ShareMarket Insights

What is the Financial Market? What is the Financial Market? The Financial Market is a marketplace, where buying and selling of various financial asset/instrument take place. The financial assets being traded in this market can be stocks, bonds, currencies, commodities, etc. It brings together the buyers and the sellers who are interested to trade in a particular instrument. So, the stock market, bond market, forex market, commodities market, and any other market trading in financial instruments together, fall under a single umbrella, which is the Financial market. These markets operate in a proper structure but, more on that later. Who participates in the Financial Market? Participants include investors (institutions, individuals, government, etc.) wishing to invest in various investment avenues, entities /governments wishing to raise funds, financial intermediaries (exchanges, brokerages, banks, mutual funds, etc.) and regulatory bodies (RBI, SEBI, etc.).   What is the...

 Financial Regulatory Bodies in India  Several bodies set up the regulatory framework of the Indian financial system. They are all there to ensure parity and responsibility among participants in that particular sub-sector. Every regulator is instrumental in making sure that the interests of the investors and all other parties are not compromised and that there is fairness in the financial system of India. Financial Regulators In India SEBI:  The market regulator in the Indian capital market is the Securities and Exchange Board of India (SEBI). IRDAI:  The Insurance Regulatory and Development Authority (IRDA) does the same for the insurance sector.  RBI:  Reserve Bank of India (RBI) conducts the country’s monetary policy. PFRDA:  Pension Funds Regulatory and Development Authority (PFRDA) regulates pensions. MCA:  Ministry of Corporate Affairs (MCA) regulates the corporate sector. We will look at the  role of these financial regulators in detai...

 

  What is Credit Rating Agency Why is it Important for the Financial Business? A credit rating agency (CRA) measures the debtor’s ability to pay back the loan by making timely principal and interest payments and the possibility of default. Agencies show how strong the country and institution is financial. Three Standard & Poor, Moody’s, and Fitch names in rating world. Credit rating agencies indirectly tell how strong the country, institution, or person is financially and how much loan or loan to them is dangerous or not. That is, how much debt he has the ability to repay. It basically tells investors that a firm has a track record and shows how likely it is to be able to return the money. Currently, there are three Standard & Poor, Moody’s, and Fitch names in the rating world. They occupy about 95 percent of the market. So far, 6 credit rating agencies under SEBI, CRISIL, ICRA, CARE, SMERA, Fitch India, and Brickwork Ratings have been registered by these agencies. The rati...

  What are Hedge Funds ? Hedge Funds  are Similar to mutual funds. But in their portfolio, you’ll find assets such as derivatives, equities, bonds, currencies, and convertible securities. Mostly banks, insurance firms, High Net-Worth Individuals (HNIs) & families, and endowments and pension funds invest in these kinds of funds. These investors have complete faith in the ability of the fund manager. The investment pattern in  hedge funds  is completely different than that of mutual funds. Hedge funds  follow an aggressive investment pattern hence they take big risks.  Hedge fund  management teams resemble traders rather than orthodox investors. In a hedge fund, limited partners contribute funding for the assets while the general partner works as a fund manager.  Underwritten are some important points that you need to know before investing in  hedge funds . Who Should Invest in Hedge Funds ? Hedge funds  are privately managed...

  What is Dividend? Dividends  are the amount in which companies offer their shareholders from their profits or their reserve cash balance. This amount will credit directly to your bank account. For example –   If any company declares a dividend of ₹5 and ex-date is 9th may & record date is 10th then if you want the dividend you must buy the share before 9th. That means you need to buy shares of that company on 7/8th or before that.  If you buy shares on the ex-date that is 9th then you will not receive the dividend.  Now you need to hold that shares till the record date that is 10th here. You can sell your stocks on 11. The whole process works on the T+2 settlement process. Here T= The buying date, T1 is the next day or ex-date & T2 is the record date. Dividends can be paid anytime in a year. There are 2 types of Dividends. One is called the interim dividend. Another is called the final dividend. Some companies give both & some g...

What is Bulk Deal? Definition of Block Deal, How Block Deal is done, Is Block Deal Good for Stock, Is Block Deal Positive or Negative  Definition:  A bulk deal is a deal where the total quantity of shares bought or sold is more than 0.5% of the number of equity shares of the listed company. Bulk deals happen during the normal trading window provided by the broker. It is a market-driven deal. This deal is visible to everyone trading on the stock exchange. The broker who manages the bulk deal is required to provide the details of the transaction to the stock exchanges. If 0.5% or more is bought and 0.5% or more is sold during the same trading session, it would be deemed as two separate bulk deals and would require two separate disclosures. Since percentages of shares and money involved in and Bulk Deals are quite high, retail investors do not participate in such transactions. It is Institutional investors like foreign institutional investors, super HNIs (high net worth individua...

 What is Block Deal ? Definition of Block Deal, How Block Deal is done, Is Block Deal Good for Stock, Is Block Deal Positive or Negative  Definition:  It is a single transaction, of a minimum quantity of 5 lakh shares or a minimum value of Rs 5 crore, between two parties which are mostly institutional players like FII's, DII's, Mutual Fund Houses etc.  The transaction happens through a separate trading window. So they are not Visible in regular markets. The deals happen in the beginning of trading hours for a time span of 35 minutes. i.e from 9:15 am to 9:50 am. Generally  on this day the stock becomes volatile due to trading in such heavy quantity. The Block Deal is a Positive or good news for a Stock. But One Should Consider Current Market Price of Share vs Deal Price Per Share.