For those who want to confidently enter the world of trading, selecting the correct stock market institute is essential. In this post, we list the top five stock market schools in India that provide in-depth instruction and mentoring.
1.Trendy Traders Academy
Top stock market school In India, Trendy Traders Academy is regarded as the top school for stock market education. They cover chart patterns, indications, risk management, and more in their courses, which have a heavy technical analysis focus.
2.Nifty Trading Academy
This technical analysis-focused school offers classes on candlestick patterns, trend analysis, support and resistance levels, and algorithmic trading.
3.NSE Academy
A reputable school that offers a variety of stock market courses appropriate for all skill levels is NSE Academy. Their courses encompass risk management, trading in derivatives, fundamental analysis, and technical analysis.
4.BSE Academy
BSE Academy offers thorough stock market education encompassing equities markets, derivatives, commodities, and trading psychology. It is supported by the Bombay Stock Exchange.
5.National Institute of Financial Market (NIFM)
NIFM provides thorough stock market courses with an emphasis on technical analysis, fundamental analysis, derivatives, and risk management.
CONCLUSION
Trendy Traders Academy stands out as the greatest option among India’s top stock market training facilities.
Do you want to know which Telegram channels to follow for the Indian stock market? If so, you’ve found the proper site. In India, Telegram is a social media application that is expanding quickly. People today have numerous options to learn and make money. Because you can find all the stock-related information and some trading advice in one spot, stock market channels are likewise becoming more and more popular. It cannot be simple to select the best channel for you when there are hundreds available. We have selected some of the top stock market Telegram channels for you as a head start.
List Of Top 14 Stock Market Telegram Channelsin India
This table of highlights includes some of the top Telegram channels for stock marketing. Last modified on September 1 , 2023 .
1. Stock Gainers (SEBI REGISTERED)
Choose STOCK GAINERS if you are a novice trader or only have a few years of experience. Stock Gainers offers calls with the appropriate Stop Loss (SL) and Targets direction. They provide calls with a high degree of accuracy and are SEBI registered. You can make the most money by following their calls if you have a few hours to trade each day.
Characteristics
Free 7–10 trade calls in commodities, futures, equity cash, and options (on the Nifty, BankNifty, and stocks). Genuine Research Analysts SEBI registered 60,000+ Traders Intraday and Positional Calls are free.
2. Profits Everyday
Profits Everyday is a Telegram channel dedicated to the stock market. Offering analysis-based tips on stock options is their area of focus. They post one free stock options call on a daily basis, along with giving updates on whether to exit the trade on time or book profit.
They also offer paid services at lucrative prices and claim to retrieve membership fees within 2-3 trades.
Characteristics
Free services
Economical premium services
Tailor-made support over Telegram
Small investment required
3. Stox Master Advisory
One of the reputable Telegram channels you need to join is Stoxmaster, which has the goal of enabling financial independence for everyone. A team of analysts and stock market traders at StoxMaster is registered with the Sebi and has ten years of experience trading equities on the stock market. They provide the most effective strategies and tactics for profitable stock market investing.
Characteristics
Over 100,000 Members Everyday free calls Get professional advice on positional trading, futures & options, intraday trading, and the nifty and bank nifty. actual webinars provides stock market training.
4. Jᴀᴄᴋᴘᴏᴛ TʀᴀᴅᴇX
You can join the trustworthy trading Telegram channel J TX. They provide daily intraday equity and nifty calls. This group can be helpful if you are new to trading and want to learn about portfolio management. In addition, they provide brief pre-market updates that provide you a preview of the market’s behavior.
Characteristics
80,000+ participants daily equities and intraday calls for the nifty Beginning portfolio management pre-market information
5. NSE Stock Pro
Another well-liked stock trading Telegram channel is NSE Stock Pro. This channel actively offers investment calls. More than a lakh people subscribe to them. If you’re seeking for the most recent stock market trends, we recommend giving this channel a try since they offer experienced stock trading tips and recommendations.
Characteristics
100,000+ participants Everyday free calls updating the nifty stocks
6. 20PAISA.COM (Banknifty Option)
You can also check out 20PAISA.COM (Banknifty Option) for the most recent news and trends in the stock market. They have more than ten years of market experience. They provide accurate updates and calls. You may obtain professional guidance on trading futures, options, stocks, and equity options as well as bank nifty options here.
Characteristics:
Expert advice and tips for the stock market, futures and options trading, equity options, etc. are provided by Bank NIFTY Call Put 95% High Accuracy Quality Performer.
7.TradeOnomics
TradeOnomics is the place to go if you want to trade in Nifty, Banknifty, and stock options. They conduct free webinars every weekend, offer free trades, and offer live market help. They think you can learn and make money at the same time. On their website and channel, the public can access their trading report for 2023.
Characteristics:
Daily stock and index transactions with appropriate targets, entrance, and exit Live market assistance Free option trading information No cost webinars
8. BankNifty Masters
BankNifty Masters is another prominent stock market Telegram channel. This channel’s primary goal is to teach traders of all experience levels how to trade options profitably. Additionally, they offer professional opinions on the BankNifty and Stock options with 1-2 daily BankNifty calls. In addition, they frequently inform viewers on the channel’s calls, such as whether to exit a trade or book a profit.
Along with providing free information and perspectives on their Telegram channel, they also provide traders who are interested in their commercial services. Check out these incredible SEBI-registered Telegram channels as well if you want to stay up to date on the stock market.
