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Amit ranawat

Be creative enough to create your own Destiny

Risks and Investments: Partners in Success

Risk and rewards are two products which travel side by side. And Risk is a part of investing. So, it become an important aspect to understand different types of risk an investor can face while investing and how to deals with risks involved and get succeed.
There can be many risks depends upon the behavior of investors and investments but here we are mainly covering some common risks and these are as follows:

1) Social/Political risk:
It is the risk that a country’s government will suddenly change its policies, It is mostly seen in emerging economies.
For this we are taking a recent example i.e., Demonetization.
On 8 November 2016 (20:15 IST), the Government of India announced the demonetization of all ₹500 and ₹1,000 banknotes. This was the sudden action taken by Government of India.
Now we will studies the Demonetization affect on various indices of the Indian share market.
(Source: WWW.NSEINDIA.COM)

Let’s start with:
NIFTY50

Date Open High Low Close Shares Traded Turnover (Cr)
07-Nov-2016 8535.75 8535.85 8481.45 8497.05 178070534 8436.70
08-Nov-2016 8540.00 8559.40 8480.10 8543.55 201759648 8515.57
09-Nov-2016 8067.50 8476.20 8002.25 8432.00 323968654 15536.37

 

As the announcement made after closing of the market, so its effect clearly seen on next day opening price which is around 500 points below then closing price of 8th November 2016 and moreover there is huge increase in the turnover of 7020.8 Cr. And this increase in turnover is due to selling pressure on that day. So, it is important for an investor to check political risk, though this type of risk is bit unavoidable but investor need to handle and manage this risk properly in disciplined manner.

2) Taxability Risk:
It refers to the risk that a security that was issued with tax exempt status could potentially lose that status.
Finance minister Arun Jaitley, in his Union Budget 2018 Speech, re-introduced LTCG tax on stocks/mutual funds investments. Now Investor will have to pay 10% tax on profit exceeding Rs 1 Lakh made from sale of shares or equity mutual fund scheme held for over one year.
Earlier LTCG tax on stocks was scrapped in 2004-05 by then finance minister P Chidambaram.
These types of risk are unavoidable and investors need to adjust their investing criteria accordingly.

Source: Economics Times

If you have invested 1 Lakh rupees 3 years ago and now your total invested worth is 2.50 Lakhs rupees, then you have total of 1.5 Lakhs rupees profit and with the introduction of LTCG tax, now you have to pay 10% of 1.5 Lakhs rupees profit as tax, which is 15,000 of your profit is calculated as tax, earlier this LTCG tax was null since 2004-05. So investor also needs to keep them updated with these types of risks which may arise at any point of time and may impact investor’s overall profit.

3) Market Risk:
Market risk is a risk that will affect all securities in same manner. This is the risk that the value of your investment will fall due to market risk factors and it is caused by some factor that cannot be controlled by diversification and that affect the entire market.
Main types of Market risks are:
A) Equity Risk: Applies to an investment in shares.
The market price of shares varies all the time depending on demand and supply. Equity risk is the risk of loss because of a drop in the market price of shares.
B) Interest rate risk: Applies to debt investments such as bonds.
It is the risk of losing money because of a change in the interest rate.
For example, if the interest rate goes up, the market value of bonds will drop. Interest is inversely proportional to value of bonds.
C) Currency risk: Applies when you own foreign investments.
It is the risk of losing money because of a movement in the exchange rate.
For example, if the INR becomes less valuable relative to the USD, your Indian stocks will be worth less in USDs.

4) Regulatory Risk:
It is the risk that a change in laws and regulations will materially impact a security, business, sector or market. Changes in regulations can increase the cost of operating a business; reduce the attractiveness of an investment, change in cost-structures, etc.
For example,
The Maharashtra government had passed the resolution on July 12 to allow food inside movie theatres from August 1. Though it was a major relief for movie goers but a big hit on multiplexes as sales of food and beverages inside the multiplexes contributes a lot to the overall revenue.
Due to this, following the announcement, the stock of PVR Cinemas fell 13.47 per cent or 188 points to 1209 level whereas Inox Leisure fell 10.34 per cent or 25 points to 226 levels.

