Get the feel of actual Stock Market with Stock Trading Simulators

Stock Trading Simulator are stock trading based games that feature a virtual stock market. These games are developed and ideated mostly by stock brokers, to give its clients a feel of the actual stock market and get some hands on training and confidence before they begin trading in the actual Stock Market.

Stock Market simulators are of two different types, i.e. Financial Market simulators and Fantasy simulators.

Financial Simulators

Financial market simulators allow its users to generate a virtual portfolio which is based on real stock entries but is bought with virtual currency. A majority of the current active financial simulators use delayed data feed between 15-20 minutes to ensure that traders do not use their data to trade actively on a competing system.

The main purpose behind such a system is to let the investor get hands on practice with fantasy funds in a real-life situation so that they can understand and determine whether they would or not gain money by investing all by themselves.

Fantasy Simulators

Fantasy simulators trade in shares or derivatives of real world items or things that usually are not listed on a commodities trading list or market exchange. For e..g, movies, television shows, etc. Some of these simulators focus on sports and may or may not have been linked to active betting and wager based systems.

Technology behind these simulators

Many of these online stock simulators use Java, Javascript, ASP or php with a mysql or postgresql database. Many of them are based on open source and others are proprietary with the codes being marketed as priceless market software. This technology has been sold to a lot of film studios such as MGM and Lion’s Gate films and also to many popular science teams for usage in their PPX systems.

The stock market simulator engines can be customized for being used in other functions other than basic stock information tracking. The HSX engine has also been modified to trace popular science trends and is very useful in tracking YouTube videos.

Other various applications that can be used for implementation with this software including popularity tracking and ranking from a set scale rather than actual numerical values.

Many of these Stock market games are speculative that allow its players to trade in stocks or in a virtual or simulated share market.

There are many stock market games which exist in several forms but the basic concept in these games is to allow players to gain experience in trading in the stock market or just for entertainment by trading stocks in a virtual world where there is no actual risk.

Some stock market games do not involve real money at all. Players compete with each other to actually see who can predict the direction of the stock markets. Many stock market games are based on real life stocks from NSE, BSE, etc.

These games are useful for people who don’t know anything about the stock market but want to invest in stock market.

It allows them to get a feel of the actual market without involving any risk factor.

Initial Public Offering – A boon or a curse for investors?

An Initial Public Offering (IPO) or a share market launch is the very first sale of a stock by a company to the public. It is a type of public offering as a result of which the private company turns into a public company. This kind of process is used by various companies to raise or expand their capital and become a public based trading enterprise. Many companies that undertake an IPO also request the assistance of an investment banking firm which acts in the capacity of an underwriter by aiding them correctly to assess the face value of their shares i.e. the share price.

Whenever a company lists its shares on a public exchange platform, the money paid by the investors for the recent issued shares directly goes to the company. This is in contrast to a much later trade of shares on the exchange and the money has to pass in between the investors.

Therefore an IPO, allows a company to gather a wide pool of investors to provide itself with capital revenue for future growth, repayment of debt or working capital. A company that sells its common shares is never required to repay its capital back to the investors.

Once a company is listed, it will be able to issue extra common shares via a secondary offering, thus providing itself again with a capital for expansion without incurring any debts.

This ability to raise large amounts of capital from the market in a short span of time is a key reason for many companies seeking to go public.

There are many benefits on offer after becoming a public limited company. Some of them are listed below:

1)            Bolstering and assorted equity base

2)            Allowing cheap access to capital

3)            Providing, exposure, prestige and public image to the company

4)            Attraction and retaining better management and employees through liquid equity participation

5)            Facilitating acquisitions from various investors

6)            Creating multiple financing opportunities via equity, convertible debt, cheaper bank loans, etc.

 

Thus IPO’s can be a mixed bag as an investment option. One must carry out the necessary investigations, background and reference check for a newly turned public limited company before investing their money. However, one must also simultaneously remember that investments are a long term process and one must show maximum patience during the investment period. The long term benefits can prove really a boon, if the investor shows the right amount of patience while investing in the right place.

The difference between a financial and an investment advisor

Investment Advisor is either a firm or an individual that provides advice or guidance to its clients regarding securities (financial).

It guides and advices on securities such as investment in stocks, bonds, mutual funds, or exchange traded funds are investment advisers. Some investment advisers manage portfolios of securities.

The main difference between an investment advisory and a financial planner is that almost all financial planners are investment advisers but not all investment advisers are financial planners. Some financial planners assess every aspect of an individual’s financial life which includes savings, investments, insurance, taxes, retirement and in some cases estate planning as well. After their assessment, they help the individual to develop a detailed strategy, insurance, taxes, retirement and estate planning.

They also help you to develop a strategy or a financial plan for meeting your day to day financial goals.

Before hiring the services of any financial professional, one must know what kind of services is exactly required and what kind of a background does the financial professional hold. After all you are going to invest your hard earned money therefore it is very necessary for you to know everything about your investment advisory.

1)            To how many people do you provide advices regarding investments?

2)            What is your educational background?

