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Stock market update: Fertilizer companies are on the Run ! Should you buy it?

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Fertilizers companies Coromandel Inter, FACT, Chambal Fertilizers, RCF, GSFC, Paradeep phosphates and National Fertilizer are all making a run this season. Should you add them to your portfolio? let’s find them out

On Thursday, 13 Apr, 23 Fertilizers & Chemicals Travancore Ltd was up ₹ 321 12.40% National Fertilizer Ltd was down ₹ 85.3 -0.87%, Coromandel International Ltd ₹ 927 -0.05% respectively.

Let’s look at companies Technicals one by one to find out which one to invest in

National Fertilizer Ltd

While the company has not been profitable all this while. However, The company has posted profits of 700 cr for 2022 as compared to a -95CR loss Last year. As per the price point, one should avoid making new positions.

Coromandel International Ltd

Net Profit26197208213294-181237-95700

Coromandel seems to be making a fine entry at CMP 927 however, considering the stock could be making a BEARISH Rising wedge pattern. Hence, it is not advised to make an entry in this stock.

What is a rising wedge?

A technical signal known as a rising wedge suggests a reversal pattern typically observed in bad markets. This pattern appears on charts when the price rises and the pivot highs and lows converge towards the apex, which is a single point.

Fertilizers & Chemicals Travancore Ltd

FACT seems to have taken the best of all already, Stock price currently trading at Rs320 a Piece. Already 64% up from its last low of Rs 193. It is not advised to make new positions in this stock.

The company has made over Rs 681Cr profit this year compared to 353cr Profit last year.

Chambal Fertilisers & Chemicals Ltd

The only company that seems to have the advantage of being added to the portfolio. Chambal fertilisers posted a profit of 1,184CR this year compared to 1566CR last year which seems to be a fall yet profitable still.

The price of Chambal Fert is Rs 289 and it can be a good buy still in the portfolio with targets of up to Rs 312.

Rashtriya Chemicals & Fertilizers Ltd

RCF has posted 1,041CR profit as compared to 702CR from the last year. Furthermore, the stock seems to be in the category of a buy zone. As can be seen in the start. RCF is making a symmetrical triangle pattern. To know more about this pattern, click here

Gujarat State Fertilizers & Chemicals Ltd

The company has posted a whooping profit of 1,345CR which was 891CR last year. Also, Stock seem to be on the support in a channel pattern. This can also be a decent addition in your portfolio.

Paradeep Phosphates Ltd

With only ₹ 4,402 Cr Market cap, Paradeep phosphates CMP 54 posted 330CR profit this year. Last year, PP gained 398CR which seems to be a decent fall. Considering the DII holds 20.73% of the company. we recommend this to be a decent accumulation.

Please note: Paradeep phosphates are making a descending triangle, which indicates a possible downfall. Or it has been done already, as you can see in the stock price,

Conclusion

While the sector/industry seems to be getting a lot of FII and DII attention. There are fewer stocks only which can be added to the portfolio at this time. We recommend you do your complete analysis of them before adding them. To stay updated follow us on Instagram.

This learning sharks article is of a general nature. Our articles are not meant to be investment advise; instead, we only offer analysis based on objective methods, past information, and projections from analysts. It doesn’t represent an advice to buy or sell any stock, and it doesn’t take into consideration your goals or financial position. We hope to provide you with long-term analysis that is driven by essential facts. Be aware that recent price-conscious announcements from businesses or high-quality information may not be taken into account in our analysis.

#stockmarket #sharemarket

Can I make a career in the stock market?

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stock market courses

Can I make a career in the stock market after this course? ok, let’s understand this. We at learning sharks- stock market institute offers share market courses. Thriving makes you a full-time stock trader or a full-time employee.

All things considered, Yes!, you would be able to do both of them after your course at our stock market institute. Once you learn how to trade in the stock market. The cash you would be generating can not be offered in any corporate. You become your own boss.

Besides

Yet, if you see the stock market as a passion yet still want to work after the course, we respect that. You can appear for the NCFM and NISM exams for which we btw pay if you clear with about 90%. A plethora of job vacancies are open for you once you clear the exam.

Altogether, From the banking sector, Insurance companies, broking houses and research houses. Also, financial institutions &investment banking sector as a terminal operator/dealer relationship executive. Manager, executive.

Apart from this manager in RMS, executive and manager in the depository department DP. Also, executive and manager in the back-office department, technical and fundamental analyst. The best is a research analyst.

Definitely, You can become a broker or sub-broker and do business. Furthermore, you can open your research advisory company. and give research tips to your clients. The choice is yours.

Here are some of the courses that you can do to make career in the stock market

Some of the certifications that you would need to find a job are here below, to find all, click here

NISM Series I: Currency Derivatives Certification Examination

NISM Series V A: Mutual Fund Distributors Certification Examination

NISM-Series­V-B: Mutual Fund Foundation Certification Examination

NISM-Series-X-A: Investment Adviser (Level 1) Certification Examination

NISM-Series-X-B: Investment Adviser (Level 2) Certification Examination

NISM Series-XV: Research Analyst Certification Examination

If you want to apply for a job in the stock market , click here

#stockmarketjobs #sharemarketjobs #career

A Chemical Company which can make your portfolio shine

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Falling wedge pattern

What is a Falling wedge pattern?

