Rachana Ranade. Blog

Stock name: Bharat Petroleum Corporation Ltd.

Pattern: Resistance breakout

Time frame: Weekly

Observation:

Over an extended duration, the stock has moved between 260 and 530, creating a parallel channel from 2016 to 2024 on its weekly chart. In January 2024, the stock experienced a breakout from the parallel channel's resistance, backed by higher-than-average trading volume. Post breakout the stock moved in the upward direction. According to technical analysis, the stock may see further upward movement if it can sustain the momentum generated by the breakout.

You may add this to your watch list to understand further price action.

Disclaimer: This analysis is purely for educational purpose and does not contain any recommendation. Please consult your financial advisor before taking any financial decision.

Stock name: Bank of Baroda

Pattern: Rounding bottom pattern

Time frame: Monthly

Observation:

Following its all-time high in January 2015, the stock experienced a downward trend until recently when it began an upward trajectory. Presently, the stock has reached the same level as in 2015, forming a rounding bottom pattern from 2015 to 2023. Towards the end of 2023 in the month of December 2023, the stock has registered a breakout, supported by average trading volume. Post-breakout, the stock is on an upward trajectory, and technical analysis suggests that the stock may see further upward movement if the current momentum is sustained.

You may add this to your watch list to understand further price action.

Disclaimer: This analysis is purely for educational purpose and does not contain any recommendation. Please consult your financial advisor before taking any financial decision.

News for the day:

The Reserve Bank of India (RBI) is considering issuing a clarification regarding Paytm due to its substantial user base. This move comes amid concerns and speculations surrounding Paytm's financial health. The potential clarification aims to address uncertainties and reassure users and stakeholders about the stability of Paytm's operations. The RBI's intervention seeks to provide transparency and alleviate any apprehensions within the market regarding the popular digital payment platform.
Prime Minister Narendra Modi has highlighted that the energy sector will receive a significant portion of infrastructure investment in India. This underscores the government's commitment to enhancing energy infrastructure to meet growing demands and promote sustainability. The focus on the energy sector aligns with efforts to boost energy security and support economic growth in the country.
The Indian government is exploring the possibility of leasing strategic oil reserve space to private companies as a strategy to enhance energy security. This move signifies a shift towards involving the private sector in efficiently managing and maintaining strategic oil reserves to address dynamic challenges in the global oil market.

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Technical Analysis of BANKBARODA & BPCL

Stock name: Mahanagar Gas Ltd.

Pattern: Resistance breakout

Time frame: Monthly

Observation:

For an extended duration, the stock has fluctuated within the range of Rs. 720 to Rs. 1200, establishing a parallel channel from 2016 to 2024 on its monthly chart. However, a noteworthy development occurred in January 2024 when the stock decisively broke out from the resistance of this parallel channel. This breakout was accompanied by trading volume surpassing the average. According to technical analysis, should the stock sustain its newfound momentum, then it may see further upward movement.

You may add this to your watch list to understand further price action.

Disclaimer: This analysis is purely for educational purpose and does not contain any recommendation. Please consult your financial advisor before taking any financial decision.

Stock name: AU Small Finance Bank Ltd.

Pattern: Double top pattern

Time frame: Weekly

Observation:

While exhibiting a general upward trajectory, the stock temporarily stabilized from April 2023 to January 2024, forming a double top pattern on its weekly chart. Towards the end of January 2024, the stock experienced a breakout from this pattern, accompanied by substantial trading volume. Additionally, the stock's RSI is at lower levels, and the MACD indicator has signaled a negative trend. Based on technical analysis, if the stock continues with the prevailing momentum it may see continuation of downward movement.

You may add this to your watch list to understand further price action.

Disclaimer: This analysis is purely for educational purpose and does not contain any recommendation. Please consult your financial advisor before taking any financial decision.