Characteristics
Bank 1-2 dailyNifty calls are free 85% or more accuracy
Transparent P&L reporting on a regular basis
There are premium services and individualized help available.
9. StockPro Online
StockPro is another reliable source for stock market information. It is run by Dr. Seema Jain, a research analyst registered with SEBI. This channel features educational material, real information, and stock market advice.
It is one of the best channels to subscribe to because they publish content on a variety of topics, such as trade calls, YouTube videos, strategies, market trends, chart analysis, and free webinars.
Characteristics
98% of their trading calls are accurate. Offer positional stock updates and the best equity calls. Exclusive morning discussions on various subjects Expertise in trading options and the bank nifty
10. Honest Stock Marketer
A Telegram channel for intraday trading is called Honest Stock Marketer. They offer a variety of trading calls, such as stock options and bank nifty. In addition, they provide advice, regular updates on calls, and timely profit booking.
On this channel, you can also find market analysis and forecasts. In addition to free trading calls, this channel offers premium services including stock and commodity stock advice.
Shree Tech Analysis is the channel for you if you are interested in index and stock options. They offer free calls, including BankNifty call options, with open targets and up to 90% accuracy. In addition to this, they also provide premium services, such as 2-3 intraday tips with individualized help.
If you’re just getting started, you can use Shree Tech’s referral code to register a Demat account and take advantage of their premium service.
Characteristics
Free offerings Minimal investment necessary To access premium services, open a referral Demat account. Telegram customer service
12. INTRADAY Tradex
Another well-liked Telegram channel for intraday stock and options trading is Intraday Tradex. They offer daily market news updates and three to four premium, highly accurate trading calls.
Characteristic
3–4 daily calls for high accuracy trading Periodic market updates Recurringly lucrative clients They give stop loss and take profit price levels together with the entry price.
13. Trade Phoenix
Trade Phoenix is another rising Telegram channel for the stock market in India. If you are into options trading, then this channel is for you. It offers great opportunities for BankNifty trading.
Characteristics
3-4 regular BankNifty calls
Provide updates on a daily basis
In-depth market research provided
The constantly profitable client base
In addition to this, we would also like you to check our latest blog, where we have mentioned some of the top money-making telegram channels in India. Do check them out and get all the inspiration needed to start your own Telegram channel.
14. Nifty 50 & Stocks
Another popular Telegram channel for the Indian stock market is Trade Phoenix. If you enjoy trading options, you should watch this channel. It provides excellent prospects for trading BankNifty.
Characteristics
3–4 standard BankNASDAQ calls Daily updates should be given Thorough market research was conducted The consistently lucrative clientele Additionally, we encourage you to read our most recent blog, in which we list some of the best Telegram channels for making money in India. Please visit them to gain all the inspiration you need to launch your own Telegram channel.
Conclusion
If you have the correct financial guidance and understanding, stock trading can help you earn a sizable sum of money. The Telegram channels listed above might help you learn useful information about the financial market. Always keep in mind to use these Telegram channels to conduct your study. Cheers to trading!
Friends, if you’re seeking for the WhatsApp group links for the stock market, you’ve come to the proper place. We have some WhatsApp group links for Share Market for you today. The best location to put your money is in the stock market, but not everyone is aware of what it is or how to invest there.
On WhatsApp, there are certain groups that are based on the Share Market. These organizations can educate you, and you will become aware of the ideal investment location at the moment. So stop wasting time now. Let’s look at all the WhatsApp group links for Share Market.
The WhatsApp group does not permit racists to join.
Avoid making political or religious jokes since they might produce a lot of drama.
The group name and group profile picture cannot be changed.
The WhatsApp group is open for joining at any time and leaving at any time.
Respect should be reciprocated.
Contact the Admin if you need assistance of any kind.
How to join Share Market Groups?
It’s fairly simple to join a share market organization. To join, click the Join button. Join the group by clicking on any of the links. Once you’ve joined the group, you may start chatting with everyone.
Stock research is a technique for evaluating equities based on aspects including the company’s finances, management, and competitors. Stock analysis aids investors in assessing a stock and determining whether it merits inclusion in their portfolio.
4 steps to research stocks
Before we get started, it’s important to keep in mind that stocks are long-term investments because they are quite risky; you need time to ride out any ups and downs and reap the rewards of long-term gains. For money you won’t need for at least the next five years, investing in equities is the greatest option.
1. Gather your stock research materials
Start by going over the business’s finances. Gathering the following documents, which businesses must submit to the U.S. Securities and Exchange Commission (SEC), is the first step in quantitative research.
An annual report that includes significant financial statements that have undergone an independent audit is known as a Form 10-K. You can look at a company’s balance sheet, income sources, cash management practices, revenues, and expenses here.
Form 10-Q: A quarterly report on business and financial performance.
2. Narrow your focus
There are many figures in these financial reports, making it simple to become overwhelmed. Focus on the following line items to learn about a company’s measurable internal operations:
Revenue:This is the total revenue a business generated throughout the time period. Because it appears first on the revenue statement, it is frequently referred to as the “top line.” Revenue can occasionally be divided into “operating revenue” and “nonoperating revenue.” The company’s operating revenue, which comes from its main line of activity, is the most revealing. Non-operating revenue is frequently generated by one-time company operations, such selling an asset.
