Technical Terms in Share Market

Support is the price level at which demand is thought to be strong enough to prevent the price from declining further. The logic is that, when the price declines, there will be more demand for the particular share. By the time the price reaches a particular level, it is believed that demand will overcome supply and prevent the price from falling below support.
Resistance is just the opposite of ‘support’. A Resistance is the price level at which selling is thought to be strong enough to prevent the price from rising further. The logic behind the theory is that , as the price advances , sellers become more inclined to sell and buyers become less inclined to buy. By the time the price reaches a particular level it is believed that supply will overcome demand and prevent the price from rising above resistance.

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Bonus Shares

Bonus shares are additional shares given to the shareholders without any additional cost, based upon the number of shares that a shareholder owns. These are company's accumulated earnings which are not given out in the form of dividends, but are converted into free shares. The basic principle behind bonus shares is that the total number of shares increases with a constant ratio of number of shares held to the number of shares outstanding. For instance, if Investor A holds 200 shares of a company and a company declares 4:1 bonus, that is for every one share, he gets 4 shares for free. That is total 800 shares for free and his total holding will increase to 1000 shares.

Companies issue bonus shares to encourage retail participation and increase their equity base. When price per share of a company is high, it becomes difficult for new investors to buy shares of that particular company. Increase in the number of shares reduces the price per share. But the overall capital remains the same even if bonus shares are declared.

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Chart Analysis in Stock Market

• Chart analysis is the technique of using patterns formed on a chart to get an idea about the price movement of a share.
• There are two types of chart patterns: reversal and continuation.
• A continuation pattern suggests that the prior trend will continue upon completion of the pattern.
• A reversal pattern suggests that the prior trend will reverse upon completion of the pattern.

Financial Definitions: Rule of 72

A rule stating that in order to find the number of years required to double your money at a given interest rate, you divide the compound return into 72. The result is the approximate number of years that it will take for your investment to double.
For example, if you want to know how long it will take to double your money at 12% interest, divide 12 into 72 and you get six years.

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Claim Rejection of Term Insurance Plan

1) Provide correct details in the health declaration as hiding past history of diseases and essential health related information could lead to claim rejection.
2) Stop agent from filling wrong details or better still fill the form yourself.
3) Don't opt for the single premium plan even though a discount is offered as thanks to the uncertainties of life you may or may not need to pay the premium for the whole term. The premium doesn't increase each year.
4) Inform the nominee you have appointed about the term policy you have purchased.
5) Don't fall for mis selling offers of insurance agents that you will get back the entire amount you have invested, so the cost is zero. The money will be back upon death and the inflation cost as well as opportunity cost of money should be looked at from 15-20 years perspective.

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L&T Ltd - Safe Stock to Invest

The company is well poised to capitalise on the upcoming business opportunities, particularly in the infrastructure, power and defence sectors, which are likely to benefit from the government's thrust.

The management expects about Rs 150000 crore of orders in the next couple of quarters to come for bidding. These include orders from airports, metros, dedicated freight corridors, urban infrastructure, power generation, including nuclear power plants, T&D, etc. 

Larsen & Tourbo

BSE: 500510 | NSE: LT | ISIN: INE018A01030 | SECTOR: INFRASTRUCTURE - GENERAL

Target Price: 2123

52 Week High/Low

Prices of commodities, securities and stocks fluctuate frequently, recording highest and lowest figures at different points of time in the market. A figure recorded as the highest/lowest price of the security, bond or stock over the period of past 52 weeks is generally referred to as its 52-week high/ low.

It is an important parameter for investors (as they compare the current trading price of the stocks and bonds to the highest/lowest prices they have reached in the past 52 weeks) in making investment decisions. It also plays an important role in determination of the predicted future prices of the stock.

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IPO

The initial sale of stock by a private company to the public which turns it into a public company. IPOs are typically offered by smaller, younger companies who are seeking to expand through the infusion of capital from the IPO. It can also be done by large privately owned companies looking to become publicly traded.

Most IPOs use the services of an underwriting firm, which helps it determine the type of security to issue. The underwriting firm also helps select the price and timing for the IPO.