When the market makes lower lows and lower highs with a contracting range, a chart pattern arises. It suggests a possible reversal in the trend in the upward direction. That is called a Falling wedge pattern.

What are Technical Analysis Chart patterns?

A chart pattern is a shape within a price chart that helps to predict what prices will do next based on prior performance. Chart patterns are the foundation of technical analysis and necessitate a trader’s understanding of both what they are looking at and what they are looking for.

If you wanna learn about all the chart patterns for free, click here

Chemplast Sanmar Limited is a chemical firm based in India.[1] It is a leading producer of PVC resins, chlorochemicals, and pipe systems.

We recommend this stock at CMP 405, for multiple reasons. The stock has been taking a beating since its IPO listing. Fortunately, the company has been making only a profit, and it’s considered a bright addition to your portfolio.

If you know about support and resistance; you will learn, the stock is on its resistance after multiple attempts of Breaking out.

Stock Breaking out of its resistance in the chart above.

Now that you have seen it on the chart along side the Falling wedge pattern. Let’s look at the fundamental side of the Chemplasts Sanmar.

Profit & Loss

Consolidated Figures in Rs. Crores / View StandalonePRODUCT SEGMENTS

Mar 2019Mar 2020Mar 2021Mar 2022TTM
Sales +1,2541,2583,7995,8925,601
Expenses +9691,0113,1714,6954,884
Operating Profit2862476281,197717
OPM %23%20%17%20%13%
Other Income +12848457-23
Interest4895433322151
Depreciation5687131137149
Profit before tax19372547796395
Tax %39%36%25%18%
Net Profit11846410649338
EPS in Rs14.816.8830.5941.0321.38
Dividend Payout %0%0%0%0%
Compounded Sales Growth
10 Years:%
5 Years:%
3 Years:67%
TTM:3%
Compounded Profit Growth
10 Years:%
5 Years:%
3 Years:75%
TTM:-50%
Stock Price CAGR
10 Years:%
5 Years:%
3 Years:%
1 Year:-35%
Return on Equity
10 Years:%
5 Years:%
3 Years:12%
Last Year:50%
P&l of Chemplasts sanmar

Balance Sheet

Consolidated Figures in Rs. Crores / View StandaloneCORPORATE ACTIONS

Mar 2019Mar 2020Mar 2021Mar 2022Sep 2022
Share Capital +671,2741,2517979
Reserves2,4331,845-4171,6261,705
Borrowings +25382943882925
Other Liabilities +1,0492,1133,8933,0143,101
Total Liabilities3,8024,1084,4875,6015,810
Fixed Assets +2,1082,1743,1483,2593,211
CWIP1178253473
Investments1,1591,458000
Other Assets +4184671,3132,3082,525
Total Assets3,8024,1084,4875,6015,810
The balance sheet of Chemplasts sanmar

Conclusion

Now that you have seen the fundamentals and the technicals of this stock. You would see the price CMP 405 is a good price to add on. However, as a Disclaimer, we suggest you do your complete analysis before adding this stock. This is not buying financial advice, but instead merely for education purposes.

If you are new to this page, Don’t forget to check out our courses page.

To contact us, use this link.

#stockmarket #learningsharks #chemplastsanmar #fallingwedge #chartpatterns

Stock Market jobs 2023 l Technical analyst, Research analyst, Option strategist, and more

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Stock Market jobs 2023 l Technical analyst, Research analyst, Option strategist, equity dealer, senior relation ship manager

If you are looking for stock market jobs and want to make a career in the stock market as freshers, Use this link here to apply

What is a Technical analyst job?

For the business they work for, a technical analyst, also known as a market technician, is in charge of analysing the stock market and investment opportunities. They are responsible for researching potential investment opportunities, forecasting potential investment returns, and analysing the stock market. For technical analyst job Use this link here

What does a Technical Analyst do?

Businesses that use the stock market and other types of investment opportunities as a means of capital growth are frequently those that employ technical analysts. Technical analysts apply their knowledge to assist business executives in choosing the best investments for the company’s money in order to maximize growth or protection. The majority of a technical analyst’s time is typically spent analysing market indicators to aid in the creation of reports and presentations for their employers.

What is a Market research analyst?

Market research analysts are primarily responsible for gathering and compiling consumer and competitor data for businesses. Analysts analyse this data to offer their employers or clients insightful information. To assist a buyer in making an investment decision in the stock market, a research analyst may look into the performance history of a company or its stock.

Additionally, they might conduct research to support businesses through operations like IPOs and expansion (Initial Public Offerings). Equity and stock frequently exhibit characteristics of goods or commodities, the performance of which is influenced by supply and demand factors. Using their knowledge of these market forces, market research analysts create carefully curated investment portfolios and financial strategies to successfully navigate a market at any given time.

