Tuesday, November 30, 2021

Reliance Industries - India's Biggest Company

     



“You will never reach your destination if you stop and throw stones at every dog that bark… better keep biscuits and move on.”

“If you don’t build your dream, someone will hire you to help build theirs.” 

                                                                     




Reliance Industries Limited (RIL) is India’s most profitable company, the top contributor to India’s gross domestic product (GDP), exports and taxes as a single company. It owns India’s leading telecom company Reliance Jio, the top brick and mortar retailer (Reliance Retail), India’s largest producer of petrochemicals and polyester business, and is the number one company in market capitalization. In 2004 Reliance Industries (RIL) became the first Indian private sector organization to be listed in the Fortune Global 500 list.

In the year 1966 the RIL was founded by Shri Dhirubhai H.Ambani it was started as a small textile manufacturer unit. In May 8 1973 RIL was incorporated and confirmed their name as RIL in the year 1985. Over the years the company has transformed their business from manufacturing of textiles products into a petrochemical major. The company has set up a texturising / twisting facilities in 1979 RIL has also set up plants for Polyester Staple Fiber (PSF) in 1986 and for Linear Alkyl Benzene (LAB) & Purified Terephthalic Acid (PTA) in 1988. RIL has setup a petrochemical facility to produce HDPE and PVC at Hazira Gujarat in technical collaboration with DuPont and BF Goodich respectively.

Dhirajlal Hirachand Ambani was born on 28 December 1932 in a small village called Chorwad (Gujarat). He died on 6 July 2002 in Mumbai. Reliance commercial corporation was founded in 1966 as polyester firm. In 1973 the company got renamed as Reliance industries. Later the company entered into petroleum and financial service. Upon his death, the company was headed   by     his     two    sons Anil Ambani and Mukesh Ambani.




Mukesh Dhirubhai Ambani, elder son of Dhirubhai Ambani, is the present CEO of Reliance Industries Limited. He holds 44.7% of the shares of the company and is one of the most influential persons in the country. He was the 36th most powerful person in 2014 as per the Forbes most powerful people of the world. Currently, he has created a sensation by launching Reliance Jio services which resulted in massive share drops of all the competitors.

Reliance Industries Limited (RIL) is India’s largest publicly traded company and became the first-ever Indian company to exceed US$150 Billion in market capitalization.

Reliance Industries Business divisions:

• Gas and oil exploration:

Reliance is involved in a number of significant partnerships and joint ventures with the world’s leading oil and gas companies, such as BP, Chevron and American shale oil developers. Through these collaborations, Reliance is engaged in exploration, extraction and refinement of petroleum products including: natural gas, hydrocarbons, and liquid shale.

• Petroleum refining:

The Reliance petroleum factory in Jamnagar, India produces liquefied petroleum gas, kerosene oil and gasoline. It is the largest refining facility in the world. Crude oil is refined into usable petroleum product and shipped throughout the world, including: gasoline, naptha, liquefied petroleum gas, kerosene oil, propylene, high-speed diesel, aviation turbine fuel, Sulphur, and petroleum coke.

• Petrochemicals:

Reliance products have wide-spread applications for the healthcare, packaging, automotive, agriculture, and housing industries, among others. Their customer base spans the globe, providing cutting-edge petrochemical product including: polymers, aromatics, polyesters, elastomers and fiber intermediaries. Polymers are exported to more than 60 countries, serving the needs of the water and gas, transportation, agriculture, consumer durables, healthcare, housing and automotive industries.

• Textiles:

Naroda, Reliance’s signature plant, is manufacturing and marketing complex textile produfor use by the world-wide automotive, clothier and home textiles industries.

• Retail:

Reliance Retail launched in 2006 and is providing services and products to millions of farmers, consumers and vendors throughout the world. It is the largest retail outlet in India with more than 11 million square feet of retail space, offering everything from digital technologies, to apparel to furniture and fabrics.