The initial day of trading as well as the near term can see huge swings in price.  For small private investors, this makes IPOs tough to predict and highly risky for small investors. Most companies with an IPOs are going through a transitory growth period, which adds to the  uncertainty regarding their future values.

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Online Trading

Online trading is nothing but trading via the Internet with the help of trading software provided by the broker. But for many of us this trading platform can be very confusing. You can also transfer funds online from your bank account to your share trading account with the click of a button.
The advantages of using online trading are:

• Fully automated trading process which is broker independent.
• Access to advanced trading tools to perform technical analysis
• Investors have direct control over their trading portfolio.
• Ability to trade multiple markets and/or products. You can trade in BSE / NSE.
• Real-time market data.
• Faster trade execution.
• Easy to operate and manage account
• No geographical limits i.e. you can be anywhere in the world you can invest in Indian share market through online trading platforms.

Share Market Ka Funda: Types of Price GAPs

 

Common gaps: Common gaps are ‘common’ and ‘uneventful’. If a Gap is formed when the markets are moving in a narrow range, it is called a Common Gap.

Breakaway Gaps: A “breakaway” gap ends a consolidation pattern and happens as prices break out. Often, they would be accompanied by huge volumes. Break-out Gaps are generally not filled for a long time, i.e. in the case of an uptrend, the price does not fall back to wipe off the gains. They may be filled as and when the prices retrace after a substantial up move. If the breakout happens to be a downtrend, the prices may not rise soon to wipe off the loss.

Runaway Gaps:Runaway gaps are best described as gaps that are caused by increased interest in the stock. For runaway gaps to the upside, it usually represents traders who did not get in during the initial move of the up trend and while waiting for a retracement in price, decided it was not going to happen. Increased buying interest happens all of a sudden, and the price gaps above the previous day’s close. This type of runaway gap represents an almost panic state in traders. Also, a good uptrend can have runaway gaps caused by significant news events that cause new interest in the stock. Runaway gaps can also happen in downtrends. This usually represents increased liquidation of that stock by traders and buyers who are standing on the sidelines. These can become very serious as those who are holding onto the stock will eventually panic and sell – but sell to whom? The price has to continue to drop and gap down to find buyers. So, in either case, runaway gaps form as a result of panic trading.

Exhaustion Gap: An “exhaustion” gap occurs at the end of a price move. If there have been two or more gaps before it, then this kind of gap should be regarded very skeptically. A genuine “exhaustion” gap is filled within a few days to a week. It is generally not easy to distinguish between the Runaway and Exhaustion Gaps. Experience in reading charts will help in due course. The best clue available is that Exhaustion Gaps are not the first Gaps in the chart, i.e. they follow the Runaway Gaps and usually occur when the runaway Gap is nearing completion. Exhaustion Gaps do not indicate whether the trend will reverse, they only call for a halt in the price movement.

   

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Technical Analysis: Price Gap

A gap is an area on a price chart in which there were no trades. It is easy to see gaps if you take candle stick charts. Let us try to understand gaps in another way. The fluctuations in stock prices are coherent in nature. That means that the price rises or falls gradually.  Thus, in rising scrip, if on one day the low was Rs 100 and the high was Rs 135, on the next day the low would be Rs 130 and the high Rs 140. Here, the low for the next day falls within the high-low range of the previous day. But suppose for the second day, the low was Rs 145 and the high Rs 150. Then, the low for the next day has fallen above the previous day High-Low range, or it was higher than the previous day’s high. So, when one draws bar charts showing High-Lows every day, there would be a discontinuity, termed as a ‘Gap’ in technical theory. An interesting feature of Price gaps is that it gets filled within a short amount of time. That is, the price would come back to fill the price gap of Rs 140 – Rs145, where there was no trade in the previous days.
In simple terms-a gap occurs when the current bar opens above the high or below the low of the previous bar. On a price chart, a space appears between the bars indicating the gap.




