Investing

The wholesale inflation data comes after the statistics ministry reported on June 12 that headline retail inflation in May fell to a 25-month low of 4.25 percent.

Wholesale prices in India fell further into the deflationary zone in May, according to data issued by the commerce ministry on June 14. Inflation in the Wholesale Price Index (WPI) decreased to -3.48 percent in May, down from -0.92 percent in April, with a positive base effect once again playing a prominent role.

• The current WPI inflation figure of -3.48 percent is the lowest in seven and a half years. The last time wholesale inflation was less than 3% was in November 2015, when it was -3.68 percent.

• The wholesale inflation figures come after the statistics ministry reported on June 12 that headline retail inflation in May fell to a 25-month low of 4.25 percent.

Not only did wholesale prices fall year on year in May, resulting in the sub-zero inflation print, but they were also lower compared to April, with the WPI’s all-commodity index falling 0.9 percent. This is the index’s greatest drop in five months.

• However, for the first time since December 2022, all three major WPI groupings — primary goods, gasoline and power, and manufactured products — saw their indices fall from April.

• The highest loss was in fruits (-4%) and vegetables (-2.6%) among primary articles, whose index was down 1.1 percent month on month.

The manufactured products index, which accounts for approximately two-thirds of the total WPI, fell by 0.4 percent. The highest month-on-month reduction in this category was in edible oils, which fell 3.6 percent.

Input price increases helped push up Consumer Price Index (CPI) inflation last year, and while they have subsequently eased, retail inflation still has some way to go.

While CPI inflation declined to 4.25 percent in May, the Reserve Bank of India (RBI) forecasts it to average 4.6 percent in April-June before rising to 5.2 percent in January-March 2024, as the favourable base impact fades.

• The RBI has held the policy repo rate at 6.5 percent since April, awaiting the full impact of its 250 basis point rate hikes.

• Although inflation has slowed, experts predict that growth will suffer in the next months as well.

As a result, the RBI’s monetary policy committee may be forced to begin decreasing interest rates in early 2024.

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A Demat Account, also known as a Dematerialised Account, allows you to hold shares and securities in an electronic format. Shares are purchased and held in a Demat Account during online trading, making it easier for users to trade. A Demat Account consolidates all of an individual’s investments in stocks, government securities, exchange-traded funds, bonds, and mutual funds.

Demat enabled the digitisation of the Indian stock trading market and compelled SEBI to improve governance. Furthermore, by storing securities in electronic format, the Demat account reduced the risks of storing, theft, damage, and malpractices. NSE first introduced it in 1996. Initially, the account opening process was manual, and investors had to wait several days for it to be activated. A Demat account can now be opened online in 5 minutes. The end-to-end digital process has helped to popularize Demat, which has grown in popularity since the pandemic.

Demat Account Meaning

The term “Demat” refers to the process of converting physical shares and securities into electronic form. Demat Accounts are required to hold shares electronically rather than on paper. Demat Accounts safeguard the shares, reducing the risk of share loss or forgery. It is a simple way to trade securities quickly. A Demat account and a trading account are required to trade stocks on the stock exchange.

What is Dematerialisation (Demat)?

The process of converting physical share certificates into electronic form, which is much easier to maintain and accessible from anywhere in the world, is known as Dematerialisation. To trade online, an investor must open a Demat account with a Depository Participant (DP). The goal of dematerialisation is to remove the need for investors to hold physical share certificates while also allowing for seamless tracking and monitoring of holdings.

Previously, the process of issuing share certificates was time-consuming and cumbersome, which Demat has helped to transform by speeding up the entire process and storing security certificates in digital format. Once your Demat account has been activated, you can convert paper certificates to digital format by submitting all of your physical securities along with a Dematerialisation Request Form (DRF). Remember to deface each physical certificate with the words ‘Surrendered for Dematerialisation’. When you surrender your share certificates, you will be given an acknowledgement slip.

Important of Demat Account

A Demat account is a convenient and secure way to hold shares and securities. It prevents physical certificate theft, forgery, loss, and damage. You can transfer securities immediately with a Demat account. The shares are digitally transferred to your account once the trade is approved. Furthermore, in the event of events such as stock bonuses, mergers, and so on, shares are automatically credited to your account. By logging into the website, you can access your Demat account information regarding these activities. You can trade on the go with your smartphone or desktop computer. As a result, you do not need to go to the stock exchange to transact. You also save money on transaction costs because there is no stamp duty involved in the transfer of shares. These features and benefits of a Demat account encourage investors to trade more frequently, increasing the potential for lucrative returns.

Having a demat account has made it easier to manage stocks. The Indian exchanges now adhere to the T+2 day settlement cycle made possible by the Demat account. When you buy shares after the settlement cycle, you pay the seller on the second business day, and your Demat account is automatically credited with the purchased securities. Demat accounts have simplified and streamlined the process of trading securities.

Benefits of Demat Account

• Shares are transferred smoothly and quickly.
• Allows for the digitally secured storage of securities.
• Security certificates are no longer stolen, forgeried, lost, or damaged.
• Simple trading activity tracking
• Access at all times
• Allows for the addition of beneficiaries
• Automatic crediting of bonus stocks, rights issues, and stock splits

How does a Demat Account work?

Trading through a Demat account is similar to trading in person, except that a Demat account is electronic. You start trading by entering an order into your online trading account. Both trading and Demat accounts must be linked for this purpose. When an order is placed, the exchange will process it. Before final processing of the order, the demat account details the market price of shares and the availability of shares is verified. Following the completion of the processing, the shares are reflected in your statement of holdings. When a shareholder wishes to sell shares, a delivery instruction note detailing the stock must be provided. The account is then debited for the shares, and the cash value is credited to the trading account.

According to the Depository Act of 1996, having a Demat account is required. In order to facilitate this, the National Securities Depository Limited (NSDL) was established in 1996. Three years later, the Central Depository Services Limited (CDSL) became the second such institution. The two agencies work together to keep track of all electronic securities held by investors. They provide Demat account opening services through a number of depository participants, including Angel One. SEBI has registered both agencies and their partner brokers.

The opening of a Demat account involves three parties: your bank, the depository participant, and the depository. Tagging your bank account with your Demat account is essential for smooth trading. When you link your account details, the money is debited directly from your bank account when you buy shares, and the proceeds are automatically credited when you sell.

A non-banking financial institution, a bank, or a stockbroker can all be depository participants. To open a Demat account, you would need to contact a DP. The depository is obviously the third party. They manage your Demat account on your behalf.