• Reliance Jio:

Reliance Jio Infocomm Limited, popularly known as Jio, is an Indian mobile network operator that is owned by Reliance Industries and is headquartered in Mumbai, Maharashtra. It operates a national Long-Term Evolution (LTE) network technology with coverage across all 22 telecom circles. Jio does not offer 2G service or 3G service, and instead uses Voice over LTE (VoLTE) to provide voice service on the company’s network. The launch of Reliance Jio has caused a revolution in the Indian telecom industry on a level never seen before. Now, Jio claims to be the world’s largest data network, based on mobile data consumption. Further, Jio also disrupted other industries with the likes of Jio TV, Jio Phones with Jio Phone 3, Jio Fiber, etc.

Jio soft-launched on 27 December 2015 (the eve of what would have been the 83rd birthday of Reliance Industries founder Dhirubhai Ambani), with a beta launch for partners and employees, and became publicly available on 5 September 2016. As of 31st January 2019, it is the third-largest mobile network operator in India and the ninth-largest mobile network operator in the world with over 289.44 million subscribers.


Latest Quarterly results of Reliance Industries Ltd are shown below  :

                 Data Source : The Economic Times (Markets)


Motilal Oswal Financial Services Limited, an Indian brokerage company, has recommended buying the stock of Reliance Industries Limited (RIL) with a target price of Rs. 2,900. The brokerage forecasts a +16 percent rise from the stock's current market price of Rs. 2500. 

Reliance is ranked 96th in the 2020 ranking released by Fortune. This is the highest any Indian company has been ranked on the Fortune Global 500 list.








Success = Goals + Habits

Goals and habits are the two main variables in the success equation. While goals provide you with a sense of direction and help you focus, effective habits give you the mental discipline to reach your goals. If either variable is missing, the success equation simply doesn’t add up. Conversely, when you improve your goal setting skills and form good habits, success levels soar.









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Tuesday, November 23, 2021

How to make profit by using technical analysis in Stock Market






Meaning & Definition

Technical analysis is a strategy used to aid the decision-making procedure is simplified by day traders. Technical analysis is built on real fundamental principles while you'll find an infinite number of sophisticated strategies. The basic techniques in technical analysis are not very simple, but no doubt they can supply another important view point which can enter to your broad investment strategy and help you to get the right decisions.

Technical analysis can be used on any security with historical trading data. This includes stocks, futures, commodities, fixed-income, currencies, and other securities. 

Technical analysis as we know it today was first introduced by Charles Dow and the Dow Theory in the late 1800s. Several noteworthy researchers including William P. Hamilton, Robert Rhea, Edson Gould, and John Magee further contributed to Dow Theory concepts helping to form its basis. Nowadays technical analysis has evolved to include hundreds of patterns and signals developed through years of research.

Technical analysis as a methodology for forecasting the direction of prices. This is done through the study of past market data, primarily technicals like price and volume. Price is the rate at which the security traded at different points in time. Volume is the amount of trades that were done. There are breadth indicators, price based indicators, volume based indicators and mixing indicators.


How Technical Analysis work

By using historical price data, technical analysis attempts to interpret the supply and demand that moves share prices. Dinosaurs can’t walk in the sand without leaving footprints. The dinosaurs are the institutions, mutual and hedge funds. They are the participants that move stock prices. Technical analysis visually tracks the activity of the dinosaurs using various charts and indicators to pinpoint price areas of strong interest both in terms of buying and selling. History tends to repeat itself as evidenced by price patterns.


Who can use Technical Analysis

Anyone who trades or invests in the stock market or any other tradable financial instrument should consider learning at least a basic level of technical analysis. If your money is invested into a position that has price movement, then technical analysis will help you make better-informed decisions as to how much risk to employ for how much potential reward.

Basics of Technical Analysis

Technical analysis involves and utilizes various tools and indicators. The right mix of the tools can be used to generate converging signals that improve the probability of a direction price move.