For a Market research analyst job, Use this link here

What is an Equity dealer?

Dealers’ main responsibilities include purchasing, holding, and selling equity on a stock exchange. To make a profit, they try to buy stock before demand spikes and sell it to interested buyers at higher prices. A dealer conducts transactions for their own benefit and financial gain. On the other hand, a broker merely arranges these transactions in order to earn a commission. A dealer operates as a business and typically has a larger scale of operations, which is the difference between dealers and traders.

For instance, a trader might buy 100 shares of a stock, sell them all for a small profit, and then decide whether to reinvest the money or take it out. In contrast, a dealer purchases a much larger quantity of the stock (such as 10,000 shares) and engages in transactions with numerous traders and buyers in order to make a much larger profit. This profit may be used primarily for new investments and the acquisition of equity.

For an equity dealer job, Use this link here

What is a trader?

Primary responsibilities: Stock market traders are people who frequently buy and sell stocks and other securities in order to make money. To maximise profits, they strategize, pinpoint entry and exit points for share values, and execute the required transactions. They operate differently than investors because they aim to profit financially from momentary changes in the market. In order to maximise their profits, investors typically employ long-term financial strategies and start with larger starting capital than traders. Trading has enormous earning potential but comes with a lot of risk.

What is an Investment consultant?

Investment consultants’ main responsibility is to advise clients on sound investment choices using their understanding of equity and market trends. Depending on their investment strategy, investors may anticipate either short-term or long-term financial gains. Investment advisors are aware of their client’s particular financial objectives and provide useful information on stock prices, stock performance, company reputation, and performance history. They assist investors in gaining a deeper comprehension of their financial situation and the effects of their choices. To evaluate clients’ investment plans, they might work alone or with banks or other financial institutions.

For an Investment consultant job, Use this link here

What is a Financial analyst?

Financial analysts’ main responsibilities include gathering, organizing, and interpreting financial data in order to produce forecasts, monitor metrics, and develop simulations or financial models. Analysts are frequently needed by businesses to assist in making important financial decisions. Before making significant investments, analysts offer their clients insights and inferences to help them gain a thorough understanding of market scenarios. Professionals in this field may work alone or as regular members of a company’s staff.

For a Financial analyst job, Use this link here

What is a fundamental analyst?

Fundamental analysts are experts who conduct an in-depth analysis of a business, a stock, or a market to identify the inherent value or risks related to financial decisions and transactions. To produce these insights, they may analyze a variety of variables and indicators, such as financial stability, growth potential, total capital, return on equity, and profit margins.

For fundamental analyst job, Use this link here

What is a risk analyst?

Risk analysts’ main responsibilities include assisting businesses and clients in determining the financial and practical consequences of important commercial decisions. They research market trends and clients’ financial records on behalf of businesses to assess the risks associated with doing business with them. Their knowledge is frequently needed in the stock market when businesses or investors want to drastically alter their holdings or portfolios. Before offering advice, risk analysts carefully consider the advantages and disadvantages of a business situation in order to paint an objective picture.

FOr risk analyst job, Use this link here

what is an Investment banker?

Primary responsibilities: Investment banking is a branch of banking operations that enables businesses or individual investors to raise capital and resources for operations. Experts in economics and finance, working in this field development plans and plans of action to assist clients in achieving their financial objectives. They might serve as a consultant and give guidance, or they might even serve as a middleman to help transactions proceed according to a methodical pre-planned strategy.

For an Investment banker job, Use this link here

Reliance to buy 51% stake in this Chocolate share – Read to know if you should Invest

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Lotus Chocolate Company Ltd share price - Full technical and fundamental analysis 2023

Who knew reliance’s Mukesh Ambani was such a big fan of chocolate? He recently plans to buy 51% of Lotus chocolate for 74 crores. Read full to know whether you should invest in this stock.

Lotus chocolate’s current share price is 122.95 apiece. Today the stock opened and rushed 5% during the trading hours on the BSE exchange. Let’s look at the technical analysis of this stock.

Lotus chocolate share price technical analysis

The company looks fine on the daily and Monthly chart time frame, however, on the Monthly time frame it seems overbought already. You should be a little concerned if you are planning to invest for the next few months. In the short time frame, the technical seems fine.

