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How Does a Stock Split Benefit Shareholders?

If you regularly follow news on finance or the share market, you would know that several companies have announced their intent to split shares. Now if you own stock in any of these companies, what does split stock mean for you? Does your position get altered due to the split? Well, we are about to find out. [B-01] What is a Stock Split? A stock split is when a business’s board of directors issues more number of shares to the existing shareholders without diluting the value of their stakes. In other words, a stock split increases the organization’s number of outstanding shares and drops the individual price of each share. The process does not affect the overall market capitalization of the organization as the value of every shareholder’s stake remains the same. Let’s understand this with an example: Say a company has issued 10,000 equity shares with a face value of INR 1,000 per share. Now the most common split stock ratio is 2:1 (i.e. 2 for 1). What this fundamentally means is that every share of the company will be split into 2. So now, instead of 10,000, your company will have 20,000 equity shares and the face value of each will come down to INR 500. With this example, you must have understood the stock split meaning. Now, let’s get a few things clear. Every company can choose a different ratio to split the stocks. Regardless of the split ratio the company selects, its market capitalization does not change. A stock split has a direct effect on the price of the stock. The more the company splits its stock, the cheaper it becomes. Why Does a Company Decide to Split Shares? In most cases, the board of directors of a company decides to split its stocks for two primary reasons: The share prices have increased to a level that is too high The share prices are beyond the price levels of other companies in the same sector The main intention behind announcing a stock split is to make the shares of a company much more affordable to small investors. That being said, sometimes, a company may initiate a reverse stock split. This is done if they believe that the stock prices are much below the average range. Also, some companies do it to avoid being delisted as many stock exchanges have a minimum share price requirement. So, in such a 1:2 reverse stock split scenario, for every INR 1,000, you would receive 1 share instead of every 2 shares you owned as the stock prices have doubled. How Does a Stock Split Benefit its Shareholders? Now that you have understood the stock split meaning, it’s time to address the most significant question: how does a stock split impact its shareholders? Well, splitting the stock offers the following benefits: It makes the shares much more accessible As discussed above, one of the main reasons why many companies opt for a stock split is high share prices. And when the share prices are very high, it can deter investors from investing. A stock split can bring the shares in everyone’s price range. Besides, most investors will be more satisfied if they obtain 100 shares at a certain price instead of only 50. Therefore, companies can easily make their shares much more attractive and accessible to their potential investors by initiating a split stock. It boosts liquidity Another significant benefit of a stock split is that it increases liquidity. With the reduction in the share price, there is often an increased investor demand. And more demand translates to increased liquidity. In other words, shareholders can easily buy and sell more shares after a stock split. It may result in increased share prices After a split stock, your share prices have reduced. Consequently, there is an increased demand for the shares with more investors contemplating a purchase. Although fundamentally, nothing has changed, there might be increased demand. This increase in demand may lead to a future hike in stock prices, which may benefit investors in the long run. Some Split Share Examples A stock split is a common phenomenon and many companies have opted for it. Tesla, for instance, announced its stock split last year where each stock was split into four. In other words, it went for a 1:4 split ratio. In February 2022, Finolex brand also initiated split shares at a 1:5 ratio. Alkyl Amines Chemicals Ltd. split the face value of its equity shares, bringing the price down from Rs. 5 to Rs. 2. The move helped the company increase investor demand drastically. Even many foreign companies have opted for a stock split. Apple, for instance, split its stock 7 times ever since it got listed on the US stock exchange. Is Stock Split Different from Bonus Issue? Yes, the stock split is very different from the bonus issue. You may have heard companies crediting dividends to their shareholder’s accounts. This happens when a company has an excess of cash reserves. However, sometimes, instead of distributing dividends, a company gives bonus shares to its shareholders. The exact number of bonus shares allotted to each shareholder varies. It depends on the number of shares they presently hold. And this is called a bonus issue. Unlike the bonus issue, in the case of a stock split, the number of shares does not increase. [B-02] Wrapping Up A split stock is typically initiated by companies that have seen their stock prices go up substantially. Splitting their stocks allows them to keep their stock prices in the optimal range while increasing affordability and accessibility for potential investors. In most cases, stock splitting is not harmful to the shareholders. However, sometimes, these splits fail to generate good returns. So, as a shareholder, it is a good practice to keep up with the fundamentals of the company to ensure a sound investment. Visit Piramal Finance to access articles and blogs to help you learn more about a stock split.
08-11-2023
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Investment

What Is Inflation, And How Does It Impact Your Investments?