Net income:The amount a firm makes overall after operating costs, taxes, and depreciation are removed from revenue is known as the “bottom line” amount since it is presented at the end of the income statement. Revenue is the same as your gross pay, and net income is the amount that is left over after covering your living expenditures and taxes.
Earnings and earnings per share (EPS):Earnings per share is calculated by dividing earnings by the total number of shares that are available for trading. This figure illustrates a company’s profitability on a per-share basis, making comparisons with other businesses simpler. If you see “(ttm)” after earnings per share, that stands for “trailing twelve months.”
Earnings are far from being an ideal financial metric because they do not reveal how effectively or how the company uses its cash. Some businesses use those profits to boost their operations. Others distribute them as dividends to shareholders.
Price-earnings ratio (P/E):The trailing P/E ratio of a corporation is calculated by dividing its current stock price by its earnings per share, which are typically over the last 12 months. The future P/E is calculated by dividing the company price by the expected earnings predicted by Wall Street analysts. This indicator of a stock’s value reveals how much investors are ready to spend to receive $1 in current earnings from the company.
Remember that the P/E ratio is derived from the potentially inaccurate calculation of earnings per share, and that analyst predictions are notoriously short-term oriented. As a result, it is not a valid stand-alone metric.
Return on equity (ROE) and return on assets (ROA):
Return on equity quantifies, in percentage terms, how much profit a business makes off each dollar invested by shareholders. Shareholder equity makes up the equity. Return on assets demonstrates how much profit a corporation makes for every dollar invested in assets. Each is calculated by dividing the annual net income of a corporation by one of those variables. These percentages also provide information about how effectively the business generates profits.
Again, watch out for gotchas. By repurchasing shares to lower the shareholder equity denominator, a business can raise return on equity artificially. The number of assets used to compute return on assets grows as more debt is taken on, such as loans to finance property purchases or to increase inventory.
3. Turn to qualitative stock research
Qualitative stock research offers the technicolor details that give you a more accurate image of a company’s operations and future, whereas quantitative stock research discloses the black-and-white financials of a company’s tale.
The famous quote from Warren Buffett goes, “Buy into a company because you want to own it, not because you want the stock to go up.” This is due to the fact that when you buy stocks, you buy a personal investment in a company.
You can use the following queries to assist you weed out possible business partners:
How does the business generate revenue? When it comes to a retailer whose primary activity is selling clothing, it can be quite clear. Sometimes it’s not, as in the case of a fast-food chain that makes the majority of its money through franchising deals or an electronics company that depends on consumer financing for expansion. Investing in firms that make sense and that you actually understand is a sound strategy that has worked well for Buffett.
Is there a competitive edge for this business? Look for a quality in the company that makes it challenging to duplicate, match, or surpass. This could be, among other things, its reputation, commercial strategy, capacity for innovation, research prowess, ownership of patents, operational competence, or superior distribution capacities. The strength of the competitive advantage increases with the difficulty of competitors breaching the company’s moat.
How effective is the management group? The ability of a company’s leaders to set direction and guide the business determines how successful it will be. Reading the transcripts of business conference calls and annual reports can reveal a lot about management. Do some study on the board of directors of the business, who sit in the boardroom as the shareholders’ representatives. Be aware of boards that are primarily made up of business insiders. You want to see a good mix of independent thinkers who can evaluate management’s activities with objectivity.
What might possibly fail? We’re not discussing events that can have a short-term impact on the stock price of the company, but rather fundamental shifts that have a long-term impact on a company’s capacity for expansion. Use hypothetical “what if” situations to spot potential red flags: A significant patent expires, the CEO’s replacement steers the company in a different path, a strong rival enters the market, or new technology displaces the company’s goods or services.
4. Put your stock research into context
As you can see, there are several measurements and ratios that investors may use to determine a company’s intrinsic worth and evaluate its overall financial health. However, focusing only on a company’s earnings from a single year or the most recent actions made by the management team would only provide you a partial view.
Build an informed narrative about the company and what characteristics make it deserving of a long-term relationship before you purchase any stock. Context is essential for doing it.
Pull back the scope of your investigation and examine previous data to gain a long-term perspective. You can learn more about the company’s ability to overcome obstacles, adapt to changing circumstances, and enhance performance over time by doing this.
Then, by comparing the figures and key ratios to industry averages and other businesses in the same or similar industries, consider how the company fits into the overall picture. On their websites, several brokers provide research resources. Using the educational resources provided by your broker, such as a stock screener, is the simplest way to make these comparisons.
Conclusion
A company’s performance can be compared to that of its competitors in its industry as well as to itself over the course of several years by gathering the right information from the right websites, looking at some key numbers, and asking some crucial questions.
When a financial asset or security may be quickly and easily converted into cash without depreciating in value, this is referred to as having liquidity. Cash alone is the most liquid of all the assets.
An asset may be converted back into cash more quickly and efficiently the more liquid it is. Less liquid assets require more time and could cost more.
Understanding Liquidity
In other words, the degree to which an asset may be swiftly purchased or sold on the market at a price representing its underlying value is referred to as liquidity. Due to its ease and speed of conversion into other assets, cash is regarded as the most liquid asset. Real estate, fine art, and collectibles are examples of tangible goods that are all rather illiquid. Other financial assets fall at various points throughout the liquidity spectrum, from stocks to partnership units.
Cash, for instance, is the resource that can be utilized to buy a $1,000 refrigerator most readily. The likelihood of finding someone willing to exchange them the refrigerator for their collection is slim if they have no cash but a rare book collection worth $1,000. They will have to sell the collection instead, then use the proceeds to pay for the refrigerator.
