey. Click on the link to know more. Until next time!

Click next image to Know the Basics of Initial Public Offering (IPO)

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What is NIFTY50?

Welcome Aboard on the journey of Stock Markets.

Ladies and gentlemen, welcome onboard flight- Basics of Stock Markets with service from level newbie investor to a smart investor. Please fasten your seatbelts and keep your devices, notebook, and pen handy. Tips/calls are prohibited for the duration of the flight. Thank you for choosing team CARR. Happy learning!

You might be wondering that why is ma’am making this announcement. Well, learning about the stock market is no less than a flight. When you start learning about the stock market, you take off in the market, you might even face some turbulence during the journey and ultimately you land well only if you have learned the secrets to successful and efficient investing. If you wish to board on this fun flight you have arrived at the right airport, my friend. We will make sure that you understand all the concepts, right from the basic to the advanced level in the stock market, in the most simplified manner.
Are you ready? Let’s get started!

Why should one invest in the Stock Market?

Because I said so? Absolutely no! We all have dreams and aspirations in our lives which we are passionate about. For some people, it might be getting a nice car, for some, it might be going on a fancy vacation or some might wish to build their dream home. Irrespective of what the dreams are, they become achievable when the finances are in the right place. So, let’s understand how investing in the stock market can help us in our financial life.

1. Start with a small amount :

Believe me or not, but investing in the market could cost as low as a pizza! Yes, you read that correctly. On average, we spend between Rs. 500 - 1000 on pizza. There are several quality stocks within this price range to invest in. We can even invest with a minimum of Rs. 500 regularly in stocks or mutual funds. This proves that investing in the stock market doesn’t burn a hole in the pocket. Just imagine how well your wealth and health can improve only by redirecting your pizza money into the market.

2. Enjoy the magical power of compounding :

We all have learned about compound interest in our schools. What we did not know then was how it is rightly called the 8th wonder of the world. It is simply a way of earning more interest on the already earned interest. Let’s understand this with an example. Let’s say you invest Rs. 1000 every month for 25 years expecting 10% return p.a. Your total investment amount of Rs. 3 Lacs would have grown to approximately Rs. 13 Lacs. And that, my friend, is the power of compounding!

It’s like your money is earning more money for you, isn’t it? The compounding effect would be more if you stay invested for a longer period. Hence, it is correctly said that “Time is money” and one must start investing as early as possible.

3. Victory over inflation:

Inflation is like a hanging sword over our necks. It is reducing the purchasing power of our money. As per the trading economics, the average rate of inflation between 2012 to 2021 was around 6.01 percent in India. The bad news is that inflation is here to stay and we can’t do much about it. The good news is that the stock markets can help us generate inflation-beating returns of around 10-12% if invested efficiently.

This is possible because India is a developing country. Hence, our industries grow in tandem with our economic growth and have the potential to reflect and generate returns by outperforming the inflation rate.

4. Higher returns than traditional investment avenues:

FDs have been a popular choice for investment amongst Gen X (born before the 1980s) and Gen Y (Born between 1980-95). They are considered to be a safe and secure option. Currently, FD rates range between ~4.50% to 6.00% percent for tenures between 1 and 10 years. Now, have a look at the Nifty chart below. The Nifty50 index has grown ~150% in the last 10 years! I agree stocks can be volatile however, the risk gets averaged out over a longer investment term. Investing in sound and proven companies can help you generate stable and better returns than FDs

5. Additional income source:

It is always wise to have more than one source of income. If at all you face any difficulties in your professional or personal life and are forced to discontinue your job then you might experience financial distress after a while. Hence, having an additional source of income comes in handy and the stock market can be of help in this case. You can earn through value appreciation and dividends from your investments providing steady income apart from your paycheck.

6. It is not rocket science:

You do not need any fancy degree or qualifications to understand investing in the market. No matter what your educational background or age is. If you approach it in the right way, you can perform the required analysis and research all by yourself.

Bottom Line:

The stock market has its ups and downs but a learned investor will know how to glide through it all. It is always advised to learn about the market before jumping into it. An investor must be aware of his risk appetite, expected returns, and investment horizon. And the investment decision must be based on extensive research only.

There are several exciting concepts to learn like- the structure of the Indian financial market, what is Nifty, the basics of IPO, different types of corporate actions, Dividends, Stock splits , Block deals, and many more!.

Click the following image to know how to start learning about the stock market.

After understanding all of this, if you want to level up a little, you can check out my course on “Basics of Stock Market” wherein I have explained everything you need to know before starting your investment journey. Click on the link to know more. Until next time!

