Why invest in the Indian stock markets?
As it is a known fact to many entrepreneurs and aspirants taking a right decision at the right time, investing in the stock market is one of the best suggested options in the world of financial ventures.
Some orthodox people having ideas that making investments in stock markets is a risky decision to venture there capital in to the chaotic and turbulent world of stock market which might otherwise prove to be un-just to their hard earned money. They also advise investors that it would be better if they go for investing in fields like banking, real estate and even the industrial sector, which they think are very much lucrative in the future.
However recent observations show as follows:
1) Due to lack of transparency and other vital aspects like risk coverage comparatively escalated over the years, the returns in the above fields plummeted down to staggering levels of 4 to 5% where as in the field of stock market they rose up to an 24% returns.
2) Personal appraisals and the things like customer support are almost nil in the above fields like banking, real estate...etc. The kind of response that could be expected when one goes to a banking organization or any real estate office...etc is highly inferior and it is never up to the mark when compared to any advisory in the field of stock marketing, where they personally take care of them and as well as their issues with regular updating of data and continuous advice with an unbelievable timely support.
3) Due to wonderful advancement in the field of technology and research done extensively, stock market is able to provide its customers the right kind of advice and enable them to make the right kind of decision at the appropriate time.
Market transparency is a central design feature of financial markets. One traditional motivation which motivated transparency was concerns about ethical standards. Transparent markets are innately less vulnerable to malpractice, and this has encouraged many regulators to favor transparency as a vehicle for reducing the costs of monitoring and enforcement. This is particularly important in a context like India, where high quality enforcement of laws is extremely costly in terms of monetary resources, political costs and the costs of time and focus of policy makers.
In recent decades, there are three new arguments which favor transparent markets: (a) the idea that enhanced market transparency leads to greater liquidity, (b) the idea that the anonymous electronic exchange makes quantitative measurement and control of transactions costs possible and (c) the idea that a transparent market makes risk management much easier by supporting marking to market and VaR estimation.
All these arguments notwithstanding, when we look at financial markets in the real world, high standards of transparency are not often found.
In India, the equity market has made enormous progress towards market transparency. When NSE built a stock market based on anonymous, electronic order matching, it became India's largest stock market within a period of one year, and all other stock markets in India followed suit. In recent weeks SEBI has taken the momentous decision to force all market participants (even institutions) to expose their orders to the discipline of the screen - i.e. private transactions conducted purely over telephone would be forbidden.
In contrast, India's fixed income and currency markets lag far behind in terms of market design. These markets are characterized by entry barriers in intermediation, domination of a few large players who engage in strategic games, private negotiation of deals, and a lack of public observation of prices and liquidity. When X buys from Y, external observers do not know anything about what transpired, and even if you would be happy to sell to X at a lower price than that offered by Y, there is no way for you to break into the transaction.
The most limited notion of market transparency is one where external observers get an opportunity to know one "reference rate" for the day. This is a very limited idea, since individual orders and trades are not reported. However, there is more transparency in a market with a reference rate as compared to one without.
On 15 June 1998, NSE commenced the dissemination of the MIBID/MIBOR reference rates for the overnight call money market. From 7 September 1998 onwards, NSE started calculating reference rates for 14--day, 30--day and 90--day interest rates, however, these new rates were not disseminated.
On 10 November 1998, dissemination of the 14--day rate began, and on 1 December 1998 dissemination of the 30--day and 90--day rates began. These events are valuable natural experiments where we can observe the impact of improved transparency on market liquidity. For days before dissemation, the reference rates observed by NSE (which were not disseminated) tell us about market quality without transparency.
In a recent paper A natural experiment in market transparency by Susan Thomas, Mandira Sarma and myself, we examined the empirical evidence to learn about the impact of these three natural experiments. At the simplest, the bid-ask spread - the best measure of market liquidity - dropped by 19.9 basis points (14--day), 11.8 (30--day) and 21.5 basis points (90--day) in the days after transparency as compared with the days before. After controlling for fluctuations in the spread owing to external factors, we find that the spread dropped by 22.8 basis points (14--day), 13.6 basis points (30--day) and 22 basis points (90--day) with extremely high levels of statistical significance. In all three cases, the spreads stood at 80 to 90 basis points before the reference rates became publicly available, which helps suggest that these reductions are quite substantial in economic terms?
This experiment is a valuable illustration of the impact upon market liquidity of the most limited notion of market transparency: the public reporting of "the market price" once a day. It suggests that even small gains in market transparency have a big impact.
NSE's Wholesale Debt Market (WDM) is often criticized for not having true anonymous trading like NSE's equity market. This research suggests that even if WDM plays a highly limited role of information dissemation (and not true anonymous order matching), this is a valuable function as compared with a 100% non-transparent market.
With this backdrop, we can think about RBI's announcements about interest rate swaps (IRS) and forward rate agreements (FRA). The vision for market design that is implied in these announcements is one that is rooted in market non--transparency.
These markets operate on a purely bilateral basis. There is no public reporting of transactions, there is no public visibility of unmatched orders or liquidity, and trading procedures lack anonymity. The only information which has come out to the public about IRS or FRA transactions is based on journalists interviewing dealers. I am not aware of whether the RBI knows the open interest of the market on a same--day basis; external observers certainly do not.