3)            With which stock broking organization are you associated with?

4)            Which are the licenses you hold?

5)            What products and services do you offer?

6)            What is the commission that you charge for your services?

Also one needs to know how the investor advisers are paid in order to make better use of the services that are provided to them.

1)            A percentage of the total value of the assets that they manage for you.

2)            An hourly or daily fee on the basis of their handling of your work.

3)            A fixed fee for the services that they offer you.

4)            A commission on the basis of the securities that they buy/sell for you.

5)            A small combination of everything mentioned above.

All the compensation methods have potential benefits and possibly drawbacks, based on your individual needs. You must ask the investment advisory to explain you all the differences thoroughly before you do any business with them.

One must also ask if these service fees are negotiable or they are a onetime fixed amount. Based on your needs and requirements, the investment advisers will provide you with various strategies that will cater to your financial needs.

Indian stock market and companies daily report (June 08, 2012, Friday)

The Indian markets are expected to open in the red tracing negative opening in most of the Asian bourses and the SGX Nifty. Asian stocks were trading lower after comments by Federal Reserve Chairman Ben S. Bernanke overshadowed China’s first interest-rate cut since 2008.
The People’s Bank of China has lowered its benchmark lending and deposit rates by 25 basis points. The announcement, two days before China is due to report inflation, investment and output figures, may signal that the economy is weaker than the government expected. Bernanke said the central bank will need to assess conditions before deciding if more measures are needed to stoke an economy threatened by Europe’s debt crisis and U.S. budget cuts.
Meanwhile Indian shares extended recent gains on Thursday after the rupee breached the 55 mark to hit a two-week high against the dollar reflecting a return of appetite for risk. Talks of the government giving a big push to infrastructure development bolstered sentiments. Although there were reports of the Union Cabinet deferring a decision on the Pension Bill due to lack of consensus, the benchmark indices ended the trading day with significant gains.

Markets Today
The trend deciding level for the day is 16,617/5,039 levels. If NIFTY trades above this level during the first half-an-hour of trade then we may witness a further rally up to 16,713 – 16,777/5,070 – 5,091 levels. However, if NIFTY trades below 16,617/5,039 levels for the first half-an-hour of trade then it may correct up to 16,552 – 16,456/5,018 – 4,987 levels.

China cut borrowing costs
China reduced interest rates for the first time since 2008 and loosened controls on banks’ lending and deposit rates, in its bid to combat a deepening slowdown as Europe’s ongoing debt crisis threatens global growth. The one-year lending rate and one-year deposit rate were reduced by 25bps to 6.31%, and 3.25%, respectively. Banks are now given more leeway to offer upto 10% higher than benchmark deposit rate to depositors and to charge upto 20% lower than the key benchmark lending rate (previously 10%).

RIL plans a capex of Rs.100,000cr over next 4 years
Reliance Industries (RIL) conducted its Annual General Meeting (AGM) for FY2012. With cash and equivalents of ~Rs.80,000cr as of March 31, 2012 on RIL’s balance sheet, Chairman Mr. Mukesh Ambani announced that the company plans to invest Rs.100,000cr across business segments over the coming four years. It targets to invest ~US$3.5bn on shale gas. On its core petrochemical business, RIL aims to increase its capacity to 25mn tonnes from the current 15mn tonnes and also invest in operational efficiency projects. RIL aims to become a market leader in retail business and targets to achieve top-line of Rs.40,000-50,000cr over the next threefour years (current top-line Rs.7,600cr). Further RIL informed that although KG D6 production has declined over the past one year to 34mmscmd, it aims to raise total gas production to 60mmscmd by 2015. On profitability front, Mr. Ambani said that RIL aimed to double its operating profits in the coming five years. RIL has bought back 2.79cr shares at a cost of Rs.1,929cr under its share-buyback program. Alongside decline in KG D6 gas output, deployment of huge cash pile was amongst the key concerns on the stock. Clarity over deployment of cash is positive in our view. We maintain our Buy rating on the stock with a target price of Rs.879.

L&T bags orders worth Rs.2,410cr
L&T’s construction arm has won Rs.2,410cr new orders across various businesses during April-June 2012. The Buildings and Factories IC has secured new orders worth Rs.1,921cr. The orders are from leading developers for the construction of major residential towers across various cities in the northern part of the country. L&T Infrastructure IC has won orders to the tune of Rs.345cr for the design and construction of viaducts and three elevated stations from Delhi Metro Rail Corporation which also includes additional orders from various ongoing projects. Water effluent and treatment business has bagged new orders worth Rs.244cr from Bangalore Water Supply and Sewerage Board for upgrading the existing water distribution systems including additional orders from various ongoing projects.
At the CMP of Rs.1,277, the stock is trading at 16.7x FY2014E earnings and 2.4x FY2014E P/BV on a standalone basis. We have used the SOTP methodology to value the company to capture all its business initiatives and investments/stakes in different businesses. Ascribing separate values to its parent business on a P/E basis and investments in subsidiaries on P/E, P/BV and mcap basis, our target price works out to Rs.1,553, which provides 21.6% upside from current levels. We recommend Buy on the stock.