If the person has months or years to wait before making the purchase, it might be okay, but if the person only had a few days, it might be problematic.Instead of waiting for a buyer who was prepared to pay the full amount, they might have to sell the books at a discount. An illustration of an illiquid asset is rare books.
Market Liquidity
Market liquidity describes how easily assets may be purchased and sold in a market, such as the stock exchange of a nation or the real estate market of a city, at predictable, open prices. In the aforementioned case, the market for refrigerators in exchange for rare books is so unviable that it essentially does not exist.
On the other side, the stock market has a larger level of market liquidity. The price that a buyer offers per share (the bid price) and the price that a seller is ready to take (the ask price) will be very close to one another if an exchange has a significant volume of activity that is not dominated by selling.
Therefore, investors won’t have to forfeit unrealized gains in exchange for a speedy sale. The market is more liquid when the difference between the bid and ask prices narrows; as it widens, the market becomes less liquid. Real estate markets typically have much lower levels of liquidity than stock markets. The size and number of open exchanges on which markets for other assets, such as futures, contracts, currencies, or commodities, can be exchanged frequently affects how liquid those markets are.
Accounting Liquidity
Accounting liquidity evaluates a person’s or a business’s ability to easily satisfy their financial commitments with the liquid assets at their disposal—their capacity to settle debts when they become due.
The rare book collector in the case above has somewhat illiquid assets, so they probably wouldn’t be worth their full $1,000 value in an emergency. Assessing accounting liquidity in terms of investments entails contrasting liquid assets with current liabilities, or debts that are due within a year.
Accounting liquidity is measured by a number of ratios, each of which has a different definition of what constitutes liquid assets. These are used by analysts and investors to find organizations with high liquidity. It is also regarded as a depth measurement.
Measuring Liquidity
Financial analysts assess a company’s capacity to meet short-term obligations with liquid assets. In general, a ratio greater than one is preferred when applying these calculations.
Current Ratio
The easiest and most flexible is the current ratio. It compares current obligations to current assets (those that may theoretically be converted to cash in one year). Its equation would be:
Current Ratio = Current Assets ÷ Current Liabilities
Quick Ratio (Acid-Test Ratio)
The fast ratio, often known as the acid-test ratio, is a little stricter. It does not include inventory or other current assets, which are less liquid than short-term investments, cash and cash equivalents, and accounts receivable.
The formula is:
Quick Ratio = (Cash and Cash Equivalents + Short-Term Investments + Accounts Receivable) ÷ Current Liabilities
Acid-Test Ratio (Variation)
The quick/acid-test ratio can be made a little more forgiving by just deducting inventory from current assets:
Acid-Test Ratio (Variation) = (Current Assets – Inventories – Prepaid Costs) ÷ Current Liabilities
Cash Ratio
Of all the liquidity measurements, the cash ratio requires the highest precision. It defines liquid assets strictly as cash or cash equivalents, excluding accounts receivable, inventory, and other current assets.
The cash ratio evaluates an entity’s potential to remain solvent in the worst-case scenario more accurately than the current ratio or acid-test ratio since even highly lucrative businesses might have financial difficulties if they lack the liquidity to respond to unforeseen circumstances. It is as follows:
Cash Ratio = Cash and Cash Equivalents ÷ Current Liabilities
Liquidity Example
Equities are one of the most liquid asset classes when it comes to investments. But in terms of liquidity, not all stocks are created equal. On stock exchanges, some shares are traded more frequently than others, indicating a larger market. In other words, traders and investors show a higher and more persistent interest in them.
The daily volume of these liquid equities, which can range from millions to hundreds of millions of shares, is typically what allows investors to identify them. It is simpler for investors to purchase or sell a stock when it has a high volume since there are many buyers and sellers in the market, which reduces the impact of price fluctuations.
Low-volume equities, on the other hand, could be more difficult to purchase or sell because there might be fewer market players and consequently less liquidity.
For instance, 69.6 million shares of Amazon.com Inc. (AMZN) traded on exchanges on March 13, 2023. Only 48.1 million shares of Intel Corp. (INTC) were traded in comparison, indicating that it was a slightly less liquid stock. However, Ford Motor Company (F) was the most active and perhaps the most liquid of these three companies on that day with a volume of 118.5 million shares.
Why is liquidity important?
It is challenging to sell or convert assets or securities into cash when markets are not liquid. For instance, you might possess a priceless family heirloom that has a $150,000 appraisal. If there isn’t a market for your item, though (i.e., no buyers), it is useless because nobody will pay anything close to its appraised value—it is extremely illiquid. It might even be necessary to hire an auction house to serve as a broker and find potential buyers, which will take time and cost money.
However, liquid assets can be swiftly and readily sold for their full value at little to no expense.Companies must also maintain a sufficient level of liquid assets to fulfill their immediate liabilities, such as bills and payroll, or else they risk experiencing a liquidity crisis that could force them into bankruptcy.
What are the most liquid assets or securities?
Cash and its equivalents, such as money market accounts, certificates of deposit (CDs), and time deposits, are the most liquid assets. Marketable securities, such the stocks and bonds listed on exchanges, are frequently quite liquid and can be swiftly sold via a broker. Additionally, it is simple to sell gold coins and some valuables for cash.
What are some illiquid assets or securities?