The rise in prices is a big concern. The increasing inflation is a concern for all. It reduces the purchasing power parity of the individuals. It causes a fall in the investment capacity as your expenses rise. You can easily feel the effects of inflation. It is important to have a deeper understanding of what inflation means. It is vital to help you prepare for increased expenses and manage your finances. [B-01] Understanding Inflation In simplest terms, inflation is the rise in prices. It can be explained as a drop in the amount of money people have to spend. It shows how much the prices of a basket of goods and services have increased on average over time. You can understand the inflation meaning from this example. Let’s say that you could buy a cup of coffee for INR100. It now costs INR120. The prices have gone up by 20%. This is happening because the prices went up. Changes in market prices also affect your investment. When prices go up, you have to spend more money. This rise makes it harder for you to save money. Causes Of Inflation Inflation is a serious concern. To understand the meaning of inflation, it is vital to understand the causes. The top causes are: 1] Due to increasing demand It is called demand-pull inflation. It happens when supply is limited, and the demand is more. The difference between the demand and supply causes a price rise. This is one of the major reasons for this phenomenon. 2] A rise in the price of raw material A rise in the prices of raw materials increases production costs. An increase in production cost will increase the price of goods and services. If the price rises and there is no wage rise, there will be inflation. 3] Increase in money supply It is referred to as the total amount of money in circulation. There are chances that the money supply will increase faster than the demand in the market. Here, your demand tends to increase against supply, but since the production is still the same, they will cause an unwanted price rise. 4] Devaluation It is the downward adjustment in the exchange rate of a country’s currency. It makes the country’s exports budget-friendly. This makes the domestic products devalued and increase their demand. This increase in demand is faster than supply. This rise in demand in the domestic and foreign markets causes a hike. 5] Increase in wages Your buying capacity is directly proportional to your wages. An increase in wages causes an increase in production costs. Though the wages rise, there are chances that supply might not increase in proportion. The difference in demand and supply causes price hikes. 6] Policies and regulations Policies from the government can cause inflation. Tax subsidies provided by the government for particular goods may boost demand. Costs could increase if demand exceeds supply. Unfavourable policy changes can lead to negative market situations and even price rises. Measures Of Inflation It is calculated based on the CPI and WPI. WPI refers to the wholesale price index, and CPI stands for the consumer price index. CPI tracks the changes in retail prices over time. CPI helps to analyse the following: The real value of salaries Value of pensions Purchasing power Interest rates. WPI tracks the changes in the price at the wholesale level. It measures inflation based on the prices of goods bought and sold in bulk or between organisations. The formula for the CPI and WPI is the same. It is as follows: CPI or WPI = (Price of the basket in current period / Price of the basket in base period) * 100 Based on this, inflation is calculated as below: Inflation = (Current CPI or WPI – Old CPI or WPI) / Old CPI or WPI * 100 Inflation below 2% is fine, but when it goes above 4%, you need to focus on your savings. Understand the Effects Of Inflation On Investment A price rise is going to impact your savings capacity. But there is more to the same. The effects of inflation on different types of investments are as follows: Effect on fixed assets A link between inflation and fixed assets goes in the opposite direction. You would rather have higher returns as it goes up. But the rate of interest on fixed assets stays the same over time. So, when inflation happens, fixed assets usually lose value. So, this can have a bad effect on investment. Effect on equity For equity, the effect of inflation can be both good and bad. It depends on the level and nature of the same. The effect will be based on the type of industry. Hyperinflation is troublesome for a layman and can negatively affect investment returns. Effect on real estate investment Real estate is a physical asset directly linked to market price movements. Rents and home prices typically increase as inflation does. This is because landlords and property owners seek larger profits to balance increased input and consumption costs. Effect on commodities Commodities are real, tangible assets that are a great way to protect yourself from inflation. It is the basis for how their prices are set. Their prices are a sign that prices will go up soon. Because of this, commodities usually do very well when inflation increases and vice versa. Tips To Secure Investment From the Effects Of Inflation The effects of inflation on investment can be serious if investments are not planned properly. Here are a few tips that can help you to secure your investments: Find your personal inflation rate Comparing your normal costs over two time periods will help you achieve this. Many of the instruments for managing expenses are available at your disposal. This will give you an idea of your disposable income for savings. Modify your portfolio If inflation happens, it’s best to change your portfolio. You need to change your asset class and invest in things that can give you better returns. Make sure you put some of your money into fixed assets to keep it safe. Understand its effect Investment has a different effect on each investment. When you buy stocks or market-linked options, you need to be careful. You will have more options if you have fixed assets and real estate. Avoid overspending When your purchasing power declines, you shouldn’t spend more than you can afford. Putting limits on your wants is a great way to spend more money. It will help you make good use of your savings. [B-02] Conclusion Inflation is an aspect that you should understand while investing. You should be cautious of your expenses and savings when there is such an unforeseen price rise. You can visit Piramal Finance for better information on savings and investments. Ensure to diversify your portfolio to avoid the negative effects of inflation.
