Perfect Investment for Future

Why Need to invest in

Equity MarketS Nagarethinam +91 98659 29993

Why Need to invest in Equity Market

• Stocks can give multiple returns on investment that no other asset class

can match. If you can invest wisely in the potentially strong stocks, you

are all set to gain hugely from your investment.

• There are so many options in stock market investment. You can choose

to do intraday trading or delivery trading and you can trade in cash

segment or in derivative segment.

S Nagarethinam +91 98659 29993

• You also get a variety of choices in equity trading itself. You can invest

in growth stocks to gain rapidly, or you can invest in dividend stocks

for long term and enjoy the dividends that keep coming to you.

• In short share market investments have plenty of options that you can

choose according to your need and your budget.


What is EQUITY MARKET ?

The market in which shares are issued and traded,

either through exchanges or over-the-counter markets. Also

known as the stock market, it is one of the most vital areas of

a market economy because it gives companies access to

capital and investors a slice of ownership in a company with

the potential to realize gains based on its future performance. S Nagarethinam +91 98659 29993

Why should one invest?

One needs to invest:

earn return on your idle resources

generate a specified sum of money for a specific goal in life

make a provision for an uncertain future


The BSE and NSE Most of the trading in the Indian stock market takes place on its two stock

exchanges:

The Bombay Stock Exchange (BSE) and

The National Stock Exchange (NSE).

The BSE has been in existence since 1875. The NSE, on the other hand, was

founded in 1992 and started trading in 1994. However, both exchanges

follow the same trading mechanism, trading hours, settlement process, etc.


http://www.investopedia.com/terms/b/bombaystockexchange.asp

http://www.investopedia.com/terms/n/national_stock_exchange.asp

• At the last count, the BSE had about 4,700 listed firms, whereas the rival

NSE had about 1,200. Out of all the listed firms on the BSE, only about

500 firms constitute more than 90% of its market capitalization; the rest of

the crowd consists of highly illiquid shares.


http://www.investopedia.com/terms/i/illiquid.asp

15 reasons to invest money in stock market

• If you are contemplating the idea of investing in the stock market but still can not make your mind, here are few reasons that will help you take the decisions for investing in stocks.

• Good return – Stock market investment can get you huge return that is otherwise impossible from any other source of investment provided you have invested at the right stocks. There are instances where investors have gained manifold within short period of time by investing in certain stocks.

• Long term investment –

You can invest in the stocks for long period of time as well. If you are doing delivery based trading you can hold the stocks for as long as you want. You can gain from your long time investment in the stock market as that will give the stock enough time to appreciate.

• Regular income with long term return

You can even earn regularly by trading in stocks while investing in that for long term. You can earn buy a stock at a lower price and then sell the stock at a higher price and then again buy that stock when the price reduces and hold the stock for longer period.

• No lock in period –

Unlike some other modes of investment where you can get higher returns, stock market investment has no lock in period. That means you do not have a time frame for selling the stocks. You can hold the stock for as long as you want or sell the stocks right after buying the stock.

• Earn from dividends –

There are certain companies that offer dividends at regular intervals. This is done by the companies to distribute the profit among its investors. You can earn regularly from these dividend stocks by investing in them at a point of time.

http://www.sharetipsinfo.com/divident-payingcompany.html

• Benefit from merger –

When two companies merge together or one company takes over the other it is often seen that the price of the stock rises manifold. This is a unique opportunity for the investors to earn from this situation by investing in companies that are about to merge with the other.

• Bonus shares –

When a company plans for expansion or gather funds by opening new stocks they offer bonus shares to its existing investors. This bonus shares are offered at significantly lower price than the current market value of the stocks. This is also a gain for investor if they at all wish to invest further in the company.

• Take your own decisions –

When investing in the stock market you can actually take your own decisions regarding the extent and type of investment. So unlike other forms of investment you can control your investment more actively.

• Invest with little fund –

Even if you are having a small fund to invest in the stock market you can earn good returns by investing in the stocks. There is no limit for investing in the stocks and with small funds you can actually gain a lot by investing in the penny stocks.

• Wide options –

When it comes to stock market investment you have got wide range of options. You can either do derivative trading, or do margin trading or you can choose the conventional route of delivery based trading.

• Simple trading process –

With the online trading facility widely available these days, trading in the stock market have become easier than ever before. You can simply buy and sell stocks at the stocks market with a click of the mouse.