Securities that are traded over the counter (OTC), such as certain complex derivatives, are often quite illiquid. For individuals, a home, a time-share, or a car are all somewhat illiquid in that it may take several weeks to months to find a buyer, and several more weeks to finalize the transaction and receive payment. Moreover, broker fees tend to be quite large (e.g., 5% to 7% on average for a real estate agent).
Why are some stocks more liquid than others?
The equities with the highest daily transaction volume and greatest level of interest from diverse market participants tend to be the most liquid. These equities will also draw more market makers, who keep a more tightly controlled two-sided market.
Stocks that are less liquid have shallower markets and broader bid-ask spreads. These brands frequently have lower market value and volatility, a lower trading volume, and a lower degree of brand recognition. Therefore, a large multinational bank’s stock will typically be more liquid than a small regional bank’s.
The insurance regulator requests SEBI look into whether the book was used to assess the fair market value. CNBC-TV18 reported this.
After looking into the transfer of Max Life’s shares to Axis businesses in March 2021, the IRDAI penalized Max Life Rs 3 crore on October 13, 2022.
According to CNBC-TV18 on August 31, the Insurance Regulatory and Development Authority of India (IRDAI) has written to the Securities and Exchange Board of India (SEBI) requesting that it look into the Axis Bank-Max Life Insurance agreement. A division of Max Financial Services is Max Life Insurance.
To determine whether there were any irregularities in estimating the fair market value of Max Life Insurance shares, the insurance regulator has ordered SEBI to conduct an investigation.
Only IRDAI had previously been looking into share transfers made in March 2021 and had also levied a fine, but now the regulator has also enlisted SEBI, according to CNBC-TV18.
In an August 9 filing, Axis Bank stated that its board had approved increasing the bank’s share in the life insurance from 9.9 percent to 16.22 percent, bringing the total stake held by Axis businesses to 19.02 percent.
In order to purchase 14.25 crore shares at Rs 113.06 each, the bank will inject Rs 1,612 crore into Max Life, representing a premium of Rs 103.06 per share over the face value of Rs 10 per share, it was announced.
According to the filing, the transaction was made to improve the bank’s position in the life insurance industry.
IRDAI repression
Following an investigation on the transfer of shares to Axis businesses in March 2021, the IRDAI fined Max Life Rs 3 crore on October 13, 2022.
According to its findings, Axis Bank sold shares to Max Financial Service Limited (MFSL) and Mitsui Sumitomo International (MFI) for Rs. 166 apiece on March 15 and 16, 2021. Ten or eleven days later, Axis businesses (Axis Capital, Axis Securities, and Axis Bank) purchased the shares from MFSL and MFI for a price ranging between Rs 31.5 and Rs 32.12.
The identical equity share is valued differently depending on whether Axis Bank is the buyer or seller, as the IRDAI order noted.
“The transfer of shares was not done at fair market value determined on a uniform basis, which resulted in Axis Bank, a registered Corporate Agent of the Insurer, and its group companies receiving undue financial gain of significant amounts from such buy/sale of equity shares,” the order stated.
On October 13, 2022, the IRDAI penalized Axis Bank Rs 2 crore for failing to follow its instructions and for obtaining significant unauthorized gains through the sale of these shares.
They give lenders and borrowers a way to meet their urgent financial needs.
Money markets were frequently taken for granted as basic, low-volatility components of the financial system UNTIL issues emerged during the global financial crisis.
Banks, money managers, and retail investors can typically make secure, liquid, short-term investments through money markets, and borrowers including banks, broker-dealers, hedge funds, and non-financial firms can get low-cost capital through them. The word “money market” is an umbrella term that encompasses a variety of market types that differ based on the requirements of lenders and borrowers.
One effect of the financial crisis has been to draw attention to the variations across distinct money market segments, some of which have proven to be fragile while others have shown considerable resilience.
For the short term
These exchanges are referred to as “money markets” because the assets that are purchased and sold have short maturities—ranging from one day to one year—and typically may be converted into cash with ease. Bank accounts, including term certificates of deposit, interbank loans (loans between banks), money market mutual funds, commercial paper, Treasury bills, securities lending and repurchase agreements (repos), and other financial instruments are all included in money markets. According to the Federal Reserve Board’s Flow of Funds Survey, these markets make up a sizable portion of the financial system in the United States, accounting for nearly one-third of all credit.
These money market instruments, many of them securities, differ in how they are traded and are treated under financial regulatory laws as well as in how much a lender relies on the value of underlying collateral, rather than on an assessment of the borrower.
The most familiar money market instruments are bank deposits, which are not considered securities, even though certificates of deposit are sometimes traded like securities. Depositors, who are lending money to the bank, look to the institution’s creditworthiness, as well as to any government programs that insure bank deposits.
Since collateral is not used to secure interbank loans, a lender must solely rely on a borrower’s creditworthiness to determine the likelihood that they will be repaid. The interbank market in England, where the London interbank offered rate (LIBOR), which reflects the average price at which large banks are ready to lend to one another, is the one that receives the most attention. During the crisis, that market did not prove to be a dependable source of funding. Once the credibility of banks was questioned, LIBOR rates jumped significantly in compared to other money market rates. Additionally, lending volume considerably reduced as banks struggled to fund their current assets and showed less enthusiasm in making new loans. Central banks’ emergency lending assisted in making up for this funding source’s contraction.