08-11-2023
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Important Things to Keep in Mind While Opening a Demat Account

A DEMAT account holds securities and shares in electronic form. It is a critical requirement for trading. You buy and hold the shares in a Demat account during online trading. This aids in easy and secure trading for the users. A Demat account holds all the investments you make in shares, exchange-traded funds (ETFs), government securities, and mutual funds. Now that you know the Demat account’s meaning, you must be intrigued to open a Demat account. [B-01] Although it is easy to open a Demat account, it is important to know a few other things while doing so. Here are the five things to consider before opening a Demat account. Things to Keep in Mind while Opening a Demat Account After knowing “what is a Demat account” it is essential to know certain things before you want to open one. Consider the following things while opening a Demat account: 1. Choice of broker Although the government allows you to choose different brokers for opening a Demat account and a trading account, it is better to choose a broker that offers both services. What if your Demat broker doesn’t have a DP (Depository Participant) licence? A broker who will carry out the process of trading must have a DP licence. After you sell your shares, you need to submit a Debit Instruction Slip (DIS). A DIS can only be presented by a DP-licensed broker. However, if you do not present DIS on time, this may result in losses and bad delivery. It is necessary to have the same broker for both dematerialisation and trading. Due to this, your trading journey from beginning to end will be simple and seamless. One of the major advantages of having the same broker is that you can give them the power of attorney for your Demat account. Your broker will debit your account in the case of a sale and credit your account in the case of a purchase. But make sure you choose the right, trustworthy, and experienced broker. 2. Check the reliability of the DP technology platform With the growing trend of trading, most demat brokers offer you both the services of a Demat account and a trading account in one place. Your bank account financing, the crediting of Demat accounts, the debiting of Demat accounts, and the crediting of your bank account all happen effortlessly. Make sure your DP platform has robust technology so that your trading process is carried out smoothly. Normally, when you sell shares, your account gets debited the next day. And when you buy shares, the account gets credited on T+2 days. 3. Watch out for Demat charges You must have noticed DPs promoting free account openings rather frequently. Keep in mind that this is just one expense related to keeping your DP account active. The annual maintenance charge (AMC), which is levied on you annually, is the next. Typically, this is based on the value of the shares held in custody. Additionally, the DP must pay a fee to the NSDL or CDSL each time you sell shares, and that fee is also taken from your account. This happens each time the shares are debited from your Demat account. In addition, your DP charges a fee if you request a physical statement, a duplicate statement, or a statement of holdings and transactions to provide proof. If your DIS is denied for technical reasons, the DP will once again assess a penalty. Add all these fees to get a complete picture of how much your Demat account will cost overall. 4. Seamless integration of banking, broking, and custody Only if your broker is also a bank can all three major activities—banking, broking, and custody—be seamlessly integrated. But it’s not that significant. You are good to go if your broking and custody are flawless and if you load money via NEFT, RTGS, UPI, or an authorised payment channel. Remember that many brokers will charge you a small fee to utilise the payment gateway; therefore, transferring money through the free NEFT, RTGS, or UPI methods is recommended. You have less to worry about in terms of administrative concerns the more smooth these three actions are. 5. Superior support services One cannot solely evaluate a DP based on their usual transactions. It must also be evaluated in light of the supplementary services they offer. How long does it take to dematerialise your physical shares? Do the corporate actions automatically credit your Demat account? How well does the DP handle problems like liens, pledges, customer complaints, etc.? These factors all work together to provide you with good service. [B-02] Bottomline Now that you know “what is a Demat account,” start your trading journey right away. However, all these five things are important to consider before you open a Demat account. Your trading journey will be seamless once you have your dematerialization and are trading with the same broker. Trading security is the biggest concern; for this, see how reliable your DP technology platform is. Moreover, don’t fall into the trap of “zero Demat account opening charges.” Also, consider the additional and hidden charges. Make sure your broker is a bank to make your banking, brokerage, and custody easier. Finally, choose a Demat platform that offers superior support services.
08-11-2023
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Electronics

Reasons You Should Choose An Electric Car

Eclectic cars are a thing, like it or not, and if you haven’t heard about them, then you might be living under a rock! Countries across the globe have started to adopt and encourage the use of electric vehicles (EVs). For instance, the Indian government provides many incentives to those buying electric cars, like tax incentives. Moreover, the cars themselves come with built-in incentives such as zero emissions, no need for fueling at petrol pumps, and a noise-free, vibration-free ride, among others. [B-01] If you look at the history of electric car development, initially the industry did not gain quick popularity. High costs, short battery life, low speed, and far fewer environmental benefits meant that these cars were not that popular, until recently. In the last decade, there has been a considerable rise in interest in the EV industry. Original equipment manufacturers (OEMs), consumers, and government authorities have pushed for massive developments in EV and battery technology. Some excellent collaborations have been made in recent years and the outcome? Sale of millions of electric vehicles in numerous nations and the hope of a greener planet. Continue reading to learn more about the reasons why you should choose an electric car over others. 