Sunday, January 17, 2010

Do it now!

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Dear Readers,

As I said in one of the previous posts, a decision to invest in selected Indian equities will be a milestone in your investment life because India has such a rock-solid pedestal to compound your money in coming 5-10 years. In better words, such a decision or putting your money (cautiously) in Indian market will change not only your life but of the generations to come.

The whole world is anxiously monitoring the growth magnitude of China and India, the powerful BRIC duos. I am not feeling any sense of surprise in the growth of China because they are better disciplined in every facet. They are moving on a strict and closely controlled path of growth where decision making & strategies are in the hands of permanent people, Government or ruling Party. The concept discipline will work well in almost everywhere for a handful period and I believe that’s the fundamental platform of China’s growth chronicle.


When we talk about India, I believe, we have achieved much more than China in the midst of a constraint and complex scenario of democracy. Here, decision makers are assigned for just five years, very stunted period to plan/execute solid projects with long term vision/dynamics. Even, that time frame is not assured for them. Economical policies are entirely contrary between players/possible rulers. Most of the time, we are unable to even select a single party/team to rule us with clean majority. The annoyed Red Tapeism is another greatest real-time practical barrier and demoralizing factor to the entrepreneurial community. The list of constrictions are lengthy, but we are still growing in a fast pace! Is it not incredible? I am realizing the term “Incredible India” mostly in this point of view because our growth model is incredibly unique and exceptional.

Coming to the point, if I start to type the known statistics, this article will insufficient to explain about our growth forecasts. But still I wish to do that in bits. Broadly, 30-35% of our population will going to participate in the equity market, directly or indirectly with in the coming 5-10 years where the percentage stands now is just below 2. More than 100 Indian companies have US $1 bn market Cap now, will boost to 300-400 with in the time frame. About 1100 Indian companies are enjoying FII investments now, will precede to 1800-2000 by 2020. Around 135 Fortune 500 companies have R&D facilities in India will hike to > 300. These figures are continuously hiking in a fast pace. What else you need to put your faith in our market? or to invest in our own terra firma?

If you are not yet started investing in equities, you will soon be... And I am sure; every one of you must do that, if not now, later with the crowd. I wish to converse certain basics related to Stock market investment for the non-equity investing community. Following lines are again intended to freshers or who plans to invest in equities considering the above facts. Check the links concerned will aid you better.

It is better if you have basic knowledge on market concepts or you should be a bit familiar with this contour before stepping to invest in shares. You must achieve basic awareness from any sources, if you are serious to invest in equities. I am not talking about investment/trading tips from unreliable sources, rather the general knowledge including technical terminologies related to market.

The website http://www.investopedia.com/ especially the following sub-links may help you in a great manner in this purpose.

http://www.investopedia.com/university/buildingblocks.asp
http://www.investopedia.com/university/
http://www.investopedia.com/dictionary/default.asp
http://www.investopedia.com/search/searchresults.aspx?q=stock%20picking

You can dig knowledge as much from this site depend on your passion. The subject specific links will guide you to a wonderful world of equity market jargon.

Further, let us see, how we set up investment in shares. A PAN card is essential to invest in shares. You should have a PAN (Permanent Account Number) card to invest in any form of equities or attaining a PAN issued by Income Tax Department is a mandatory to every kind of investment related to equities. If you don’t have one so far, you can apply for that through an agent with a photocopy of your election ID Card, Address proof, and Photographs with less than Rs.100/-. It takes normally 10-15 days to attain the PAN after your application submitted. Fill the form correctly according to the instructions because it is your fiscal Identification which might have more significance in the days to come. You can learn more on the importance as well as statutory norms on PAN related issues at the link. http://www.tin-nsdl.com/

The first step is over. Now a demat/trading account required to start your investment. Check the link http://demataccount.com/ where you get a better idea on various issues related to the term. It is nothing but an account which keeps the shares you owns in electronic format. With a photocopy of PAN Card, Identity proofs, 2 Photographs with bank account details, you can approach any broker/sub broker to start a Demat/Trading account.


The next important step is to find a good broker who has a valid SEBI registration. There are hundreds of brokers and sub brokers existing but opt one or two who suits your requirements. I also wish to connect the phenomenon, “Increasing number of equity firms in India” to explore the unleashed potential of share market investments. Why share broking firms are budding in such a fastest pace? I would like to compare this trend with the previous IT boom era where thousands of IT companies launched to tap the theme of time. The growing numbers of financial firms are one another symptom or fidelity of our market prospective. They knows better the opportunities ahead and in effort to emit the maximum with the time ahead.

Study the brokerage structures on various trade types and decide the best one/two which suits you. The most important think is, try to find such a broker who values your hard earned money in all respects even if you are investing a very nominal amount. It is harder to find such one, but you have to find a team who cares you and your funds. Short list 3-4 best brokers after close research and discuss with their customers on the service aspects etc... It is also an important decision, how you are going to make buys and sells. If you are capable to do your own, then you are safe and it is the most decent way to invest.

Thats all for now. We will discuss some more on the topic later….

Comment please….


Shabu Thachat – sthachat@gmail.com

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7 comments:

  1. Dear Readesr,

    The comment option was disabled accidently for last few days. Please do it freely...

    regards

    ReplyDelete
  2. Sir,

    I know many bloggers who writes good articles on economic activities of past and why a stock went up or down in past. But I try to follow experts who have vision about future. I remember your last recommendation to me. You recommended a stock which gets orders mainly from oil companies when crude oil went below $70. But crude oil started going up after you recommend that stock. I feel sad when I see investors who have years of experience in stock market buying and selling according to past data and not according to future prospects.

    ReplyDelete
  3. Thank you james..

    I really enjoys such appreciations and thanks for the continuous encouragement.

    The company is my favourite in the category with cheap valuation and I feels a multibagger smell on that in very short span of time.. Let us see...

    ReplyDelete
  4. I really find your analysis and explanations very interesting to read...I sometimes get lost with lot of expert articles with the business terminologys like EBIDTA etc., A lay man can very easily understand your articles....Thanks a lot for writing this blog......

    ReplyDelete
  5. Thank you Jagadeesh,

    Readers like you are the inspiration of this blog.

    Keep reading...

    ReplyDelete
  6. Shabu sir, once again a superb article!!

    But Indian economy has so many blocking parameters- Growing threat from Nuke powered Neighbouring country ,terrorism, Climate changes effect on India, Growing Population, Regional diff on rise,Rise of Inequality, inflation concerns, rise of black money,Poor educational standards,Poor Infrastructure etc etc..

    So these many things may play together at some point and eventually could derail the economy at some point i feel..I may be wrong..:)

    Venkat

    ReplyDelete
  7. Dear Venkat,

    Thanks for the comment.

    All of these negatives are seriuos concerns to a growing nation and it is possible, any of this or collectively can pull back our economy in some point of time. But all these chaos are with us since 3 decades. We have proved our competence to deal such anarchies in a successfull manner than surrendering and I think our economy is immunized in someway to respond most of these except nuke and climate.

    Nuke holding is a cannon to make sound not to fire. Climate changes is another concern, but I count it as a calamity, if occures in extreme, no way out. For the rest we have experienced well to counter, forget or forgive :-).

    regards

    ReplyDelete

Disclaimer

The blog is associated with information on Indian stock market and author’s investment view points on various emerging stocks/sectors. The contents discussed in this blog are purely my own personal opinion and in no case weigh it as any kind of recommendation for stock market investment. The sheer purpose of this blog is to educate the interested community on market related subjects based on my experience and I am, in no way, responsible for investment decisions based on the contents described in this blog.



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