5) Concentration Risk:
This risk involved when your money is concentrated in 1 investment or type of investment or not able to diversify investments.
For example, you restrict yourself towards one kind of investment like in only one sector so if any case that stock not performing good then you may end up losing money.
But when you diversify your investments, you spread the risk over different types of investments, industries and geographic locations.
For Example: If investor bought 1000 shares of Vakrangee limited on 25 Jan 2018 at 505 prices having total value of INR 5, 05,000, but after nine months i.e., on 5 Nov 2018, share price remained only 22.50, which means value investment reduced to 22,500.
This is why concentration risk needs to be avoided and investment needs to be diversified so that investor will not face any kind of concentration risk in future.
So below is the price chart of Vakrangee Limited for Last one year and give us an idea that how it fall in last one year.

6) Delisting Risk:
It is an risk which any company can face from the side of regulator. In this risk, regulator can delist the company from trading if it is suspended from trading for more than 6 months.
Like in Recent scenario:
In a circular, the BSE said, “210 companies that have remained suspended for more than six months would be delisted from the platform of the exchange, with effect from 4 July, 2018 pursuant to order of the delisting committee of the exchange”
Under the compulsory delisting regulations, the delisted company, its whole-time directors, promoters and group firm would be debarred from accessing the securities market for ten years from the date of compulsory delisting.
For example:  If you have invested in Arvind Remedies then you were into a great loss as it is one of the company which got delisted status from BSE in July 2018.
So it is always preferred to invest in Bluechips stocks rather than going for Z category stocks because it is important that stock should have enough volume so that trade can be settled easily. 

Risk involved with real time Examples:

Now we will consider Suzlon Energy and will see how risk is associated with it and which leads to collapse of its stock.

Suzlon Energy

Suzlon Energy Ltd is one of the leading renewable energy solution providers in the world and formally it was ranked fifth in the world. It is one of the world’s largest wind turbine suppliers.
But from last one year its share price collapse by almost 60%, main reason for this collapse is that it is heavily debt and almost over 99% of Promoter Stake is pledged and main reason for this heavy debt is its loss in FY18 (reported loss in FY18 was 389.18 Crore, whereas in FY17 profit was 899.89 Crore) and this loss was due to introduction of GST from 1 July 2017.

Introduction of GST  -> Increase in Expense cost and no tax exemption -> Decrease in PAT -> already in debt and after GST filled with more debt -> Increment in pledging of promoter’s shares -> negative impact on stock price

This is how regulatory risk is involved if invested in Suzlon Energy.

How introduction of GST collapse Suzlon Energy:

The indirect tax bill is negative for companies like Suzlon as it will put pressure on developer margins and internal rate of return (IRR) could eventually force a decline in prices and realizations, up to 10 to 13 per cent as excise duty exemption and concessional rate of duty would not be applicable in GST regime.
The impact includes a 16-20 per cent rise in Solar off Grid costs; 12-16 per cent rise in Solar PV Grid installations and an 11-15 per cent jump in the cost of setting up wind energy projects. This ultimately leads to negative impact on profit and loss book in FY18. This created huge pressure on debt situation of company and ultimately leads to crashes down to its low levels of stock price.
Suzlon Energy was already hit by global crisis of 2008 when it was trading around 400 and now with introduction of GST made its journey become worst and now it is trading around 5 rupees.

With regulatory risk involvement this company touches its lowest share price ever, so understanding regulatory risk for future perspective is very important because it can impact any company to a great extent.

Conclusion:
Risk plays an important role in success because it helps us in understating different factors responsible for achieving targets.
That’s why risk and rewards walks side by side each other.
In Investment perspective, understanding risk factor is very important because if you not able to make plans to avoid these risks then you may face losses in your investment so it become very important to understand each and every concept linked with your investments.

Above mentioned risks are few common risks which any investor can face while investing so understanding these risks and making proper plans to tackle these risks will be first priority for any investors.

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Travel Blog Ready #traveloholicway

Hey All
I am thinking to write a travel blog and finally i am done with this.
So here is the link for this travel blog
https://traveloholicway.wordpress.com/
Please visit and share this as much as possible and stay connected for many stories yet to come.

Global Crisis 2008

The 2008 financial crisis was the largest and most severe financial event since the Great Depression and reshaped the world of finance and investment banking.

Though global crisis felt in 2008 but its root was deep since 2000, so the base of this crisis was building from early 2000s.