6 Reasons to Invest in an Electric Car It is safe to say that electric cars represent the future of driving and transportation as developments continue in the industry. So, if you are looking for reasons why you should choose an electric car, this blog will help you make an informed decision. In recent years, some major companies have come up with innovative electric cars. Some well-known names in the EV industry, in India and abroad, include: Tesla Tata Motors Mercedes-Benz Hyundai Morris Garage (MG) Renault Audi BMW and many more. Benlow-mentioned is some reasons to invest in EVs: 1. Electric cars offer tax advantages With India’s adoption of electric cars, the government has released numerous incentives to promote their use. For example, electric cars have lower registration and road taxes than vehicles with internal combustion engines (ICEs). According to the budget proposal for 2021, after 15 years, personal automobiles would be subject to a ‘green tax.’ Whereas, electric and hybrid vehicles will be exempted from it. Did you know that if you buy an electric car in India that is registered in the name of your company, you may benefit from 40% depreciation during the first year? Additionally, you can enjoy additional tax advantages of up to Rs 1.5 lakh, under the government’s recently implemented EV policy. 2. Electric cars mean reduced operational expenses Buying an electric car is a smart idea. It enables you to save a lot of money on fuel as you don’t have to pay for expensive fuels like gasoline or diesel. If you consider the rising cost of fuel such as petrol, diesel, or CNG, the cost of charging an electric car will leave you in splits. Besides, you have options to further reduce the cost of charging by using greener energy sources, such as solar energy, to charge your electric car. 3. Reduced maintenance expenses Considering the many moving components a gas, petrol, or diesel-fueled car contains, it requires routine maintenance checks. Today the driving belt could cause an issue; tomorrow, the piston may get jammed, among many other issues. On the other hand, electric cars have fewer moving components. This means that your electric car will most likely have cheaper long-term maintenance costs, which means you get to enjoy considerable cost savings in the long run. 4. Improved vehicle performance Earlier, electric cars were thought to be an impractical option—high price, low drive-time and expensive charging. However, this has changed over time with advanced technology. Today, you will find several well-designed and attractive EVs available on the market. Electric cars weigh less and deliver superior acceleration (equivalent electric motors have more thrust and torque than most ICEs) when compared to ICE vehicles. Moreover, electric vehicles wield more power in each wheel, in the least time, than cars with ICEs. The fastest ones in the market can throw a mobile phone from the dashboard into the backseat if accelerated considerably—thanks to the magic of instant torque EVs deliver. 5. Increased eco-friendliness with reduced carbon emissions Global warming and climate change’s adverse consequences are escalating. As EVs have zero tailpipe emissions, it ultimately benefits the environment as it reduces carbon emissions. If you switch to electric cars, like millions of others are, it will help India avoid roughly one gigaton of CO2 emissions by the end of 2030. Our planet is in desperate need of alternative green energy. With the vast number of automobiles and industrial usage of non-renewable fossil fuels, switching to cleaner energy has become the need of the hour. If you wish to leave a planet worth living on for future generations, it’s time to cut your reliance on fossil fuels. This is where a “zero-pollution” fuel choice like electric power makes the most difference. 6. Excellent driving experience As electric cars do not have gears and ICEs that vibrate and produce sounds, they provide a superb driving experience (although many people enjoy the roar and hum of the ICEs). With EVs, you don’t have to deal with confusing engine settings or controls either, since most EVs are automatic transmission machines. All you need to do is simply accelerate, brake, and steer to stay in control and enjoy a quiet, comfortable, secure, and noise-free ride. Numerous studies [1] have found that vehicle noise may cause a variety of harmful effects, including heightened anxiety, depression, elevated blood pressure, and so on. So, another major advantage of driving an electric vehicle is that it produces less noise. In comparison to ICE cars and their exhaust systems, the motors used in electric cars are extremely silent. 7. The convenience of charging batteries Electric cars use electrical energy to charge their batteries. Whereas, with ICE cars, that is not the case as they use fossil fuels such as CNG, petrol, or diesel to run. To make it easy for EV owners, numerous battery charging stations are being developed in the country. So, consumers will be able to charge their EV batteries at a local station instead of wasting time in huge lines at CNG or gasoline stations. Additionally, EV users might even be able to charge their batteries at home using charging equipment and a correct setup. Stay Future Ready With Electric Vehicles Electric vehicles are the way of the future. Manufacturers are making greater efforts to drive the transition from conventional automobiles to electric ones. Now that you know the many advantages of owning an electric car, you can start exploring your options. If the sales numbers of electric cars are any proof, then there’s never been a better time to buy one. [B-02] While you are at it, if you are looking to finance your purchase of an electric car, you can explore car loans from reputed lenders such as Piramal finance. We offer a hassle-free process for securing different types of loans, including personal and car loans. You can help fulfil your many needs using such loans. So don’t wait; consider going the EV way today!