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Why you should invest in the stock market?

Indian Financial Market Simplified!

It is close to the month-end and you realize you need to go for your monthly shopping. Let’s say you need to get some snacks, fruits, clothes, personal care products, stationery, and utensils but you don’t have the time to go around the town visiting different shops for different items. Where would you go? Supermarket! A supermarket would be like your one-stop solution for all the things you need.
Now, think of the Indian Financial Market as a supermarket, where all kinds of financial assets/instruments can be bought and sold. Would you like to know more? I got you! In today’s blog, we will be understanding what is a Financial Market. Who are the market participants? Why is it important? and What is the structure of the Financial market in India? So, let’s get started!

What is the Financial Market?

I guess the name suggests itself. The Financial Market is a marketplace, where buying and selling of various financial asset/instrument take place. The financial assets being traded in this market can be stocks, bonds, currencies, commodities, etc. It brings together the buyers and the sellers who are interested to trade in a particular instrument. So, the stock market, bond market, forex market, commodities market, and any other market trading in financial instruments together, fall under a single umbrella, which is the Financial market. These markets operate in a proper structure but, more on that later.

Who participates in the Financial Market?

Participants include investors (institutions, individuals, government, etc.) wishing to invest in various investment avenues, entities /governments wishing to raise funds, financial intermediaries (exchanges, brokerages, banks, mutual funds, etc.) and regulatory bodies (RBI, SEBI, etc.).

What is the importance of the Financial Market?

Enables smooth circulation of Funds :

The market participants continuously interact with each other. Thus, funds flow efficiently from investors to businesses/government and vice versa.

Encourages people to invest :

Various financial instruments like stocks and bonds have given better returns than traditional options like FD’s or Savings. Improved transparency, proper regulation and rising financial literacy in India have ultimately encouraged people to trust and earn good returns by investing in markets.

Reflection of economic growth :
I think the 2008 crisis would be the best example to understand this point. The financial market and economic growth go hand in hand. The performance of financial markets is reflected in the strength of the economy.

Structure of Indian Financial Market

The Financial market in India is divided into Money Market and Capital Market.

1.Money Market :
It is a marketplace where short-term borrowing and lending of funds take place. This happens through various money market instruments with maturities ranging from a day up to a year. Banks usually use money market instruments to borrow money and meet their short-term liquidity requirements as per RBI guidelines. Types of money market instruments include T-bills, Certificate of Deposits (CD), Commercial papers (CP), Money market MF, etc. Individuals and institutions invest their excess or idle funds in these instruments and earn interest in a short period.

2.Capital Market :
In simple words, the Capital market is a marketplace where funds can be raised by businesses and governments for more than a year. These raised funds are utilized for their plans and growth. Interested investors can lend their surplus funds to earn good returns. This happens via various capital market instruments like stocks, bonds, etc. So, the Stock market and the Bond market comes under this umbrella. If you want to understand what bonds are, you can check out my YouTube video.

The Capital market is further divided into Primary markets and Secondary markets.

Primary Market :
It is a marketplace where companies and the government raise funds for the long term by issuing shares or bonds for the first time to the public. Because of this, it is also known as the New issue market. Here, the transaction happens between a buyer and the company/government issuing the security. When a company comes up with an IPO (Initial Public Offer), it takes place in this market.

Let’s take the example of Happiest Minds IPO. Investors who applied for the IPO had to go through the Primary market. To do so, they submitted their bid price to the company via their brokers. Later, the investors who got the allotment in this IPO received the shares directly from the company via their brokers again.

Secondary Market :
It is a marketplace where already-issued securities from the primary market are bought and sold. Hence, it is also known as the after-market. Here, new securities are not created, unlike the primary market. Trading and investing take place in already existing shares or bonds. A company or government is usually not involved in the transactions. It purely happens between a buyer and a seller through exchanges

Let’s continue with our previous example of Happiest Minds IPO. There might have been so many investors who were interested in the company but did not get the allotment. Also, there might be investors who got the allotment but want to sell their shares. So, these investors will now buy and sell their shares when the company gets listed on the stock exchanges. This is nothing but the secondary market. Once the company is listed, buyers and sellers can trade in these shares on the stock market.

There’s a lot more to learn about the primary and secondary market. If you are keen on learning what exactly goes around in these markets and how they work in detail, you can check out my course “Basics of Stock Market” at the link below.