Types of Demat Account

• Regular Demat account:- Regular Demat accounts are for resident Indian investors who want to trade in shares alone and require security storage. When you sell stocks, your Demat account is debited, and when you buy, your account is credited. Because F&O contracts do not require storage, you do not require a Demat account.
• Basic Services Demat Account:- The SEBI has introduced a new type of Demat account. If the account balance is less than Rs 50,000, no maintenance changes are made. The difference between Rs 50,000 and Rs 2 lakh is Rs 100. The new account type is aimed at new investors who have yet to open a Demat account.
• Repatriable Demat Account:- Non-resident Indian investors open a repatriable account in order to transfer their earnings from the Indian market to another country. To receive payments from a repatriable account, you must close your regular Demat account in India and open a non-resident external account.
• Non-repatriable account:- This is a type of Repatriable Account that is also used by Non-Resident Indians. This account, however, cannot be used to transfer funds abroad, and it requires an associated NRO bank account to function properly.

How to Open Demat Account?

Step 1: Selection of DP
Step 2: Fill out the Dematerialization Request Form
Step 3: Submission of necessary documents for verification 
Step 4: Signing of agreement between an investor and the DP
Step 5: Verification of Documents
Step 6: Creation of the account

Benefits of Demat Account

• No Stamp duty on transfer of securities.
• Immediate and fast transfer of securities.
• Elimination of ‘Bad Deliveries’.
• Elimination of risk by loss, theft, mutilation etc.
• Faster settlement and disbursement of Corporate benefits like Bonus, Rights, Dividends etc.
• Elimination of mismatch in Bank Accounts and Address.
• Convenient Nomination facilities.
• Convenient Transmission formalities in case of death of a holder.
• No TDS deduction for demat securities.
• Demat account information and statement regularly sent to the customer.

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A stock market index is a statistical tool for tracking changes in the financial markets. The indices are performance indicators that show how well a particular market segment or the market as a whole is performing.

Equities from similar companies or those that meet a preset set of criteria are chosen to create a stock market index. These shares are already traded and listed on the exchange. Market capitalization, industry, and other factors can all be used to create share market indices.Each stock market index keeps tabs on the performance and price changes of the stocks that make up the index. This merely indicates that the performance of the stocks that make up any stock market index is directly correlated with the index’s performance. Simply put, as the prices of the stocks in an index grow, so does the index overall.

An investment’s performance for a certain group of stocks, bonds, or other investments is tracked by a market index. As with the S&P 500, Dow Jones Industrial Average (DJIA), or Nasdaq, these investments are sometimes organised around a specific industry, such as tech companies, or even the stock market as a whole.

When it comes to market indices, there is no standard size. The CRSP index has more than 3,700 stocks, whereas the DJIA only has 30 stocks. What matters is that each study has a sufficient sample size to accurately reflect the general trends in the economic sector they are intended to represent.

KEY TAKEAWAYS

• An index uses a standardised metric and methodology to calculate the price performance of a group of securities.
• In the financial markets, indices are frequently used as benchmarks to compare the performance of investments to.
• The S&P 500 and the Dow Jones Industrial Average are two of the most significant indices on American stock exchanges.
• A common and affordable method for duplicating the results of well-known indices like the S&P 500 Index or Dow Jones Industrial Average is passive index investing.
• Understanding a portfolio’s success depends on comparing it to the proper index while developing your investing strategy.

How Stock Market Index Are Constructed?

When choosing which businesses or other investments to include, each stock market index uses its own unique proprietary algorithm.

Only firms that rank highly in terms of market capitalization, or the sum total of the value of all of their outstanding shares, may be included in indices that track the performance of large segments of the market. Alternatively, they might be chosen by a panel of industry professionals or just sum up all the shares that are traded on a certain stock market.

After choosing which companies to include, an index manager must choose the index weighting, which determines how those companies are represented in the index. Any company included in an index may have an identical impact on index performance regardless of weighting or may have a varying impact dependent on market capitalization or share value.

The following are the top three index weighting models:

• Market-Cap Weighted: An index that is market cap weighted favours stocks with larger market caps. Large corporations have a greater influence on the performance of the index under this structure.
• Equal Weighted: In an equal-weighted index, each component is given the same weight by the index. This means that regardless of how big or small a firm is, its performance has an equal impact on the index.
• Price Weighted: An index that is weighted according to the price at which each company’s shares are trading. Regardless of how big or little the companies are, those with higher share values have more influence in these indices.

What are the uses of Stock Market index?

Following stock market indexes can be beneficial for a number of reasons.

• You can get a rough idea of how the stock market is doing by tracking the most popular stock market indices.
• You can compare a certain market segment’s performance to the performance of the market as a whole by monitoring less popular indexes.
• Investing in index funds that follow the stock market indices you’re most interested in is a cost-effective approach to generate steady returns over time if you don’t want to invest in individual stocks but instead just want to mirror the performance of the overall market.

Stock market indices make it simpler to monitor the market’s performance without having to track each stock’s ups and downs separately. They also create straightforward investing possibilities that even beginner investors can take advantage of to benefit from the stock market’s long-term performance.

What are the Major Stock Market Index?

• The S&P 500 Index: The S&P 500, one of the most well-known indices, measures the performance of 500 of the best U.S. corporations as chosen by a committee at S&P Dow Jones Indices. An index that is weighted by market capitalisation is the S&P 500.
• The Dow Jones Industrial Average: The DJIA has a somewhat limited scope because it only monitors the performance of 30 U.S. corporations that S&P Dow Jones Indices has chosen. The equities that make up the DJIA are blue chip stocks, which are common across a variety of industries, including technology and healthcare. This implies that they have a track record of excellent financial performance. One of the few price-weighted market indices is the DJIA.
• The Nasdaq 100: The performance of 100 of the biggest and busiest stocks listed on the Nasdaq Stock Exchange is tracked by the Nasdaq 100. Companies listed on the Nasdaq can be found in a wide range of sectors, although they tend to focus on technology and exclude anyone from the financial industry. Market-cap weighting is used in the Nasdaq 100.
• The NYSE Composite Index: The performance of all equities traded on the New York Stock Exchange (NYSE) is tracked by the NYSE Composite Index, a thorough index. Modified market capitalization weighting is used for the index.
• The Russell 2000 Index: The Russell 2000 tracks the performance of 2,000 of the smallest publicly traded domestic companies, unlike other stock market indices that concentrate on the biggest businesses in a given sector. A market capitalization-weighted index, the Russell 2000 is calculated.
• The Wilshire 5000 Total Market Index: The performance of the whole U.S. stock market is monitored by the Wilshire 5000 Total Market. The weighting of the index is determined by market capitalization.

How to Invest in Stock Market Index?

Funds based on major indexes are regarded as a great method to invest fast, easily, and affordably because they track the performance of a variety of businesses and investments. Many investment gurus, including Warren Buffett, advocate index funds and exchange-traded funds (ETFs), which give access to a pre-made, diversified portfolio of stocks and bonds.

The beautiful thing about index funds and ETFs is that any amount of money can be invested in them at almost any brokerage.

If you’re unsure of which investing options are ideal for you, you might want to speak with a financial planner. They can assist you in developing a custom strategy based on your objectives. Alternatively, look at our list of the top index funds.

