Posted at 3:26 PM , on March 31, 2015
A successful self trader – Rule # 7
A mid-cap stock is hard to define, but there are some standards set. Globally, it’s a mid-cap stock if it has a market cap between $2 billion and $10 billion. The relevant numbers in India will be obviously smaller. These mid-cap stocks become important because they constitute a much larger share of trading volumes; disproportionate to their size. And retail interest in mid-cap stocks is huge.
Getting your mid-cap strategy right…
If you want to understand the importance of mid-cap stocks, just look at the NSE CNX Mid Cap Index. Launched in 2005 with a base date of January 01st 2003 and a base value of 1000, this index has grown around 13 times during this period. The frontline Nifty has grown a little over 8 times during the same period. This outperformance lies at the core of why mid-caps need better understanding. Continue reading
Posted at 5:29 PM , on March 30, 2015
The real worry is the $9 trillion global Dollar borrowing…
As the Fed moved in to indicate a timetable for rate hikes, there were concerns over capital outflows from emerging markets into the US. While that could happen, it would be a smaller problem to contend with. The real problem is the $9 trillion debt that global companies and governments owe in dollars. Let us understand why… Continue reading
Posted at 5:18 PM , on March 30, 2015
But, do investors need to panic, not necessarily!
The nifty is down close to 10% from its peak. Over the last 1 week there has been evident panic in the markets. The question is whether this is a normal correction or an indicator of something bigger? And what should investors do? Be opportunistic and buy on declines; or panic and rush for the exits?
India story is still intact…
You just can’t miss the irony behind the market correction. The Indian GDP is still likely to grow at 8% plus. Current account deficit and fiscal deficit will be under control. Forex reserves at $340 billion are at an all time high and so is FPI investment. Quarterly results may be below expectations but Indian companies are still growing in a deflationary world. Capital cycle is not reviving, but that was a good 3 years away. Nothing seems to have changed. Continue reading
Posted at 4:27 PM , on March 30, 2015
In an inter-connected market, your credit score matters a lot…
Have you ever wondered why your credit card application or loan application got rejected? Have you also wondered why your loan and credit card sanctions are for lower values that you desire? The answer could be your credit score or CIBIL Score.
Know your credit score…
The moment you take a credit card or a loan your background and repayment data is shared by the lender with CIBIL. The Credit Information Bureau of India Ltd. (CIBIL) is the repository of credit information of Indian borrowers. Your credit score is a function of factors like; the extent of leverage, proportion of high cost debt, your repayment track record, number of cheque / ECS bounces, loan rescheduling etc… Normally a credit score of 700 and above is considered loan-worthy, while a score of 750 and above is considered to be credit worthy. You may be surprised to know that 90% of all lending happens to borrowers with a CIBIL score above 700. Continue reading
Posted at 2:24 PM , on March 24, 2015
A successful self trader – Rule # 6
There are actually two parts to this rule. Firstly, how do you identify a bear market from a temporary blip? Secondly, how do you make the best of a bear market? Both are easier said than done. But there are some basic characteristics of a bear market like reversal of leaders, lower lows and consistent negative breadth. But the question is; how to weather a bear market and also make the best of this difficult phase?
Understanding bear markets…
How exactly do you define a bear market? The most popular measure of a bear market is a 20% correction from the peak. Some analysts also define a bear market in terms of 3 months of consistent negative returns in the market. But in a way, bear markets are like the elusive temptress. They may be hard to define and delineate, but you can surely recognize one when you see them. Continue reading