Maitra Commodities Pvt. LTD: Introduction To Investing in Stocks

Maitra Commodities Pvt.
Ltd
Introduction to
Investing In Stocks
A guide to successful Investing
1
Maitra Commodities Pvt. Ltd
Table of contents Pages
Introduction 2
Investment product options 3
Market Regulators 5
Market Intermediaries & Their Functions 6
Common terms and concepts surrounding investments 7
How to select the right investment products 13
Establish your investment strategy 14
Determine with whom to invest 15
About Maitra Commodities 16
How do I pick stocks? 17
How do I choose an IPO? 18
Settlement Process 18
When do I buy stocks? 20
When should I sell stocks? 21
Data & Corporate Actions to Watch 22
How much should I invest in stocks? 23
Should I invest in stocks or mutual funds? 23
7 must-read books for investors 23
Bonus tips 24
Conclusion 24
Phone No: 044-45630555 | Email id: [email protected] | www.maitracommodities.com

3
Investment Product Options

An investment product is an opportunity offered to an investor based
on security purchased with an expectation of gaining a profit out of
it. Types of investment products include –
Equities- They represent ownership in a publicly-traded compa-

ny; if u buy a share of stock, you own the specified portion of
profit gained by a company. Stocks can be purchased through IPO
or in the secondary stock market i.e. stockbrokers and exchanges.
Bonds- These are the type of investments in which investors give

money to an issued company in exchange for a bond. In return,
the company is obliged to pay back the money within a given
period with interest.
Mutual funds- It reflects investing in a market-linked pool of

assets such as stocks, bonds, or a mix of equity and debt instru-
ments. Investors can choose as per their financial situation and
the benefits they intend to achieve.
Exchange-traded Funds (ETFs)- They are similar to mutual

funds such as stocks, bonds. They ensure tracking market index to
replicate the same market index within its returns. The ETF model
acquires differentiation based on the purchase and selling method
of assets.
Annuities- These are the type of investments established within

a company and the individual. In this investment, the company
repays the individual over some time for their initial investment.

4
Public Provident Fund- These include opening an account with

a bank that is operated by the government. You will only need a
minimum payment of Rs 100 for opening such a bank account. You
will find it as the most secure way of investment.
Fixed Deposits- It’s an account that includes depositing a fixed

amount of payment to the bank and non-bank organizations for a
particular period in exchange for interest after a certain period.
Commodities- For investor commodity markets are the way to

diversify their portfolio beyond securities. Commodities that are
traded are typically sorted into categories: Bullion, metal, energy
and agricultural.
Real Estate- Real Estate Investment involves buying and selling

commercial and non-commercial land or buildings.
CryptoCurrency- A cryptocurrency is a form of digital asset

based on a network that is distributed across a large number of
computers. This decentralized structure allows them to exist out-
side the control of governments and central authorities.

7
Common Terms And Concepts Surrounding

Investments
Various common terms are used in the investment industry that
includes –
Ask/Offer- It’s the price at which people are willing to Sell or Buy
their assets.
Asset- It’s something owned by a person, which can turn out to

be beneficial and provide monetary or economic value. These
can be stocks, bonds, commodities etc.
Asset Allocation- Asset allocation is a type of investment strate-

gy used to include varying products in your portfolio. Hence, al-
locating assets can help to reduce loss and risk during investing.
Balance Sheet- It is a statement that includes information about

a company’s liabilities and assets. The balance sheet offers a
direct insight into the company's financial status.
Bear Market- It is a market condition or sentiment that shows a

downward trend in the stock prices. A person is called a 'bear' if
he/she acts according to the falling scenario of the market. A
bearish period can last for months to years.
Bid- That’s the highest price a person is willing to pay to pur-

chase an investment.
Blue-chip- These are companies with a good reputation for

holding beneficial earnings and well-maintained financial re-
cords. They always provide substantial returns over time to their
investors.

11
Opening price- It is the price at which the security is traded for

the first time in a day.
Closing price- It is the value at which the asset is traded for the
last time in a day.
Day’s High- It refers to the peak of the stock price on a specific

day.
Day’s Low- It refers to the lowest point of the stock's value for a
specific day.
NSE- Everyone in the stock trading world is aware of NSE i.e. Na-
tional Stock Exchange.
BSE- BSE refers to the Bombay Stock Exchange, which is one of

the oldest stock exchanges in the world.
MCX- MCX is the Multi-Commodity Exchange of India.
DEMAT- Known as dematerialized account, the DEMAT account

is needed to perform the trade in the securities market.
NIFTY 50- It is the Indian stock market benchmark that high-

lights the weighted average of 50 leading companies listed on
the National Stock Exchange.
NIFTY 500- It is India's very first stock market index based on

the broad concept. It represents approximately 96% of the total
market capitalization along with NSE's 93% of total turnover.