Investors find index funds especially useful for many reasons:

• Reduce your investment research to a minimum by trusting the portfolio manager of an index fund to simply replicate the performance of the underlying index over time.
• Reduce investment risk: By diversifying your portfolio, you reduce your risk of suffering significant losses in the event that one or more index businesses suffer a setback.
• There are many options: You can purchase both broad index funds, like one that tracks the S&P 500, and more specialised index funds that invest in certain industries or trends.
• Low fees: Compared to alternatives like actively managed funds, index funds are typically far less expensive. This is because an index fund management only needs to purchase the stocks or other investments included in an index; you are not required to pay them to make their own stock selections.
• Tax-efficient: When compared to many other types of investments, index funds are quite tax-efficient. Since index funds often don’t need to buy and sell as frequently as actively managed funds, they don’t produce capital gains that could increase your tax bill.
• Build your portfolio gradually by using index funds, which allow you to invest month after month without worrying about short-term fluctuations because you know you’ll benefit from the market’s long-term development.

What are the Different Types of Market Index?

a) Sectoral Index: Strong indicators that evaluate businesses in a certain sector are available on both the BSE and the NSE. Known to be reliable predictors of changes in the pharmaceutical industry are indices like the S&P BSE Healthcare and NSE Pharma. The S&P BSE PSU and Nifty PSU Bank Indices, which are indices of all listed public sector banks, are another noteworthy example. Although this is a major factor generally, neither exchange is mandated to have comparable indices for all industries.

b) Benchmark Index: The top 50 performing stocks are compiled into the Nifty 50 index, which represents the NSE, and the top 30 performing stocks are compiled into the BSE Sensex index, which represents the BSE. Since they use the highest standards to regulate the companies they choose, this set of stocks is referred to as a benchmark index. They are therefore regarded as the most trustworthy resource of knowledge regarding how markets function generally.

c) Market Cap Index: Only a small number of indices choose companies based on their market capitalisation. The stock exchange market value of any publicly listed firm is referred to as market capitalization. Companies that fall under the Securities Exchange Board of India’s (SEBI) definition of “lower market capitalization” are included in indices like the S&P BSE and NSE small cap 50.

d) Other Kinds of Indices: The S&P BSE 500, NSE 100, and S&P BSE 100 are a few additional indices that are significantly bigger and have more stocks listed on them. If you don’t like taking risks, Sensex stocks might not be the best choice for you. Investment portfolios are not made to meet every need. Investors must therefore maintain their concentration and place their money where they feel secure.

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Despite its high valuation, brokerages believe Trent has additional upside potential since its industry-leading growth and outstanding financial performance are likely to support high multiples.

Trent’s share price rose 5% in early trade on June 13 to a 52-week high of Rs 1,675, a day after the Tata group firm announced an aggressive expansion strategy at its annual general meeting, which brokerages applauded.

Other highlights from the AGM included a forecast of 30 new Westside stores, 10 Samoh stores in FY24, and a Rs 800 crore gross capital investment estimate for the current fiscal year. The company is also planning an international growth.

• Brokerages praised the company’s expansion plans as well, with Nuvama Institutional Equities and Motilal Oswal Financial Services issuing “buy” recommendations on the stock.

• Nuvama also increased its EBITDA (earnings before interest, taxes, depreciation, and amortisation) forecasts for Trent by 10%/140% to account for larger store openings.

• While the company is still adjusting to Zudio’s franchise model, its growing share is improving the returns profile, making the stock a top option for Nuvama.

Even while on an aggressive expansion spree beginning in FY23, the company was able to maintain its financials thanks to Zudio’s growing profits. Motilal MOFSL anticipates Trent to maintain its traditionally strong footprint growth through its expansion ambitions.

Despite Trent’s wealthy valuations — it trades at a P/E of 54.8x on an FY25E basis — Motilal Oswal feels the company’s excellent growth potential and historically robust performance justifies its higher multiples.

According to ICICI Securities, the company’s industry-leading performance and sustained revenue growth would underpin its premium valuations.

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Savings and investments are channeled through capital markets between suppliers and those in need. Banks and investors are examples of suppliers because they have capital to lend or invest. Businesses, governments, and individuals are all looking for capital in this market. Primary and secondary markets comprise capital markets. The stock market and the bond market are the two most common capital markets. They aim to improve transactional efficiencies by bringing suppliers and those seeking capital together and providing a venue for them to exchange securities.

KEY TAKEAWAYS

• Capital markets are exchanges of funds between suppliers and those seeking capital for their own use.
• Capital market suppliers are typically banks and investors, while those seeking capital are businesses, governments, and individuals.
• Capital markets are used to sell various financial instruments such as stocks and bonds.
• These markets are classified as primary and secondary markets.
• The stock and bond markets are the most well-known capital markets.

Structure of Capital Market in India

Market

Two type of market :-

• Primary market :- It is the market for new issues, in which companies issue stock for the first time through an Initial Public Offering (IPO). When the IPO is successful, the company’s shares are listed on the stock exchange. Money is raised in the primary market through private placements, rights issues, and prospectuses. The funds are being raised to help the company grow and expand.
• Secondary market :- It is the market for new issues, in which companies first issue stock through an Initial Public Offering (IPO). The company’s shares are listed on the stock exchange if the IPO is successful. Private placements, rights issues, and prospectuses are used to raise funds in the primary market. The funds are being raised to assist the company in growing and expanding.

Instruments

The market consists majorly of five types of instruments:

• Stocks: Stocks represent a company’s ownership. Each share contributes to the company’s ownership. Shares are traded on the stock exchange, and their value is determined by market demand and supply. The shareholder is the person who owns stock in a company. Dividends are paid to shareholders. In the case of equity shares, they also have voting rights and can vote on important company decisions at the annual general meeting. They receive a share of the assets after the liabilities are paid off during liquidation.
• Bonds: Bonds are stock exchange-traded debt securities. Companies and firms issue bonds to raise funds for the company’s growth and expansion. Because bonds are debt instruments, bondholders receive interest. At the end of the maturity period, the company repays the principal plus interest.
• Exchange-Traded Funds: Exchange-traded funds are a pool of investors’ money that is used to buy a variety of capital market instruments, such as stocks, debt securities like bonds, and derivatives.
• Derivatives: Derivatives are financial instruments whose values are derived from the underlying assets. Currency, bonds, and stocks are examples of such assets.
• Currency: Currency is a financial instrument in foreign markets. Currency agreements are classified into three types: spot, outright forwards, and currency swaps.

Intermediaries

The following are the intermediaries: 

Financial intermediaries are companies that help with money transfers. They act as a bridge between surplus and deficit parties. As an example:

• Brokers: A broker assists in buying and selling shares for a commission.
• Stock Exchanges: For example, the National Stock Exchange (NSE), the Bombay Stock Exchange (BSE), and so on.
• Regulator: The capital markets in India are governed by the Securities Exchange Board of India (SEBI).

Functions of a Capital Market 

A capital market is a marketplace for long-term financial assets. It is critical in mobilizing resources and allocating them to appropriate channels. As a result, the capital market aids a country’s economic development.