The integrity of the pricing methodology used to calculate LIBOR has also come under scrutiny in recent regulatory inquiries.
Commercial paper is a promissory note (an unsecured debt) issued by some sizable nonfinancial firms and highly rated institutions. Investors rely exclusively on the trustworthiness of the issuer to repay their savings because the instrument is unsecured (basically just a promise to pay, hence the name). Like a security, commercial paper is issued and traded. However, it is exempt from most securities rules because it is short-term in nature and not bought by individual investors. Here in the United States,For instance, commercial paper is issued in denominations that are judged too big for retail investors (usually $1 million, but occasionally as low as $10,000) and with maturities ranging from 1 to 270 days.
The safest investment
Government-issued securities with maturities of less than a year are known as Treasury bills. The safest investment for short-term savings is U.S. Treasury bills, which are actively bought and traded once they are issued and are sold at a discount from face value. The trading is governed by securities rules and takes place on a deep and liquid market. US Treasury bills can be used to settle transactions as well as serve as a savings instrument. Electronically issued Treasury Bills can be transferred through the payments system much like cash.
The money markets include a significant, although more intricate, section known as repos. Repos provide affordable interest rates for short-term borrowing and lending—typically no more than two weeks and frequently overnight. In exchange for cash, a borrower sells a security it owns with the promise to buy it back from the buyer—effectively a lender—at a later date and for a price that represents the interest paid for borrowing during the time period. The transaction’s central security acts as collateral for the lender.
Repo and other securities loan markets are essential to short-selling, which is when a trader agrees to sell a security they do not own, in addition to making it feasible for secure short-term borrowing and lending in money markets. The short-seller must temporarily borrow or purchase such a securities through a repo transaction. The short seller must once more purchase or borrow the security when it is time to return it to the lender. The short-seller benefits from the deal if the price has declined.
Companies that invest in various money market products, such as commercial paper, certificates of deposit, Treasury bills, and repos, sell securities known as money market mutual funds (MMMFs). In the United States and the European Union, money market mutual funds are governed as investment firms. They provide enterprises, institutional investors, and ordinary investors with a low-risk return on a short-term investment. A typical MMMF makes investments in highly rated, liquid, short-term instruments. The fund is managed to keep the price constant, or, in terms of securities, maintains a consistent net asset value, which is typically $1 per share, despite the fact that the price is neither fixed nor guaranteed. (This contrasts with other mutual funds, whose per share value fluctuates daily and invest in stocks or bonds)
The difference is paid as interest if the underlying MMMF assets’ value increases over $1 per share. A money market fund with a net value of less than $1 per share, or “breaking the buck,” was practically unheard of prior to the financial crisis. The fund’s investment managers utilized their own funds to maintain the price at $1 per share the few times it occurred.
However, losses on commercial paper and later notes issued by Lehman Brothers (the broker-dealer that filed for bankruptcy in September 2008) put money market funds at risk during the financial crisis. The U.S. government took measures to avert a panic that may have led the credit contraction to spread because MMMFs are significant players in other critical money markets. To help MMMFs fend off an investor run, the U.S. Treasury guaranteed the principal and the Federal Reserve established a special lending facility for commercial paper.
Dysfunctional markets
The money market has other segments that are less straightforward. They include certain triparty repo agreements and asset-backed commercial paper (ABCP).
A company that has illiquid (difficult to sell) financial assets like loans, mortgages, or receivables may use ABCP to borrow money at a reduced rate of interest or to get rid of these assets from its balance sheet. It establishes a special purpose business that buys the firm’s illiquid assets and pays for the transaction by issuing ABCP, which, in contrast to standard commercial paper, is “backed” or secured by the underlying assets. If the assets are rated well and the special facility has enough capital and credit lines, this sort of commercial paper can get a high credit rating. The lines of credit account for the difficulties of selling the underlying assets to meet financial needs, and the capital is meant to cover unforeseen losses on the assets.
During the crisis, there were issues in several segments of the ABCP market. Investors can easily evaluate an issuer’s credit condition because standard commercial paper issuers—almost entirely major nonfinancial firms and banks—file quarterly financial statements. The special purpose entity’s structure, its credit improvements, its liquidity backup, and the value of the underlying assets, among other factors, all of which were likely to be less transparent and more complicated than those of the plain commercial paper, all affected the credit risk on ABCP. Between August and November 2008, the ABCP market in the US shrank by 38%.
More than one-third of all outstanding commercial paper is held by the MMMF market, which was impacted by this. The money in MMMFs abruptly shifted away from ABCP and into government and agency assets when investors started to withdraw their money.
For Treasury and agency assets, the triparty repo market turned out to be substantially less dependable than the regular repo market. When a loan is repaid, ownership of the collateral is transferred from the borrower to the lender and back again by one or two clearing institutions, which control the triparty repo market.
The scariest market occurrences you’ll experience are bear markets, which occur when an asset’s value drops 20% from recent highs. However, long-term investors are able to persevere.
Many investors experience panic when they hear the term “bear market”. However, these severe market downturns are inevitable and frequently only last a short while, especially when contrasted to the length of bull markets, during which the market is appreciating in value. Even in bear markets, there are lucrative investing possibilities.
More information on what a bear market entails and precautions you can take to ensure your portfolio endures (and perhaps even flourishes) until the bear turns into a bull are provided below.
What is a Bear Market?
An extended decline in investment prices is what is known as a bear market; typically, a bear market is when a broad market index declines by 20% or more from its most recent high. A bull market, which is defined by gains of 20% or more, is the opposite of a bear market.