Let’s look at the Fundamentals of the Lotus chocolate share

Balance Sheet

Figures in Rs. CroresCORPORATE ACTIONS

Mar 2011Mar 2012Mar 2013Mar 2014Mar 2015Mar 2016Mar 2017Mar 2018Mar 2019Mar 2020Mar 2021Mar 2022Sep 2022
Share Capital +20.2320.2320.2320.2320.2320.2320.2320.2320.2320.2320.2320.2320.23
Reserves-18.57-20.66-22.19-24.88-24.29-23.03-23.50-22.45-21.13-20.20-18.43-12.42-12.84
Borrowings +20.4517.3816.9119.8718.3229.3623.2916.9415.6314.3016.2013.608.30
Other Liabilities +13.5012.1016.3414.8915.6515.0613.1514.9313.7514.1111.6913.445.65
Total Liabilities28.2221.6623.9022.7222.5234.2325.7822.2621.0921.0522.3027.4621.34
Fixed Assets +4.363.925.746.095.795.795.523.422.772.121.491.601.75
CWIP2.002.000.330.030.050.000.000.010.010.010.010.000.00
Investments0.200.180.180.000.000.000.000.000.000.000.000.000.00
Other Assets +21.6615.5617.6516.6016.6828.4420.2618.8318.3118.9220.8025.8619.59
Total Assets28.2221.6623.9022.7222.5234.2325.7822.2621.0921.0522.3027.4621.34
Balance sheet of Lotus chocolate share

While the company has reduced its borrowings, its reserves are Negative. While we look at the profit and loss

Profit & Loss

Figures in Rs. Crores

Mar 2011Mar 2012Mar 2013Mar 2014Mar 2015Mar 2016Mar 2017Mar 2018Mar 2019Mar 2020Mar 2021Mar 2022TTM
Sales +38.6955.5146.4456.3060.7865.4066.4756.9265.6969.8947.8786.9785.94
Expenses +42.2555.6147.0757.9759.8662.6565.0454.2263.7568.3245.4880.6382.04
Operating Profit-3.56-0.10-0.63-1.670.922.751.432.701.941.572.396.343.90
OPM %-9.20%-0.18%-1.36%-2.97%1.51%4.20%2.15%4.74%2.95%2.25%4.99%7.29%4.54%
Other Income +0.080.310.140.060.590.190.130.020.070.050.110.20-0.24
Interest0.881.800.530.420.070.911.220.660.150.200.200.310.38
Depreciation0.510.500.510.660.730.770.800.800.650.650.620.220.18
Profit before tax-4.87-2.09-1.53-2.690.711.26-0.461.261.210.771.686.013.10
Tax %0.00%0.00%0.00%0.00%0.00%0.00%0.00%26.19%-9.92%-14.29%-5.36%0.00%
Net Profit-4.87-2.08-1.54-2.690.711.26-0.460.931.330.881.776.013.10
EPS in Rs-3.79-1.62-1.20-2.090.550.98-0.360.721.040.691.384.682.41
Dividend Payout %0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%
Profit and loss of lotus chocolate share

The company has turned slightly profitable, and most of the shares are with the promoters themselves. Overall it is a decent buy. One can accumulate this share at this rate and average if it goes south.

If you wanna stay updated with these stock recommendations for educational purposes, stay connected with our website. Have a look at the share market courses here our institute has to offer.

#sharemarket #reliance #lotuschocolateshareprice #mukeshambani #latestpost2023

Is it right to invest in Nestle? Buy, sell or Hold

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share market articles

Checked by: Vijay Verma

NESTLE started doing business in India in 1912, importing and selling finished goods there. The business gradually increased its presence in India. Are you holding this stock?

The company has maintained its share capital and its continuous supply of FMCG made this stock a multi-bagger. If anybody had invested in this stock in 2010, this stock would have given 600% growth along with Dividends and bonuses.

Nestle CMP is Rs20338 as of Dec 13 which is almost its all-time high. Ideally is it not advised to make a new entry at this point of time? While looking at the NIFTY 50 CMP 18608 again at its all-time high suggesting the stocks would see resistance at this level.

Let’s look at the technical analysis of the stock.

Nestle stock price chart – Technical analysis

Looking at the technical analysis of the stock, the stock seems to be touching the upper band of the channel. Another entry can be taken somewhere around the support.

let’s look at the fundaments of this stock

Quarterly Results Figures in Rs. Crores

Sep 2019Dec 2019Mar 2020Jun 2020Sep 2020Dec 2020Mar 2021Jun 2021Sep 2021Dec 2021Mar 2022Jun 2022Sep 2022
Sales +3,2163,1493,3253,0503,5423,4333,6113,4773,8833,7393,9814,0374,591
Expenses +2,4492,4552,5322,3032,6582,6562,6812,6292,9352,8743,0563,2173,580
Operating Profit7666947937488847779308489488669258191,011
OPM %24%22%24%25%25%23%26%24%24%23%23%20%22%
Other Income +564543383431302934-209211931
Interest32314141404254525244363737
Depreciation91949192919694959610610410298
Profit before tax700614704652786670812730834507806700906
Tax %15%23%25%25%25%28%26%26%26%24%26%26%26%
Net Profit595473525487587483602539617387595515668
EPS in Rs61.7449.0254.5050.4760.8950.1362.4655.8664.0340.1061.6853.4569.32
Raw PDF