12
Sensex- It is the most popular stock index in India. It represents

30 highly active and largest stocks listed on the Bombay Stock
Exchange.
ETF’s- Exchange Traded Funds. They are investment tools.
Futures and Options- These are other investment tools present

in the stock market. Traders are allowed to enhance their portfo-
lios through these trading options.
Debt Market- It is a marketplace that facilitates buying and sell-

ing of financial instruments from the debt market.
There are two concepts of investment-

Economic Investment- It means an increase in the capital
stock of the society. For instance, it can be building, equip-
ment and inventory.
Financial Investment- It involves a trade-off between finan-

cial properties. Includes written consent on a piece of paper
in the form of documents.

13
How To Select The Right Investment Product?

Investing for our future is great, but we should also remember the
quote “Look before you Leap”. The first part of the look is to look
inside ourselves to understand
What is our Objective of the investment?
What is our Risk capability?
How much can we contribute to our future?
What are the returns we expect?
Are we willing to risk the principal or wait for the growth?
What is the time frame?
Keep in Mind:
There are many options available in the market, but you need to choose
according to what is ideal for you –
Your goal Affects the Investment Type- You need to always invest
according to your goals. These goals can be a future event or ex-
pense like marriage or education.
Risk-Return Playoff- One should always invest as per their

risk-bearing capacity so that if the market crash occurs, your loss
will remain in the window of risk-bearing.
Alternative Investment Options- While investing, always keep in

mind a list of options. This will help you divide your investment
risk and further remain in the least risk zone.
Liquidity Matters- You need to invest while considering the case

when you need urgent money. You should have the desired liquid-
ity to withdraw when needed. Don’t just invest seeking profit only.
The second part of the Look is to look at the investment avenues and
what returns can they offer.

15
Determine with whom to Invest-

Always choose a platform/ broker for investing based on –
Background and reputation of the broker.
Brokerage fee and other key charges.
Customer services offered and quality of response.
Trading instruments are offered on their platform.
Advisory & research facilities are available.
Range of facilities offered.
Hidden charges during the investment.
Fund transfer mechanism.
Whether you are new to the stock market or an experienced trader,

Maitra commodities offers a great investing ecosystem for you. Learn
more on our website www.maitracommodities.com

16
About Maitra Commodities

Maitra is a Financial Broking House headquartered in Chennai.
Established in 2012, we have a strong network of business associates

and branches all across South India with a patronage of 11,000+ clients.
Kick starting as a financial portal with operations only in commodity

trading, Maitra has now ventured into other Investment opportunities
like Equity and Derivatives, to envisage the diverse needs of all our cli-
ents and provide a complete array of financial trading products and ser-
vices.
The essence of Maitra is to partner you in all your investments, breaking

all barriers that traders and investors face in terms of cost, support and
technology. Although we are radically changing and evolving, our belief
and passion to be the pioneers and most insightful, hasn’t. At Maitra,
we aim to be accessible, responsive and connected, both to the markets
we serve and our clients.

17
How do I pick stocks?

Stocks should be selected based on fundamental analysis which uses
some significant elements such as,
EPS (earning per share), which is a measure of profitability,
P/E Ratio (price to earnings ratio) that helps in the process of

valuation.
P/B Ratio (price to book ratio), which measures of valuation of the

asset for banking and financial companies.
D/E Ratio (debt to equity ratio) that determines indebtedness.
RoE (return on equity ratio) has the most significant role in evaluat-
ing profit to enable money investment.
ROA (Return on Assets) This measures the returns on the asset that
has been deployed by the company.
Management- The soundness and experience of the management
personnel’s.
Sector- The sector in which the company is dealing. Their product
offerings and position in the segment.
These financial analyses are useful for long term investment and give a
complete view of the financial aspects of the company.

18
How do I choose an IPO?

When you decide to invest in an IPO, you will see many suggestions
coming forward to you. Although, here are the quick tips you should
follow.
Know the business you would like to invest into. Understand their
operations and management.
While choosing an IPO, you must seek if it has a strong underwriter.

