Category: Uncategorized

Best cryptocurrency Exchange in India?

I had a similar question when I thought to diversify my portfolio to cryptocurrency, After a lot of research I zeroed on these factors and selected my cryptoexchange

  • Security

The first and foremost thing you should look for is security. Despite the fact that bitcoin is developing at unprecedented rates, there have been a number of cyber-attacks and digital heists in which hackers stole large sums of money and then vanished.

Check to see if the exchange site is HTTPS or HTTP. HTTPS indicates that the site uses secure protocols. What type of wallet does the exchange offer? Is there cold wallet storage or hot wallet storage? Because it works offline and is physical, cold wallet storage is more secure. Hot wallets, on the other hand, may be the best option for regular transactions. Other factors to consider are if the exchange provides secure logins, whether two-factor authentication is used, and so on.

  • Volume and Liquidity

Another critical issue to consider is liquidity. A higher liquidity level indicates that the exchange is more stable. If a cryptocurrency exchange is unable to complete a transaction or fulfill an order, it is most likely due to a liquidity shortage. A crypto exchange with sufficient liquidity, on the other hand, allows traders to complete their transactions quickly and easily. As a result, traders and cryptocurrency exchanges will be protected from market fluctuations.

  • Exchange and Transaction Fees

Essentially, cryptocurrency exchanges function as an intermediary between the buyer and seller by facilitating the exchanging of cryptocurrencies for other assets. As a result, they mostly profit from commissions and transaction fees. 

Given that crypto exchanges require a large amount of capital to operate in addition to offering a secure trading environment, some crypto trading platforms may be justified in charging high transaction fees. However, in order to make big profits, numerous crypto exchanges frequently charge double the fees required, and most users are unaware of this. This is why, before making a final decision, individuals should always perform research and compare exchange and transaction fees across various trading platforms. Otherwise, there’s a good chance that you will get ripped off. 

Other than these, users should also consider other factors such as ease of using the trading platform, user experience and navigation, and transparency of the exchange before they get started on their crypto trading journey. 

Why WazirX is the best bitcoin trading platform in India

Taking into consideration several factors, including the ones mentioned above, WazirX is undoubtedly the best cryptocurrency trading platform in India. Here are some features of WazirX which make it the best.

  • Best-in-class security – In order to make WazirX India’s most secure exchange, the platform undertakes regular security audits to ensure that no security flaws are overlooked.
  • Quick KYC procedures – Wazir has industry-leading identity verification solutions with significantly reduced verification timeframes.
  • Fast transactions – With the potential to handle over a million transactions, the platform architecture can readily scale up in seconds to meet demand.
  • Integration across various platforms – WazirX is supported on Web, Android, iOS, macOS, and Windows. WazirX trading app is available on Google Play Store and App Store.
  • Easy user navigation – The platform includes a simple and easy-to-navigate interface that makes it easier for users, especially beginners, to start trading. The interface also makes it simple for users to go through the various options, whether you wish to deposit or withdraw money.
  • Low transaction fees – WazirX continues to attract more customers with each passing day thanks to significantly cheaper transaction fees than other platforms.
  • Supports global currencies – WazirX is integrated with the Binance app to allow for global currency investing.
  • Own utility token – WazirX also has its own utility token, the WRX, which can be used to pay the transaction fees. 
  • Availability of more than 150+ cryptocurrencies and 140+ trading pairs – WazirX allows you to trade in any major cryptocurrency, including Bitcoin, Litecoin, Ethereum, and even the WRX token, thanks to its availability of over 150 cryptocurrencies and 140 trading pairings.
  • P2P Trades – WazirX also has a peer-to-peer (P2P) trading engine that matches users to trade with one another.

You can open an account online in 5 minutes – To open an account online click here

Which is the best broker to invest in cryptocurrency in india?

My priority when it comes to buying cryptocurrencies is that I want to grab the best market price on each of my purchases.

That’s why I choose WazirX, which is one such exchange that helps me achieve my goal of fetching the best prices.

Because it is not just another exchange but a crypto aggregator that pools liquidity from some of the top exchanges in the world and presents the best rate on its app for every buys and sell, apart from that their customer support is also very hands-on and thus it is my preferred choice.

Other notable features of WazirX are:

Liquidity

With respect to liquidity, WazirX is still on its way up. The exchange had a 24-hour trading volume of USD 3.37 million, placings it on place no. 153 on the list of the exchanges in the world with the highest 24-hour trading volumes.