08-11-2023
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Business Loan

Gold Loans – A New Way To Finance Start Up Business

A strong financial backup can convert a creative idea into a huge venture. Finance is not only necessary, but also a basic requirement for running any business. A constant supply of finance in a business will help the business multiply its value and increase its worth. However, for a startup business, getting ample capital becomes a challenge. In such scenarios, entrepreneurs opt for credit and loans from different lending sources. Out of many credible sources of loans, like business loans, and government-run schemes, gold loans have become one of the most widely used loan products in the Indian market. Because gold is a highly coveted metal, it is commonly used as a medium for investment and loan repayment. It is an ideal way to raise immediate funds for your business venture. In this article, you will learn about the best gold loans, their features, benefits, and downsides, as well as various gold loan interest rates. [B-01] What are some of the exclusive benefits of taking a gold loan? A gold loan provides a handful of benefits in comparison to other forms of loans. Lower rate of interest: As gold loans are a secured form of loan, the rate of interest is subsequently lower than that of other unsecured loans. In India, most banks charge an interest rate starting at 7 percent per annum on gold loans. Lenient eligibility: As the loan you apply for involves physical gold as collateral, the eligibility requirements are quite lenient, and you can easily get into the process without much documentation. No processing fee: Another striking benefit of availing of a gold loan is that there are no processing charges involved. With that, there are no foreclosure charges, in case you want to make a prepayment or close your loan account before the tenure. Anytime liquidity: Gold loans are also subject to Anytime Liquidity, or ATL, which means that by using gold as a medium of exchange for the loan, the loan amount can be disbursed within an hour. There would be no requirements for rigorous paperwork, formalities, or anything similar that would further delay the process. No requirement of credit history: Unlike other loans, where a good credit history is a mandatory requirement for getting a loan, gold loans do not require a good credit history. So, this is an advantage for you if you do not have a good credit history, as gold is used as collateral, and the lender is assured about the repayment. Safety of the metal: The lender must ensure the safety of the gold. A gold loan also gives you the means to store your gold safely. Banks often follow the best safety protocols to keep your gold possessions safe from theft. Most banks use a triple-layered security feature to keep your gold safe from exposure. Gold loan for financing business: Like other secured loans, in a gold loan, you have to use gold as collateral in return for the loan amount. This is a significant benefit, as most startups face problems when they try to apply for an unsecured loan. The interest rates of such loans are higher, and it weakens your financial muscle and increases your financial burden. A gold loan will also prevent you from sharing your equity with other companies. You can get the required funds from the loan and easily pay it off in the form of instalments. There are various parameters that state the importance of taking a gold loan to finance your business. Immediate funds: Applying for a loan against gold is the best way to raise immediate funds for your start-up business. In the event of a financial crunch, you might need a lump sum to bridge the sudden demand for money. As mentioned earlier, with physical gold as a guarantee for the loan, the amount is disbursed within an hour. So, after filling out your application and submitting your documents, the bank will disburse you the amount in no time. More control: Applying for a gold loan gives you more control over your business venture. If you sell a share of your company in the form of equity to another company, you will eventually lose some control over your business. The decisions of your company will be influenced by the decisions of the shareholders. However, applying for a loan will help you invest your own money and get a grip on your company. Regular cash flow: A good cash flow is a very crucial requirement that determines the sustainability of your business. A regular cash flow can help you swim through troubles like economic recession, steady demand, inflation, etc. By applying for a gold loan, you can get steady cash flow to buy raw materials and equipment, hire new employees, invest in manufacturing units, etc. [B-02] The Bottom Line: In an era of competitive entrepreneurship, a lack of finances might stand as a huge obstacle to your business. You may have difficulty raising sufficient funds to get your business idea off the ground. To sort that out, you need steady cash flow and, at the same time, should avoid selling shares of your company. To do that in the best possible way, you need to get a gold loan at a nominal interest rate to cover your business needs. If you want to know more about gold loans, gold ETFs, sovereign gold bonds, etc., you should prefer visiting Piramal Finance. Besides that, it also has ample content related to personal loans, MSMEs, mutual funds, GST, tax planning, etc.
08-11-2023
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All about convertible debentures, it’s meaning and features

Investors looking to diversify their portfolio with minimal risk for their investment often opt for convertible debentures. Convertible debentures are debt investment instruments that allow companies to raise money by selling bonds, which can be converted into shares on a fixed date. [B-01] On the investor’s end, these are popular debt instruments thanks to their low-risk profile. It goes without saying that if you are a risk-averse investor, convertible debentures can be a good option. They can help you keep your money secure and earn a fixed rate of interest, all while giving you the option to participate in the company’s future performance. In this article, we will provide a detailed understanding of convertible debentures. Keep reading! Debentures and Their Different Kinds Let us start at the very basics and understand what debentures are. Debentures are a type of debt instrument issued by companies to raise capital. While debentures are mostly issued by companies to raise capital, government or quasi-government agencies may also issue them. You will find two kinds of debentures in the market: convertible and non-convertible. Convertible debentures can be converted into equity shares or other securities at the option of the company or the debenture holder, while non-convertible debentures do not have this conversion option. What is a convertible debenture? Convertible debentures, or CDs, are a type of debt security that allows you to convert the principal amount into common shares or other securities after a specified period. If you do not want to take any risk with your money and have a longer time horizon for your investment, these debentures are a great choice. It offers flexibility as well as upside potential. So, what are your earnings when you invest in a convertible debenture? You will get fixed interest at a rate conveyed to you at the beginning. This interest will be paid to you until the maturity of the debenture. Upon the expiration of a specific