It reflects that the company is in contact with a major investment
firm.
Make sure you are aware of the objective of the company. You
should know for what purpose your IPO is been used.
Do not miss reading the prospectus. It holds all the important infor-
mation you need to check.
Try to be patient and make your move after the lock-up period.
Settlement Process
In terms of the securities market, the settlement process is referred to as
the period that implies the duration between trade month, year and
day, between which an order is placed within a market to the date it has
been settled. It happens in case the trade becomes final.
The day when you buy or sell the stocks is again called the trading day,
represented as ‘T Day’.
Types of settlements:
Spot Settlements
Forward Settlements
Rolling Settlement

19
Rolling Settlement cycle on the NSE

Activity Day
Trading Rolling Settlement Trading T
Clearing Custodial Confirmation T+1 working days
Delivery Generation T+1 working days
Settlement Securities and Funds pay in T+2 working days
Securities and Funds pay out T+2 working days
Valuation Debit T+2 working days
Post Settlement Auction T+2 working days
Auction settlement T+3 working days
Bad Delivery Reporting T+4 working days
Rectified bad delivery pay-in and pay-out T+6 working days
Re-bad delivery reporting and pickup T+8 working days

Close out of re-bad delivery and
funds pay-in & pay-out T+9 working days
For more information on Clearing & settlement visit https://www.nsein-

dia.com/products-services/equity-market-clearing-settlement
Settlement of Derivative products

The settlement of trades is on T+1 working day basis.

20
When do I buy stocks?

The best time to buy a stock is when the share prices of a given stock are
low. But, also remember that today's high price can be the lowest price
after 1 year. Though the price can be further reduced, it is always safe to
buy stocks at an expected low price or evaluate the company's opera-
tions and foreseeable future by understanding their financials and proj-
ects they are into. It will not only save money but also increase the
chances of profit in future when stock rates increase.
Further, buying stocks includes some steps-
Select an online stockbroker.

Research the stocks you want to buy.
a. Read the financials.
b. Look at the Ratios.
c. Know the management.
d. Look at their cash flow.
e. Follow the Holding pattern and the investors.
f. Never forget to read what is written in fine print.
Decide how many shares you would purchase.
Choose your stock order type.
Optimize your stock portfolio.

21
When should I sell stocks?

TSelling stocks is always tricky. Imagine you sell early and the stock
goes higher, you reduce profits. Although, if you sell late and stock
plunges, you will incur losses out of it. Hence, selling stocks at right time
is important. The way you can decide the right timing of stocks passes
through –
Intrinsic Factors- These factors influence selling decisions based

on market trends. You need to decide to sell stocks at the desired
price target. So, when your share's value reaches a specific thresh-
old, you can make the sale. Besides, there are certain events you
need to take into consideration. It could be the downfall of your
rival's company's share prices or a tactical inflexion point.
Extrinsic factors- The extrinsic factors align with financial determi-

nants and other lifestyle concerns.
So before selling, both the intrinsic and extrinsic factors should be con-
sidered and then only stocks should be sold to gain maximum profit.

22
Data & Corporate Actions to Watch

Corporate actions are the events undertaken by the company that trig-
gers changes within the stock prices. Here are the top corporate actions
that affect data.
Dividends: The intervals at which a company pays dividends and

its concerned percentage have a major impact on the reputation of
the company and its related stock prices.
Bonus Issue: The decision regarding the bonus issue also affects
the company's position in the stock market. It is done to induce
retail participation, so lowering the share value through bonus
issues affects the trade in the stock market.
Rights Issue: Right Issue is a concept that implies the attempt to

raise fresh capital. You may want to check the company's stake in
the rights issue. You must subscribe only when you are certain
about the company's future.
Data’s that impact the market

Budget
Monetary Policy
Inflation
Index of Industrial Production
Unemployment Rate
Manufacturing PMI
Interest rates

23
How much should I invest in stocks?

If you are new to the market, Invest
- the amount you will not require for the next 3 years at a minimum.
- Invest after keeping aside your emergency funds
Should I invest in stocks or mutual funds or Bullion?

If one is new to the investment industry and do not have much idea
about the risks and returns, then it is advisable to invest in mutual
funds. The mutual fund's reward potential is medium and the risk is less.
Besides, you don’t have to spend much time and can include different
assets in your portfolio. These assets include real estate, gold, cash etc
along with some stock market indexes.
7 Must-Read Books For Investors

“Rich Dad, Poor Dad” By Robert Kiyosaki
“The Essays Of Warren Buffet” By Lawrence A. Cunningham
“Beating The Street” By Peter Lynch
“The Intelligent Investor” By Benjamin Graham
“Think And Grow Rich” By Napolean Hill
“Value Investing And Behavioural Finance” By Parag Parikh
“The Little Book Of Value Investing” By Christopher H. Brow