Economic and Political News
- People’s Bank of China cuts interest rates as economy continues to slide
- Monsoon 36% below average in first week: IMD
- PM's push for infra sector to boost investor confidence: CII
- Cabinet defers decision on pension reforms bill

Corporate News
- Tata Steel to set up Rs.30,000cr plant in Karnataka
- Suzlon to invest Rs.15,000cr to set up a 2,500 MW wind farm in Karnataka
- Dr Reddy's launches generic Parkinson's disease tablets in US
- BHEL commissions 250MW unit at UP thermal power project
- Jubiliant Life Sciences to invest ~Rs.1,000cr across businesses in Karnataka

Online share trading in India, open demat account in Angel Broking for stock market trading

What are Mutual Funds and different types of Mutual Funds

Mutual funds are a type of certified managed combined investment schemes that gathers money from many investors to buy securities.  There is no such accurate definition of mutual funds, however the term is most commonly used for collective investment schemes that are regulated and available to the general public and open-ended in nature. Hedge funds are not considered as any type of mutual funds.

Mutual funds are identified by their principal investments. They are the 4th largest category of funds that are also known as money market funds, bond or fixed income funds, stock or equity funds and hybrid funds. Funds are also categorized as index based or actively managed.

In a mutual fund, investors pay the fund’s expenditure. There is some element of doubt in these expenses. A single mutual fund may give investors a choice of various combinations of these expenses by offering various different types of share combinations.

The fund manager is also known as the fund sponsor or fund management company. The buying and selling of the fund’s investments in accordance with the fund’s investment is the objective.  A fund manager has to be a registered investment advisor. The same fund manager manages the funds and has the same brand name which is also known as a ‘fund family’ or ‘fund complex’.

As long as mutual comply with requirements that are established in the internal revenue code, they will not be taxed on their income. Clearly, they must expand their investments, limit the ownership of voting securities, disperse most of their income to their investors annually and earn most of their income by investing in securities and currencies.

Mutual funds can pass taxable income to their investors every year. The type of income that they earn remains unchanged as it gets transferred to the shareholders. For e.g., mutual fund distributors of dividend income are described as dividend income by the investor. There is an exception: net losses that are incurred by a mutual fund are not distributed or passed through fund investors.

Mutual funds invest in various kinds of securities. The various types of securities that a particular fund may invest in are mentioned in the fund’s prospectus, which explain the fund’s investment’s objective, its approach and the permitted investments. The objective of the investment describes the kind of income that the fund is looking for. For e.g., a “capital appreciation” fund generally looks to earn most of its returns from the increase in prices of the securities it holds rather than from a dividend or the interest income. The approach of the investment describes the criteria that the fund manager may have used to select the investments for the fund.

The investment portfolio of a mutual fund’s investment is continuously monitored by the fund’s portfolio manager or managers who are either employed by the fund’s manager or the sponsor.

Advantages of Mutual funds are:

1)         Increase in diversification.

2)         Liquidity on a daily basis.

3)         Professional investment management.

4)         Capacity to participate in investments that may be available only for larger investors.

5)         Convenience as well as service.

6)         Government oversight.

7)         Easier comparison

Like its advantages, the Mutual funds have disadvantages too. Here are some of them:

1)         High fees.

2)         Less control over timing of recognition of gains.

3)         Much lesser predictable income.

4)         No opportunity for customization.

There are different types of Mutual funds as well. Here are some of them.

Open-end funds

In open-end mutual funds, one must be willing to buy back their shares from investors at the end of every business day at the net asset value that is calculated for that day. Most of the open-end funds also sell shares to the public on every business day. These shares are also priced at a particular net asset value. A professional investment manager will oversee the portfolio, while buying or selling securities whichever is appropriate. The total investment in the funds will be variably based on share buying, share redemptions and fluctuation in the market variation. There are also no legal limits on the number of shares that can be issued.

Close-end funds

Close-end funds generally issue shares to the public just once, when they are created via an initial public offering. These shares are then listed for trading on a stock exchange. Investors, who don’t wish any longer to invest in the funds, cannot sell their shares back to the funds. Instead, they must sell their shares to another investor in the market as the price they may receive may be hugely different from its net asset value. It may be at a premium to net asset value (higher than the net asset value) or more commonly at a lesser to net asset value (lower than the net asset value). A professional investment manager will oversee the portfolio, in buying or selling securities whichever is appropriate.

Unit Investment Trusts

UIT or Unit Investment Trusts issue shares to the public just once when they are created.  The investors in turn can cash in on the shares directly with the fund or they may also sell their shares in the market. UIT’s do not have any professional investment managers. Their portfolio of securities is established by the creation of the UIT’s and does not undergo any changes. UIT’s in general having a limited life span, which is limited at their creation.

At Angel Broking, we provide insights into various aspects on Mutual Funds. You also can benefit by investing in Mutual Funds. For more details, please contact: Tel: (022) 3935 7600 or SMS EBRO to 5757587.