WazirX Fees

WazirX Trading fees

The fees at WazirX are what we call flat fees, meaning that makers and takers are charged the same fee. WazirX’s fees are 0.20% for both takers and makers. This is in line with the industry average, which has historically been around 0.25%. Today, which is quite normal.

WazirX Withdrawal fees

WazirX charges a withdrawal fee amounting to 0.0005 BTC when you withdraw BTC. This fee is below the global industry average and thus constitutes a competitive advantage against the majority of other top crypto exchanges in the market. The global industry average is 0.000812 BTC per BTC-withdrawal, so WazirX is roughly 40% lower than that.

WazirX Security

This is actually the only place where this particular cryptocurrency exchange takes the “gold medal” among Indian cryptocurrency exchanges. The security score received by this Indian cryptocurrency exchange site is C when performing the test at Observatory by Mozilla. No other Indian cryptocurrency exchange has a higher security score. A “C” is also in line with the global industry average.

If u want to join WazirX, Join with my referral code ksppe42b, you will get an extra 1 WRX or alternatively open an account online – Click here

I personally feel WazirX is the best for trading cryptocurrencies in India. WazirX looked to me like a fresh grad student out of the university, who felt that he could take on the world right then. But the fact that Binance had acquired WazirX, elevated its status in front of my eyes. Intuitively, I started researching WazirX. And the more I read, the more still the raging waters turned in my mind. Without waiting for another night, I created my account on WazirX.

Apart from this, the association of Binance with WazirX provides its legitimate security. So far I can undoubtedly say that I am happy with my decision.

Hope that answers your question.

What is SIP ?

A Systematic Investment Plan or SIP is a smart and hassle free mode for investing money in mutual funds. SIP allows you to invest a certain pre-determined amount at a regular interval (weekly, monthly, quarterly, etc.). A SIP is a planned approach towards investments and helps you inculcate the habit of saving and building wealth for the future.

A SIP is a flexible and easy investment plan. Your money is auto-debited from your bank account and invested into a specific mutual fund scheme.You are allocated certain number of units based on the ongoing market rate (called NAV or net asset value) for the day.

Every time you invest money, additional units of the scheme are purchased at the market rate and added to your account. Hence, units are bought at different rates and investors benefit from Rupee-Cost Averaging and the Power of Compounding.

With volatile markets, most investors remain skeptical about the best time to invest and try to ‘time’ their entry into the market. Rupee-cost averaging allows you to opt out of the guessing game. If are a regular investor, your money fetches more units when the price is low and lesser when the price is high. During volatile period, it may allow you to achieve a lower average cost per unit.

Other Benefits of Systematic Investment Plans

Disciplined Saving – Discipline is the key to successful investments. When you invest through SIP, you commit yourself to save regularly. Every investment is a step towards attaining your financial objectives.

Flexibility – While it is advisable to continue SIP investments with a long-term perspective, there is no compulsion. Investors can discontinue the plan at any time. One can also increase/ decrease the amount being invested.

Long-Term Gains – Due to rupee-cost averaging and the power of compounding SIPs have the potential to deliver attractive returns over a long investment horizon.

Convenience – SIP is a hassle-free mode of investment. You can issue a standing instruction to your bank to facilitate auto-debits from your bank account.

SIPs have proved to be an ideal mode of investment for retail investors who do not have the resources to pursue active investments. There is no single mutual fund to call as ‘best fund’, as there are many well performing funds over a longer period of 5 to 10 years and invested through SIP mode.

SIPs have proved to be an ideal mode of investment for retail investors who do not have the resources to pursue active investments. There is no single mutual fund to call as ‘best fund’, as there are many well performing funds over a longer period of 5 to 10 years and invested through SIP mode.

Generally SIP returns of good mutual funds have been between 12-18%. The actual returns might differ for different investors. But for this discussion, let’s be conservative and assume the average SIP returns in 5, 10, 15 or 20 years to be 12% per annum.

Here is what a Rs 10,000 per month SIP in mutual funds can do over the years:

  1. 5 year SIP of Rs 10,000 monthly = Rs 8.05 lakh
  2. 10 year SIP of Rs 10,000 monthly = Rs 21 lakh
  3. 15 year SIP of Rs 10,000 monthly = Rs 41.93lakh
  4. 20 year SIP of Rs 10,000 monthly = Rs 75.6 lakh
  5. 25 year SIP of Rs 10,000 monthly = Rs 1.29crore
  6. 30 year SIP of Rs 10,000 monthly = Rs 2.1 crore

Wow, on a mere investment of 36 lakh rs in the course of 30 years with easy installments you will be able to amass 2.1 crore rs.