News for the day:

The Reserve Bank of India (RBI) has granted approval to HDFC Bank and its group to acquire a 9.5% stake in both Yes Bank and IndusInd Bank. This move signals a strategic development in the banking sector as HDFC Bank strengthens its position by acquiring stakes in two prominent banks, in line with regulatory consent from the RBI. The approvals open avenues for collaboration and potential synergies within the banking industry, reflecting the evolving landscape of financial institutions in India.
Paytm has refuted speculations regarding an acquisition by Jio Financials of its wallet business. The company has clarified that no such discussions or plans are underway. This denial comes in response to recent rumours suggesting a potential acquisition, emphasizing that Paytm remains independent and is not currently in talks for any such transaction with Jio Financials.
Adani Total Gas and INOXCVA have partnered to bolster the LNG ecosystem in India, focusing on enhancing distribution and supply infrastructure. This collaboration aims to promote the use of LNG as a cleaner and sustainable energy source, contributing to the growth of India's energy sector.

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Technical Analysis of MGL & AUBANK

Stock name: Glenmark Pharmaceuticals Ltd.

Pattern: Flag and pole pattern

Time frame: Weekly

Observation:

Experiencing a swift ascent from March 2023 to September 2023, the stock then underwent a consolidation phase, adopting a sideways trajectory until January 2024. During this period, a flag and pole pattern materialized on the weekly chart. January 2024 marked a breakout, accompanied by above average trading volume and a favourable MACD indicator signal. Despite the breakout, the stock has maintained its lateral movement. According to technical analysis, if the stock is able to gain a momentum, it may propel the stock upward in the future.

You may add this to your watch list to understand further price action.

Disclaimer: This analysis is purely for educational purpose and does not contain any recommendation. Please consult your financial advisor before taking any financial decision.

Stock name: Radico Khaitan Ltd.

Pattern: Cup and handle pattern

Time frame: Weekly

Observation:

The stock has exhibited a consistent upward trajectory. From January 2022 to November 2023, a cup and handle pattern emerged on the weekly chart, culminating in a breakout at the close of November 2023. The breakout was substantiated by a notable surge in trading volume. Subsequent to the breakout, the stock continued its ascent. As per technical analysis if the current momentum is sustained then the stock may see further upward movement.

You may add this to your watch list to understand further price action.

Disclaimer: This analysis is purely for educational purpose and does not contain any recommendation. Please consult your financial advisor before taking any financial decision.

News for the day:

Hyundai is considering a listing of its local unit on Dalal Street for the largest IPO in India, aiming to raise $3.3-5.6 billion this Diwali, potentially valuing Hyundai Motor India at $22-28 billion. The move comes as Hyundai aims to capitalize on India's IPO surge, with HMIL being the second-largest passenger vehicle seller in the country after Maruti Suzuki.
Force Motors plans to invest Rs 2,000 crore over 3-4 years, emphasizing electric vehicle (EV) development, starting with the Traveller Electric. The investment will span sustainability and green energy initiatives, with a new paint shop installation. Managing Director Prasan Firodia anticipates continued strong growth of 25-35% due to government infrastructure focus and positive market sentiment.
The Singapore Arbitration Centre has denied Sony's request to prevent Zee Entertainment from pursuing the National Company Law Tribunal (NCLT) for a merger, terminated by Sony last month. The Emergency Arbitrator ruled lack of jurisdiction, enabling Zee Entertainment to proceed with its NCLT application, while Sony seeks a USD 90 million termination fee through arbitration. The NCLT had previously approved the merger in August 2023, and if completed, it would have created a USD 10 billion media entity.

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Technical Analysis of GLENMARK & RADICO

What is Buyback of Shares?

As we are on our journey of unravelling the corporate actions, the next stop is a share buyback, in the dynamic world of corporate finance, companies often employ various strategies to enhance shareholder value and optimize their capital structure. One such strategic move that has gained prominence in recent years is the buyback of shares. Share buybacks, also known as share repurchase, involve a company repurchasing its own outstanding shares from the open market. In this blog post, we'll delve into the reasons why companies choose to buy back their shares and explore the benefits it brings to shareholders.