BASICS OF STOCK MARKET COURSE

Bottom line:

Our Indian financial market has come a long way since Independence. It has opened up so many options for us to invest in and to take advantage of growing businesses and the national economy. It’s always a better idea to understand the overall structure and operations of the Financial market before we make trading or investing decisions.

Click the following image to know what is Nifty and its calculation.

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What is the Financial Market?

How did I open my Demat A/c with Zerodha?

What is a Demat A/c?

Demat A/c is simply short for Dematerialized A/c. Its purpose is to hold all your Financial Securities in an electronic form, eliminating the need and hassle of physical handling of securities and related documents.

There are 2 depositories in India, namely National Securities Depository Ltd (NSDL) & Central Depository Services Ltd. (CDSL). These depositories hold all the securities in our Demat A/c, in order to offer efficient trading and settlement in the markets. For this, we must open a Demat A/c with a broker (also known as a depository participant) recognized by SEBI.

Just like we have a Bank A/c to keep our cash, we need a Demat A/c to store our securities in an electronic form.

Today, I am going to share my story of how I opened my Demat A/c with Zerodha. There are 2 ways through which this is possible: offline & online. I opened my a/c online; however, I will quickly walk you through the offline process as well. So, let’s begin!

a) Offline account opening

First, you need to download the application forms from their website. Take a printout, fill it up, sign it and send the application to Zerodha via courier at the address mentioned on their website.
After this, you should schedule a meeting with a Zerodha representative who will complete your in-person verification. The representative will guide you with all the documents needed and take signatures wherever necessary, to complete the account opening process. Right now, all of this might take more time than before due to the pandemic. However, you can open an account online as I did. How? Let’s find out...

b) Online account opening

Before I started with the process, I ensured to keep a scanned copy of my PAN card, Aadhar, signature, and canceled cheque/bank statement in the device from which I was opening my account.

Step 1: Mobile Number & Email verification

I visited the Zerodha website and clicked on the “Sign up” section to start my account opening procedure. The first step was mobile number verification wherein I had to enter my number. After I hit the ‘Continue’ button, I received a 6-digit OTP number which I had to key in on the screen.

Next was email verification. I entered my email id and received a 6-digit OTP in my mailbox. I entered it and pressed continue.

Step 2: PAN verification

For this step, I had to enter my PAN and DOB as per my PAN. The portal asked me to pay a sum of Rs. 300 as an account opening fee. Various payment options like UPI and Net banking were available for the same. I had to fill in all the necessary bank details to complete the payment.

Step 3: Digilocker

After the transaction was successful, the Zerodha portal redirected me to the “Digilocker” window. Digilocker is an online locker wherein we can keep our government-issued documents in an electronic form. I had to separately sign in for Digilocker with my Aadhar, so Zerodha could access necessary documents uploaded in the locker.

Step 4: Personal Details

This step was very simple. Here, I just had to enter my personal details like Name, occupation, trading experience, and bank details carefully.

Step 5: Webcam IPV

For In-person verification (IPV), all I had to do was give my webcam access to Zerodha, write the code flashed on the screen on a blank paper, hold it up to the camera and click a picture. I had to save this picture as my IPV and move ahead with e-signing.

Step 6: E-sign

E- signing was done by uploading my PAN, Aadhar, Income Proof, and signature which I kept handy before starting the process. A Digio dialog box appeared on my screen for registration with the NSDL. I verified my email again. After this, I could see my complete form, check everything, and click on ‘Sign now’.

Voila! I successfully applied for opening a Demat A/c. Within 24 hours I received a mail from Zerodha with a PIN to activate my account. I was instructed to Log in using the same and change my password immediately and that was all.

Isn’t opening a Demat a/c easy peasy lemon squeezy? So, hurry up and click the link below to open your Demat A/c today!

Click the following image to read about financial markets.

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How I opened Demat A/C with Zerodha?

Imagine this... It’s a beautiful day. Your salary just got credited and you decide to treat yourself a little. You go on Amazon to buy some clothes. After hours of scrolling, you finally find a T-shirt you like BUT!!! The customer rating for that T-shirt is very low. Would you still buy that T-shirt? Hold that thought…Just like every product available on Amazon has a rating, we all have a rating based on our credit history, called Credit Score. So now tell me, would you, as a bank, give a loan to someone with a Low Credit Score? The answer to both the questions is a big fat NO, A low score is a clear red flag, isn’t it? Now that you have got the crux of this, let’s understand what CIBIL score is and how you can improve it.

What is CIBIL?

