Best start up companies in the world

Here is the list of best start up companies in the world.

1. Uber - Car hiring services
2. AirBnb - Accommodation services
3. Instagram - Photo sharing 
4. Facebook - Social networking
5. PinInterest
6. Dropbox 
7. Snapchat 
8. Square - Mobile payments
9. JawBone 
10. Fanatics - Selling branded items

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Everything about Start ups

On this page you will find all information related to start ups.

1. Best start up companies in the world?
2. Best start up companies in India
3. How to start a new company?
4. How to fund your project?
5. Where to find the investors?
6. How to transform solution into business model?
7. How the shares are distributed while registering the company?
8. What is angel investor?

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How to start a new successful start up company?

Many people wish to be the successful entrepreneur. But very few succeed in reaching the goal. Most of the start ups fail to impress the public.

Starting a new company is not a joke. It needs a lot of time, effort and money.
Follow below steps to launch your new venture.

1. Find out the problem you are planning to solve.
2. Discuss the problems and possible solutions with your friends, family and potential end users of your product or service.
3. Finalize the product.
4. If you have enough funds, start building the product or service. Otherwise find out the investors.
5. Once product is ready, launch it in a small suburb or entire city based on the availability of  the resources.
6. Tap and retain the customers.
7. Grow your company by expanding the services to multiple cities and countries.

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What are different stock rating agencies in India?

Stock rating agencies are involved in doing research on stock prices of companies listed on NSE and BSE. Rating of stocks helps investors make good choices while putting money into stocks.

Below is the list of Stock rating agencies in India.

1. Goldman Sachs
2. Bank of America Merrill lynch
3. Credit suisse
4. Nomura
5. Barclays
6. CITI Bank
7. BNP Paribas Geojit   
8. Morgan Stanley
9. JPMorgan Chase
10. UBS
11. HSBC
12. Deutsche bank

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What is a contract note?

Contract note is the digital share certificate. In the past, we used to have a physical (paper) share certificates which are now replaced by digital certificates called as contract notes.

When you buy the stocks, you will get the contract note for your transaction.
Contract note shows below information.

1. Exchange name
2. Security name
3. Quantity
4. Executed price
5. Transaction amount
6. Brokerage fee
7. Stamp duty
8. Service tax
9. Trade date and time

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What are the brokerage charges for trading stocks on BSE and NSE?

Brokerage charges for trading stocks in India on NSE and BSE are different for different brokers.

For example ICICIDirect charges around 0.5% of the transaction amount as a brokerage charge.
So if you buy shares worth 1 lac Rs., You will have to pay 500 Rs as a brokergae fee.

Please note that total charges for trading stocks in India also include stamp duty and service tax on brokerage amount.

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How much money you can make in Indian stock market?

There are 2 possibilities when it comes to investment strategies.

1. Earn fixed returns (Fixed deposits, Bonds)
2. Earn dynamic returns (stocks) 

If you do not want to take any risk, put your money in fixed deposits or Bonds. They will get you around 10% annual returns.
Fixed deposits and bonds are considered as the safest investment options. You put money x amount of money and get back (x+ 10% of x) amount at the end of one year.
For example - You invest 1 crore today in bonds or fixed deposits and get back 1 cr and 10 lacs at the end of 1 year for sure. No risk..No matter what happens!

If you are happy to take risk, you can put your money in stocks. Stocks can give you maximum returns if you are lucky. But if you are trapped in market turmoil, you could incur huge losses as well.
So consider this option only when you are take on the stock market by horns. You can easily earn 20%-50% annual returns by investing the amount in quality stocks with strong fundamentals.
I usually recommend stocks in sensex to people as sensex companies are well established and market leaders in the industry they work in with solid business models.

Overall I will say that you can earn unlimited returns in stocks but the key thing is that you never know how the stock is going to behave in future. You need to balance the trade off between risk and profits.

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Significance of the face value of the stock

Face value is the par value of the stock. It is used to determine how much cash a company needs to put in reserves.

Example -

Reliance stock face value is 10 Rs per share and it's outstanding shares in the market are 3238.43 Million. So RIL has to put 32384.3 million Rs in it's reserves.
RIL can not pay dividends to it's shareholders from this reserve cash. This reserve is kept as a guarantee for creditors of the company. In case of bankruptcy, this amount is used to pay off creditors and pay the debt.

Market price has no relation to the stock price.Face value is also used to calculate the dividend.
If RIL declares the dividend of 100% of face value, it means that company will pay 10 Rs per share to the shareholders.

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Difference between normal trade, bulk deal, block deal in Indian Stock Market

There are mainly 3 kinds of transactions that happen on NSE and BSE in India.

1. Normal deal - All trades that are worth less than 5 crore or the transaction which involves less than 5 lac shares. Retail investors usually come in this category.
2. Bulk deal - It is the deal in which more than 0.5% of total shares of the company are traded on single day.
3. Block deal - Block deal is only allowed during the beginning of the stock market. There is a seperate window reserved for these kinds of deals. Deal size is greater than 5 crore or total number of shares involved are more than 5 lacs 

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What is intra-day trade?