The following are the functions:

• It transfers cash and other forms of savings from parties to financial markets. It bridges the gap between those who have capital and those who need it.
• Greater risks can result in greater profits for investors.
• Capital markets also help to stabilize stock prices while also facilitating capital mobilization. Stock exchange instruments, for example, are liquid for participants.
• As a result, the availability of funds is an ongoing process. Platforms such as the National Stock Exchange and the Bombay Stock Exchange aid in this endeavor. It reduces the cost of information and transactions.
• Brokers and traders, for example, facilitate the transfer of capital and shares between two investors. This helps them run their business.

Features of a Capital Market

The following are the features of capital markets:

• Safety: The capital markets are regulated by the government. They operate according to a set of rules. As a result, investors regard it as a secure trading environment.
• Channelizes savings: Capital markets serve as a conduit for savers and investors. They channel savings from savers to industry players, thereby promoting economic growth.
• Long term investment: Capital markets serve as a foundation for long-term investments. Any investor interested in making long-term investments can do so through capital markets.
• Wealth Creation: The capital market allows investors with excess funds to invest in capital market instruments such as stocks and bonds and create wealth for themselves through the power of compounding.
• Helps intermediaries: The capital market transfers savings from savers to borrowers through the use of intermediaries such as stock exchanges, brokers, banks, and so on. In this way, the capital market assists intermediaries in conducting business and earning income.

How does it work?

For example, when you start a new business, it takes a few years to generate consistent revenue. Short-term money market funds such as commercial papers, bills, and treasuries cannot be used to manage business expenses.

As a result, in a capital market, an individual or organization with excess funds agrees to invest in a business for the mutual benefit of both parties in the long run. To raise funds, securities are issued in the primary market. After conducting research on the company, interested parties purchase those shares through the IPO process. The first shares are then traded on the secondary market. This process is made possible by intermediaries.

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On Tuesday, June 13, MRF became the first Indian stock to reach the rupee one lakh per share barrier. The stock achieved an all-time high of Rs.8261562.89 during morning session on the BSE, opening at 99,500 against the previous close of 98,939.70.

In the past year, the stock has seen significant advances. In comparison to the benchmark Sensex, which saw a gain of 19%, it has increased by 45% in the past year. On June 17, 2022, MRF stock reached a 52-week low of 65,900.05 on the BSE. The stock has increased 50% since that point as of the previous session’s close.The company’s good March quarter results and increased profitability expectations as a result of the decline in raw material prices may be responsible for the recent increase in the stock price.

For the fourth quarter that ended in March 2023, the company’s consolidated profit after tax (PAT) was Rs. 25825.00 crore, an increase of 86 percent year over year (YoY) over the net profit of 168.53 crore realised in the same quarter of FY22. Its consolidated operating revenue for the fourth quarter of FY23 was Rs. 481172.20 crore, an increase of 10.12% YoY from the fourth quarter of FY22’s Rs.436948.54 crore.

Its net expenses in the fourth quarter of FY23 were Rs. 445635.13 compared to Rs. 36706307.62 in the fourth quarter of FY22. In the quarter under review, MRF’s EPS increased to 803.26 from the Rs 389.55 recorded in the same quarter last year.

Analysts noted that MRF’s income stream is diversified throughout the categories and its balance sheet is robust, making it less susceptible to a slowdown in a specific segment. So, someone with ample funds may think about purchasing the stock in the long run. The stock currently appears to have some momentum left for the near future.

All About MRF Share Price (Madras Rubber Factory)

The current value of the anticipated stream of future dividend payments is represented by the company’s share price. Only this dividend stream influences the share price in an efficient market.

It’s interesting that MRF’s share price is so high in India. The company’s strong brand reputation is the primary explanation behind this. It is regarded as one of India’s top tyre manufacturers.Over the years, MRF has constantly kept up its performance.

It has increased its market share and implemented a number of strategies to grow its company internationally. Additionally, the business has been successful in lowering expenses and raising productivity, both of which have boosted sales.

MRF Share is incredibly expensive in India, and the company has a net worth of Rs. 13178.86 cr. This is due to the fact that the business is a domestic one that sells goods in India. It requires a large sum of money in order to supply goods to the Indian market. To spread the word about its products, the business invests a lot of money in advertising.

Because consumers continue to be interested in purchasing MRF’s goods, the price of its shares is still high. The price of MRF shares also stays high due to the continued high demand for these goods.

Who is the CEO of MRF?

Founder	K. M. Mammen Mappillai
Headquarters	Chennai, Tamil Nadu , India
Area served	Worldwide
Key people	K.M.Mammen (Chairman), Rahul Mammen Mappillai (MD)

Why is the Market Price of MRF so high in India?

Reason 1:

• The fact that MRF is a well-known firm in India and has a strong reputation there may be the first factor contributing to the high pricing. People may believe that because the company has been around for more than 50 years and has a solid reputation there, it will never go out of business. People are aware that this business will offer better products than any other and that its customer service will likewise be superior.
• People in India trust MRF since it is a well-known brand and they are aware of the high calibre of its products, therefore they do not need to worry about the product’s calibre before purchasing it.
• MRF is a prime illustration of how many small-scale industries may grow into thriving ones through dedication, perseverance, integrity, and innovation.

Reason 2:

• The second reason for such a high price is that when the government changes policy, there is a possibility that all stocks could be impacted because there is a possibility that the government may take actions that negatively impact the stock market, which could result in a sizable loss in share market capital and cost.
• The capacity of the organisation to produce earnings and cash flow, as well as its strategies for using this cash flow to raise shareholder value, provide the answer. The business operates with one of India’s most effective business models and consistently achieves high free cash flow (FCF) margins. The corporation also has a sizable net cash position. By generating value for shareholders through significant dividend payments or share buybacks, it can quickly raise shareholder value.

Financial Fundamentals of MRF share price 

MRF routinely generates strong returns on capital employed (ROCE) thanks to its low-cost operating style. Its ROCE has been above 30% for a number of years and is anticipated to stay there for the foreseeable future. This enables it to produce high FCF margins. The FCF margin for MRF has routinely exceeded 20%.

The discounted value of the dividends that stockholders can anticipate receiving drives the stock price. Future dividend payments will increase as the company grows. Additionally, a company’s market share will increase with size. Both of these variables raise the cost.

Compared to other Indian companies, MRF’s operations are so large that it is simpler to increase revenues by simply opening more outlets. The highest price-earnings ratio among stocks listed on Indian stock markets is MRF’s.

The cause is attributed to the company’s sustained high growth rate and stable net solid profit margins and return on equity ratios. This indicates that investors have been prepared to pay more to buy into this growth narrative.

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1.Rs 400 Coffee

Starbucks, the well-known global coffee chain, has become a status symbol in India. Even though prices are much higher than in the United States, many Indians are willing to pay more for a cup of coffee that they believe makes them appear cool. While the reasons for the higher prices are complex, one thing is certain: Starbucks has become a brand with which many people in India want to be associated.