Profit & Loss

Figures in Rs. Crores

Dec 2010Dec 2011Dec 2012Dec 2013Dec 2014Dec 2015Dec 2016Dec 2017Dec 2018Dec 2019Dec 2020Dec 2021TTM
Sales +6,2557,5158,3359,1019,8558,1759,14110,01011,29212,36913,35014,70916,348
Expenses +5,0165,9906,5097,1537,8166,6207,2927,9138,6759,44310,14911,11812,727
Operating Profit1,2391,5251,8251,9482,0391,5551,8502,0972,6182,9263,2023,5923,620
OPM %20%20%22%21%21%19%20%21%23%24%24%24%22%
Other Income +3521319787-391140177259247146-116-138
Interest1527371439192112129164201153
Depreciation128153277330338347354342336370370390410
Profit before tax1,1451,3881,5531,6781,7748141,5451,8392,4292,6732,8132,8842,920
Tax %29%31%31%33%33%31%35%33%34%26%26%26%
Net Profit8199621,0681,1171,1855631,0011,2251,6071,9682,0822,1452,165
EPS in Rs84.9199.73110.76115.87122.8758.42103.86127.07166.67204.16215.98222.46224.55
Dividend Payout %57%49%44%42%51%83%61%68%69%168%93%90%

Balance Sheet

Figures in Rs. CroresCORPORATE ACTIONS

Dec 2010Dec 2011Dec 2012Dec 2013Dec 2014Dec 2015Dec 2016Dec 2017Dec 2018Dec 2019Dec 2020Dec 2021Jun 2022
Share Capital +96969696969696969696969696
Reserves7591,1781,7022,2722,7412,7213,1863,3243,5771,8221,9231,9882,232
Borrowings +09711,0501,1892018333535189147266280
Other Liabilities +1,7032,1572,3152,7562,9633,2513,4953,9074,3795,0655,7335,8606,007
Total Liabilities2,5584,4025,1646,3145,8206,0866,8107,3638,0887,1737,9008,2108,616
Fixed Assets +1,0131,5763,2043,3693,1772,8982,7302,6162,4012,3412,1792,9943,054
CWIP3491,37234429524523118894105143639246197
Investments1511343658518121,3251,7561,9792,6581,7511,464774809
Other Assets +1,0461,3201,2511,7991,5861,6332,1362,6732,9242,9373,6184,1964,556
Total Assets2,5584,4025,1646,3145,8206,0866,8107,3638,0887,1737,9008,2108,616

Cash Flows

Figures in Rs. Crores

Dec 2010Dec 2011Dec 2012Dec 2013Dec 2014Dec 2015Dec 2016Dec 2017Dec 2018Dec 2019Dec 2020Dec 2021
Cash from Operating Activity +1,0371,1581,6931,7961,6441,0981,4661,8182,0522,2952,4542,271
Cash from Investing Activity +-446-1,528-941-441-432-70-126-131-5283-321-1,957
Cash from Financing Activity +-544323-513-580-1,635-498-666-997-1,317-3,602-1,956-2,019
Net Cash Flow47-47239775-423529674691683-1,223177-1,704

Ratios

Figures in Rs. Crores

Dec 2010Dec 2011Dec 2012Dec 2013Dec 2014Dec 2015Dec 2016Dec 2017Dec 2018Dec 2019Dec 2020Dec 2021
Debtor Days464344434454
Inventory Days82898679821031079192107107111
Days Payable10692636871949199118124115122
Cash Conversion Cycle-2032814151220-5-22-14-3-7
Working Capital Days-51-14-11-17-13-21-10-15-21-19-21-15
ROCE %161%90%62%53%56%46%54%57%71%96%139%147%

Shareholding Pattern

Numbers in percentagesDEALS / TRADES

8 recently

Dec 2019Mar 2020Jun 2020Sep 2020Dec 2020Mar 2021Jun 2021Sep 2021Dec 2021Mar 2022Jun 2022Sep 2022
Promoters +62.7662.7662.7662.7662.7662.7662.7662.7662.7662.7662.7662.76
FIIs +12.0711.8112.1011.5112.8412.2912.4312.3112.3512.0111.6512.05
DIIs +8.929.128.718.917.757.957.927.997.898.609.148.86
Government +0.070.070.070.000.000.000.000.000.000.000.000.00
Public +16.1816.2416.3616.8216.6516.9916.8816.9316.9916.6216.4516.33

Overall the company seems good to hold. However, It might take a healthy correction. If you wanna learn about the course check out our courses page.

#stockmarket #sharemarket #nestle

Update – 15-04-23

Current Market price is 19465

Introduction to forward market

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Forward market

• Forwards market
• Futures contract
• Future trades
• Leverage & payoff
• Margin & M2M
• Margin calculator
• Open interest

• How to short
• Nifty futures
• Nifty futures
• Futures pricing
• Hedging with futures
• Notes

 

learning sharks stock market institute: what is Forward-Market

Introduction to forward market

Firstly, Because the forwards and futures markets are comparable, I believe that understanding the “Forwards market” is the best method to introduce the futures market. Comprehending the forwards market well would lay a strong foundation for understanding the futures market.

Secondly, The universe of financial derivatives includes the futures market in its entirety. When the value of a security is  from another sort of financial asset known as an “Underlying Asset,” it is  to as a “Derivative.” 