What is volatility index (VIX)?

It’s a measure of the traders’ expectation of the rate of change in stock prices in the near-term (Current month & a portion of the next month). It is also known as the fear index as it indicates the uncertainty amongst market participants. In India, the Volatility Index is calculated based on the calculation mechanism adopted by the Chicago Board Options Exchange (CBOE) by using the bid/offer prices of NIFTY ATM Options Prices.

What to make sense of the VIX levels?

  1. When Vix goes up → It means that traders are willing to pay more to get the right to buy the underlying. In essence, they foresee the risks increase in the near future. Try looking at it from an insurance buyer’s mindset. When the perceived risk is high, the buyer is willing to pay more to cover that risk.
  2. When Vix goes down → It means that traders are willing to pay less to acquire the right to buy the underlying. In essence, they foresee the risks to reduce or remain low in the near future. In insurance analogy, when the perceived risk is low and there is complacency, the willingness to pay for insurance reduces, the prices reduce.
  3. Sudden Spikes → Historically, India Vix has not spiked above 40 despite many sudden uncertainties in the market. However, when there is a fear of epic proportions, the levels have gone above and beyond 40. Such times are considered the riskiest and unpredictable when compared to other uncertainties that are part and parcel in the marketplace.

Can VIX is useful to make position in options?

It is very logical question, VIX is useful to me to create my option position. The answer is YES, by studying VIX we can ascertain the risk involved in stock market. In last 3 days as on 25 Feb the VIX was at high because of air strike done by Indian air force.

In a week period I.e. 1st March today VIX fall almost 20% from pick. So, market is showing some strength and almost every stock option fall drastically due to fall in VIX. Take any name reliance volatility was 29 and during day it reach to 26, so vix is common parameter to study overall market fear.

What is meant by Rights Issue?

A right is actually an abbreviation for the full form “Right of first refusal”. It is an option given to the existing shareholders to invest in a public issue of the company in proportion to their existing shareholding.

It is given as a privilege to the current investors to increase their holding in the company. You can think of it as a loyalty program of sorts. The option’s time value (subscription period) in India is between 15 – 30 days depending on the company. It cannot extend beyond 30 days as per the securities law.

The right to subscribe is non-transferable and if shareholders don’t do it within the stipulated time-frame, it expires. To lure shareholders to buy in the rights issue, companies issue shares at a discount to the market price. The long-term shareholders tend to subscribe for these issues if they don’t want their % ownership of the company to get diluted.

Why do companies do Right issue?

The main reason is to keep its shareholding structure unchanged!

Rights issues are a classic way to keep away from new activist investors, hostile acquiring attempts from competitors, corporate raiders etc. Unlike an IPO, a rights issue is a silent affair which does not attract any attention of the outside world.

A company that wants to do a rights issue must only issue a public notice in 3 newspapers (English, Hindi & regional). Usually, these advertisements are stuck in the notice board part of the paper which hardly invites any attention.

This source of funding is especially useful for companies that have a large promoter holding with a narrow shareholder base. Raising equity becomes easy and inexpensive through this route.

What is NAV in mutual funds?

Net asset value(NAV) is the value of a fund’s asset less the value of its liabilities such as operating expenses, marketing expenses, management fees, among other permissible expenses and charges per unit. NAV = (Value of Assets-Value of Liabilities)/number of units outstanding.

Let us assume I run a company. I have a factory, land property across the country, 100 Four Wheeler vehicle, 25 heavy pieces of machinery and I have borrowed a loan of Rs. 100/- from a bank. The company has 100 shares outstanding in the market.

The value of a factory is Rs. 1000/-, the value of a land property is Rs. 200/-, the value of 100 four wheeler vehicle is Rs. 100/- and the value of 25 heavy pieces of machinery is Rs. 500/-.

So my company’s total asset is = 1000 + 200 + 100 + 500 = Rs.1800/-

Since I have borrowed Rs. 100/- from the bank this is my liability which is to be repaid whether in the long term or short term.

So the company NAV is = 1800-100/100 = 1700/100 = 17

How to calculate the Fund NAV: The Mutual Fund invests the money in many different sectors and a bunch of companies to minimize the risk and diversify the portfolio.