So here is the story start, Few events like vast amounts of money were invested in real estate assets or loans after the 1997 Asian financial crisis (which led to foreign inflows), the burst of the dotcom bubble in 2000-2002 and George W bush, President of America at the time wants to fulfill the dream of every Americans to have their own home. So, with these reasons the Federal Reserve lowered the Federal funds rate 11 times – from 6.5% in May 2000 to 1.75% in December 2001 – creating a flood of liquidity in the economy.

This environment of easy credit and the upward spiral of home prices made investments in higher yielding subprime mortgages look like a new rush for gold. The Fed continued slashing interest rates, emboldened, perhaps, by continued low inflation despite lower interest rates. In June 2003, the Fed lowered interest rates to 1%, the lowest rate in 45 years. The whole financial market started resembling a candy shop where everything was selling at a huge discount and without any down payment.

But the bankers thought that it just wasn’t enough to lend the home lying on their shelves. They decided to repackage home loans into collateralized debt obligations (CDOs) (which have few tranches with high rated to low rated) and pass on the debt to another shop considered as Investment banks.

Soon a big secondary market for originating and distributing subprime loans developed. To make things merrier, in October 2004, the Securities Exchange Commission (SEC) relaxed the net capital requirement for five investment banks – Goldman Sachs, Merrill Lynch, Lehman Brothers, Bear Stearns and Morgan Stanley which freed them to leverage up to 30-times or even 40-times their initial investment. Everybody was on a sugar high, feeling as if the cavities were never going to come.

Fall in interest rates and increase in the subprime loan at same period and sudden decline in subprime loans after 2006 due to defaults on previous loans and increase in interest rates. And that’s leads to beginning of this bubble burst.

The trouble started when the interest rates started rising and home ownership reached a saturation point. From June 30, 2004, onward, the Fed started raising rates so much that by June 2006, the Federal funds rate had reached 5.25% (which remained unchanged until August 2007). And also by 2004, U.S. home ownership had peaked at 70%; no one was interested in buying or eating more candy. Then, during the last quarter of 2005, home prices started to fall, which led to a 40% decline in the U.S. Home Construction Index during 2006. Not only were new homes being affected, but many subprime borrowers now could not withstand the higher interest rates and they started defaulting on their loans.

Every month, one subprime lender or another was filing for bankruptcy. During February and March 2007, more than 25 subprime lenders filed for bankruptcy, which was enough to start the tide. In April, well-known New Century Financial also filed for bankruptcy.

Problems with short-term debt funding and mortgages were not restricted to the United States. In September 2007 the UK mortgage lender and bank Northern Rock was declared insolvent and had to be bought by the UK government.

By October 2008, the Federal funds rate and the discount rate were reduced to 1% and 1.75%, respectively. Central banks in England, China, Canada, Sweden, Switzerland and the European Central Bank (ECB) also resorted to rate cuts to aid the world economy. But rate cuts and liquidity support in itself were not enough to stop such a widespread financial meltdown.

As this Global crisis mainly happened due to bad loans defaulting in Subprime so this Crisis is also known as the Sub-Prime Mortgage Crisis which shaken the whole world by its impact.

Startup or End-up : Choice Is Yours!!!

We are living in an innovative world with peoples who have lots of different and unique ideas to change the lifestyle of the world. Few decades back this was not the scenario but all thanks to the technological improvement and people’s exposure towards the market that people can not only see dreams with closed eyes but also seeing their dreams comes true with open eyes and this is done in very quick time than ever.
So what’s making these dreams a big investment purpose?
So answer lies on that its human nature that consumers wants more easy lifestyle and framing model on this concept, entrepreneurs developing and setting up businesses so that they can earn a good bucket of money by providing or selling easy lifestyle to the consumers.

But does all the startups are successful?
Seeing this question, a success story of one of big e-commerce company of India (Headquarter based in Singapore) comes to in mind i.e., FLIPKART, recently it was in news. Flipkart started its journey in October 2007 by Mr. Sachin Bansal and Binny Bansal with mere investment of 4, 00,000 Indian rupees to develop its website. Within next 7 years, company has become the billion dollar company. In 2017, the company has set the target to reach Value of goods sold (GVM) of $8 Billions.
But recently 9 May 2018, promoter’s stake in Flipkart has sold to Walmart for $16 Billion by making it the world’s largest E-commerce deal.

flipkartdeal

Though Flipkart survived and become the successful business but is this story gets repeated with every startup?