Any kind of stock, bond, commodity, or money can serve as the underlying asset. 

Financial derivatives have been in use for quite some time. Around “Kautilya’s Arthashastra,” which was  in 320 BC, the use of derivatives is first discussed in relation to India. According to popular belief, Kautilya wrote about the pricing structure of the standing crops that were awaiting harvest in the ancient Arthashastra (study of Economics) script. He reportedly utilized this technique to pay the farmers well in advance, creating a true “forwards contract.” 

Thirdly, Because the forwards and futures markets are comparable, I believe that understanding the “Forwards market” is the best method to introduce the futures market. Understanding the forwards market well would lay a solid foundation for understanding the futures market.

Forward contracts are the most straightforward type of derivative.Think of the forwards’ contract as the futures contract’s more ancient incarnation. Both futures and forward contracts have a similar transactional structure, but over time, traders have tended to favor futures contracts by default. The forward contracts are still in use, but only by a select group of parties, including businesses and financial institutions. 

This chapter’s main goal is to explain the structure of a typical forward transaction, following which we will dissect it into its component parts and examine its benefits and drawbacks.

A Simple EXAMPLE OF FORWARD MARKET

Importantly, The Forward market was primarily established to safeguard farmers’ interests from unfavorable price changes. Forward market, the parties agree to trade products for money. Besides, The trade takes place on a given future date at a particular price. Both sides agree on a day to establish the price of the items. 

Similar manner, the day and time of delivery of the items are also determined. Without a doubt, the agreement is  in person with the help of a third party. Also known as “Over the Counter” or “OTC,” this agreement. Only the OTC (Over Counter) market, where individuals and institutions transact through one-on-one discussions, allows for the trading of forwarding contracts.

Take into account that there are two parties in this scenario.

For example, One works as a jeweler, designing and creating jewelry. Call him “ABC Jewelers,” please. The other is a gold importer, whose responsibility it is to offer gold to jewelers at a discount. Let’s refer to him as “XYZ Gold Dealers.”

Another, On December 19th, 2014, ABC and XYZ made a deal for ABC to purchase 15 kg of gold at 999 purity from XYZ within three months (19th March 2015). 

They set For gold, a price of Rs. was chosen. per gram or Rs. 3000,000 per kilogram, which is the going rate on the market. Therefore, by this contract, on March 19, 2015, ABC is required to give XYZ a total of Rs. 4.000 Cr. (30,00,000/Kg*15) in exchange for the 15 kg of gold.

Surely, This is a pretty straightforward and typical business agreement that is often used in the sector. A “Forwards Contract” or “Forwards Agreement” is the term used to describe such an agreement.

Furthermore, Keep in mind that due to the fact that the contract was  on December 19, 2014, regardless of the price of gold on March 19, 2015, both ABC and XYZ must comply with its terms. Before proceeding, let’s first review the reasons that each party chose to enter into this Agreement.

Indeed, Why do you think ABC  this contract, in your opinion? Because ABC believes that the price of gold will rise during the following three months, they wish to lock in the present market price. ABC intends to safeguard itself against a downward trend in gold prices.

Obviously, In a forwards contract, the party agreeing to buy the asset at a later time is referred to as the “Buyer of the Forwards Contract”; in this case, that party is ABC Jewelers.

Similar spirit, XYZ wants to benefit from the high price of gold that is now being sold on the market. Also, They predict that the price of gold will decline over the next three months. Forwards contract, the party promising to sell the product at a later date is referred to as the “Seller of the Forwards Contract”; in this case, that party is XYZ Gold Dealers.

Last but not least, Due to their divergent perspectives on gold, both sides consider this agreement to be in keeping with their expectations for the future

3 possible scenarios

Even though each of these parties has a different perspective on gold, there are only three outcomes that could occur after three months. Let’s examine these scenarios and how they might affect each party.
In case 1, the cost of gold rises.

Suppose that on March 19, 2015, the cost of 999-percent pure gold is Rs. 2700 per gramme. It’s obvious that ABC Jeweler’s assessment of the gold price was accurate. The arrangement was worth Rs 4.00 crores at the time of the agreement, but due to the rise in gold prices, it is now worth Rs. 4.38 crores. According to the contract, ABC Jewelers has the right to purchase Gold (999 pure) from XYZ Gold Dealers at the previously agreed-upon price of Rs. 3000 per gramme.

As a result, XYZ Gold Dealers will have to purchase gold at a cost of Rs. 2700 per gramme on the open market and sell it to ABC Jewelers at a cost of Rs. 3000 per gramme, incurring a loss in this transaction.

 

Scenario 2: The cost of gold decreases.

Take into account that on March 19, 2015, the price of 999-percent pure gold is Rs. 2050 per gramme. In these circumstances, the gold price prediction made by XYZ Gold Dealers has come to pass. The arrangement was worth Rs 3.67 Cr at the time of the agreement, but now that gold prices have dropped, it is only worth Rs. 3.075 Cr. 