While 20% is the cutoff, bear markets frequently plunge much more than that over an extended period of time. A bear market may occasionally see “relief rallies,” but the overall tendency is negative. Pessimism and lack of confidence among investors are traits of bear markets. Investors frequently appear to disregard any positive news during a bear market and continue selling aggressively, driving prices farther lower.
Investors eventually start to discover attractively priced equities and start buying, effectively ending the bear market.
Bear markets are possible for both individual equities and markets as a whole, such as the Dow Jones Industrial Average. Investors’ negative sentiment about a certain stock is unlikely to have an impact on the market as a whole. However, practically all stocks inside a market or index start to decrease when it turns negative, even if they are all individually reporting positive news and increasing earnings.
How long do bear markets last, and what causes them?
Although it doesn’t always happen, a bear market frequently happens just before or after the economy enters a recession.
Investors closely monitor the hiring, wage growth, inflation, and interest rate indicators to determine when the economy is slowing.
Investors anticipate a short-term reduction in business profits when they observe a contracting economy. So, they sell equities, which causes the market to decline. A bear market may portend increased unemployment and difficult economic circumstances.
In general, bear markets last 363 days on average as opposed to 1,742 days for bull markets. According to data gathered by Invesco, they also tend to be statistically less severe, with average losses of 33% compared with bull market average gains of 159%.
1. Make dollar-cost averaging your friend
Let’s say a stock in your portfolio sees its price fall 25%, from $100 per share to $75 per share. It can be tempting to try to buy when you think the stock’s price has fallen if you have money to invest and want to purchase more of this stock.
Unfortunately, you’ll probably be in error. It’s possible that the stock hasn’t fallen 50% or more from its high; instead of bottoming out around $75 per share. Attempting to “time” the market or “pick the bottom” is perilous because of this.
A more conservative course of action is to consistently contribute funds to the market using a technique called dollar-cost averaging. You consistently invest money over time and in about equal amounts when you use dollar-cost averaging.
As a result, your purchase price is smoothed out over time, preventing you from investing all of your money in a company at its peak (but still profiting from market falls).
Bear markets can undoubtedly be frightening, but the stock market has shown over and again that they eventually end.
2. Diversify your holdings
Speaking of purchasing stocks at a discount, increasing your portfolio’s diversity to include a variety of assets is another wise move, down market or not.
During bear markets, all the companies in a specific stock index, like the S&P 500, often decline, but not always by the same percentages. A well-diversified portfolio is essential because of this. The overall losses of your portfolio are reduced if you have a mix of relative winners and losers in your portfolio.
If only you could predict who would win and lose. Investors frequently select assets that give a steadier return during these times since they typically occur before or concurrently with economic recessions. This is true regardless of the state of the economy.
The following investments could be included in your portfolio as part of this “defensive” strategy:
stocks that provide dividends. Many investors still desire dividend payments even when stock values aren’t rising. Investors will therefore be drawn to businesses that offer higher-than-average dividends during downturn markets. (Are dividends of interest? See our list of stocks with large dividends.)
Bonds. Because they frequently move in the opposite direction from stock prices, bonds are also a desirable investment during uncertain times in the stock market. Any portfolio must include bonds, but adding more short-term, high-quality bonds to your holdings may lessen the impact of a down market.
3. Invest in sectors that perform well in recessions
What investments are profitable during a bear market? Consider the products that consumers will always need because those industries typically do well when the market is weak. People still need petrol, groceries, and healthcare even in times of high inflation, therefore commodities like consumer staples and utilities typically fare better in bear markets than other commodities.
Through index funds or exchange-traded funds that follow a market benchmark, you can invest in particular industries. For instance, investing in a consumer staples ETF can expose you to businesses in that sector, which is more stable than others during recessions. Because each fund owns shares in numerous firms, investing in an index fund or ETF offers greater diversification than buying a single stock.
4. Focus on the long-term
All investors are put to the test during bear markets. Even while these times are difficult to endure, history indicates that the market will most likely rebound rather quickly. Additionally, the downturn markets you’ll experience if you’re investing for a long-term objective—like retirement—will be eclipsed by bull markets. You shouldn’t invest money you need for short-term goals, often those you intend to accomplish in fewer than five years, in the stock market.
Even yet, one of the finest things you can do for your portfolio is to resist the urge to sell investments when markets fall.
You can have a robo-advisor or a financial advisor manage your investments for you in both good and bad times if you struggle to keep your hands off them during a bear market.
Bear markets are, in the end, an excellent opportunity to review your goals and objectives and to remind yourself of the reasons you are invested where you are. Stay the course if your asset allocation feels appropriate. If something seems out of place, a down market might present a chance to reset your accounts while paying less capital gains tax than you would in a bull market.
Conclusion
When stock prices drop 20% or more from a recent high, it might be frightening, but investors shouldn’t panic.
The typical bear market lasts less than a year, and investors can lessen its effects by utilizing straightforward strategies like dollar-cost averaging, diversification, investing in areas that are more resilient to recessions, and putting a priority on the long term.
Investment management includes more than just purchasing and selling financial assets and other investments. Creating a short- or long-term strategy for the acquisition and sale of portfolio holdings is a component of management. It may also cover banking, budgeting, and tax-related services and obligations.