According to a source, which says that over 50 Millions new businesses appears each year and also truth is that same number of businesses disappear each year.
In 2016, 74% of job seekers in US started their own businesses.
And Talking about India, According to economic survey 2016, more than 19000 technology enabled startups started, led by consumer Internet and financial services startups.

That’s great numbers.
But Wait wait, that’s not the real face.

According to a report by the IBM Institute of Business Value and Oxford Economic found that 90% of Indian Startups fail within first five years.

So now you are thinking about, if all the startups are built on an innovative ideas then why startup success rate is so slow?

The answer lies with this Report of IBM Institute of Business value and Oxford Economic found that 77% of Venture Capitalist surveyed believed that Indian startups lack new technologies and unique business model.

Even they may have innovative ideas but these ideas always come by seeing other well established businesses of that sector and following their business story. Even the number of Patent Registration from India is very less as compared to other countries (Japan stands first in this list) which tell us the story that we are basically involved in copy business ideas rather than building our own unique business model.
So instead of creating unique Startups they end up creating a business which need to be compete with already big established firms of that sector with same or kind of same business model and ultimately leads to end up of that business.

E-books,E-readers, Etc.

In this Modern and Digital world, you don’t need to go at printing machines for sharing your views on a sheet of papers. If you want to get noticed in the digital age, waiting for someone to choose you is the worst strategy. You have everything. You need to start sharing your message-Fingers, Keyboard and the Internet.

The numbers don’t lie: Amazon now sells more eBooks than printed books. Kindle sales topped 1 million per week by the end of last year. More than 20 % of publishing giant random. House’s revenues last year were from digital sales.
Amazon is at the forefront of this publishing revolution. Through the kindle e-Reader and the kindle eBook store, it has given indie authors a platform to get published and gather an audience.
Amazon is a marketing Machine. Once you start selling a certain number of copies; it refers your book to other, who has never heard of you. So, Amazon is the best stage for eBooks and their infamous writers to show their abilities.
In order to hit #1 on Amazon, you will need to sell somewhere between 3,500 and 5,000 copies in 24 hours.
Certain points below showing steps needed for publishing an eBooks:
Step 1-Write: When publishing an eBook, the first step is, Of course, to write it. Think in terms of three Drafts: (A) The “Vomit Draft” ,(B)The Review Draft ,(C)The Editorial Draft .

This three-step approach will help you get the work finished without endlessly stalling.

Step 2-Format and Design: Once you have written a book you are proud of it, here’s what to do next:

(A) Format it on kindle, (B) Design the Cover and (C) Double check everything and have friends proofread for errors.
Step 3-Publish: All it takes is just 12 simple steps:

(A) Go to kdp.amazon.com and sign in (you’ll need an Amazon account).
(B) Register your tax info for royalties.

(C) Click “Bookshelf” and then “Add new title.”
(D) Fill out the form; including book title, description, and keywords you want people to search to find your book.

(E) Upload the cover file (JPEG format).
(F) Upload the book file.
(G) Test your book with Amazon’s online viewer to make sure it looks right.
(H) Click “Save and continue” and advance to the “Rights and Pricing” page.

(I) Choose “Worldwide Rights.”

(J) Choose a 70% royalty rate and select your price, letting the international prices adjust based on the US price. Most E-Books are priced $2.99-9.99 (this is what I recommend to maximize your royalty rate).

(K) Click Save and Publish.

(L) Amazon will email you when the book is ready, which may take 24–48 hours but often happen much more quickly.

Step 4- Promote and Marketing: Now you are ready to tell the world about your book. But before you do that, you need some reviews. Reviews are important, because they are your “social proof” that will legitimize your work to new readers.

(A)Marketing around your product: It means instead of promoting just the book, we need to promote the larger ideas behind the books. It is interesting, captivating and helpful.

(B)Creativity Content and community: We need to create a community related to our topics. People will become part of it. They will comment and share it. Take ownership of the ideas.

(C)You are your Best Marketer: For achieving good results from selling your products and books, you need to hire top marketing agencies. But above this, best marketing starts with you. The leader, The Entrepreneur, The Face. People want to hear from you. People want to talk to you. Media wants to connect with you.

(D)Quality Matters: Quality matters in everything you do and honestly, it rises to the top.