However, according to the terms of the agreement, ABC Jewelers must buy Gold (999 pure) from XYZ Gold Dealers for Rs. 2450 per gramme.

Despite the fact that gold may be bought on the open market for much less money, ABC Jewelers is compelled to pay more through XYZ Gold Dealers, incurring a loss.

 

Scenario 3: The cost of gold remains unchanged.

If the price is the same on 19 March 2015 as it was on 19 December 2014, neither ABC nor XYZ will profit from the agreement.

A quick note on settlement

On March 19, 2015, let’s assume that the price of gold is Rs. 3000 per gramme. At Rs. 3000 per gramme, it is obvious that ABC Jewelers stands to gain from the agreement, as we have just learned. 15 kg of gold was worth Rs. 4.00 crores on the agreement date (19th December 2014), but as of 19th March 2015, it is worth Rs. 4.38 crores. If both parties uphold the agreement at the end of the three-month period, on March 19, 2015, they have two choices for resolving the dispute:

  1. Physical Settlement: In this scenario, the seller delivers the actual asset after receiving complete payment from the forward contract buyer. XYZ purchases 15 kg of gold on the open market for Rs.4.38 crore and agrees to deliver it to ABC in exchange for Rs.4.00 crore. It’s referred to as a physical settlement.

  2. Cash Settlement: No real delivery or receipt of security occurs in a cash settlement. The buyer and the seller will swap the cash difference in a cash settlement. According to the contract, XYZ must sell Gold to ABC for Rs. 3000 per gramme. To put it another way, ABC pays Rs. 4.00 Crs in exchange for 15 kg of gold, which is worth Rs. 4.38 Cr on the open market. Instead of carrying out this transaction, in which ABC would pay Rs. 4.00 Cr. for gold valued at Rs. 4.38 Cr., the two parties could agree to simply exchange the cash difference. It would be Rs.4.38Cr – Rs.4.00 Cr = Rs.38 Lakhs in this instance. Therefore, in order to close the agreement, XYZ would pay Rs. 38 lakhs to ABC. Known as a cash settlement.

            At a much later time, we shall know a lot more about the colony. However, you still need to be aware that a forwards contract has two fundamental types of  settlement alternatives available: physical and monetary.

What about the risk?

While we are clear on the agreement’s structure (terms and conditions) and how a price variation will affect each party, what about the risk? Keep in mind that there are other significant disadvantages to a forward contract as well, including the following:

  1. Liquidity Risk: For the purposes of our scenario, we have naively assumed that ABC discovers a party XYZ that holds the exact opposite opinion with respect to gold. So they quickly come to an agreement. This is not as simple in reality. In the real world, the parties would go to an investment bank and explain what they wanted. The investment bank would research the market to identify a party with a different viewpoint. Naturally, the investment bank charges a fee for this service.

  2. Counterparty risk and default risk– Think about it. Assume that after three months, gold would cost Rs. 2700. With the financial decision they had taken three months earlier, ABC would be happy. They are anticipating payment from XYZ. But what if XYZ makes a default?

  3. Regulatory Risk: No regulatory body is in charge of overseeing the Forwards contract structure, which is carried out with the agreement of the parties concerned. Without a supervisory body, a perception of anarchy sets in, which in turn makes defaulting more appealing.

  4. Rigidity: On December 19, 2014, both ABC and XZY entered into this agreement with a specific gold view. What would happen, though, if their viewpoint were to drastically alter midway through the agreement? They cannot close the agreement in the middle because of how tight the forward agreement is.

            Future contracts were  to lessen the risks associated with advance agreements because the forward contracts had some drawbacks.

India’s Financial Derivatives Market, which is incredibly active, includes the futures market. We will study more about futures and effective trading strategies during the course of this module!

So let’s get going!

CONCLUSION

  1. A futures contract’s fundamental foundation is by the forwards contract.

  2. A forward is an exchanged off-exchange (OTC) derivative.

  3. Since forwarding contracts are private agreements, each one has a different set of criteria.

  4. A forward contract has a straightforward structure.

  5. The person who commits to buying something in a forward contract is known as the “Buyer of the Forwards Contract.”

Stock Market discussion – 22 July 22

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Discussions with people of various age groups, with different educational backgrounds, engaged in different types of activities. Belonging to different income groups often reveals a general perception that stock market investing is risky, akin to gambling. Also always loss-making, highly speculative and can have severe adverse financial implications. This chapter intends to update the participants about the nature of the stock market. Additionally, introduce them to the established tools and techniques of stock market investing. Along with, hand hold them for informed decision making. lastly, highlight the riskiness of random decision-making on the basis of hearsay.

It is an awareness exercise aimed at dispelling certain myths associated with this market. Also, providing readers with the tools for trading in this market. Many of us may not be aware that even if we directly stay away from the stock market. Be it our savings are deployed in this market by insurance companies and mutual funds. Yes, it is true, that these financial institutions are manned by experts in this area. However, it is our savings that they are using and it is our responsibility to understand the basics of this market.

Stock markets are dynamic in nature.