The phrase most frequently relates to managing the holdings within a portfolio of investments and trading them to accomplish a certain investment goal. Money management, portfolio management, and wealth management are other terms for investment management.
Advantages and Disadvantages of Investment Management
Managing a company in the investment management sector has its challenges despite the potential for rich profits. The performance of the market has a direct impact on the earnings of investment management companies.
The company’s profits are therefore directly correlated with market valuations. A significant drop in asset values may result in a fall in the company’s revenue, particularly if the price drop is significant relative to the ongoing and constant operating expenses. Additionally, during recessions and weak markets, clients could lose patience, and even above-average fund performance might not be enough to keep a client’s portfolio afloat.
Pros
Expert analysis
Constant diligence
Ability to beat or time the market
Capacity to protect a portfolio during a slump
Cons
Significant costs
Profits vary with the market
issues with robo-advisors and passively managed vehicles
The sector has also faced difficulties from two more sources since the mid-2000s.
The rise of roboadvisors, or online services that offer asset allocation and investment methods that are automated and driven by algorithms.
Exchange-traded funds (ETFs) with portfolios that closely resemble benchmark indices are readily available.
The latter is an example of passive management because it requires fewer human fund managers to make investment decisions. The only human involved in the first challenge is the programmer who created the algorithm. Both are therefore able to charge much cheaper costs than traditional human fund managers. However, other studies indicate that because they don’t have high fees weighing them down, these less expensive options frequently outperform actively managed funds—either outright or in terms of overall performance.
Investment management organizations are under pressure from this dual rivalry, which is why they need to attract skilled, knowledgeable individuals. While some clients examine the success of certain investment managers, others examine the firm’s overall performance. Not only how much money a customer makes in prosperous times, but also how little they lose in difficult times, is a crucial indicator of an investment management firm’s competence.
If these organizations don’t register themselves, there are thousands of dollars to be made off of retail investors.
Using illiquid stock options with big lot sizes is the secret to success.
The Securities and Exchange Board of India (SEBI), the market regulator, has received many justifications for why finfluencers, or financial influencers, do not want to be registered as research analysts (RAs). Among these justifications are the limitations on trading stocks they have recommended and, consequently, live trading.
The market regulator may at any moment request information about a registered RA’s trades. This is done to make sure the analyst isn’t engaging in any trading that is against the law (such purchasing a security before 30 days and after five days after their recommendation, for example), according to a RA filed with SEBI.
What then are these instruments?
Both front-running and a pump-and-dump plan include the use of illiquid or just moderately liquid stock options.Because profits are only realized when the price of the security may be moved, even by a few rupees, they use illiquid options. It is challenging to adjust the price if they are very liquid.
Telegram or any other social media platform is used in the pump-and-dump strategy. A Telegram channel may have up to 10,000+ subscribers with ease. Let’s say an option trades for about Rs 20. The finfluencer or his/her partner may purchase a number of them before placing a call on the channel to purchase them for Rs 21. The finfluencer will then earn Rs 10,000 (10×1,1000xRe 1) from just one subscriber if they sell 10 lots of 1,000 shares each. A day’s profit of Rs 1 lakh can easily be made if 10 of the 10,000 subscribers choose to heed the finfluencer’s recommendations. That is from just one Telegram channel; there are typically at least two or three active ones.
Selling spoiled fruit
The second racket involves handling money. On their social media platforms, many finfluencers promote their rags-to-riches tale in an effort to attract followers for their illicit money-management business.
They use the client’s trading account information to execute trades on the client’s behalf when managing the client’s money.
They purchase an illiquid stock option from the customer’s account and sell it for a price over the market price in order to profit from the client. The client’s account is where the loss was incurred.
The customer is left holding the illiquid option while the influencer claims it was an honest error, and they square off their position by purchasing the option at the reduced market value.
Similar to a pump-and-dump scheme, if a client is sold merely 10 lots with 2,000 lot sizes at a profit of Re 1, the client may not feel the pinch of Rs 20,000 very much. However, the finfluencer can earn Rs 1 lakh per day if they achieve so with just five clients, according to an insider.
Using huge lot sizes of illiquid stock options is the key to the success of both strategies.
Littler fraud
There is also, albeit to a lesser level, a tax evasion scheme. This is only a small portion of the business since it requires a lot of talent, a larger network, and the willingness to accept the greater risks associated with tax fraud against the government. The current tax scam operates as follows.
Consider a scenario in which you earned Rs 50 lakh through trading while finfluencer A lost Rs 50 lakh. Through a loss-making transaction, you can ‘transfer’ your profit to the influencer and evade taxes. As a result, both you and the influencer are in net loss (because the influencer’s initial Rs. 50 lakh loss cancels out the profit you transferred and you have no taxes to pay).
How do I transmit this?
You ask the influencer to sell an option that is very far out of the money at a price that is far more than its market price. You might urge the influencer to sell the option for Rs 25 if it is already selling at Rs 5, for instance. There won’t be any other buyer because it is so much higher than the market price. After purchasing this option, you quickly sell it back to the influencer for, say, Rs 5 less. Overall, the influencer has earned Rs 20 and you have lost the same amount.
250 contracts, each with a 1,000-lot size, would require a transfer of Rs. 50 lakh (250 x 1,000 x Rs. 20).
The influencer then transfers the money back to you via a hawala transaction or a company established up in a tax haven like Dubai. Since there are no restrictions on transferring money between different offices of the same business, the influencer will establish an office in the other country and send money there.