Stock Charts

Technical analysis seeks to interpret the story of a stock’s price action. Charts act as the canvas where the story is painted. The common types of charts are candlestick, bar and line charts. Charts plot the prices where trades have been executed. The time interval of the chart can be specified through the settings. Time intervals segment the price action of the stock. 

For a 5-minute candlestick chart, each candle represents a five-minute segment of trading that record the starting price (open), the highest price (high), lowest price (low) and last price (close) trade during the period. As the five minute window ends, it will display a candlestick that details the four data points (open, high, low, close) and a fifth data point that encapsulates the opening and closing price (body) and colors the body red if the last trade (close) is lower than the first trade (open), or green if the last trade (close) has a higher price than the first trade (open). Bar charts include the same information without painting the body. Line charts simply connect the closing price only for each time period.


Support/Resistance

By visually marking the charts, users can see certain price levels that tend to prevent prices from falling any further before rising back up again. These are known as price support levels. Users will also spot price levels that continue to provide a ceiling, those eventually causing prices to fall back down again after testing. These are known as price resistance levels.



Stock Volume

Volume measures the total number of shares traded for a specified period of time. It is used as a measure of interest that can manifest into significant price action. High volume indicates significant trading activity that triggers a breakout or a breakdown accompanied by a sustaining trend in prices. Breakouts result in higher trending prices and breakdowns result in lower trending prices. When volume is light, stocks tend to chop around in a range known as consolidation.




Trends

Trends indicate the current direction of share prices. When stock prices continue to rise higher, it is considered to be in an uptrend and vice versa for a downtrend. Uptrends indicate increasing demand for shares, as buyers are willing to pay higher prices as supply diminishes. Downtrends represent an oversupply of shares with waning buying interest resulting in falling prices. By connecting the various high and low points on a chart, you can manually generate trendlines that pinpoint support/resistance and direction of stock prices. When compared to historical templates of similar trendlines, you may be able to forecast the future direction, turning/inflection points and targets.




Every investor wants to find high profitability trading setups, but the thing is they don’t know-how. Instead of looking at the prices, you are looking at indicators without understanding their purpose. Instead of following trends, you are predicting market reversals. Instead of proper risk management, you are putting huge bet as the trade feels good.

If we learn about technical analysis and implement it in a simple way, we can consistently make profits from technical analysis.










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Monday, November 22, 2021

Top Stock Markets Terms Every Investor Must Know




As a Stock Market Investor and enthusiast, you must know Stock Market terms really well in order to make money in the stock markets. Moreover, it will also enhance your understanding of the relationship between stock markets and events happening in the economy. You can accurately gauge market movements and be in control of your investments. At the same time, it helps you analyze expert opinions, read between the lines, and make an informed choice.

Below we mention some of the top Stock Market Terms every investor must know to start journey into the world of Stock markets.

Stock Market

A Stock market is a place where regular activities of buying, selling, and issuance of shares of publicly-held companies take place. In the stock market, one can also trade in financial instruments such as derivatives, bonds, mutual funds, along with shares of a listed company. When you buy a share, you become a part owner of the company.

In India, the prime stock exchanges are the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE).

 

Primary market

The primary market is where a company first gets registered to raise money and issues a certain number of shares or bonds. It's in this market that firms float new stocks and bonds to the public for the first time. When a company decides to list its shares for the first time this is known as an initial public offer (IPO).

Another way for a company can raise capital in the primary market is through rights offering or issues. A rights offering (issue) allows companies to raise additional equity through the primary market after having securities in the secondary market.

 

Secondary market

After stocks or securities of a company have been sold in the primary market, they are then traded in the secondary market. Investors trade previously issued securities without the companies' involvement. In the secondary market, the investor buys shares from another investor at the prevailing market price or whatever price both the buyer and seller agree upon.

In India, primary and secondary markets are governed by the Security and Exchange Board of India (Sebi).