Understanding Share Buybacks

Share buybacks can take different forms, including open-market purchases or tender offers, where shareholders are invited to tender their shares at a specified price. The primary motivation behind share buybacks is often rooted in the desire to deploy excess cash in a manner that maximizes shareholder value. Generally, companies’ buyback shares at a price higher than the current market price.

There are two types of buybacks - tender offer where a company makes an offer to buy back its shares at a particular price (offer price) at which the shareholders can tender, i.e., sell their shares. and open market offer where a company can buy back its shares by actively buying from sellers on the exchange. Companies can choose either of these methods to buy back shares from their shareholders.

In the case of a tender offer, the existing shareholders as on a record date can opt to accept the offer and tender their shares in exchange for cash offered by the company as per the prescribed buyback ratio.

In the case of an open market offer, any Equity shareholder of the company can participate in the buyback offer through their stockbroker till the buyback window is open.

Let's explore some of the key reasons why companies opt for this financial strategy.

Capital Structure Optimization

Companies often embark on share buybacks to optimize their capital structure. By reducing the number of outstanding shares, a company can increase its earnings per share (EPS) metric. This, in turn, makes each share more valuable, signalling positive financial health to investors and potentially boosting the company's stock price.

Undervaluation Signal

When a company believes its shares are undervalued in the market, initiating a share buyback can be a way to communicate confidence in its own prospects. By repurchasing shares at what it perceives as a discounted price, the company signals to investors that it believes in the long-term value of its business.

Return of Excess Cash

Companies occasionally find themselves in possession of excess cash with limited investment opportunities. Instead of letting the cash sit idly, they may choose to return it to shareholders through share buybacks. This approach is particularly appealing when the company believes that reinvesting the cash internally would not generate sufficient returns.

Tax-Efficient Capital Return

Share buybacks can be a tax-efficient way to return capital to shareholders. While dividends are typically taxed as income, capital gains taxes on stock repurchases are often lower. This makes share buybacks an attractive option for companies aiming to provide returns to shareholders without the tax implications associated with dividends.

Now that we've explored why companies engage in share buybacks, let's turn our attention to the benefits shareholders can derive from this financial strategy.

Enhanced Earnings per Share (EPS)

As mentioned earlier, one of the primary benefits of share buybacks is the potential enhancement of EPS. By reducing the number of outstanding shares, the company's earnings are distributed among fewer shares, leading to an increase in EPS. This can make the company more attractive to investors and potentially drive up the stock price.

Share Price Appreciation

When a company buys back its shares, it signals confidence in its future prospects and a belief that the shares are undervalued. This confidence can be contagious, attracting other investors and driving up demand for the stock. As a result, shareholders may witness an appreciation in the value of their shares.

Return on Investment

For shareholders who choose not to sell their shares during a buyback, the repurchased shares effectively increase their ownership stake in the company. This can be seen as a form of return on investment, as shareholders' ownership in the company becomes more concentrated.

Tax Efficiency

Shareholders benefit from the tax efficiency of share buybacks, particularly compared to dividends. Capital gains taxes are generally lower than income taxes on dividends, providing shareholders with a more tax-friendly form of capital return.

In the complex world of corporate finance, share buybacks stand out as a strategic tool employed by companies to optimize their capital structure, signal confidence to investors, and return excess cash to shareholders. The benefits of share buybacks extend beyond the financial statements, positively impacting shareholders through enhanced EPS, share price appreciation, increased ownership stakes, and tax efficiency.

However, it's important for investors to approach share buybacks with a critical eye. Not all buybacks are created equal, and shareholders should evaluate the underlying reasons and financial health of the company before celebrating the announcement of a stock repurchase. As with any financial strategy, a well-informed and discerning approach is essential for both companies and shareholders to derive lasting benefits from share buybacks.