Before we get into what is CIBIL score, let’s learn about CIBIL. Credit Information Bureau (India) Limited (CIBIL) is the oldest and most popular Credit information Company, authorized by RBI. They maintain credit records of individuals and businesses. The member banks and financial institutions submit their customers’ credit information to CIBIL every month. CIBIL then analyzes this data, calculates our Credit Score, and creates our Credit Information Report (CIR) which helps determine the credit score.

What is CIBIL Score?

To put it simply, our CIBIL score is like a rating given to us by CIBIL based on our credit histories such as borrowing and repayment. Banks or lending institutions use this score to understand our creditworthiness before approving any loan to minimize default risk. This score ranges from 300 to 900. The higher the score higher is your chance of getting the loan and vice-versa. If you have a good CIBIL score you may get a lower rate on a personal loan, credit cards, and lower insurance premium. However, too many loans, untimely repayment, and high utilization of credit limits can poorly impact your credit score. If you have never taken any loan your CIBIL score would be -1.

How can you check your CIBIL score?

CIBIL provides CIBIL score and Credit Report once a year for free. You just need to create an account with CIBIL online and apply for your free annual credit report. They also offer unlimited access plans allowing you to track your CIBIL score and Credit Report every 24 hours and other credit monitoring services for some charges applicable. All you need to do is visit their website and subscribe!

Ways to improve/maintain your CIBIL Score

Timely Repayment

Be it your credit card bills or EMIs, making timely payment of your dues is one of the important factors in improving your CIBIL score. If you miss your repayment deadlines, you are charged interest on the interest you are already paying. Ultimately, this reflects poor creditworthiness and drags down your CIBIL score.

Check your Credit Report

Monitoring your Credit Report will help you realize where you are spending more and what caused your score to slip. If there are any errors in your report because of incorrect information or delay in updating your report, you can put up an enquiry with CIBIL, and get it corrected. This will get your score right back on track.

Pay attention to your Credit Mix

You must have a good credit-folio including secured and unsecured loans. Secured loans include Home loans, car loans, etc. whereas Unsecured loans include personal loans, credit cards, etc. A good balance between the two indicates better credit management on your part. However, if a person highly relies on unsecured loans then it is not favourable.

Credit Utilization

Credit utilization of above 30% on your credit card can adversely impact your CIBIL score. Just because you have a certain credit limit does not mean you use it all at once. On the other hand, not using your credit card at all will also affect your score poorly. The only solution to this is to keep a track of your spending which will help in limiting your credit utilization. If you are not using any of your credit cards it is best to cancel them.

Say no to Multiple loan application

Every time you apply for a loan; the bank initiates a hard enquiry on your credit profile to understand the default risk involved. This hard enquiry is reflected on your credit report for two years affecting your CIBIL score. So, if you apply for multiple loans at the same time, it will open several hard enquiries on your account which will damage your score. Additionally, if your loan application gets rejected, it could cause more harm to your CIBIL score. So, next time you apply for a loan or credit card keep this in mind.

Avoid closing Old Debt Accounts

By now you must have understood that the CIBIL score is all about your past credit habits. Therefore, it is advisable to keep your old loan accounts open even after you have repaid them. If you have had a good credit record for past loans then it will contribute positively to your CIBIL scores.

Bottomline

Healthy credit habits can help you improve and maintain a good CIBIL Score. It will undoubtedly pay off when you need to take a loan. Tracking your expenses regularly can help you make conscious spending decisions. Manage your debt smartly and pay your dues in advance wherever possible. Your CIBIL score is a crucial factor in availing of loans and credit cards. Hence, keeping an eye on it is a must. Remember, Perseverance is the key to success, or in this case to avail credit😉

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CIBIL Score

Ye Dil mange more! So welcome back to this special blog where we discuss one more fundamentally strong stock under Rs. 1000. I am sure many of you might have felt at some point in life that investing in good stocks comes at a cost and I wanted to debunk this myth. That is when I started my research on fundamentally strong stocks under Rs. 1000 and this stock is one of those 3 which I shortlisted. I am sure you already know the other 2 from today’s YouTube video. So, without prolonging your excitement let me disclose the third stock - KEI Industries Ltd. Stay tuned till the end of this blog to understand everything about this company. Let’s dive in!

What does the company do?

KEI is one of the leading manufacturers of cables and wires (C&W). But what is the difference between cables and wires? A wire is a single or a group of conductor strands of copper or aluminium whereas a cable is two or more insulated wires wrapped in one jacket. The company supplies a broad range of C&W products and plays an integral role in the development of core sectors of the country, such as Real Estate, Infrastructure, Power, Steel, Fertilizer, Refinery, Transportation, Energy, and Building Materials among many others.