period, you will be given the option to either take your principal back or convert it into the company’s stock. This specific period will be conveyed to you at the beginning of the purchase. However, due to their convertibility, convertible debentures have lower interest rates than typical bonds. Therefore, this instrument is beneficial for you, if you want to enjoy the option of conversion to shares in the future. If you are a risk-averse investor focused on earning interest and keeping your investment safe, you might want to look at bonds instead. How Does a Convertible Debenture Work? Convertible debentures typically have a term of five to seven years, after which they can be converted into shares. The conversion ratio, or the number of shares per debenture, is set at the beginning itself, when the paper is issued. For example, let us suppose ITC Ltd. issues 100 convertible debentures with a conversion ratio of 1:10. Hence, each debenture can be converted into 10 shares. Thus, if you buy 100 convertible debentures, you will receive 1000 shares of ITC Ltd. on a specific date. This conversion is done at a predetermined price, which is also communicated while issuing the debenture itself. If the company’s stock price rises above the conversion price (the price at which the debenture is converted into shares), it will be immensely profitable to you. You can convert your money into shares at a profit. However, the reverse is also true. If the stock price falls below the conversion price, you might have to face a loss if you plan to sell the shares immediately. This is one of the risks of investing in CDs. You should hold on to the stocks and wait for the price to rise if you are not in a hurry to receive your investment back. Another method by which you can earn from a convertible debenture is by selling it in the secondary debt market. Due to their convertible nature, these instruments sell at a higher price in this market than their non-convertible counterparts. What is a non-convertible debenture? A non-convertible debenture, commonly known as an NCD, is a debenture that cannot be converted into equity shares of the company issuing the debenture. Non-convertible debentures typically have a higher interest rate than CDs and have a more extended maturity date. As a non-convertible debenture investor, you can receive periodic interest payments, known as coupons, until maturity. At maturity, you will receive your principal back. There’s more! Some debentures may give you the option to invest your interest payments in cash or purchase additional NCDs instead. This option is known as “rolling over.” Rolling over is a great opportunity for you to compound your returns and earn more money. However, keep in mind that this also increases their risk because you have to commit to holding the debenture for a longer time. Features of a Convertible Debenture When issuing a debenture, you first need a trust indenture. A trust agreement is a contract that governs the relationship between the issuing corporation and a trustee who manages the investor’s interests. Interest rate One of the first things you need to check before investing in a convertible debenture is the interest rate or coupon rate. This is the interest the company will pay to you as a debenture holder of the company. CDs may have a fixed or floating coupon rate. In some cases, a floating rate is tied to a benchmark, such as the yield on a 10-year Treasury bond. Maturity date The second important feature of a convertible debenture is its maturity date. As the name suggests, this is the date on which the company will repay the debenture or convert the debenture into shares. You should check this date before investing so that you know when you can expect to receive your principal back. Credit rating The next critical feature is the company and debentures’ credit rating. Every company strives to maintain a good credit rating because this determines the demand for debt papers issued by them. This credit rating is assigned by a reputable credit ratings agency such as CRISIL, CARE, ICRA, and others. [B-02] Investors are always looking for papers issued by companies with high credit ratings. Moreover, each debenture also has a specific credit rating. Hence, you need to check the credit rating of the company as well as the debenture before investing your money. Debentures have a long history in the financial world and are commonly used to fund the expansion and growth of companies. They can be a good addition to your portfolio and help you diversify your assets.
08-11-2023
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Other

Steps to Making Money in Intraday Trading

How can you earn a living from intraday trading? Although success in intraday trading is never certain, following these ten measures dramatically improves your chances of doing so. Below are a few intraday trading strategies that will help you. [B-01] 10 Intraday Trading Tips To Get You Started Learn the rules governing the industry In a nutshell, it is the structure upon which intraday trading strategies is built. It lays forth the rules and constraints that apply to your intraday trading. Consider your risk tolerance, the rate at which your funds may be depleted, and the potential rewards from taking risks. Locating stocks for intraday trading strategies, narrowing attention to stocks, and executing and monitoring trades are all things that will be spelled out in the trading rules. The goal is to abide by your industry’s guidelines at all times strictly. Determine how much of a loss you are prepared to accept Indicate the maximum amount you are willing to lose before gambling. When you reach this value, you must pull back from trading and go back to the drawing board. It would help if you also chose a daily loss limit for yourself. If this happens within the first hour, you will lose access to your terminal for the remainder of the day. Find out your risk-reward ratio by calculating the distance between your stop loss and your profit objective. You should always use a stop-loss order while trading Stop losses must be placed on both long and short trades. Stop-loss orders may be placed around key technical levels of support and resistance or at a price you’re comfortable taking a loss. However, after the trade has been made, it is too late to enter the stop-loss. Your position must be liquidated once the stop loss is hit. There is no use in trying to average out your trade since the chances are against you. Set attainable financial goals and stick to them One of the best intraday trading tips is to set financial goals. Whether you’re going long or short on the intraday trading market, you need to have a plan. To ensure a timely cancellation of the opposite leg of the order when the stop loss or profit objective is met, these profit targets must be logged in the system as part of the bracket order. Only add profit targets afterward, although a trailing stop loss might be used while riding the trend. Trade in hearsay and gossip While this may not appear important at first, trading in market hearsay is one of the most crucial intraday trading strategies. Most of the time, an announcement’s effect is included in the price or leaves little room for you to negotiate. As a result, you’ll need to base your entry into the trade on your best-educated guess and then hope to reap the rewards after the real news has been out. Maximising the alpha from your transactions is best accomplished by following market speculation. You