To understand more about such interesting concepts along with further interesting examples, check out my course on Basics of Stock Market.

Until next time !!!

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What is Buyback of Shares?

APLLTD | INVERSE HEAD AND SHOULDER |

Stock name: Alembic Pharmaceuticals Ltd.

Pattern: Inverse head and shoulder pattern

Time frame: Weekly

Observation:

Since December 2020, the stock has experienced a decline. Between January 2022 and January 2024, it exhibited an inverse head and shoulder pattern on the weekly chart. The first week of January 2024 witnessed a breakout from this pattern, backed by above-average trading volume and a positive MACD indicator signal. Subsequently, the stock has been on an upward trajectory. According to technical analysis, the stock may continue its ascent if the current momentum is sustained.

You may add this to your watch list to understand further price action.

Disclaimer: This analysis is purely for educational purpose and does not contain any recommendation. Please consult your financial advisor before taking any financial decision.

GRAPHITE | INVERSE HEAD AND SHOULDER |

Stock name: Graphite India Ltd.

Pattern: Inverse head and shoulder pattern

Time frame: Weekly

Observation:

Since May 2021, the stock has undergone a downward trend. Between October 2021 and December 2023, it developed an inverse head and shoulder pattern on its weekly chart. In December 2023, the stock successfully broke out from this pattern with substantial trading volume and a positive MACD indicator signal. Following the breakout, there was a retest of the breakout level. Presently, the stock's RSI levels are favourable. Technical analysis suggests that if the stock rebounds from the retest, it may continue its upward movement.

You may add this to your watch list to understand further price action.

Disclaimer: This analysis is purely for educational purpose and does not contain any recommendation. Please consult your financial advisor before taking any financial decision.

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News for the day:

Vodafone Idea (Vi) aims to roll out 5G services in India within the next six months, according to reports. The telecom company is gearing up to introduce the next-generation technology to enhance its network capabilities.
Consumer electronics companies anticipate a surge in household appliance adoption following Budget 2024's emphasis on housing and solar schemes. The budget includes plans for rooftop solarization, providing free electricity to one crore households. Industry executives foresee medium-to-long-term sales growth, particularly in the housing sector and solar appliances.
The electric vehicle sector awaits clarity on FAME subsidy extension, as the interim budget did not address the future of FAME II set to expire in March. Industry seeks specifics on subsidies and taxation, highlighting challenges like parking space for light EVs and urging a comprehensive strategy, including reduced GST rates and affordable financing for critical infrastructure.

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Technical Analysis of APLLTD & GRAPHITE

After a long afternoon, you’ve finally finished your chores and got some time for yourself. You decide to put the radio on and enjoy some good music. After a few mainstream songs, you hear a song that you have never heard. It does not matter whether it’s an old song or a new one because you loved it. In fact, you loved that song so much that you add it to your daily playlist. You ask your friends about this great song that you discovered on the radio, but none of them have heard it. And that’s when you realize that you have stumbled upon a gem of an underrated song! Not just that, but the delight and the essence of this discovery makes it even more satisfying, isn’t it? I am sure we all have at least one such underrated song in our playlists. So how do you feel about discovering such an underrated stock or an undervalued stock as we call it in the markets and reaping the benefits out of it? Now an excited smart investor like you might say, “YASSS! But how do I find one?..” Well, you obviously won’t stumble upon it on the radio like you did with the song, so to find out “how?”... Keep reading ahead because you are about to learn it in the next 5-10 mins!

How to find an Undervalued Stock?

An Undervalued stock is the one whose market price is lower than its Intrinsic value and has promising growth potential. They might be undervalued for reasons like market crash, low recognition or sometimes because of bad press. Here are few metrics which we can look for, in order to identify these Gems in the stock market for Long term investing.

1) Price-to-Earnings Ratio (P/E)

P/E ratio is the most popular and favored metric amongst Value investors. This ratio tells us how much the market is willing to pay compared to a company’s earnings. It is calculated by dividing Market price per share (MPS) by Earning per share (EPS) of a company.