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Debt Funds

Debt funds are mutual funds that invest in fixed income securities like bonds and treasury bills. Gilt fund, monthly income plans, short term plans, liquid funds, and fixed maturity plans are some of the investment options in debt funds. Apart from these categories, debt funds include various funds investing in short term, medium term and long term bonds.
Debt funds are preferred by individuals who are not willing to invest in a highly volatile equity market. A debt fund provides a steady but low income relative to equity. It is comparatively less volatile.

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FMPs

FIXED MATURITY PLANS (FMPs) are similar to bank fixed deposit in that they offer a fixed return for a specific tenure. The difference is that they are mutual fund schemes. These closed-ended debt schemes are structured in such a way that the duration of the debt papers that form part of the scheme’s portfolio are aligned with the tenure of the overall scheme. The drawback, or rather a constraint, is liquidity as an investor cannot withdraw funds before the due date. The biggest attraction of FMPs was the tax arbitrage they enjoyed over bank deposits. 

For Example – If an individual invested in a 13 month bank deposit offering a rate of 9% pa, he would earn Rs. 9,750 over a period of 13 months and the effective post tax return (assuming the individual falls in the 30% tax bracket) would be Rs. 6,825. If the same amount was invested in an FMP of the same rate (9% pa), his earning would have Rs. 9,750, same as a bank FD but the effective post tax return would have been Rs. 9,632. Thus, as you can seen, in the case of an FD, the tax payable would be Rs. 2,925 and for an FMP it was merely Rs. 118, offering investors a clear saving of Rs. 2,807 in terms of tax outgo.

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Why Invest in Stock Market?

Stock markets is the only place where you can start creating wealth with a little money. All it requires is a bit of discipline, average intelligence and good temperament. Any other form of investments like real estate, gold are not strictly regulated like stocks and they may also require substantial capital investment. Although in reality people have made more money by investing in assets like real estate and the stock market still remains infamous for destroying common man’s wealth. People with bad temperament and emotional attachment generally fail in stock markets.
The reason for this is that, profitable investing in stock requires proper financial knowledge and a cool mental attitude.So choosing right Stocks is most important. There will be many choices available & it is not an easy task to select few out of them. Depending on the type and nature of investment you choose, there are varying degrees of risk associated with it. And risk is part and parcel of all type of investments and success of any investment you’ve made depends on how well you have managed the risk part of it.

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FII

An investor or investment fund that is from or registered in a country outside of the one in which it is currently investing. Institutional investors include hedge funds, insurance companies, pension funds and mutual funds. The term is used most commonly in India to refer to outside companies investing in the financial markets of India. International institutional investors must register with the Securities and Exchange Board of India to participate in the market. One of the major market regulations pertaining to FIIs involves placing limits on FII ownership in Indian companies.

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Invest in GOLD

Gold is the base of monetary systems all around the world. Gold is an asset that’s highly liquid. It is accepted everywhere and considered equivalent to cash for ages. It’s also one of the lesser volatile commodities traded internationally.Gold is very effective in bringing solidity into your portfolio and reduces investment risk big way. In terms of returns, it might not bring you very short term profits. Gold gains in value over a period of time. So you will have to wait for some time (say 5-10 years or sometimes more than that) to see the real effect of gains.
Gold as investment will never fail you. It will always be shining.

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Shares Valuation

• Whether you do simple valuation process or very complicated methods, remember that value is a relative measure. What you’re trying to find is a bargain. Opportunity to buy shares at a bargain generally arises when something is out of favor.
• Always look for moderately undervalued shares rather than trying to find out grossly undervalued shares. If a share is grossly undervalued, it means that there is something terribly wrong with that company.
• You should be able to justify why you bought a share and before buying, make sure you know what would make you sell the stock.
• Never compare your decisions with others. If you are ready to buy a stock at a particular rate for a reason, there’s someone equally ready to sell that stock for some other reason. So, it’s natural; for others to think contrary to your views.

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Interest Rate

Interest Rate in simple words means the cost of borrowing funds. It is the payment we make to the lender for the facility of using his money for our own purpose. Many times our spending decisions are also guided by the interest burden that we would be bearing.