should invest only a small amount in rumours and suggestions from the market. At the same time, you should keep an open mind and an ear to the ground. Take the initiative to create your charts Do not believe that technical charting is so complex that only a few people can understand it. With a little study and practice, you can interpret common technical chart indicators such as: Supports and resistances Bollinger bands Exponential moving average (EMA) breakouts Retracements, etc The most important factor in making money intraday is learning to read charts. Only have a few opportunities for jobs at a time In the world of intraday trading, this is a common blunder. When you have a lot of open positions, you can only keep tabs on so many of them at once in terms of fundamentals, charts, and news flows. One way to lose money throughout the trading day is to have too many intraday trading tips trades open simultaneously. Only have up to four or five vacancies at any one moment. Forget about making any moves if the market needs to be more clear As a trader, you have three primary options: buying, selling, or standing still. Despite appearances, it is possible to profit in intraday trading even if you do nothing. When the market becomes too volatile, it’s best to stay away from the water altogether rather than risk being caught in the waves. If you save up, you’ll have more money to spend when good possibilities present themselves. Never attempt to trade counter to the market’s trend Those who attempt to trade like value scavengers daily are the ones who end up losing money. This is what a basic analyst does for a living. The trend is your best buddy as a day trader. The market is attempting to tell you something when it exhibits a pattern. Paying attention to this data and making sound trading decisions is up to you. You will be on the right track if you enter intraday trading with the mindset that the market is always smarter than you are. Keep an accurate record of your deals in a trading notebook A trading notebook is not only a record of purchases and explanations; it also evaluates results daily. You should keep accurate records of your trading failures and any ideas for fixing them. You may use this to hone your intraday trading tips and move closer to financial success. [B-02] The Bottom Line Those who trade daily with the attitude of a “value scavenger” are condemned to fail. For a fundamental analyst, this is just another day at the office. The trend is your best buddy if you’re a day trader. A pattern in the market is a message from the market. It is up to you to carefully consider this data when you make trading choices. You will be on the right road if you approach intraday trading with the mindset that the market is always wiser than you. If you wish to learn more about intraday trading strategies, check out the Piramal Finance website right away.
08-11-2023
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Personal Loan

Key Perks of a Used Car Loan

A used car loan helps you drive home your dream vehicle without draining your savings, offering flexible repayment options, lower interest rates compared to unsecured loans, and the chance to build or strengthen your credit. Whether you’re a first-time buyer or looking to upgrade smartly, understanding the benefits of a used car loan can make your purchase both convenient and financially savvy. Benefits of a Used Car Loan from Piramal Finance Getting a used car loan to pay for your dream car is now quite simple. With Piramal Finance’s used car loan, you can benefit from a simple process, faster loan approval, and total freedom. The top five perks of a used car loan are as follows: Flexible Repayment Choices Piramal Finance allows you to determine your loan sum, payback term, and EMI period. In this manner, you can manage your budget and buy a used car when it is most suitable for you. Attractive Interest Rates Because the cost of a used car is less than that of a new one, Piramal Finance offers low-interest car loans for buying a car. The used car interest rate charged by Piramal Finance is highly tempting, which allows you to prepare your budget before finalising the purchase of a used car. Fast Approvals Buying a used car is now quite simple since you can complete the loan process online. The loan approval and payment processes are quite rapid and easy, making the whole loan procedure very simple. Simple Paperwork The paperwork needed is quite basic and modest, making the paperwork process simple. The paperwork needed for loan requests differs depending on the funder. Valid identity verification, salary proof, property proof, valid address proof, and picture proof are usually required when asking for a used car loan from Piramal Finance. Small Down Payment Some banking firms give 100% funding on used cars, generally known as a loan on used cars with no down payment. You are likely to get the whole loan amount if the value of the used car is less than the loan sum. How to Pick a Used Car Loan? Here are a few elements to check while looking for a used car loan: Interest Rates Like any other loan, one of the most vital aspects of a used car loan is the interest rate. Interest rates on used car loans are higher than those on new cars and may vary from 10 to 17 percent depending of various factors like credit history, nature of employment etc.. Picking the Loan Sum When looking for a car, consider how much you would have spent on a new vehicle and then seek similar types of used cars. Keep your loan sum modest and refrain from extending your budget to get a high-end car whose used price is fair. Note that high-end cars need more upkeep. As a result, it is vital to avoid taking out a large used car loan. Make a Greater Down Payment After deciding on the loan sum, it is vital to make a sizable down payment. Used car loans can offer you credit for up to 85% of the automobile’s purchase price. However, keep in mind that used car loan rates of interest are on the high end. As a result, you will wind up paying more interest. In addition, a used car will be less costly than a new car. Make as large a down payment as possible when applying for a used car loan. This will keep your EMIs modest. Picking a Tenure Most used car loans have a maximum duration of 5 years, while certain lenders may offer up to 7 years. Yet, make it a goal not to extend your term too much. Because the interest rate is higher, you will end up paying more in interest on a loan with a longer term. Try to limit your loan term to under 3 years. Calculate Your EMI with a Loan Calculator When getting a Piramal Finance loan, it is vital to figure out the monthly EMI. The EMI outgo must be such that you can pay those payments each month without affecting your budget. You may use a debt calculator for this. Enter your loan sum, duration, and interest rate, as well as the calculator, which will calculate your EMI. [B-02] Conclusion Using a Piramal Finance loan to pay for a used car might present you with a plethora of perks. One of the main perks you will enjoy is a lower car price. A used car will always be less costly than a new one. As a result, your loan’s principal will be reduced. As a consequence, your auto loan interest rate will be lower. Another key advantage of buying a used car with a loan is that you may still benefit from a car loan tax deduction. However, keep in mind that the auto loan tax deduction is only applicable for cars used for business purposes under Section 80E of the Income Tax Act of India.
