Capital market & emotional equilibrium of investor-B.V.Raghunandan


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Deals with Principles of Capital Market Investment, Emotional Attitude of the Investors, Guidelines for Buying and Guidelines for Selling and Time of Entry and Exit and Seasonality of Indian Stock Market

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Capital market & emotional equilibrium of investor-B.V.Raghunandan

  1. 1. Capital Market & Emotional Equilibrium of Investor Investor Awareness Week, ICAI, SDM Law College, Mangalore March 9, 2013
  2. 2. Capital Market Investment• Investment in Long-Term Securities like equity shares, debentures, preference shares, corporate bonds, government bonds, mutual funds and ETFs• Long Term Perspective• Mainly capital profit more than income• Time of Entry and Time of Exit• Market Linked Insurance and Provident Funds
  3. 3. Market Drivers…. • Fundamental Factors • Sentimental Factors
  4. 4. Fundamental Factors • Inflation Rate • Settlement of • Rating by Derivative International Credit Contracts Rating Agencies • Traders • Index of Industrial Activities Production • Governmental • RBI Policy and Policies Market • Crude Oil Prices Expectation • Taxation Policies • Quarter End • FII Activities Results • DII Activities • Global Cues • Monsoon
  5. 5. Sentimental Factors • Industry Approach • Business Confidence • Macro-Events/Events • Surveys Conducted • Scams • Festivals • Confidence in a Boom Market • Depression in a Bear Market
  6. 6. Nature of Returns• Shelf Investment-Growth with Maturity of Market• Return from the Total Portfolio• Loss of Profit is only Notional• Mistakes are to be Corrected early even at a loss• Junk Investment in case of new companies• Ignoring Temporary Reverses
  7. 7. Emotional Equanimity• Ignoring Temporary Developments• Ignoring Expert Advices• You have the Investment and the Investment does not Have You• If Fluctuations Affect You, see only the Closing Prices• Avoid Day Trading and Derivatives• Avoid Concentrated Investment
  8. 8. Investment Criteria• Liquidity• Returns (Regular and Capital)• Diversification• No Fund Parking• Reservation on Sunrise Industries• Stability• Risk Profile (High Beta/Low Beta)
  9. 9. Steps Involved in Selection• Selection of Industry: Avoid High Cost and Highly Competitive Industry, Scalability, Inexhaustible Growth, Low Taxation, Government Support• Selection of Company: Strong Promoter Group, Good Reserves, Market Penetration, Aggressive Strategy, Innovation, Products with wide market
  10. 10. Financial Aspects• PE Ratio • Bonus Shares/Interim• Dividend Pay-Out Dividends• Growth in Sales • Financing Capex out• Earning per Share of profit• Governance Quality • Asset Quality• Concern for • Annual Reports Enhancing Share- (Auditors’ Qualifying holder Value Report)• Regular Investment of • Debt Equity Ratio Cash Surplus
  11. 11. Purchase• Out of Surplus Funds not needed in the Near Future• In a Market on the Downtrend• Monday of the Derivative Settlement Week• Fridays of Weeks of Bull Market preferably after 3 o’ clock• Between March to August• Do not Worry, if Prices come down subsequently-if need be, do the averaging• Avoid too high priced shares
  12. 12. Selling• Last Resort• Selling in temporary boom market to buy back subsequently• Monday- at the opening or before 12 o’ clock• Wednesday of the Derivative Settlement week• September to December• Ex-Dividend
  13. 13. THANK YOU