Intra-day trade is a trade which is squarred off on the same day.
Intra day trades allow you to make profit out of fluctuations in the stocks prices on a given day. The brokerage and tax charges are also very less as compared delivery trades.

Example - Long position
You buy RCOM shares at 9.30 AM and sell them at 3PM on the same day.

Example - Short position
You short sell TATA Motors shares at 10.30 AM and buy them at 2PM on the same day.

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What is margin trading in India?

Consider a scenario where in you know for sure that Tata Steel stock price is going to soar and you want to make money out of it. More you invest in this stock, more you will earn! But the problem is that you have just 1 lacs in your account. You can only buy shares worth 1 lac Rs.

Is there any solution to above problem? Yes - that's when margin trading comes into picture.
Margin trading allows you to buy shares worth more than your account balance. So in above case, you could be allowed to buy shares worth more than 1 lacs Rs. (may be up to 3 lacs).

Different stock brokerage houses have different margin rules. You should also note that margin trading could be very risky. You will have to square off your position before settlement cycle completes otherwise your position will be squared off automatically.

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What is the meaning of borrowing securities?

In short selling, you sell the stocks that you do not hold to make money out of falling stock prices.
Traders usually plan to square off their positions on the same day. If price of the stock goes down, they make the profit by buying the shares at low prices.
                     
But consider the scenario where stock prices rise. In that case, traders will make a loss. To avoid this loss, traders can borrow stocks for certain duration from brokerage firms for a fee and hold their position for some more days in the anticipation of fall in stock prices.

Thus borrowing of the stocks help traders meet their obligations to buy the security. NSE and BSE have started this practice of securities borrowing since 2015.

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What is the meaning of squaring off the position?

When you buy the stock, you are said to have created a long position in the
stock. Some traders are actively involved in taking positions throughout the day.
When you sell the stocks, you are said to have squared off your position.

Reverse is also true. If you short sell some stocks in the beginning of the day
then you need to square off the position on the same day other wise brokerage house
will automatically square off your position.

In summary, Squaring off the position means closing the position that you have opened earlier.


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Difference between open market and OTC market

You can buy or sell stocks in 2 ways.

1. Stock exchange (open market)
2. OTC - Over the counter

Generally large deals are executed on the OTC. Retail investors usually trade in open market like NSE and BSE. While Institutional investors trade in both open market as well as OTC. Deals made on OTC are customized as per the requirements of the parties involved in it.

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Difference between ex-date and record date

In case the company declares dividends, ex-date and record dates are also declared.
Ex-date is the last date of the transactions which are eligible for getting the dividends. Record date is usually 3 days ahead of ex-date.

Example - If company declares the dividend with record date as 5-october-2015, it means all share holders who own the stock on that particular date would be eligible to receive the dividend. People who buy the stock on or before ex-dividend date will get the dividend. If ex-dividend date is 2-Oct then if some one buys the stock on 3-october would not get the dividend.


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Difference between options and futures

There are 2 types of derivative instruments in Indian stock markets.

1. Options
2. Futures

Options and futures allow you to trade in future for a pre-determined price. The difference between option and future is that in case of options, you do not have obligation to execute the trade while in case of futures you are obliged to execute the trade no matter you make profit or loss.

Example - If you think that stock price of RIL will go up in next few days, you buy the call option. If price goes up, you exercise the option and make profit. But if price goes down, you do not exercise the option thus avoiding the loss.

But in case of future, you will have to execute the trade no matter what the spot price is.

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What is the meaning of short selling?

Short selling means the selling of stocks that you do not own.

This is used when you want to make profit from the falling stocks that you do not own. You can borrow the stocks for certain period from other party and then sell it in the market. When stock price falls, you buy the same stock at lower price and return it to the lender.

Example - If you think that Infosys share price will go down by the end of next month, you can use short selling to earn profit from this scenario. Suppose the current share price is 1000 and you think that stock will slump to 900 in next 30 days. So you borrow some quantity of stocks from stock lender for a fee for 1 month period. Then you sell the stocks at 1000. If you are lucky and price goes down to 900 in next month, you will buy the same stock in the market for 900 thus making a profit of 100 per share.


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How to exercise the option in India?

There are 2 types of options in Indian stock markets.

1. European style (Index options)
2. American style (Stock options)

European style options can be exercised only on the expiry date of the option. In India, expiry date is the last Thursday of the contract month.

American style options can be exercised any time on or before the expiry date. 

SEBI allowed both types of options in India in 2010 but stock exchanges have been only trading in European type options till now.

The options that are in money are automatically exercised by the stock brokerage house. Out of money options expire on the expiry date.

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How to make money in bearish market?

Bearish market means the market in which most of the investors tend to sell the stocks dragging the stocks prices down.

For example - In 2008, recession triggered heavy sell off of the stocks across the stock markets all around the world. It is called as bearish market.