The management of systemic risk is innately harder with bilaterally negotiated contracts. I am not aware of the extent to which modern risk measurement is present in the IRS or FRA markets. Financial market regulators have frequently voiced concerns about their inability to comprehend the risks present in bilateral derivatives transactions and to control the probability of systemic crises. In his book Derivatives: the Wild Beast of Finance, Alfred Steinherr has a beautiful analogy. He compares the exchange-traded derivatives market to a fishtank, and the universe of privately negotiated derivatives to the great wide sea. Regulators and policy makers can monitor the fish tank, and have a good sense of risk containment and fraud in the market: this is very hard to achieve in the sea.
In the case of the FRA, there is a mature and well--understood alternative: interest rate futures. Interest rate futures are synonymous to interest rate forwards, with the difference that interest rate futures use superior standards of transparency and risk containment. Interest rate futures would give 100% transparency as opposed to what is present with the FRA market.
In the case of the IRS also, it is possible to design superior market mechanisms in a variety of directions: it is possible to have real-time trade reporting; it is possible to employ risk management through novation at the clearing corporation; it is possible to define standardized IRS contracts which trade at an exchange with anonymity. However, the vision for market design that is implicit in the existing IRS market is one of 100% non-transparency.
In summary, market transparency should be a central goal of policy in the area of financial markets, for the wide spectrum of reasons: ethics, fairplay, enhanced liquidity, enhanced measurement and control of transactions costs, and improved risk management. The currency, commodity and fixed income markets in India could benefit enormously from making the transition into anonymous order matching on an exchange.
National Stock Exchange of India Limited (NSE) is one of the leading stock exchanges in India. NSE is a market operator, clearing house and settlement system facilitator. The company operates a nation-wide, electronic market, which offers trading in derivatives market, capital market and currency derivatives segments including equities, equities based derivatives, equity based exchange traded funds (ETF), gold ETF, currency futures and options and retail government securities.
Our National Stock Exchange of India Limited - Strategic SWOT Analysis Review provides a comprehensive insight into the company’s history, corporate strategy, business structure and operations. The report contains a detailed SWOT analysis, information on the company’s key employees, key competitors and major products and services.
This up-to-the-minute company report will help you to formulate strategies to drive your business by enabling you to understand your partners, customers and competitors better.
- Business description – A detailed description of the company’s operations and business divisions.
- Corporate strategy – Our summarization of the company’s business strategy.
- SWOT analysis – A detailed analysis of the company’s strengths, weakness, opportunities and threats.
- Company history – Progression of key events associated with the company.
- Major products and services – A list of major products, services and brands of the company.
- Key competitors – A list of key competitors to the company.
- Key employees – A list of the key executives of the company.
- Executive biographies – A brief summary of the executives’ employment history.
- Key operational heads – A list of personnel heading key departments/functions.
- Important locations and subsidiaries – A list of key locations and subsidiaries of the company, including contact details.
Note: Some sections may be missing if data is unavailable for the company.
Reasons to Buy
- Gain key insights into the company for academic or business research purposes. Key elements such as SWOT analysis and corporate strategy are incorporated in the profile to assist your academic or business research needs.
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DEAR ENTERPRENEUARS AND WELL VERSED PROFESSIONALS,
Considering all the above stated facts differentiating between stock market and other fields, intellectuals and professionals like doctors, Charted Accountants, lawyers, Engineers, Builders you need to decide the better investing option.
You, like any other well informed aspirants agree with us that investment in the stock market is quite prudent and proves to be the most lucrative and good decision you can ever make which sets you and your beloved family in the path of progress and make you more prosperous than ever before.
Come and join hand with us in the process of getting benefited and reach your ultimate financial goals in life by multi folding your wealth substantially without any kind of stress and strain up on your minds.
WHY SHOLD ONE CHOOSE P3 CAPITALS?
P3 CAPITALS, the ultimate advisory of stock & share, commodity market and equity shares provides its client with an extensive range of well analyzed data which is research oriented and professionally authenticated by a team of experts well versed in the field of markets .
Research is done in various aspects by our financial experts when dealing with all financial instruments to provide services in all segments like in
Indices->Nifty Futures, Bank Nifty Futures
Futures->Stock Futures, Currency Futures
Options->Nifty Options, Stock Options and Currency Options
Commodities->Metal and Agriculture
From exchanges NSE, BSE, MCX, NCDEX. This helps the customers, to a very great extent, in intraday trading and as well as short & long term investments. With qualified team of financial professionals having experience from the past 15 years in the markets with in-depth knowledge and understanding of economical factors, market trends are serving the customers with up-dated advices and precautionary measures as far as their financial investments are concerned.
We help to a great extent to our customers so that they make a right kind of decision at right time.
OUR ACHIEVEMENTS OVER THE PERIOD:-
.1) In most of the cases customers were advised nifty future and minted 1600 points on each lot during the 50 day of live support.
The above process of advising started on 15th of June and continued up to 16th of August which will only prove how dedicated the team members are in appraising the customers by way of their investments.
2) We give every trade with great authentication, extensive and analytical research in to the valuable investments of our customers and offering them continuous supportive solutions through various media like SMS, e-mail and discussing in person and analyzing various problems and clarifying their doubts.
3) We extended our service with incredible brokerage and heavy flexibility in exposure to various financial issues. We keep in view of the fact that, whatever information we pass on to the customer regarding the status of global market is genuine and it gets properly authenticated by our expert team who conduct a thorough verification and then only shall be allowed to prefer to our customers.
4) Our sharing of knowledge is quite un-biased and without any kind of personal prejudice against those who approach us to seek our advice to take care of their future investments in the fields specified as above.
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Exclusive service cell allocated for women investors.