Formula:

P/E Ratio = Market Price per share/ Earnings per share

A high P/E indicates that the stock is expensive or overvalued whereas a low P/E indicates that the stock is low-priced or undervalued. It is important that you compare a stock with its industry peers to determine if it’s overvalued or undervalued
Let’s understand this with an example. Stock A has a market price of Rs. 50 and is earning Rs 40 per share. The P/E for Stock A would be 1.25 (50/40). Then, we have Stock B whose Market price is Rs. 20 and is earning Rs. 25 per share. Thus, the P/E for Stock B would be 0.8 (20/25). So, in our first case you are paying Rs 50 to earn profit of Rs 40 whereas in second case you are only paying Rs. 20 to earn profit of Rs. 25!...What does this tell us? Yes, you’re right. We need to look for lower P/E to identify an undervalued stock which is Stock B with 0.8 P/E from our example.

2) Price-Earnings to Growth Ratio (PEG)

PEG ratio takes P/E ratio little further by adding expected earnings growth rate in the equation. Hence, PEG is forward-looking. It is calculated by dividing P/E ratio by EPS Growth of a stock.

Formula:

PEG Ratio = P/E ratio / EPS Growth rate

Just like P/E, a high PEG indicates overvaluation and a low PEG indicates undervaluation. A company with low PEG ratio and strong earnings growth could prove to be promising. As a rule of thumb, a stock with PEG above 1 is considered to be overvalued and a stock with PEG below 1 is considered to be undervalued. Let’s take our previous example ahead to understand this. Stock A has a P/E ratio of 1.25 and Stock B has a P/E ratio of 0.8. Say Stock A has an EPS growth rate of 10% and Stock B has 12% EPS growth rate. The PEG for Stock A would be 0.125 (1.25/10) whereas that for Stock B would be 0.067 (0.8/12). Hence, Stock B wins again!

3) Price-to-Book Ratio (P/B)

The price-to-book ratio compares a company's market value to its book value. It is calculated by dividing Market price per share by Book value per share. It measures how much investors are willing to pay for each rupee of a company’s net value. Book value is the net asset value of a company which its shareholders would receive in case of liquidation. Book value per share is calculated by dividing Equity Share Capital less preferred stock by number of equity shareholders.

Formula:

P/B ratio = Market price per share/ Book value per share

Just like the previous 2 ratios, this ratio also reflects a high P/B ratio as overvaluation and low P/B as undervaluation.

Let’s continue with same example from before to understand this. Stock A has a Market price per share of Rs. 50 and let’s say its book value is Rs. 30. So, the P/B for stock A would be 1.67 (50/30). Stock B has a market price per share of Rs. 20 whereas its book value is Rs.22 per share. So, the P/B for stock B would be 0.9 (20/22) and here we have a winner.

4) Dividend Yield Ratio

If you’re looking for long term investment and wealth creation then obviously you would be interested in knowing how much dividends a company is paying to its shareholders. This is when Dividend yield ratio comes into picture. This ratio measures the amount paid by a company as Dividends to its shareholders compared to its Market price. It is calculated by dividing Dividend per share by Market price per share.

Formula:

Dividend Yield Ratio = (Dividend Per Share/Market Price Per Share) * 100

A dividend paying company is always in the good books of investors because these companies reflect good financial position enabling them to share their profits with us. Higher dividend yield is always favorable however, it is important to compare it with the industry average and its peers.

Let’s say Company A and B are both paying a dividend of Rs. 10 per share. But the market price for Company A is Rs. 50 whereas for Company B it’s Rs. 30 per share. Hence, the Dividend yield of Company A is 20% ([10/50] *100) and that of Company B is 33.34% ([10/30] *100). So, by paying only Rs 30 for a stock of Company B, I can get 33.34% dividend yield compared to the 20% dividend yield on paying Rs.50. This is the reason why investing in an undervalued stock can be fruitful in long run.

