The history of Indian capital markets dates back 200 years towards the end of the 18th century when India was under the rule of the East India Company.
India's share of market capitalization as that of the world stands at 2.6%.
Among major economies of the world, it is the fastest growing economy at 7.4%.
With nominal GDP estimated at 2.5 Trillion $, it is the sixth largest economy in the world. The demography of India augurs well for it's economy and Financial Markets. More than 65% of the population is below the age of 35. The next few years will have a huge demand for workforce in capital markets. From stockbrokers, analysts, mutual fund distributors to investment advisers.
Many Stock Market Participants fail to draw a distinction between investing and trading. They tend to mix both and call themselves investors when stock prices plunge and traders when stock prices rise. Investing is long term which is driven by fundamentals and trading is short term which is price driven. Our aim is to help you in understanding Financial Markets, the traps most of the investors/traders fall prey to, and how to avoid them. Our Flagship program, Stock Market Training is designed to educate you from basics to advanced level. Success in Markets can be attributed to contrarian thinking, patience, and discipline. To consistently outperform markets one needs to do a lot of research and invest in high conviction bets. We help you in inculcating those qualities in real time scenarios using our unique platform.
In Stock Market Parlance catching a falling knife refers to averaging down a stock. It is also known as doubling up. In this strategy the trader/investor is lured into adopting this by the cosmetic effect of averaging price coming down whereas the actual loss remains the same, other things remaining same.
In finance, Black Monday refers to Monday, October 19, 1987, when stock markets around the world crashed. The crash began in Hong Kong and spread west to Europe, hitting the United States after other markets had already sustained significant declines. The Dow Jones Industrial Average (DJIA) fell exactly 508 points to 1,738.74 (22.61%). In Australia and New Zealand, the 1987 crash is also referred to as "Black Tuesday" because of the time zone difference.
Convexity is a measure of the curvature, or the degree of the curve, in the relationship between bond prices and bond yields. Convexity demonstrates how the duration of a bond changes as the interest rate changes. Portfolio managers will use convexity as a risk-management tool, to measure and manage the portfolio's exposure to interest rate risk.
Long-Term Capital Management (LTCM) was a large hedge fund led by Nobel Prize-winning economists and renowned Wall Street traders. The firm was wildly successful from 1994-1998, attracting more than $1 billion of investor capital with the promise of an bond arbitrage strategy that could take advantage of temporary changes in market behavior and, theoretically, reduce the risk level to zero.
Historical volatility (HV) is a statistical measure of the dispersion of returns for a given security or market index over a given period of time. Generally, this measure is calculated by determining the average deviation from the market price of a financial instrument in the given time period. Using standard deviation is the most common, but not the only, way to calculate historical volatility. The higher the historical volatility value, the riskier the security. However, that is not necessarily a bad result as risk works both ways - bullish and bearish.
Delta is one of four major risk measures used by option traders. Delta measures the degree to which an option is exposed to shifts in the price of the underlying asset (i.e. stock) or commodity (i.e. futures contract). ... Generally speaking, an at-the-money option usually has a delta at approximately 0.5 or -0.5.
The gambler's fallacy, also known as the Monte Carlo fallacy or the fallacy of the maturity of chances, is the mistaken belief that, if something happens more frequently than normal during a given period, it will happen less frequently in the future (or vice versa). In situations where the outcome being observed is truly random and consists of independent trials of a random process, this belief is false. The fallacy can arise in many situations, but is most strongly associated with gambling, where it is common among players.
MPT shows that an investor can construct a portfolio of multiple assets that will maximize returns for a given level of risk. Likewise, given a desired level of expected return, an investor can construct a portfolio with the lowest possible risk. Based on statistical measures such as variance and correlation, an individual investment's return is less important than how the investment behaves in the context of the entire portfolio.
A ratio above 100% is considered overvalued and a ratio below 100% undervalued. In the year 2000 this ratio for US Economy was 153% a sign of overvaluation. Subsequently the dot com bubble burst leading to sharp fall in the Market. This ratio can be used for any economy across timeframes and also across geographies.
Companies that are leaders in niche area and have a tiny market cap.
Warren Buffett said “Time is the friend of a wonderful company, enemy of the mediocre”. If you have the patience to wait for the business to grow and the market to subsequently realize its potential, you are sitting on a huge multi-bagger. This reminds me of the domestic consumption story. If one looks back at the market-cap of Cera Sanitaryware, Symphony or La Opala, it’s clear they were just too miniscule when compared to the scale they catered to, with an efficient supply chain and distribution network in place. Eventually, tailwinds prevailed, and the market catapulted them into a different orbit.
A beta coefficient is a measure of the volatility, or systematic risk, of an individual stock in comparison to the unsystematic risk of the entire market. In statistical terms, beta represents the slope of the line through a regression of data points from an individual stock's returns against those of the market.