Pushkar Singh, a TREMIS professional who specializes in startup advisory and investment, recently shared a detailed explanation of Startbugs overpricing on Linkedin. Singh claims that Starbucks coffee is more expensive in India than other global brands. He uses The Economist’s Big Mac Index, which measures purchasing power parity, to show that the Indian rupee is 52% undervalued against the US dollar based on the price of a Big Mac burger, which serves as a proxy for a basket of goods and services. As a result, a reasonable price for a Starbucks latte in India, which costs $3.26 in the United States, should be around Rs126. However, it is actually priced at Rs292!

According to some sources, Starbucks uses a pricing strategy that takes into account both the cost of production and the desired profit margin. For example, if the cost of producing a cup of coffee is $0.50 and the desired profit margin is 20%, Starbucks would set the price at $0.60 per cup.

The high price of Starbucks coffee in India, on the other hand, can be attributed to a variety of factors, including the cost of doing business in the country, import duties, and the fact that Starbucks is regarded as a luxury brand in India.

2.Bottled Water

That is correct. Many people pay exorbitant prices for bottled water without realizing how inflated the price is. So, let’s look at the costs of bottled water versus regular tap water and see where we can save some money.

Although service fees, state taxes, and other fees may vary, 3785.41 of tap water should cost around Rs905.05 You could fill approximately 7,570 bottles of water at 0.499 fluid ounces each with that amount of water, each bottle costing less than a penny. It’s exactly Rs0.12

Is the water starting to lose its flavor?

This doesn’t mean you should start drinking bad-tasting tap water just to save money. Fortunately, there are numerous ways to obtain sweet-tasting water without breaking the bank.

3.Lottery Ticket

Don’t play the lottery if you truly want to strike it rich. This is a surefire way to spend money quickly — and rich habits don’t include a weekly trip to the convenience store lotto line. According to the World Lottery Association’s 2017 Global Compendium, a total of $293.4 billion was earned by selling lottery tickets worldwide that year. The remaining 29% was used for social welfare programs, while 71% was spent on prize money and costs.

Lotteries are legal in many countries worldwide. However, lotteries are illegal in India. Online lotteries are included. Most Indian states allow people to purchase lottery tickets. Some states, however, outright prohibit the sale of lottery tickets.

In India, there are strict laws prohibiting the operation of lottery schemes. For example, anyone found guilty of running a lottery scheme under Section 419A of the Indian Penal Code faces up to ten years in prison. Online lotteries, on the other hand, are permitted. Mega Millions, Powerball, Lotto, Euro millions, Lucky Dip, and other similar games are available.

The government earns a lot of money from lottery sales through taxation. According to estimates, the government earns about 1 INR billion per month from lottery ticket sales.

India is one of the world’s largest markets for lottery tickets. Indian lotteries are played by over 3.5 billion people. This figure is expected to rise to 4.2 billion by 2023.

4.Eating out daily

Eating out on a regular basis, especially fast food, is not the healthiest habit. It’s simply impossible to resist! This is due to the convenience and familiarity associated with fast food restaurants and fast food chains. We just want to relax at home after a long day at work and not waste time cooking dinner. With a few taps on an app, ordering a box of pizza or a bowl of ramen has never been easier!

Despite the great deals offered by fast food restaurants, eating out is more expensive than cooking your own meals. A five-dollar meal may not appear to be costly, but the costs add up. If you eat out every day, you can spend between S$35 and S$100 in a week. Plan your meals ahead of time and prepare on-the-go snacks (such as sliced apples or fruit-filled yogurts) to save money.

5.Paid Phone app

For almost as long as smartphones have existed, there have been apps that require payment or subscription. We were hesitant to spend large sums of money on apps in the beginning, but that has changed dramatically in recent years, particularly during the pandemic. According to reports, $133 billion will be spent on apps by all smartphone users in 2021, a significant increase from the previous year.

A new SensorTower report sheds some light on how much money users spend on in-app purchases, premium apps, and subscriptions. By the end of the year, Google Play users will have spent approximately $47.9 billion on app purchases through 2021, up from $38.8 billion in 2020. This represents a 23.5% increase year on year.

On the Apple side, the App Store earned $85.1 billion in 2021, up from $72.3 billion in 2020. Growth is statistically lower, at 17.7% — still an improvement, but not as large as Google’s.

Google One is the most profitable app on Google Play — it turns out that 15GB of free Drive storage is insufficient for many people. Piccoma (a Japanese manga subscription service) and Disney+ are close behind.

We haven’t yet discussed games, which, predictably, account for the majority of spending. Users spent $37.3 billion on games on Google Play, accounting for 77.87% of all app purchases. Coin Master, Garena Free Fire, and Genshin Impact are among the top-grossing games on the platform.

6.Cigarettes or Drugs

Smoking increases your chances of developing serious health issues such as stroke, heart disease, emphysema, and cancer. Cigarette smoking, according to the Centers for Disease Control and Prevention, harms nearly every organ in the body. Take care of your health by reducing or quitting smoking.

Let’s start with the average cigarette price. In Singapore last year, the average retail price for a 20-stick pack of cigarettes was S$13.08. A pack-a-day habit will cost you approximately S$4774.02 per year. Think about how much money you can save or invest in a year! When asked how many Indian cigarettes they smoked per day, 38% of Indian respondents said “1 to 5 cigarettes.” In 2022, 1,402 consumers participated in an online survey.

Quitting smoking eliminates the financial and health costs. It is, however, easier said than done. There are several methods for quitting smoking, including cold turkey and cognitive behavioral therapy. Stopping cold turkey means stopping abruptly. According to WebMD, approximately 90% of smokers who attempt to quit use this method. Unfortunately, the majority of them fail. Using this method may cause your body to experience nicotine withdrawal symptoms. Let’s look at the other method. Cognitive Behavioral Therapy (CBT) employs the power of your thoughts, feelings, and mental processing to help you quit smoking. People who are open to counselling and psychotherapy benefit the most from this.

7.Credit card fees

A credit card is similar to eating ice cream from a tub: you may feel guilty for overindulging afterwards, but it’s just too convenient. Sure, it’s simple to swipe the plastic — but you won’t find wealthy people amassing large amounts of credit card interest. They are well aware that it is a waste of money. To avoid interest, only buy what you know you can pay for when your bill arrives. Transfer or consolidate your debt to a credit card with a zero percent introductory APR if you have a balance. Just make certain that you pay off your balance before the promotional period expires.

8.Unnecessary Uber

Ride-hailing apps are luring riders away from public transportation and increasing traffic congestion in many cities. But this does not have to be the case.
Ridership on public transportation has been declining in the United States over the last half-decade. The number of vehicle miles traveled in cars is increasing, and traffic congestion in many US cities is worsening. Simultaneously, the century-old taxi industry is in trouble, with many taxi companies going bankrupt.

Are ride-hailing services like Lyft and Uber to blame? What effect have they had, and what should be done?