This dynamism stems from changing fundamentals of companies, and changes in the macroeconomy – both domestic and international. So changes in market sentiment, something that cannot be explained and which at times has no rational basis. The stock market, like any other market, has buyers and sellers and there are goods (shares of companies) that are exchanged for a price.

However, the goods are not demanded their own sake but are a means to increase wealth to enhance future consumption. It has attracted hordes of individuals, across all sections of society, with various degrees of knowledge and education. whose only objective is to make money, quickly and lots of it. There is an inherent greed factor in this market. and overall it makes it very difficult to predict market movements. In spite of this, academicians and market analysts have tried to make sense of this market, and they have provided some analytical structures of analyses.

It is only that very few market players have paid serious attention to this literature, or are unable to understand it, that has created a certain perception of this market as unpredictable and volatile.

There are various magazines, journals, websites and television channels that make an honest attempt in providing an understanding of the market, even on a daily basis. They, however, provide short-term, at times instantaneous, views on market movements, lacking analytical clarity. Brokers of repute provide valuable insight into market movements and also warn investors of market pitfalls and dangers. But they also probably have failed to provide the education that is so badly needed. It is possible that the frenzy of money-making in the stock market does not require education.

Is it a gamble?

People like to look at it as a gamble, the outcome of which is known with a certain probability, and which cannot be reduced with education.

The Indian stock market has attracted the attention of domestic players and international players and is considered to be one of the most active markets in the world. The growth rate of the economy is one of the highest in the world and its future potential has made it an attractive destination for foreign investors.

However, it is also true that the varied domestic clientele in this market neither has the inclination nor the ability to understand the various facets of this market, they are guided singularly by the motive of making money, fast. This chapter aims to weave together movements in the Indian stock market with the existing techniques available in the literature. It will show that there is logic to price movements in this market, and one should be aware of these elements.

This, I hope, will act as a guide to those who believe in informed investing.

There are four sets of players in the stock market: investors who have a medium to long-run perspective, day traders, arbitrageurs and speculators. However hard we try, we will not be able to wish any of them away. For a household who is contemplating entry into this market. it is essential to understand in which segment he or she belongs and the risk-return trade-off.

Learning sharks – Stock Market Institute in Delhi

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The stock market has been our long-time friend. There are days when the stock market gives you ur profit. Other days, it’s just not very favourable. Trade in the stock market like a pro. Enhance your trading skills with learning sharks stock market institute.

Stock Market trading and investing are not that tough. Once you know what and how much you are trading. When you know your targets and stop losses. You know when to exit a trade. However, it’s not always that simple.

Investing in the stock market is for the big players. If you do not learn it before doing it. You could just end up losing good money. Learning from a stock market can help increase your chances of winning.

How to trade in the stock market ?

Trading and investing without learning could be a big mistake. we have seen people trying it out and losing their money. Especially to the operators. how to stop losing money to operators? By learning strategies, technical charts, indicators, reading balance sheets and more.

Stock market courses

Stock market trading courses can help you get an edge over others. There are so many topics you need to cover before you even take your trade. Technical charts will always invite you to invest. It’s your choice when to put money. The stock market institute helps you cross that hurdle.

Learning sharks – stock market training institute helps you learn the basics of the stock market, derivative analysis and technical analysis. If you have a long-term vision and you want to learn fundamental analysis. you can get in touch with one of our counsellors.

Rain or portfolio in green? Different article

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You must be wondering what’s there to talk on the rain. We cannot control it. As if we can control stock market either. Is your portfolio in red? No biggie, it’s been with everyone. it’s getting so hot outside. we think they are related.

stock market crash and why isit so hot?

The stock market has been facing a downfall like anything. FII are selling like crazy. When will it stop? this must be your question. Don’t worry, this is not the first time, is it?

Today, NIFTY 50 is trading at  15554.30 -0.88 % and SENSEX 52150.17 -0.74 %. The last time we have seen a crash was back in 2019. We all witnessed a v shape recovery. can we expect it again?

where is this economy headed?

We follow the US economy even though we do not rely much on the west. The U.S has been under tremendous stress. Biden’s comments over the market just make it worst. People are losing trust in the economy’s stability. We are in India, we should not worry that much. Of course, the herd mentality will impact our stock market. Ones who sell it now will regret it.

Should you buy it?

Well, you can start accumulating the shares. There are amazing stocks one can buy with strong fundamentals. Focus on buying those. Some of the stocks are down 50% from their 52-week high. Consider accumulating those. The stock market is a cycle. Operators wait for the retailers to get then, then they start selling only to buy. you should be happy that you are getting a buying opportunity soon.

How is weather related to the stock market?

Looking at history, it has been seen that June and July have always been the worst months. For the stock market, they act unfavourably. Which makes it sensible too for some reason. Matter of fact, December also isn’t the best. We do hope we see the rain in your portfolio.

Learning sharks stock market institute has been around teaching students trading and investing. If you are in the market and facing loss. Probably, you are not invested in the right share.

Learn to trade and invest in the stock market from experts.

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