Product Portfolio
Let’s have a look at the product portfolio of the company.

I hope that cables and house wires need no further explanation. Coming to Winding wires, these wires are used for winding submersible pump motors of all sizes. They are used for both Domestic & Industrial applications. Stainless Steel Wires are used in Engineering, Chemical, Construction, and many other industries besides the various type of applications in the manufacturing of kitchenwares, ornaments, utensils. Talking about EPC, the company has forward integrated into Engineering, Procurement and Construction (EPC) services for utility projects having significant cabling requirements. They offer end-to-end turnkey solutions including engineering, consultancy, and project management for Extra high voltage substations, transmission lines, underground cabling, overhead lines, etc. These services are being delivered across core sectors like power, renewables, railways, refineries, petrochemicals, cement, steel among others.

Business Segments

Have a look at the company’s business segmentation and its revenue contributions.

If you observe well under revenue by product segments, revenue for cables and turnkey projects have gone down. Why is that? While reading the conference call transcripts, I found out that the company is reducing its stake in the EPC business due to the elongated working capital cycle, slow recovery of payments, and low margin profile. Due to this, they will limit its contribution to overall sales at 10-15%. This is a strategic decision where they plan to redirect the freed-up resources to the retail segment with an aim to generate 40-50% of overall sales from this segment in the medium term.

Industry Analysis

1. Global W&C Industry
The global wires and cables market size was estimated at USD 183.14 billion in 2020, as per a report published by Grand View Research. It is expected to expand at a CAGR of 4.4% over 2021-28, to reach USD 260.16 billion by the end of 2028. This growth is attributable to the increasing use of cables and wires across the world for transmission and distribution of power, for incremental application in the telecom sector and data centers. Increasing urbanization and commercialization are expected to further bolster investments in the real estate industry, thereby, driving the demand for low voltage insulated wires and cables.

2. Indian W&C Industry
The Indian cables and wires market is projected to grow at a CAGR of 4% between 2021 and 2025, to reach USD 1.65 billion in 2025. Out of a total capital expenditure planned by the government, segments such as energy, roads and highways, urban infrastructure, and railways cumulatively account for ~71% of the total investments, with the energy sector commanding the highest share at 24%. This underscores substantial and sustainable demand for the C&W industry in the coming years.

About the company
KEI Industries Ltd was established in 1968 as a partnership firm under the name Krishna Electrical Industries. Their products are sold in 50+ countries with offices in 5 countries. They enjoy a 7% market share in India’s organized W&C industry and 12% in the institutional segment. They have a network of 1,655 distribution partners across India. The company was able to backwards integrate services by setting up in-house manufacturing of PVC. They continued to be co-sponsors of IPL for the fifth year. KEI was the principal partner to the Rajasthan Royals Team.

1. CAPEX Plans
As stated by the management in the investor’s conference call, the company will continue to invest in increasing the capacity. In the previous years, they had increased housing wires capacity with the setting of a new facility. They are now looking at investing around Rs. 600-700 Crore from internal accruals for growing their capacities for LT, HT, and EHV cables to maintain a CAGR of 17% to 18% against a CAGR of 15% achieved during the last 15 years. The CAPEX will be undertaken over five years. Meanwhile, the company has sufficient capacity to cater to the market demand over the next years by when new production lines will also be available.

Financial Analysis
The 5-year CAGR for Revenue, EBITDA, and PAT are well above average. If we look at quarterly numbers for the same parameters, we can see degrowth on a QoQ basis but YoY growth looks good. The QoQ degrowth happened due to the non-clearance of some orders of EHV cables and the second lockdown in this quarter however, the management is confident that the order will be reflected in Q2.

Apart from this, the company has good ROE and ROCE with low DE. The Current ratio looks good as well. There is no pledging of shares. Currently, the stock appears undervalued when compared to industry P/E.

Technical Analysis
The stock has been in an uptrend. Recently, an ascending triangle was observed, however, the price has been consolidating after it gave a breakout. As per Pivot levels, the next resistance is around 788.64 and 810.20 and support is around 714.80 and 694.70. RSI has been stable at around 60. MACD is bullish but the histogram is showing weakening bullishness due to the recent consolidation.

I hope you enjoyed learning about this company and it added value to your knowledge basket. If you haven’t watched the video on the other 2 interesting yet pocket-friendly stocks which I discussed on my YouTube channel today, click on the image below. Make sure to drop your views in the comments section if you would love more of such videos and blogs. Until next time!