• Lower brokerage –

The brokerage of the stock trading have gone down significantly with the online trading.

Growth recovery in earnings to drive market returns

Cyclicals likely to outperform on moderate recovery

Indian markets have delivered healthy 15% CAGR returns over the past 11

years from FY04 to FY14. This period encompasses two big cycles: (i)

Upcycle - FY04 to FY08 and (ii)Down cycle - FY09 to FY14. Our analysis of

these two cycles presents us with interesting facts.

The phase of Upcycle was characterized by GDP growth moving from 4.0%

in FY03 to 9.3% in FY08. Cyclical were huge outperformers to Sensex with

Capital Goods outperforming Sensex by 3.2x, Metals by 1.8x, Utilities and

Oil & Gas by 1.5x. Consumer, Healthcare and Technology were

underperformers delivering merely half the Sensex returns.S Nagarethinam +91 98659 29993

Interestingly, Financials was the only sector which outperformed the Sensex in

both the cycles. Of this, Private Banks outperformed by 2.6x in Upcycle and

1.4x in the Downcycle.

Downcycle (FY09-FY14) saw GDP rates falling sharply from 9.3% in FY08, 6.7%

in FY09 to merely 4.8% in FY14. During this period, Consumer sector was the

best outperforming sector with 2.6x market returns driven by healthy earnings.

Global non-cyclical like Healthcare and Technology outperformed Sensex by

2.2x and 1.9x respectively. Utilities,Metals and Telecom underperformed the

Sensex by more than half.


SENSEX Chart


NIFTY index chart


Upcycle (FY04-FY08): Sectoral performances indexed to Sensex


Downcycle (FY09-FY14): Sectoral performances indexed to Sensex


Assessing impact of a post-election scenario on Sensex earnings

• The importance of the outcome of the 2014 general election was clearly

visible in the pre-election rally witnessed by the market during the last two

months. The rally was driven by various opinion polls predicting a near

decisive mandate for NDA, thereby generating hopes of long pending

reforms.

• While the election outcome will be known on May 16, its impact on various

businesses will be a function of the policies of the new government..


• This will surely lead to change in assumptions on various macro

parameters, in turn driving changes in earnings estimates and valuations.

• In this section, we assess what could be the likely impact on large caps in

Sensex, if the election outcome is favorable. We would like to re-iterate

that any upcycle, mainly from the current lows of 4.8% GDP, will always

surprise positively on the growth vs our current estimates. The objective of

the sensitivity analysis is to merely gauge the direction of that change


Key assumptions for the sensitivity analysis GDP growth to improve to 6% in FY15 and 7% in FY16

Industrial production (IIP) growth to improve to 4% and 6% in FY15 and FY16, respectively.

Lower CAD and higher capital flows to strengthen INR to 57 in FY15 & 55 in FY16,

from its current level of USD/INR60.


Power of Equity

Unbelievable but it has happened


Just imagine…

• How much can you make in 26 years by just investing Rs.10,000 initially in any of financial instruments ?

Take a wild guess ???

Let us look at the real example…


If you have subscribed in 100 shares of ________ company with a face value of Rs. 100 in 1980…

• In 1981 company declared 1:1 bonus = you have 200 shares

• In 1985 company declared 1:1 bonus = you have 400 shares

• In 1986 company split the share to Rs. 10 = you have 4,000 shares

• In 1987 company declared 1:1 bonus = you have 8,000 shares




• In 1997 company declared 1:2 bonus = you have 1,92,000 shares

• In 1999 company split the share to Rs. 2 = you have 9,60,000 shares



• In 2010 company declared 2:3 bonus = you have 86,40,000 sharesS Nagarethinam +91 98659 29993

At the end of 2010…

• You have 86,40,000 shares of the company

Any guess about the company ? (Hint : Its an Indian company)

Any guess about the present valuation ?


The result of ‘Power of Compounding’

Your present valuation is about

Rs. 354 Cr.+&

The company is ‘WIPRO’


Other such examples…CIPLA

Investment of Rs. 10,000 in 1979 will fetch Rs. 95 cr.+

INFOSYSInvestment of Rs. 10,000 in 1992 will fetch Rs. 1.5 cr.+

RANBAXYInvestment of Rs. 1000 in 1980 will fetch Rs. 1.9 cr.+

Thanks & RegardsS NAGARETHINAM

MOBILE: +91 98659 29993S Nagarethinam +91 98659 29993

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