Let us assume one large cap fund invests the money in 5 companies. So the companies NAV is different. To calculate the fund NAV you have to sum the respective company NAV and just average. Then you get the respective fund NAV. The companies in which the money is invested are Maruti Suzuki (NAV 400), Titan Company (NAV 300), State Bank of India (NAV 500), HPCL (NAV 500), and Interglobe Aviation ( NAV 300).

So, the Fund NAV is = ( 400 + 300 + 500 + 500 + 300 )/ 5 = 400.

What are open Ended and close ended Mutual funds?

A mutual fund is a professionally-managed trust that pools the savings of many investors and invests them in securities like stocks, bonds, short-term money market instruments and commodities such as precious metals.

Mutual funds are classified in a variety of ways. But the first classification is:

Open-ended funds: These funds buy and sell units on a continuous basis and, hence, allow investors to enter and exit as per their convenience. The units can be purchased and sold even after the initial offering (NFO) period (in case of new funds). The units are bought and sold at the net asset value (NAV) declared by the fund.

The number of outstanding units goes up or down every time the fund house sells or repurchases the existing units. This is the reason that the unit capital of an open-ended mutual fund keeps varying. The fund expands in size when the fund house sells more units than it repurchases as more money is flowing in.

Closed-ended funds: The unit capital of closed ended funds is fixed and they sell a specific number of units. Unlike in open-ended funds, investors cannot buy the units of a closed-ended fund after its NFO period is over. This means that new investors cannot enter, nor can existing investors exit till the term of the scheme ends. However, to provide a platform for investors to exit before the term, the fund houses list their closed-ended schemes on a stock exchange.

Trading on a stock exchange enables investors to buy and sell units through a broker in the same manner as transacting the shares of a company. The number of outstanding units of a closed-ended fund does not change as a result of trading on the stock exchange. The closed-ended funds are free from the worry of regular and sudden redemption and their fund managers are not worried about the fund size

What is share buy Back?

Meaning:

When a company issues shares to the public, it raises its capital and allots shares to the shareholders. Buyback is exactly opposite to this. In Buyback, the company purchases its own shares from the shareholders and pays them the money.

Advantages to the retail investors:

Increase in the wealth of the retail investor:

Whenever a company announces buy back, it is generally done at a price higher than the market price of the shares. Hence, buyback is profitable from the view point of a retail investor. Also, for an already existing investor, buy back will be more beneficial because as the company announces buyback, it is generally perceived as a good sign and hence there is a renewed buying in the share. This causes the price of the share to increase and hence it increases the wealth of the investor.

However, there are few things which must be kept in mind before giving your shares to the company for buyback.

  1. What is the % of the shares the company is willing to buy back? This matters the most because not all the shares held by the investor will be bought back by the company. Hence, the acceptance ratio matters a lot. If the ratio is low, then it would be prudent not to invest in the share only to get the benefit of buyback. Hence, the buyback will not be attractive option for a new investor who is thinking of purchasing the share after the company announces buyback if the acceptance ratio is low. But, for an existing old investor, who already holds the shares, the buy back announcement may be beneficial as he is already holding the shares because the company will be buying the shares at a price which is higher than the market price.
  2. What is the price of the buy back? If the buyback price is less attractive, then again it won’t be prudent to invest in the shares with the greed of buyback by the company. Les attractive here would mean that the existing market price and the price of buy back are not having much difference.

What is face value and market value of stock?

These terms are used for financial market and signify a particular meaning to the financial instruments. These terms have a different value for every financial instrument and should be taken into consideration. So let us know about every term in detail:

Face value: This is the value which represents the nominal value of the company. For stocks (original cost) it is generally at 10 and for bonds (par value) 100. This value usually remains the same for stocks and is of very much importance when a company decides to do most of the corporate actions (dividends, bonus, splits, etc). It changes if the company decides to split (the value goes lower) and when the company chooses a share consolidation (the value goes higher but usually not above 10). Both of these actions happen in the form of ratios, like 1:2 or 1:5 etc, with the left value denoting the initial amount andright the final value. The face value of a company does not change due to any other reason (results, news, change in government policies, etc.)

If the face value of a company is multiplied by the shares outstanding, then we get the equity capital. For bonds the face value is the amount of money the issuer provides to the investor when it becomes mature. The face value of bonds changes along with the interest/inflation rates. It may go higher (premium) or lower (discount). In the case of zero-coupon bonds the face value is always lower while purchasing.