5) Debt-to-equity ratio (D/E)

This ratio is a simple measure of how much debt you use compared to your owned funds to run your business. It is calculated by dividing a company’s total liabilities by shareholders’ equity.

Formula:

D/E Ratio= Total Debt/ Shareholder’s Equity

If a company’s D/E ratio is too high, it may be a sign of financial distress and reliance on heavy debt to run your daily business activities. But if it’s too low, it’s a sign that your company is over-relying on equity to finance your business. Hence, it is important that a company manages to strike a good balance between the two whilst keeping its books intact. It would be reasonable to compare a company’s D/E ratio with its industry peers and industry average to know the overall scenario.

Let’s say, Company A has a Debt of Rs. 10 Lacs and shareholders’ equity of Rs. 4 Lacs. So, the D/E ratio would be 2.5 (10/4). On the other hand, Company B has a debt of Rs. 8 Lacs and shareholders’ equity of Rs. 10 Lacs then the D/E ratio would stand at 0.8 (8/10), which is much better than its peer- Company A.

6) Return on Equity (ROE)

Return on Equity ratio measures a company’s profitability with respect to its Equity. It tells us how efficiently a company is using its shareholder's equity fund to generate profits. It is calculated by dividing Net income by Shareholders Equity.

Formula:

ROE = (Net Income/ Shareholders Equity) * 100

ROE can differ from sector to sector because of different assets and debt requirements. Thus, it is best practice to compare a company’s ROE with the Industry ROE average. ROE above industry average is considered good. A company should be able to maintain a stable or rising ROE over the time. If a company's ROE is growing, its P/B ratio should be growing too. It is important to notice if the company’s high ROE is because of increasing profits or more debt, which is why D/E ratio is worth checking out.

Let’s look at an example. Say, Company A has a Net income of Rs. 100 Cr and Shareholders’ Equity of 1000 Cr, then ROE would be 10% ([100/1000] *100). Say, Company B has the same Net income of 100 Cr and Shareholders’ Equity of 500 Cr then ROE would be 20% ([100/500] *100). So, we can say that Company B is generating more profits more efficiently than Company A using its shareholder's equity fund.

There are many ratios and metrics you can look at beyond this list. What’s important is that they help you identify an undervalued stock at right time. You can use various platforms like Screener. in, Investing.com, Tradingview.com, etc. to filter stocks according to your favorite metrics and criterion

Look beyond numbers

Screening just the numbers isn’t enough. If you find such a company meeting your specified criterion, it is essential to study the business of that company too. For starters, go for a company whose business you understand,check whether that business is sustainable. Study their business model and various initiatives taken by them for conducting business seamlessly.

Look at the Shareholding pattern and the shareholding of the promoters in the company. That will tell you about the promoter’s interest and confidence in the company. A company having any kind of competitive advantage over its competitors is even more convincing. It is important to learn their future outlook, business strategy, and sectoral growth aspect before investing your hard-earned money.

Bottom line: Be patient!
All these factors combined together can re-assure your investment decision in a company. There are 5,500 stocks listed in India. Take it slow, find the metrics which suits your investment style best, and then make an informed investment decision. The aim here is to make the most out of the company with great potential. As per Dow theory, price always corrects itself to its fair value in the markets and when it does, guess who will be making money out of it? Yes! My friend. It’s you! I am sure you will find such underrated gems to add value to your portfolio.

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How to find an undervalued stock?

Investing can be a great way to build wealth and achieve financial freedom. However, it can also be risky if you don't know what you're doing. To become a successful investor, you need to have an understanding of the markets and a strategy that works for you. Here are 10 tips to help you get started:

1. Set clear goals: Before you start investing, it's important to know what you want to achieve. Are you saving for retirement, a down payment on a house, or a child's education? Set specific goals and create a plan to achieve them. When you are planning for the goals make sure they are S.M.A.R.T. If you don’t know what are SMART Goals, I have made a separate video you can check out on YouTube.