Many people believe that bearish markets are always the cause of heavy loss but in reality you can make money in falling stock market as well.
Below is the list of ways to make money in bearish market.

1. Short sell the stocks
2. Buy put options

In short selling trick, you sell the stocks by borrowing from someone. Then after stock price falls, you buy back the same stock at lower price thus making the profit. Please note that risk is unlimited in this method if stock price soars. At higher price, you will have to buy the stocks and return it to the stock lender. But if stock price falls very rapidly, you may make a lot of profit as well.

In second method, you buy the put options which give you option to sell the securities at pre-determined strike price. If prices rise, you make limited loss in terms of premium paid to the seller or writer of the option. But if prices fall, you will make the profit by buying the stocks at lower prices and selling at strike prices.

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Stock market tips

Below is the list of some tips and advice for stock market investors.

1. Never lose money. If stock price goes down, do not sell the stock. Be patient. Sell the stock only when you are in profit. Most of the time, people invest money just looking at the chart. Avoid doing it. Invest in companies that have potential to grow.
2. Buy low and sell high.
3. Be bullish in bull market. 
4. Be bearish in bear market. When you know that some stocks are going to plunge, short sell them and earn profit.
5. Invest in blue chip companies.

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Demat Account providers in India

Below is the list of Demat Account providers in India

1. ICICI Bank
2. HDFC Bank
3. SBI Bank
4. Kotak Mahindra Bank
5. CITI Bank
6. Sharekhan
7. Geojit BNP Paribas

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What is demat account?

Demat account is required for trading in stock markets. In India, we can open the demat account 

with (National securities depository ltd)NSDL participants like ICICIDirect, Sharekhan etc.

When you buy the stock, cotract notes are created and kept in safe custody of 

NSDL as long as you hold the stock.

In the past, before arrival of digital contract notes, physical contract notes 

used to be issued to the shareholder. But now demat accounts can be used 

to store the contracts in digital formats 

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What are various corporate actions

Corporate actions can be of below types.

1. Stock split
2. Bonus issue
3. Dividend declaration
4. Mergers and acquisitions
5. Spin off

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Difference between common stock and preferred stock

There are 2 types of stocks.

1. Common stock
2. Preferred stock

Difference between these 2 stocks is that preferred stock holders have more preference when it comes to payment of dividends. Also when company is liquidated, preferred stock holders get more priority than common stock holders.

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Types of security instruments

Broadly there are 2 types of security instruments.

1. Stocks
2. Bonds

Companies need funds for various reasons and they can get the money from public by issuing IPO (Stcoks) and Bonds. They may also borrow funds from lending banks.

Major difference between stocks and bonds is that stocks can not guarantee you any returns but bonds will give you fixed returns annually. Another difference is that in case company tuns bankrupt, share holders will get money only after all lenders and bond holders have been paid off. So stocks are riskier than bonds.


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Tax on stock trading in India

When you buy or sell stocks on NSE or BSE, you need to pay tax on the transaction amount. There are 2 types of taxes.

1. STT - Securities transaction tax
2. Capital gain tax

STT is applicable for each buy or sell transaction. It is very negligible approximately 0.2%.  This tax is automatically deducted by brokerage firms at the time of transaction.

Capital gain tax is applicable on the the profit. So if you make a profit of say 100000 by buying and selling stocks, you will have to pay tax on that amount. This tax has to be declared while filing your tax returns at the end of financial year.

Capital gain tax can be divided into 2 parts.

1. Short term capital gain
2. Long term capital gain

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Sensex news and latest updates 2015

Visit this page any time to grab latest news and updates on sensex in 2015. You will also get some tips for buying and selling stocks as well as options and futures. My recommendations have never gone wrong!

Jan-August 2015

Year started with bang with sensex hitting all time high and then plunged suddenly in August 2015.

By the end of August, sensex was 26k. Pharma stocks, especially Lupin, were flying high. Tata steel was down to 220 close to 52-week low due to losses made in European market. Other sectors like IT, Banks, Oil and Gas, Auto were choppy. In September, I expect pharma stocks to move up further due to strong growth in US Market. There is an excellent opportunity to enter RIL at 850. RIL might cross 900 levels by the end of September 2015.

September 2015

September month started with big plunge in the Sensex as it crashed by nearly 600 points on the first day of the month due to China slowdown and weak industrial data from the USA.  

October 2015

November 2015

December 2015

My stable stocks of 2015 are given below.

1. IT sector     - Infosys
2. Oil and Gas - Reliance Industries
3. Pharma       - sun pharma   
4. Auto            - Maruti Suzuki
5. Bank           - ICICI
6. FMCG         - HUL
7. Engineering  - L & T
8. Telecom      - Bharati Airtel

Entry points for above Stocks are given below. Wait and Grab the chance!

1. RIL - 850
2. Infosys - 1000
3. Sun Pharma - 820
4. Bharati Airtel - 330
5. Maruti - 3500
6. L & T - 1400
7. ICICI - 250
8. HUL - 700

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