While ride-hailing threatens public transportation, it is also critical to its future success – but only if smart policies and price signals are implemented. We have been studying transportation trends for decades as researchers working at the intersection of energy, the environment, and public policy, and we have seen remarkably little innovation. We are now on the verge of major changes. We see ride-hailing through the lens of Daniel Sperling’s new book, Three Revolutions: Navigating the Future of Automated, Shared, and Electric Vehicles.

9.Unused subscription 

According to a survey, 42% of consumers are still paying for a subscription they no longer use. Many of these occur as a result of being enticed by a free trial for an online streaming service or a monthly subscription service for clothing or personal items, and then failing to cancel it when the trial period expires. If you have to enter a credit or bank card to get the free trial, keep in mind that if you do not cancel, you will be charged.

Most subscription services have an automatic renewal if you agree to a contract for a set period of time.

“It’s always a good idea to check your bank statements or credit card statements to make sure you’re not getting charged for subscriptions that you don’t want anymore that you don’t use anymore because then you’re just throwing money away,” BBB of Eastern North Carolina’s Meredith Radford said.

You should also be aware that scammers frequently impersonate online subscription services such as Netflix or Spotify, sending you emails or texts claiming your password has been compromised and requesting you to click on a link to verify your account. Never, ever do that. To determine whether you need to take action, always go directly to the company’s website and log in to your account.

10.Not searching for Discount

Some people are not searching for discount and paid sometime over the price. Here are benefits of discount

As previously stated, discounts can benefit both customers and businesses. However, it’s critical to avoid overusing discounts, especially when it comes to businesses. Businesses that offer back-to-back discounts are always taking a risk.

You should be aware that some customers may become accustomed to paying lower prices for items in your store. This is why using discounts on a regular basis is not a good idea. In other words, you should avoid offering discounts too frequently or too frequently. This is especially true if you only offer a few products or a single service. When you do this, these discounts can have an impact on your overall sales, so it’s critical to consider why discounts are necessary.

However, discounts have several advantages, including attracting new customers to purchase your products or services. As a result, offering discounts makes sense if you want to attract and retain new customers. Remember that new customers can bring new opportunities for selling your items, which can help your bottom line in the long run. Above all, discounts can be used to show appreciation to current customers.

11.Overpriced cell phone plan

Overprices cell phone plan like Prepaid connections are typically less expensive than postpaid connections because they provide the same services at a lower cost. Another reason is the inclusion of GST in the Postpaid bill, which raises the postpaid’s overall cost. Here are some additional reasons why postpaid connections cost more than prepaid connections.

Bill Shock is common among postpaid users and can affect almost all of them at some point. When a user receives a bill that is significantly higher than the postpaid plan they are using, this is referred to as bill shock. This could be due to a number of factors, such as incurring roaming charges while away from home or exceeding your postpaid plan’s data limit.

12.Spending Money at Bar

Alcohol is usually not inexpensive, especially in bars and restaurants. According to the Bureau of Labor Statistics, Americans spend about 1% of their gross income on booze, which includes beer, wine, and other hard liquors. This can amount to tens of thousands of dollars over the course of a decade. If you consume alcohol, consider giving yourself a dry week once a month. When out with friends, choose a beer over an expensive cocktail or wine.

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Over the past six months, Usha Martin Ltd. has had a return of 110.03 percent. As a result, the benchmark Nifty50 index, which provided a return of 0.51 percent during the same period, was significantly outperformed.

In the opening hours of trading on Monday, shares in Usha Martin spiked to their highest level in a year. The stock increased 14.76% from its previous closing of Rs 172.05. to reach its 52-week high of Rs 197.45. 1.61 lakh shares were traded in total today.

On June 12, Motilal Oswal Mutual Fund (MOSTF30) purchased 18.5 lakh shares of the producer of wire rope through an open market transaction for a total of Rs 50 crore at an average price of Rs 270.12 per share.

Usha Martin Ltd announced the cessation of Whole Time Director (WTD) in a corporate filing with the BSE on June 5, 2023, stating that “the board has placed on record its appreciation for the valuable services, guidance, and support extended by Mr. Dhrub Jyoti Basu during his tenure as a Whole-time Director (WTD) of the company.”

The 14-day relative strength index (RSI) for Maruti was 77.01. A value less than 30 is considered oversold, while a value more than 70 is considered overbought. The stock of the corporation has a price-to-equity (P/E) ratio of 22.46.

Over the last six months, Usha Martin Ltd has returned 110.03 percent. As a result, it has outperformed the benchmark Nifty50 index, which has returned 0.51 percent during the same time period.

A daily close over Rs 186 could lead to Rs 206 in the following days, but this rally should be utilised to book profits. “Rs 167 will provide strong support,” said A R Ramachandran of Tips2trades.

Usha Martin is a global leader in the production of steel wire ropes, as well as wires, LRPC strands, prestressing machines, accessories, and optical fibre cables. According to its website, Usha Martin’s wire rope manufacturing facilities in Ranchi, Hoshiarpur, Dubai, Bangkok, and the United Kingdom provide the widest range of wire ropes used in diverse sectors worldwide.

In terms of earnings, the wire ropes maker increased its standalone net profit by more than 7% to Rs 45.09 crore in the fiscal quarter that ended September 2022. In the same period last year, the company earned a net profit of Rs 42.05 crore.

Meanwhile, Indian market benchmarks got off to a good start in 2023, with indices rising in early trade, powered by advances in commodities and state-owned lenders.

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The Central Electricity Regulatory Commission (CERC) oversees the Indian Energy market (IEX), an electronic power trading market established in India.

India’s leading energy market, Indian Energy Exchange, offers a national automated trading platform for the physical delivery of power, renewable energy, and certificates. In an effort to develop a fully integrated South Asian Power Market, IEX has more recently led the way in cross-border electricity exchange. Modern, user-friendly, and customer-focused technology powers IEX, enabling effective price discovery and enhancing the simplicity of power purchase.

With 7,300+ participants spread across 29 States and 5 Union Territories, including 1,800+ RE generators and obligated entities, 600+ conventional generators, and 55+ distribution utilities, IEX has a strong ecosystem. Additionally, it has a sizable network of 4600+ commercial and industrial clients, including those from the metal, food-processing, textile, cement, ceramic, chemical, automotive, information technology, institutional, residential, and commercial real estate sectors.

IEX has been in operation since June 27, 2008, and the Central Electricity Regulatory Commission has approved and regulated it. As of October 2017, IEX is a publicly traded corporation with the NSE and BSE.

Since August 2016, The Exchange has been accredited by ISO for quality management, information security management, and environmental management.

Who is the Director of IEX?

Rajeev Gupta holds a BTech from IIT BHU and an MBA from IIMA. He has 39 years of work experience, including 29 years in the financial services industry and 10 years in senior management positions in industrial firms.