2. Diversify your portfolio: Don't put all your eggs in one basket. Spread your investments across different asset classes, sectors, and geographic regions. This can help reduce risk and increase returns over time. Understand that all the assets move in cycles, if one asset is in a negative cycle the other asset that has a lower correlation will set off the returns to avoid or minimize any possible underperformance.

3. Invest for the long-term: Investing is a marathon, not a sprint. Don't try to time the market or make short-term bets. Focus on your long-term goals and stick to your plan, even during market downturns. Have you seen a seed grow into a tree in a few days? No, it takes time. Similar is the case with investments.

4. Control your emotions: Investing can be emotional, but it's important to stay rational and avoid making impulsive decisions. Don't let fear or greed drive your investment decisions. Have you seen the image on our merchandise? It say’s “I Buy… Asa Kasa Kaay?”. Just after you buy, the stock falls and just after you sell the stock, the prices rally.

5. Do your research: Before you invest in a stock, bond, or mutual fund, do your due diligence. Research the company or fund's financials, management team, and industry trends. Make sure you understand the risks and potential rewards. If you need any help in the research of any stock, you can go through our YouTube channel and explore the knowledge bank.

6. Keep an eye on fees: Investing fees can eat into your returns over time. Look for low-cost index funds and ETFs, and be wary of high management fees and transaction costs.

7. Rebalance your portfolio regularly: Over time, your portfolio may become unbalanced as some investments outperform while others lag behind. Rebalancing can help keep your portfolio aligned with your goals and risk tolerance. Let me repeat the example of sowing a seed. It needs care and nourishment at regular intervals. You change the soil and add manure regularly to support the healthy growth of a plant. Similar is the case with investments.

8. Stay informed: Stay up-to-date on market news, economic indicators, and political events that could impact your investments. But don't let the news cycle distract you from your long-term goals.

9. Work with a professional: If you're new to investing or need help managing a large portfolio, consider working with a financial advisor. A good advisor can help you create a personalized plan, manage risk, and achieve your goals.

10. Learn from your mistakes: Investing involves trial and error. Don't be too afraid or be too hard on yourself when you make mistakes. I remember a quote by Theodore Roosevelt, 'The only person who never makes mistakes is the person who never does anything.' So, I will say just go out there, take risks, and learn from your experiences only then you will succeed. It's all part of the journey, accept and enjoy every bit of it!

In conclusion, investing can be a great way to build wealth over time, but it requires discipline, patience, and a solid strategy. By following these ten tips, you can become a successful investor and achieve your financial goals. Until next time!

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10 Investing tips to become a successful investor

The stock market can be an attractive option for individuals looking to make a quick profit. With the rise of online trading platforms and increased accessibility, it has become easier than ever to trade stocks. However, the question of whether to quit your job to trade in the stock market is complicated and requires careful consideration. In this blog, we will explore the advantages and disadvantages of quitting your job to trade in the stock market.

Advantages of quitting your job to trade in the stock market

1. Flexibility: One of the biggest advantages of full-time trading in the stock market is its flexibility. You can set your own schedule, work from anywhere, and have the freedom to pursue other interests or hobbies.
2. Potential for higher earnings: Trading in the stock market has the potential for high returns, especially if you have a good understanding of the market and are willing to take risks.
3. Personal fulfillment: If you have a passion for investing and trading, pursuing it full-time can be personally fulfilling and rewarding.