Share

A share indicates a unit of ownership in a particular company. As a shareholder of a company, you hold a percentage of ownership of the company and are liable for the company’s profits and losses.  You also get the additional benefits such as dividends, bonus shares and rights issue.

BSE

BSE Limited (formerly Bombay Stock Exchange) established in 1875 is Asia's first & now the world's fastest Stock Exchange with a speed of 6 microseconds. BSE is a corporatized entity with a broad shareholder base that includes the leading global exchange Deutsche Bourse as a strategic partner. BSE provides an efficient and transparent market for trading in equity debt instruments equity derivatives currency derivatives interest rate derivatives mutual funds and stock lending and borrowing. BSE is India's biggest bourse in terms of listed companies with over 5000 companies listed on the exchange. BSE's popular equity index - the S&P BSE SENSEX  is India's most widely tracked stock market benchmark index.

NSE

National Stock Exchange is the leading stock exchange in India. It was established in the year 1992 as the first dematerialized electronic exchange in the country. It was the first exchange to provide a fully-automated screen-based trading system to the investors to facilitate easy trading. In the year 1993, NSE registered itself as a stock exchange under the Securities Contract Regulations Act. It operates with a vision to “to continue to be a leader, establish a global presence, facilitate the financial well-being of people.”

The benchmark index of NSE, Nifty 50 is used extensively by investors around the world to keep track of the Indian capital market. NSE had also played an important role in the creation of the National Securities Depository Limited. (NSDL) allows the investors to hold and transfer their shares electronically without any hassle. This eventually leads to holding the financial instruments conveniently in electronic form thereby reducing the fake certificate issues.

 

Portfolio

Portfolio it is a collection of a wide range of assets that are owned by investors. The said collection of financial assets may also be valuables ranging from gold, stocks, funds, derivatives, property, cash equivalents, bonds, etc. Individuals put their money in such assets to generate revenue while ensuring that the original equity of the asset or capital does not erode.

A stock portfolio is a collection of stocks that you invest in with the hope of making a profit. By putting together a diverse portfolio that spans various sectors you’re able to become a more resilient investor. That’s because if one sector takes a hit, the investments you hold in other sectors aren’t necessarily affected.

Bull Market

Bull Market means that the market is on an upward spiral. It is a result of investors’ palpable excitement and optimism about the market or the economy. It means that the aggregate market prices of the stocks are rising.

During this time, investors generate high expectations regarding the stock market performance, and pool their money readily into this sector. An increasing consumer confidence level, subsequently increasing the cash flow into this sector, allows companies to increase annual turnover, which leads to higher profits to be disbursed among shareholders.

Bear Market

The bear market definition is exactly the opposite of a bull market. It’s a market where quarter after quarter the market is moving down about 20 percent. That signals a bear market, and when that happens people start to get really scared about putting money into the stock market.

Interestingly, a bear market is named for the way that this particular animal attacks its victims. A bear swipes downward during an attack, thus becoming a metaphor for market activity under these conditions.

 

Broker

The broker is an intermediary between the stock exchange and the investors or traders who facilitate the transfer of funds and shares in exchange for a commission. A broker is a middleman that facilitates the trade between the buyers and sellers. A broker can also refer to a firm when it acts as an agent of the investors and arranges transaction between the buyers and sellers. The firm charges specific fees for these services.

Derivative

Derivatives are financial contracts whose value is dependent on an underlying asset or group of assets. The commonly used assets are stocks, bonds, currencies, commodities and market indices. The value of the underlying assets keeps changing according to market conditions. The basic principle behind entering into derivative contracts is to earn profits by speculating on the value of the underlying asset in future.

Index

A stock market index is a statistical measure that reflects the changes in the stock market. It is created by picking and grouping similar kind of stocks from the listed securities on the exchange.

Criteria for stock selection may depend on the type of industry, market capitalization, and size of the company. BSE Sensex and NSE Nifty are the two most widely used stock indices in India.