24
Bonus Tips-
It has been observed that people start panicking when they are buying
stocks and when it starts falling. However, the desired reaction is to not
panic but to stay calm and do proper research. Talking to an insightful
persona and the right duration of the wait for days will bring peace and
support. As the economy will revive to normal, your investments will
gain their momentum back. Besides, you may want to know your will-
power to take the risk before investing in risky zones.
Conclusion-
The craze for the stock market is increasing day by day and it’s a good
investment platform to gain profit and acquire the business. However,
a thorough understanding of the investment market and investment
options is very important for gaining profit out of the volatile market
conditions. Hence, before investing, do thorough research and discuss
with the experts.

www.maitracommodities.com
TRADING SIMPLIFIED
Trusted By 11,000 Clients & We have become one of the momentous
Brokers in South India Today.
GET STARTED
www.maitracommodities.com
Disclaimer
Investment in securities markets are subjected to market risks. Please read all the scheme
related documents carefully.
The contents provided are only for informational purpose. Detailed study and research
must be done by the investor before entering the market. Maitra Commodities will not be
liable or responsible for any losses incurred by the client.
NSE MEMBERSHIP CODE: 90175 | MCX MEMBERSHIP CODE: 55060 | SEBI REGISTRATION NO: INZ000074139
CIN NUMBER : U74999TN2012PTC084067 | GST REGISTRATION NUMBER: 33AAHCM6659B1ZJ
DEPOSITORY NAME : CDSL || DPID : 12089300 || DP SEBI REGISTRATION NO: IN-DP-430-2019 || MUTUAL FUND AMFI ARN : 164992
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Maitra Commodities Pvt.

Table of contents Pages

Phone No: 044-45630555 | Email id: [email protected] | www.maitracommodities.com

Investment Product Options

Equities- They represent ownership in a publicly-traded compa-

Bonds- These are the type of investments in which investors give

Mutual funds- It reflects investing in a market-linked pool of

Exchange-traded Funds (ETFs)- They are similar to mutual

Annuities- These are the type of investments established within

Phone No: 044-45630555 | Email id: [email protected] | www.maitracommodities.com

Public Provident Fund- These include opening an account with

Fixed Deposits- It’s an account that includes depositing a fixed

Commodities- For investor commodity markets are the way to

Real Estate- Real Estate Investment involves buying and selling

CryptoCurrency- A cryptocurrency is a form of digital asset

Phone No: 044-45630555 | Email id: [email protected] | www.maitracommodities.com

Common Terms And Concepts Surrounding

Asset- It’s something owned by a person, which can turn out to

Asset Allocation- Asset allocation is a type of investment strate-

Balance Sheet- It is a statement that includes information about

Bear Market- It is a market condition or sentiment that shows a

Bid- That’s the highest price a person is willing to pay to pur-

Blue-chip- These are companies with a good reputation for

Phone No: 044-45630555 | Email id: [email protected] | www.maitracommodities.com

Opening price- It is the price at which the security is traded for

Day’s High- It refers to the peak of the stock price on a specific

BSE- BSE refers to the Bombay Stock Exchange, which is one of

MCX- MCX is the Multi-Commodity Exchange of India.

DEMAT- Known as dematerialized account, the DEMAT account

NIFTY 50- It is the Indian stock market benchmark that high-

NIFTY 500- It is India's very first stock market index based on

Phone No: 044-45630555 | Email id: [email protected] | www.maitracommodities.com

Sensex- It is the most popular stock index in India. It represents

ETF’s- Exchange Traded Funds. They are investment tools.

Futures and Options- These are other investment tools present

Debt Market- It is a marketplace that facilitates buying and sell-

There are two concepts of investment-

Financial Investment- It involves a trade-off between finan-

Phone No: 044-45630555 | Email id: [email protected] | www.maitracommodities.com

How To Select The Right Investment Product?

Risk-Return Playoff- One should always invest as per their

Alternative Investment Options- While investing, always keep in

Liquidity Matters- You need to invest while considering the case

Phone No: 044-45630555 | Email id: [email protected] | www.maitracommodities.com

Determine with whom to Invest-

Whether you are new to the stock market or an experienced trader,

Phone No: 044-45630555 | Email id: [email protected] | www.maitracommodities.com

About Maitra Commodities

Established in 2012, we have a strong network of business associates

Kick starting as a financial portal with operations only in commodity

The essence of Maitra is to partner you in all your investments, breaking

Phone No: 044-45630555 | Email id: [email protected] | www.maitracommodities.com

How do I pick stocks?

EPS (earning per share), which is a measure of profitability,

P/E Ratio (price to earnings ratio) that helps in the process of

P/B Ratio (price to book ratio), which measures of valuation of the

D/E Ratio (debt to equity ratio) that determines indebtedness.

Phone No: 044-45630555 | Email id: [email protected] | www.maitracommodities.com