FACE VALUE= EQUITY SHARE CAPITAL

NO. OF SHARES OUTSTANDING

Book value: The book value of a company is the net value which is in the books. It means it is the value a company will provide to the investors if the company goes bankrupt. This value is determined by selling off all the assets and paying off the liabilitiesand dividing the left amount by the number of shares. Although not very high in comparison to the market value, but if the market value of a stock goes below the book value then it is a good buy signal. Market value (coming up next) to book value is an excellent indicator in determining if the company is overvalued or undervalued. This value helps in making a few financial ratios also like price to book value, sales to book value, etc. The value changes only due to the results shared by the company, it doesn’t get much affected by the corporate actions, news, etc.

The book value for bonds refers to the current price for the remaining coupons plus the redemption value at the coupon rate. If we need to know the price in between the coupon dates then we will not consider the value of the next coupon.

Market value: This is the value at which the stocks trade in the stock exchanges. The definition is also equally valid for bonds at the bond market. This is commonly known as Current Market Price (CMP). The market value of the stock keeps on changing (almost every second) until the stock exchanges settle down. This change of prices is due to multiple reasons such as results, news, changes in government policies, corporate actions, etc. The market value faces a drastic turn when there’s a stock split (gets halved) or share consolidation (gets doubled). The market value tells the amount that the buyer pays and seller sells for every share that is purchased or sold. In cases of high volatility speculators earn good money. This value helps us in determining the capitalization of a company by simply multiplying it with the number of shares outstanding. A very high market value does scare a lot of investors/speculators but shouldn’t be bothered if we know how well is the company performing. Some companies due to either about to wind up or due to some other reasons have a very low market value and they are often called pennies (penny stocks). This value is not only used in financial instruments but in every possible thing like groceries, cattle, property, etc.

Intrinsic value: It is the actual value that the investor decides to pay/get for the investments. This is also the value which is commonly known as the discounted value of the future benefits.“It is the discounted value of the cash that can be taken out of a business during its remaining life.” This is the famous quote by the great investor Warren Buffet. Although it is tough to calculate but if someone knows how to, then that person will soon become the king of investments. If the intrinsic value is perceived to be lower than the market value then the investment is said to be overvalued and vice versa. This value is determined by qualitative and quantitative analysis. Therefore, this value is regarded as a part of the valuation and not the fundamental value or technical value. The intrinsic value is mostly calculated for stocks and other investable instruments (that provide capital appreciation).

So, while reading any financial reports or analyzing the value of a company, an investor should be careful about the type of value he/she is using as it can significantly affect the decisions to be taken.

Example on how to see these values

Red box = Market value

Blue box = Book value

Yellow box = Face value

What is meant by book value in shares?

Introduction:-

The Price to Book (P/B) Ratio is used to compare a company’s market price to book value and is calculated by dividing price per share by book value per share.

The price-to-book ratio measures a company’s market price in relation to its book value. The ratio denotes how much equity investors are paying for each rupee in net assets.

Book value, usually located on a company’s balance sheet as “stockholder equity,” represents the total amount that would be left over if the company liquidated all of its assets and repaid all of its liabilities.

Formula:-

Book value = Net Worth

Book Value per Share = Book Value / Total number of shares

P/B Value Ratio = Market Price per Share / Book Value per Share

Use of Book Value per Share:-

The book value per share may be used by some investors to determine the equity in a company relative to the market value of the company, which is the price of its stock.

For example, a SMG Ltd company that is currently trading for Rs. 200 but has a book value of Rs. 100 is selling at twice its equity. This example is referred to as price to book value (P/B), in which book value per share is used in the denominator. In contrast to book value, the market price reflects the future growth potential of the company

There are basically two methods to calculate the book value,

1. Liability Side Approach:

Under this approach the book value is calculated by adding The Share capital and Reserves & surplus which nothing but the Net worth of the firm.

Book Value = Net Worth (Shareholders’ fund)

2. Asset Side Approach:

Under this method we calculate the book value by subtracting the outsiders’ liabilities (Non current liabilities and Current liabilities) and the fictitious assets from the Total assets.

Book Value = (Total assets – Fictitious assets) – Outsiders’ liability

If you ask me, I personally prefer the Asset Side Approach to measure the book value.

Reason??

This is because when we calculate the book value by liability side approach; we don’t deduct the Fictitious assets value.

Fictitious assets are current assets which have no market value but just created out of some miscellaneous expenditures such as preliminary expenses, loss on issue of shares, discount on issue of debentures etc.

So considering them in book value makes NO SENSE.

Now to calculate book value per share just divide Book value by the total number of outstanding shares.

That is, Book Value per share = Book Value / No. of outstanding shares