But, more than the returns we should be concentrating on real returns on our savings (real return = interest rate- inflation). Even as consumers, interest rate is an integral part of our spending habit as we borrow from the bank for buying house, cars, house old items etc. For the business community interest rate is also very important as they borrow money from bank for investment activities like capacity expansion, setting up of plants, acquisitions, modernization etc. So interest rates play a critical role in a business’s profitability and hence, on stock prices.

How many of us would invest in stock markets if our bank would pay 12% interest in fixed deposits? Many of us will prefer to deposit money in that bank than invest in stocks (as well as mutual funds). Why? Because, we have the opportunity to earn higher returns at very low risk. As a result, funds move out of stock market affecting the stock markets adversely.

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Birla Sun Life Frontline Equity Fund - Plan A (G)

Investment Objective: An open-ended growth scheme with the objective of long term growth of capital, through a portfolio with a target allocation of 100% equity by aiming at being as diversified across various industries and or sectors as its chosen benchmark index, BSE 200.
Fund Type: Open-Ended
Investment Plan: Growth
Launch date: Aug 30, 2002
Benchmark: S&P BSE 200
Asset Size (Rs cr): 2,935.67 (Dec-31-2012)
Minimum Investment: Rs.5000
Fund Manager: Mahesh Patil
Exit Load: 1.00%
Load Comments: Exit Load of 1% if redeemed within 365 Days from the date of allotment.
Website: http://www.birlasunlife.com

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Property Rates in Mumbai

Central Suburbs     Capital Values Rate/Sq ft (INR)
Ambernath               2500 - 3800
Badlapur                  2300 - 2600
Bhandup                  8000 - 9500
Byculla                    12000 - 22000

Chembur                 9500 - 15000
Dadar                      20000 - 31000
Dombivali                3500 - 5000
Ghatkopar East       8500 - 18000
Ghatkopar West     8500 - 13000
Kalyan                   3500 - 4500
Kanjurmarg            8500 - 10500
Kings Circle           10000 - 17000
Kurla                     8500 - 14000
Mulund                  8000 - 10000
Powai                    9000 - 15000
Sion                       11000 - 25000
Thane                    6000 - 8700
Vikhroli                 8500 - 12000
Wadala                 8500 - 15300
Navi Mumbai
Airoli                    6500 - 7200
CBD Belapur       5500 - 8000
Kalamboli            3500 - 4600
Kharghar             4500 - 7500
Kopar Khairane   6000 - 7500
Nerul                   6000 - 10500
Panvel                 3300 - 6500
Sanpada              7000 - 9500
Vashi                   7000 - 10000
South Mumbai
Altamount Road   45000 - 72000
Bombay Central   20500 - 32000
Churchgate          26500 - 44000
Colaba                32000 - 48000
Cuffe Parade       35000 - 71000
Kemps Corner    36000 - 58000
Lower Parel        21000 - 38000
Mahalaxmi          21000 - 42000
Malabar Hills      45000 - 76000
Marine Drive      25000 - 40000
Nariman Point    58000 - 92000
Nepeansea Rd   47000 - 74000
Peddar Road     32000 - 56000
Prabhadevi        22000 - 45000
Shivaji Park       18000 - 30000
Walkeshwar      38000 - 70000
Warden Road    35000 - 60000
Worli                 25000 - 48000
Western Mumbai
Andheri East     12000 - 15000
Andheri West    13000 - 17000
Bandra East      17000 - 27000
Bandra West     26000 - 42000
Borivali East      9000 - 12000
Borivali West     9500 - 13500
Goregoan East   10000 - 12000
Goregoan West  11000 - 12500
Kandivali East    9000 - 12000
Kandivali West   9700 - 14000
Khar East          14000 - 20000
Khar West        22000 - 31000
Malad East       8000 - 12000
Malad West      9000 - 13000
MiraRoad Est   4500 - 5500
Naigon East     3000 - 3500
Santacruz East  14500 - 21000
Santacruz West 16000 - 22000
Vasai                 3300 - 3700
Vile Parle East   16000 - 21000
Vile Parle West  19000 - 23000
Virar                  3500 - 4500

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