With operations in M&A investment banking and private equity buyouts, Mr. Gupta formed Arpwood Financial Group in 2012. He formerly held positions as joint managing director of DSP Merrill Lynch (from 1995 to 2005), partner of the Carlyle Group, and head of India buyouts. Mr. Rajeev Gupta had held executive positions in industrial industries before joining DSP Merrill Lynch.

Mr. Gupta serves on the boards of United Spirits Ltd., EIH Ltd., T.V. Today Network Ltd., Vardhman Special Steels Ltd., Rane Holdings Ltd., TVS Capital Funds Ltd., and SBFC Ltd. as an independent non-executive member. He is a member of Bain & Co. India Ltd.’s advisory board.On April 27, 2022, he became a new Independent Director for our company.

How Does Trading Work On the IEX?

For instance, Bangalore is experiencing a power crisis, which would push up electricity prices and reduce the electricity board’s revenues. The electricity board will then use IEX to see whether there is a lower-priced electricity board, transmission firm, or renewable energy provider. After then, that segment will be put up for auction. Bangalore’s electrical board will be able to buy electricity more cheaply in this method. In addition, the organisation that sold the electricity will be able to turn a profit.

The IEX trades its products on a standard demand-supply basis. The IEX trades four main commodities:

• One megawatt-hour (MWh) of electricity produced by a renewable energy source is certified as the bearer’s property by a renewable energy certificate (REC). Companies must comply with standards to demonstrate that they do not pollute and are following environmental regulations. A REC aids them in achieving this compliance, which may lead to government incentives, profits, or reduced taxes in the future.
• Energy Saving Certificates (ESCerts) – Similar to RECs, Energy Saving Certificates (ESCerts) only show the amount of energy saved from a project in megawatt-hours (MWh). Like regular certificates, these certificates can be purchased and sold.Companies can buy and sell EScerts and RECs on the exchange. This implies that a corporation receives a clean bill of health even if it may be polluting heavily but yet purchases enough of these certifications.
• the Day-Ahead-Market (DAM) It is a physical electricity trading market where electricity is distributed starting at midnight the following day and continuing for 24 hours. They trade in 15-minute increments of time. The auction bidding procedure was ended by the pricing and quantity of electricity.
• The Term-Ahead Market (TAM) offers a variety of products that enable users to buy or sell power on a term basis up to 11 days in advance.

Can I Trade on the IEX?

Retail traders are not permitted on IEX. Electricity is physically delivered as part of the exchanges. A person is allowed to trade on the exchange if they are the owner of a business that uses a lot of power. In addition, the person needs the required approval from the CERC in order to be able to trade on the platform. A member or client must have at least Rs. 150 Lakhs in capital, per the exchange’s rules, in order to transact on the platform.

Why Indian Energy Exchange shares fell 15% . Explained?

In Friday’s trading, Indian Energy Exchange (IEX) shares fell as much as 15% to hit a 52-week low of Rs 116 on the NSE as some analysts took notice of a June 2 circular that stated that the Power Ministry had instructed the Central Electricity Regulatory Commission (CERC) to start the process of consultation and implement market coupling as soon as possible. The stock was down 9.93 percent at Rs 122.90 at 11:56 a.m.

IEX shares have dropped about 23 percent in two days after falling more than 8 percent in yesterday’s (June 8) final 30 minutes of trading. The IEX stock has lost 28 percent of its value over the past year, lagging the Nifty50 index, which has returned 13 percent over the same time frame.In the most recent development, price discovery would be handled by a super exchange, most likely a government organisation, leaving the power exchanges as nothing more than a platform for bid aggregation.

Market coupling will essentially kill innovation and competition in the sector, according to SN Goel, Chairman & MD of IEX. So, in my opinion, the interpretation of the market coupling that has been circulating for the past day is incorrect.

In any case, the ministry has asked CERC to check into this, according to Goel. “CERC will examine whether market coupling has a place in the current market design, which is a voluntary market, in this voluntary market design, whether we should pursue it or not, and what are the benefits,” he stated.

As of right now, IEX is India’s most reliable platform for determining power spot prices, which serves as a competitive advantage. The implementation of a full-fledged market coupler, however, entails that a neutral third party will compile all buy or sell bids and determine a standard market price for all exchanges.

This might make IEX’s “moat” ineffective because competing exchanges could eventually overtake it in terms of market share. The Day-Ahead Market (DAM) and Real-Time-Market (RTM) segments, which account for 75–80% of the exchange volumes, are almost entirely dominated by IEX.

What is market coupling?

PXIL explains market coupling as “the market coupler aggregates and matches all buy and sell orders from all the power exchanges to discover a uniform market clearing price, across all exchanges regardless of platform.”

The commercial moat of IEX is that it is now the most reputable platform in India for pricing determination. However, the MoP has instructed CERC to start the market coupling procedure.

For a relatively tiny fraction of the recently formed auxiliary market from April 23 to 29, NLDC served as the market coupler; yet, this marked the start of NLDC transitioning into a full-fledged market coupler function.

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The marketplaces where financial assets are bought and traded are referred to as “financial markets.” The term “financial assets” refers to things like stocks and bonds. The financial markets, broadly speaking, comprise a number of smaller marketplaces, including the stock market, bond market, forex market, commodities market, and derivatives market.

While some financial markets may be unregulated, others may be. And just like in any market, there are a variety of factors that affect the pricing of the financial assets traded there.

A business setting where various bonds and securities are traded at lower transaction rates is referred to as a financial market. It consists of several types of financial instruments, such as bonds, stocks, derivatives, and foreign exchange markets, to name a few.

The financial market is essential for a capitalist economy to run smoothly since it aids in resource allocation and provides liquidity for businesses.

The financial market makes sure that the right allocation of cash is made between investing and collecting parties.

KEY TAKEAWAYS

• The marketplace where various financial assets, including bonds, shares, commodities, currencies, and derivatives, are traded is known as the financial market.
• In order to transact in their desired financial assets at a defined price, it brings together the sellers and purchasers.
• Depending on the state of the economy, millions of dollars are traded every day on the capital market through OTC or stock exchanges.
• Some of the several categories of the financial market include stocks, bonds, derivatives, currencies, commodities, and cryptocurrency markets.

How Do Financial Markets Work?

A financial market is a venue where companies and investors hope to raise money to expand their operations and see a positive return on their investments. In this market, the buyers find the right vendors, and the sellers score a win by attracting the most qualified customers for their financial products.

Based on a variety of criteria, these marketplaces are divided into many categories. The primary classifications, however, are determined by the type of claim, the maturity of the claim, the delivery schedule, and the organisational structure.

For instance, a financial market is categorised as either a debt market or an equity market depending on the form and type of claim. Investors exchange bonds and debentures in the former, but they deal with stocks and other securities in the latter.

There is a money market that deals with money-backed securities and short-term funds like treasury bills, commercial paper, and certificate of deposit (CDs), depending on the maturity length. These investments expire after a year. The capital market is another one; it creates a platform for investors looking to purchase medium- and long-term assets.