08-11-2023
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Earn High Regular Returns with RBI Floating Rate Bond

Are you looking for a secure and profitable investment option? RBI Floating Rate Bond is the right choice for you. This type of bond offered by the Reserve Bank of India (RBI) allows investors to earn a high, regular return over the long term. Investing in RBI Floating Rate Bonds is a great way to diversify your portfolio and enjoy a steady income stream. Investors get a regular return on their investment while enjoying the security of government-backed securities. The bonds have a fixed tenure, and the principal amount is returned at the bond’s maturity. Additionally, interest earned is exempt from tax. With RBI Floating Rate Bonds, you can rest assured that your hard-earned money is safe. This article will also discuss the features and eligibility criteria for floating-rate bonds. Also, you will learn how you can earn more with RBI floating-rate bonds. [B-01] What is a Floating Rate Bond? A floating rate bond is a type of bond where the interest rate is not fixed but instead fluctuates with the market. The interest rate on these bonds is often tied to an index, such as the prime rate or the London Interbank Offered Rate. Floating-rate bonds can offer a higher yield than fixed-rate bonds since the interest rate will increase if market rates rise. However, these bonds also carry more risk, as the interest rate will decrease if market rates fall. Whether or not a floating rate bond is right for you will depend on your investment goals and risk tolerance. A floating rate bond may be a good option if you are looking for a higher yield and are willing to accept the risk of fluctuating interest rates. What are the features of an RBI Floating Rate Bond? The Reserve Bank of India (RBI) issues a floating rate bond with a floating interest rate. This bond interest rate is linked to the repo rate, at which the RBI lends money to banks. The main features of RBI floating rate bonds are as follows: The interest rate is based on the repo rate set by the RBI. Every six months, the interest rate is reset. The bonds have a 7-year tenure. The bonds are issued in denominations of Rs. 1000, Rs. 5000, Rs. 10000, and Rs. 50000. The bonds are issued in both physical and dematerialized forms. The bonds are eligible for statutory liquidity ratio (SLR) inclusion. The secondary market does not allow the trading of bonds. What are the eligibility criteria for investing in RBI Floating Rate Bonds? The RBI floating rate bonds will have a tenure of 7 years and carry a coupon rate that you will reset semi-annually. The RBI has set the following eligibility criteria for investors who wish to subscribe to the bond: You should be a resident Indian. Your age should not be less than 18 years, and you should have a bank account with a scheduled commercial bank. You should have a dematerialized account with a depository participant. What are the documents required to buy an RBI Floating Rate Bond? You should have the following documents while applying for an RBI floating rate bond: Firstly, you’ll need a valid PAN card and an Aadhaar card. This requirement is to ensure that you are a legitimate investor in India. You’ll also need to provide your bank details, such as a bank passbook or a cancelled cheque. This is for periodic payments and to ensure the safety of your money. Finally, you’ll need to fill out the application form and provide proof of income, such as your salary slips or an Income Tax Return. Once you have all the required documents, you are ready to invest. How can you buy an RBI Floating Rate Bond? If you want to invest in the RBI Floating Rate Bond (FRB), this guide will help you. Follow the steps mentioned below to buy FRB. Fill out an application form to become an RBI bondholder. To complete the form, provide details like your name, address, and bank account information. After submitting your application, you’ll have to wait for it to be approved. Once approved, you’ll be able to purchase the bonds! You can do this through a bank or a broker. When you buy the bonds, you’ll need to specify the amount you want to purchase, the date you want the bonds to mature, and the coupon rate you want to pay. Finally, you’ll need to make the payment on your bonds. After the payment has been processed, you’ll receive your bonds, and the interest payments will start accruing. Why invest in an RBI Floating Rate Bond? Purchasing an RBI floating rate bond is advantageous for the following reasons: The bond is issued by the Reserve Bank of India and carries an interest rate that fluctuates with the market. This means that you can earn more if the interest rate goes up, and you won’t be hit if it goes down. The bond provides more liquidity than fixed-term bonds, as you can sell it anytime. Another great thing about this bond is that the interest is paid out more frequently than on other bonds. This means that you can get better returns by reinvesting your earnings. [B-02] Conclusion Investing in RBI Floating Rate Bonds can help you earn high regular returns. These bonds are backed by the Reserve Bank of India, meaning your money is secure. Investing in RBI Floating Rate Bonds is the best way to diversify your portfolio and earn high, regular returns. Piramal Finance is the perfect place to go if you’re looking for great savings and loan offers. They offer a variety of banking and finance products, including an RBI floating rate bond. Further, if you want any information related to any financial product, you can check out the Piramal Housing Finance website. So what are you waiting for? Visit the website today and learn more about the amazing offers available.
08-11-2023
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