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KEI Industries Fundamental Analysis

I know pretty well that one stock is not enough for Stockoholics like us. Therefore, in this blog, we will be discussing another gem from one of my Thursday Livestreams. The name of the company is Gufic BioSciences Limited. I found this gem along with the other shiny gem, Oriental Aromatics Ltd. whose video is already out on YouTube. If you have liked that video then keep reading this blog as I have covered the whole company analysis of Gufic BioSciences Ltd. here for you.

What does the company do?
The company manufactures pharmaceutical, herbal, consumer care, and API (Active Pharmaceutical Ingredients) products. Out of these four, the first three are very easy to understand but what is the fourth product? Well, APIs are chemical compounds that are the most important raw material to produce a finished medicine. For instance, Paracetamol is the API for Crocin. The company is also into contract manufacturing (Domestic & International). Contract manufacturing occurs when a small business hires another company to produce its products. It is a form of outsourcing.

About the Company:

Founded by Mr Shri Pannalal Choksi in the year 1970, the Choksi family has more than five decades of experience in the Pharma sector. The company has 3 Domestic Brands:

1. Gufic Super Speciality Business includes Critical care medicines and Infertility products.
2. Gufic Mass Speciality Business includes products like Nutraceuticals and Natural products, Pain /Arthritis, Immune Boosters, respiratory products, and mass Anti-infectives that are supplied in bulk to General Practitioners, Pediatricians, Gynaecologists, and Physicians.
3. Gufic Speciality Business includes Gufic Stellar (Range of Unique Ortho-Gynaec products) & Gufic Aesthaderm (Range of Derma-Cosmetics mainly licensed).

Interesting points about the company:

They are pioneers in Lyophilization and one of the largest manufacturers of Lyophilized injections in India. Lyophilization is a water removal process typically used to preserve perishable materials and to extend shelf life. This process is done to avoid degradation, and it improves the stability and solubility of the medicine. Not only this, but they are also the pioneers in antibiotics like Amoxicillin and Dispersible Kid Tab.

Sector Analysis:
a. Globally, India ranks 3rd in terms of pharmaceutical production by volume and 14th by value. The domestic pharmaceutical industry includes a network of 3,000 drug companies & ~10,500 manufacturing units.

b. According to the Indian Economic Survey 2021, the domestic pharmaceutical market is expected to grow 3x in the next decade. It is estimated at US$ 42 billion in 2021 and is expected to reach US$ 65 billion by 2024 and further expand to reach ~US$ 120-130 billion by 2030.

c. Indian Active Pharmaceutical Ingredient (API) industry is ranked 3rd largest in the world. The majority of APIs for generic drug manufacturing across the globe are sourced from India, which also supplies approximately 30% of the generic APIs used in the US.
(Source: IBEF & Annual Report)

Annual Financial Analysis:(Figures in Rs. Crores)

Quarterly Analysis:

Financial Metrics:

I hope you enjoyed reading about this small-cap company which must have fulfilled your excitement. If you have not yet watched the video on Oriental Aromatics Ltd, click on the image below. Until next time.

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GuFic Biosciences Limited Fundamental Analysis

How to open a Metamask wallet?

Metamask is said to be a good crypto wallet option for a number of Crypto and Decentralized Finance (DeFi) applications. Metamask can be used in your Chrome browser as an extension, and it also has a mobile app.

In this blog, we will take you through the steps for creating a Metamask wallet:

Step 1:
Visit the MetaMask website https://metamask.io/

Step 2:
Click on ‘Download’ and then choose your browser. Then install the extension for your specified browser.

Step 3:
The next step will be to create an account. Click on the MetaMask icon in the top right corner of your browser. This will be available under the puzzle piece icon. Click on ‘Get Started’ and then ‘Create a Wallet’.

Step 4:
Your next step will be to create a new password. And after agreeing to the T&C, your MetaMask wallet will be created!

Step 5:
Once your wallet is created, you will be able to see your “seed phrase”. This is your secret seed phrase which should not be shared with anyone and stored safely. A good practice to safely store this is to write it down on a piece of paper and keep it in a safe location.

Step 6:

After this, you will have to correctly select the order of your seed phrase and click ‘Confirm’.

All done! Your MetaMask wallet is now active. Your wallet address is the number at top of your wallet starting from 0x. You can transfer Ether and other crypto tokens to this wallet address.

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How to open a MetaMask Wallet?

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