Step 5- Launch:After you get some reviews and using some marketing techniques, it’s time to launch your E-Book. Every book launch should be unique.

 

Books can spread pretty fast when everything is Digital: The product, the promotion, The Distributions.

In other words, if you ever wanted to get a message in front of a lot people, there’s never been a better time.

 

Destruction in Heaven

Jammu and Kashmir is famous for its beauty and attracts every person in this world to visit once in their lifetime. But in last some days, every place is covered with water instead of tourist. Yes this time flood washed almost half part of Jammu and Kashmir, India. This destruction seems to be big in statistics numbers. This will be the worst flood in last 100 years.Heaven valley seems to be destruction valley.

PTI9_4_2014_000180B              jammu_flood_650

As many as 200 people have been killed in Jammu and Kashmir floods and nearly 1, 11,000 people have been rescued by Indian Army, Air Force and National Disaster Relief Force. Thousands life still waiting for some help.

 jammu5

Immediately after this calamity, government took various actions to provide immediate relief for this painful destruction. All thanks to Rescue team and our responsible Army and Air force.Every authority joining hands to tackle this worst situation.

APTOPIX_INDIA_PAKI_2100574g                 kashmir2_650_091114090401

Now the level of water in rivers like Chenab, Jhelum is decreasing slowly. Hopefully this destruction will end as fast as possible. It seems to be National wide problem and we all have to join hands to help the needy people.

Jammu and Kashmir Floods Information

Emergency Army Helpline:(+91) 011-23019831

Home Ministry Helpline:(+91) 011-23093054 · (+91) 011-23092763

NDRF Control Room:(+91) 011-26107953 · (+91) 0-9711077372

modernization over Digital marketing

We all wake up in morning with one more new modern technique around us. In this busy life we always like to live our life easy and modernization in various fields keep us excited toward this. One can say that modernization and new techniques fill color in everyone’s life.

 When we are talking about modernization then we can’t complete our story without throwing lights over one sector which always in news. Modernization in the field of marketing also known as Digital Marketing is a perfect example to complete my story.

In simplistic terms, digital marketing is the promotion of products or brands via one or more forms of electronic media.

With the establishment of information technology, each and every activity of our daily life in personal and professional aspects has seen a massive change and the role of digital media is simply spectacular. Many people operate businesses worldwide on small scale and large scales. However, when running a business offline, you can experience only moderate success. When it comes to online, you can find it expanding largely in quick time. And, for this digital marketing is the key.

Any business can reach to millions of people through digital media. An optimized website along with marketing activities can target the customers and rive in more traffic to the website. You can attract more customers who are interested in your products or services through marketing. The key facts to start up and expand your business are as follows:

  • Target your customers
  • Engage yourselves in online communities
  • Converse with audience
  • Educate customers about products
  • Open up new ways to expand business

Social networking sites have great influence over us. So when we talk about work,we all get serious towards it but digital marketing mix your seriousness with fun of learning new things with the help of research. One can gather every bit of knowledge through internet. One can confidently say that we are living in the world of Internet.

Try to imagine your life without Internet.

INDIAN SHARE MARKET GROWTH: FAKE OR REAL

In last few months, basically after election polls to till now, Indian share market is not in mood to look behind to low level of trade. Just growing and achieving new all time high records. It is good for perspective of investor. In last one year the growth has been incredible and hoping more yet to come. Nifty has jumped from 5800 in last year to 7800 till now whereas the oldest Asia’s exchange Bombay stock Exchange (SENSEX) has grown from 18000 to 26000.What an achievement for our home exchanges.

But do we think that Indian financial market is growing due to development of the nation or it is due to another wave? Does our economy grown enough which leads to hike in financial markets?

Answer is little bitter to digest that share market is running and development is walking. In simple way share market is running faster as compare to development. This can be distinguish by saying that the GDP growth is only around 4.5% and comparatively share market is running like a bull. India’s new appointed Prime Minister Narendra Modi has described his future plans to make India as a new emerging power in the world and we are hoping best from his side.

No doubt India has all the resources which can make this nation as one of the powerful nation in every aspect. Hoping when figures of growth of the nation and Share market index will complement each other.

If it will be done in future then it will be biggest achievement for the economy of the nation.

BAD START BUT WILL BE FAMOUS ENDING

BAD START BUT WILL BE FAMOUS ENDING.

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