Disadvantages of quitting your job to trade in the stock market

1. Risk: Trading in the stock market is inherently risky and can lead to significant losses. If you rely solely on trading to make a living, you run the risk of losing your entire income if the market goes against you.
2. No guaranteed income: Unlike a traditional job, trading in the stock market does not offer a steady income. Your earnings will depend entirely on your ability to make successful trades.
3. Limited benefits: When you quit your job, you will lose access to benefits such as health insurance, retirement plans, and paid time off.
4. Lack of experience: Trading in the stock market requires a high level of skill and experience. If you are new to the market, you may not have the knowledge or experience to make successful trades consistently.
5. Emotional toll: Trading in the stock market can be emotionally taxing, especially when you are risking your own money. The stress and pressure of constantly monitoring the market and making decisions can take a toll on your mental health.

So, should you quit your job to trade in the stock market?

The answer depends on your individual circumstances and goals. If you have significant savings, a solid understanding of the market, and a proven track record of successful trades, quitting your job to trade in the stock market may be a viable option.
However, if you are new to the market, have little experience, and rely on a steady income, quitting your job to trade in the stock market is not advisable. It is important to consider the risks, benefits, and your personal financial situation before making any decision.

In conclusion, trading in the stock market can be a lucrative and fulfilling career, but it is not for everyone. Before making any decision, take the time to evaluate your financial situation, experience, and goals. Seek advice from professionals, and remember that there is no one-size-fits-all answer.
Ultimately, the decision to quit your job and trade in the stock market should be a well-informed and carefully considered one. I have also made a separate video on this topic on my YouTube channel you can watch it below. Until then…

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Should you quit your job to trade in Stock Market?

We all have witnessed what happened in the past few days in the market. Hindenburg Research LLC an investment research firm with a focus on activist short-selling published a report on Adani Group stocks on 24^th January 2023 accusing the group of various allegations. This caused the Adani group stocks to jump down the aircraft without parachutes. This is not the first time someone is making allegations about the Adani group, so there was a minimal impact on the market. The report slowly spread like wildfire and it was reflected in the stock prices on 27^th January when almost all the group stocks declined by 15%-20%. This increased the overall volatility of the market.

What is Stock Market Volatility?

Stock market volatility refers to the fluctuation of stock prices in a short period of time. This can be caused by a variety of factors, including economic news, geopolitical events, changes in interest rates, market sentiment, etc. Volatility can have a significant impact on investors, as it can lead to both large gains and losses in a short period of time. This volatility is measured by Volatility Index also called India VIX. Let us see what the VIX looked like on 27^th January.

The VIX spiked by 18.18% on 27^th January. This volatility can be seen as both a positive and negative aspect of the stock market. On one hand, high volatility can lead to large gains for investors who are able to correctly anticipate market movements. On the other hand, it can also lead to significant losses for those who are caught off guard by sudden market changes.

Another factor that can contribute to stock market volatility is the actions of market participants, such as institutional investors and hedge funds. These large players have the ability to move the market with their buying and selling decisions, which can lead to rapid price changes. They usually buy or sell stocks in bulk. The problem here is not all bulk deals are known beforehand. You can see these bulk deals on the website of the Stock Exchange a day after these deals take place.

How to protect your investments from volatility?

One way to mitigate the negative effects of volatility is to adopt a long-term investment strategy. This means avoiding making knee-jerk reactions to short-term market movements and instead focusing on building a diversified portfolio that is well-suited to your risk tolerance and investment goals. Additionally, investors can also consider using tools such as stop-loss orders, which automatically sell a stock if it falls below a certain price, in order to limit potential losses.

Can we avoid volatility?

It is also important to keep in mind that stock market volatility is a natural part of the market cycle. In general, the stock market tends to be more volatile during times of economic uncertainty, such as recessions or economic downturns. However, over the long term, the stock market has historically produced positive returns, making it an attractive investment option for those who are willing to tolerate short-term volatility.

In conclusion, stock market volatility is a part of investing, and understanding its causes and effects is essential for making informed investment decisions. By adopting a long-term investment strategy, using tools to limit potential losses, and staying informed about market movements, investors can minimize the negative impact of volatility and maximize their chances of success in the stock market. How to learn and use those tools is a topic for another discussion, until then…

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What is Stock Market Volatility?

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