Types of Financial Markets

• Stock Market

For businesses trying to raise finance, this is the centre. They first register their shares and then sell them in an initial public offering (IPO) on the secondary market to interested investors. They list the shares or stocks on stock exchanges, such as the NASDAQ, the NYSE, or OTC, a virtual trading floor.

• Bond Market

It is the market, which enables investors to purchase bonds from businesses to fund their projects. The bonds are a pledge to pay back the businesses or the government who buys them within a predetermined time frame. For a full settlement, the corporations are required to pay the principal sum and interest.Corporations, as well as cities, states, and other sovereign entities, issue bonds to fund operations and projects. Securities like notes and bills issued by the US Treasury, for instance, are sold on the bond market. The debt, credit, or fixed-income markets are other names for the bond market.

• Derivatives Market

Derivatives, which derive their value from an underlying asset, are traded on the derivatives market. Here, futures, options, forward contracts, and swaps can be traded by both individuals and businesses. To manage the financial risk, such deals can be entered either over-the-counter or in exchange-traded derivatives.The value of derivatives, which are secondary securities, is wholly based on the value of the primary security to which they are tied. A derivative has no value by itself. A derivatives market trades complex financial products like futures and options contracts, which derive their value from underlying securities like bonds, commodities, currencies, interest rates, market indices, and stocks, as opposed to trading equities directly.

• Forex Market

Currency exchange is facilitated by the foreign exchange (Forex) market. These markets, which are run by financial firms, are used to calculate the exchange rates for all currencies.The forex market is decentralised and made up of a global network of computers and brokers from all over the world, just as the OTC markets. Banks, commercial enterprises, central banks, asset management businesses, hedge funds, as well as small-scale currency dealers and investors, make up the forex market.

• Commodities Market

A commodity market deals with items like gold, oil, wheat, rice, and other commodities. There are over 50 significant commodity markets worldwide.However, the majority of these commodities’ trading occurs on derivatives markets, which use spot commodities as the underlying assets. Commodity forwards, futures, and options are traded over-the-counter (OTC).

• Cryptocurrency Market

.Given the opportunities provided to investors and traders, digital assets are in demand. Blockchain technology is utilised for the transactions and their recording. The digital currencies, such as Bitcoin, Ethereum, and others, are accessible on internet crypto exchanges, enabling traders to engage in trade on a worldwide scale.

Users can swap digital currencies, including conventional currencies, using the exchanges’ digital wallets. And These platforms are likely to experience cyber problems like hacks and frauds because they are centralised markets.

Functions of Financial Markets

• They enable the mobilisation of money:When you set aside a percentage of your salary, it just sits there until you decide to do something with it. However, financial markets give you a way to invest, which enables you to mobilise your savings. Thus, financial markets assist in bridging the gap between those who have the needed capital and those who do not.Additionally, they assist in re-directing stagnant money into the economy so that it can be productively used rather than just sitting about. After all, a country’s economy can only flourish if there is enough money in circulation.

• They help determine the price of assets:The price of items increases as demand outpaces supply. And the price decreases when there is a surplus of supply compared to demand. That is how supply and demand affect how much anything costs. And the financial markets also follow this rule.Demand and supply are undoubtedly two of the most significant variables at play, continuously and reliably guiding world economic systems. Without either supply or demand, an economy cannot function in balance. These two forces also contribute to determining the price of the traded financial assets because they are the only two things that drive the financial markets. Without these markets, it would be practically impossible to correctly assess the pricing of financial assets because they would be unregulated.

• They ensure liquidity of the assets:In essence, liquidity is a number that assesses how easily an item may be bought, traded, or turned into cash. Let’s further deconstruct it using a comparison illustration.Given its swift saleability and ability to be transformed into cash, gold is regarded as a highly liquid kind of investment. That is as a result of the high levels of yellow metal demand. In contrast, because real estate cannot be immediately sold off, it is often thought to be far less liquid.Financial markets serve as fair marketplaces for the selling and acquisition of assets. They also make certain that these financial assets are liquid by making it easy for you to buy and sell the aforementioned assets. In other words, you don’t have to look very far in these markets to find a buyer or a seller.

• They help save time and money:Building on the concept of liquidity and taking into account the ease with which a buyer or a seller can be found, financial markets significantly reduce the amount of time required by all parties. Not only that. Additionally, they help you avoid wasting a lot of time and energy searching for potential buyers or sellers.The prices and fees connected with each transaction have also greatly decreased as a result of the financial markets’ entire transition to electronic trading. You can then save a tonne of money as a result of this.

Advantages and Disadvantages of Financial Markets

Advantages

• Businesses can use it as a platform to raise money for both long- and short-term investments.
• Companies might be able to finance themselves for less money than they would pay for a high-interest loan from a commercial bank. Furthermore, big loans are not offered by commercial banks.
• Companies are able to borrow money whenever they need to, up until the point where their authorised share capital is exhausted.
• Intermediaries in the financial sector, such banks and financial institutions, advise businesses and investors on financial and strategic matters. They provide knowledge, counsel, and expert skills that might not otherwise be available.
• It provides a trading and dealing platform for many different shares, stocks, bonds, derivatives, and other financial instruments.
• Stricter financial market laws and regulations foster trust among investors and firms, which helps to grow the economy.
• create a platform for international borrowing and lending of money in different currencies

Disadvantages

• The process could get too drawn out if regulatory agencies impose too many steps.
• Some companies are unable to access the financial sector because of rigorous laws and regulations. They cannot set up resources that require ongoing oversight and compliance checks.
• Investors may lose money as a result of ignorance or lack of information about the situation.
• A company’s focus could change from investors to profits. The Board of Directors must adopt decisions that are in the best interests of all parties involved in the business and refrain from using investor funds for personal advantage.

Which is India’s Largest Financial Market?

The main financial market in India was founded in 1992 and is called the National Stock Exchange. It was recognised as a stock exchange under the Securities Contracts (Regulation) Act of 1956, and it started operating in 1994. It was the first entirely computerised electronic trading exchange in the nation.

• Mumbai, Maharashtra, serves as the home base for the National Stock market, an Indian stock market. It is India’s largest stock exchange by daily turnover and number of trades for both equity and derivatives trading, and it is the eleventh-largest stock exchange in the world by market capitalization.
• The NSE had about 2000 listings as of August 2021 with a market capitalization of more than US$3.4 trillion.
• The NSE and the Bombay Stock Exchange are India’s two most significant stock exchanges, accounting for the vast majority of share transactions despite the existence of numerous other exchanges.
• The S&P CNX Nifty, also referred to as the NSE NIFTY (National Stock Exchange City), is an index of fifty big stocks that is weighted according to market capitalisation.
• Although a number of the biggest banks, insurance companies, and other financial intermediaries in India control a portion of NSE, its ownership and administration are two distinct entities.
• NSE shares has been acquired by at least two foreign investors, NYSE Euronext and Goldman Sachs. As of 2006, there were 2799 Stock NSE VSAT terminals covering more than 1500 cities across India.

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