 

Stock split

Stock split refers to the increase in the number of outstanding shares by splitting the current ones. Companies do this to enhance the availability of their shares in the market.

The general split ratio is 2:1 or 3:1, which means that one share is split into two or three. A share’s price is also affected by a stock split. It reduces as the number of outstanding shares increases.

 

Bonus shares

Bonus shares are extra or additional shares that a company gives to its shareholders. And yes, they come at no additional cost. The number of bonus shares you get depends on the number of shares you originally own.

For example, imagine that you own a hundred shares of company X. Now, if the company announces a 2:1 bonus, you get two shares free for every share you own. That is, you would get 200 free shares and your total holding rises up to 300 shares.


Finally, like any field of activity, stock trading is also based on a set of very unique and specific terms. The stock market terminology for beginners can be quite wide and comprehensive. But you need to be familiar with some important terms used in stock markets. Above all, in the Indian context you must know some Indian stock market terms and definitions which are in common use. It helps you build a better conversation around the markets.

 




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Thursday, November 18, 2021

Magic of Compounding in Stock Market






Meaning

The word compounding means that the initial returns or interest that you earned on investment becomes part of the invested capital or principle. Compounding takes place when the returns or interest generated on the principal amount in the first period is added back to the principal amount in order to calculate the interest for the following periods.

If you invested Rs. 1 lac every year from age 20 to 40 and compounded at 8%, then by 60 you would get Rs. 2.3 Cr. If you started 10 years late, invested from age 30 to 50, you would get Rs 1 Cr from 40 to 60, just Rs. 45 lacs. In all cases, you invested for the same 20 years!

So, what changed? You allowed the compounding to start early! So, with a pretty decent income and with a little self-control on spending you can start investing early. The way compounding works, the more you invest at a young age, the more your money works for you over time and the sooner you'll achieve financial freedom.


How to make Compounding work for you

1. You should start early

There is nothing like starting early to make the most of compounding. If you start investing from the time you start earning, it will make a solid base for you that will enable your wealth to grow further over a period of time.

2. Always follow Discipline

If you wish to create a healthy portfolio, it is very important that you define your financial goals and be regular in your investments. Regardless of how less you earn, knowing what your priority is and understanding how being disciplined now would pay off later, will help you develop the habit to keep money aside for investing.

3. Patience is the Key

A lot of us wish for quick returns and not realize that it is the long-term investments that really powerfully reap from the concept of compounding. You will have to allow your investment to grow at its own pace without meddling with it from time to time. Years of dedicated investment on your part will render a strong and healthy lump sum capital for you at the end.


Compounding in Stock market

Power of compounding looks quite clear from the point of view, debt and the interest being put back. But how will the concept of compounding work in case of equities? The concept is the same but the operation is slightly different. Every company has the choice to pay dividend from earnings. Generally, wealth is created by companies that can reinvest most of their earnings in the company at higher ROE. This drives growth and profit margins and enhances the stock price.


Warren Buffet’s Stock market wealth compounded growth is amazing



On his 59th birthday, Warren Buffett’s net worth was only $3.8 US Billion.

In 6 years, his wealth multiplied 4 times!

In 12 years, his wealth multiplied 9 times!!

In 18 years, his wealth multiplied 15 times!!!

At the age of 91 his net worth is $87.5 billion. So, his wealth has multiplied by 22 times in the last 32 years!!!!

Power of Compounding is practically a Superpower.

But investing early is winning only half the game. The second most important thing is to stay disciplined.


Over the years, stocks are the only investment option that has offered superior returns than any other investment option. Take a look at the below table:

Source: RBI and BSE website


Below given, some of the best performing Indian stock market companies with high compounding over the last 10 years period :




Finally, to ensure the power of compounding in stocks, they must show discipline and reinvest the profits to let the power of compounding do its magic. If the profits are withdrawn, the idea of the power of compounding becomes void as the principal amount will not get anything added to it, decreasing the return potential for the future.

Compound Interest Formula













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