Category: Personal Finance

Why transaction PIN was a cause of agony for equity sellers last week

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Some online stock brokerage platforms last week informed users that they may face issues with authorising stock sales due to a technical issue. This provided a trigger for an interesting conversation between two friends, Anthony and Laura.

Anthony: I couldn’t sell stocks on Monday morning. Net net, some trades got affected and I lost some money, yet again.

Laura: The house always wins, be it casinos, or the stock market in the short-term. I hope you know that.

Anthony: Ha-ha. I know, Laura you have booked huge gains in the market. So, spare me that fortune cookie wisdom.

Laura: Our short-term investor seems quite irritated. What happened mister speculator?

Anthony: It was a tragedy. The issue that many investors and I faced related to the TPIN or the transaction personal identification number. The TPIN is a 6-digit password to authorise a broker to debit the chosen stocks from a demat account with CDSL.

Laura: TPIN? What’s this new password?

Anthony: I will tell you. An investor’s authorisation to debit a demat account can be given in four ways including via the Electronic Instruction Platforms of Stock Brokers / Depository Participants (eDIS). The TPIN-based mechanism is for authentication of eDIS transactions by the depository. The system was set up earlier last year to prevent misuse of power of attorney (PoA) by brokers.

Laura: So, how does this work? And, if it’s a better system, why are investors in so much pain?

Anthony: Exactly my point. A TPIN will be generated by the depository for an investor wishing to avail eDIS facility and will be communicated to the investor directly. The investor will have to enter the same TPIN every time he executes an eDIS transaction. TPIN is sent to the mobile number and email ID of the investor registered with the depository.

Laura: So, let me guess. The TPIN was not coming through. Right?

Anthony: Sadly, yes. Investors like me who use the TPIN route to authorise debit of their holdings while selling their shares were hit hard. Since, we could not authorise the debit, we weren’t able to sell shares as the TPIN authorisation was failing. Later, some brokerages allowed clients to skip the authorisation until the issue got resolved.

Laura: If you notice, we have been witnessing such technical glitches quite often recently. Remember the trading outage in February 2020 that had lasted for several hours. Then, there are also those fat-finger or freak trades. With lakhs of new investors coming into the equity fold, thanks to the stock market rally, we need a system that can deal with such things better.

Anthony: Yes. Small investors like me will always be at the losers’ end. In the February 2020 NSE outage, too, I was blind-sided and lost money in some option trades. Thankfully, the regulator, SEBI has recently issued a framework to penalise market infrastructure institutions (MIIs), which includes stock exchanges, depositories and clearing corporations, for technical glitches. I hope MIIs are taken to task.

Laura: That is why, my friend, I ask you to be a long-term investor. When you can make lakhs and millions, why go after the thousands with so much tension via day trades.

Anthony: True. Point taken, guru-ji.

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How debt mutual funds generate returns

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The functioning of debt mutual funds (MF) is easy to understand, once you get the concepts of accrual and mark-to-market.

A debt MF invests in fixed income instruments such as corporate bonds, government securities; money market instruments such as certificates of deposits issued by banks and commercial papers issued by various companies.

There is a defined coupon or interest that all these instruments earn. Hence, this coupon accrues in the portfolio of a debt fund and is taken into account for the computation of the daily net asset value (NAV). This accrual is done proportionately for every day. It is the annual rate divided by 365.

From the limited perspective of interest accrual only, an investor’s return from the units of a debt fund is the accrual from the point of entry to the point of exit.

Mark-to-market

The other aspect is mark-to-market (MTM). Since MFs are a public investment vehicle, investors can come in and exit any day. For an equitable entry and exit pricing, it has to be based on market levels, that is, the daily published NAV.

It is called mark-to-market because it represents, the price or value the portfolio would have fetched, if the entire portfolio were to be hypothetically sold off.

Since prices are subject to change every day, it adds to or takes away from the accrual of that day. If the market is favourable and bond prices move up over the previous day, that much is added to the accrual for the day. If prices move down, that is subtracted from the accrual of the day and we get the net return.

Let us take a simplistic example. There is a debt MF scheme with a corpus size of ₹100. The portfolio yield to maturity (YTM) is say 5.5 per cent. The YTM is given in the fund factsheet, which can be found on the AMC website. This YTM is taken as the proxy for the accrual level.

However, there is a refinement here. There are expenses charged to the scheme, and the net accrual level is YTM minus expenses. The NAV that is published is net of expenses.

Let us say, in our example, the expense charged to the fund is 0.5 per cent. Hence the net accrual is 5 per cent. Every day, the accrual level of the portfolio is 5 per cent divided by 365 per ₹100, which is ₹0.0137 per day.

If the MTM impact of that day is positive, depending on how bond prices have moved in the secondary market, you get the accrual plus MTM as return for that day, which is captured in the NAV.

Bond basics

If bond prices dropby more than the accrual, your return is negative for that day. In our example, the accrual per day seems miniscule. However, it is a function of time. Over one day, it accrues only ₹0.0137 per ₹100.

Over three months, it accrues ₹1.25 per ₹100 and puts the fund in a better position to absorb any adverse MTM shock. Over one year, it is ₹5 per ₹100.

To understand the MTM impact, there is a metric called modified duration (MD), which, too, is given in the fund factsheet.

The MD is taken as the multiplier on the interest rate movement in the market to gauge the impact on price movement, and hence the fund NAV.

Bond interest rates and prices move inversely. Let us assume for understanding, interest rates moved by 0.5 per cent in both directions, up and down over one year. If interest rates moved down by 0.5 per cent, with an MD of 2 years, the NAV of the fund is positively impacted by 0.5 X 2 = ₹1 per ₹100. If interest rates move up, there is a negative impact of ₹1 per ₹100. While, this is a simplistic example, it gives a perspective on how debt funds make returns.

The writer is a corporate trainer (debt markets) and author

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Tax Query: Do early retirees have to pay advance tax?

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I retired early at the age of 50. The only sources of my income are capital gains from mutual funds and stocks, and interest income. Do I have to pay advance tax?

Vijaya Kumar

As per the provisions of Section 208 of the Income-tax Act, 1961 (‘the Act’), every person whose tax liability (after considering the Tax paid viz. Tax deducted at Source / Tax Collected at Source, if any, for your case) on the estimated total taxable income, for the Financial Year (FY) exceeds ₹10,000, is required to pay taxes in advance in 4 prescribed quarterly instalments —June 15, Sep 15, Dec 15 and March 15 during the said FY.

As per Section 207 of the Act, Resident individuals who is of the age of 60 years or more and not having income under the head Profits and Gains of business and profession’ are not required to pay advance taxes.

Advance tax is required to be paid on capital gains. However, as one cannot estimate the exact capital gain in advance (unless it actually materialises), hence if taxpayer has made any capital gain after the due dates of advance tax instalment, then such tax liability is required to be paid in remaining instalments. Interest for shortfall in payment of advance tax on account of capital gains would not be applicable for the previous instalments.

In case you estimate the total tax liability on your estimated taxable income (Capital Gains and Interest) to exceed ₹ 10,000 (after considering the tax deductible/collectible at source), you would be required to pay taxes by way of advance tax in the four prescribed instalments.

The writer is a practising chartered accountant

Send your queries to taxtalk@thehindu.co.in

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How you can make your home climate-proof

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The effects of climate change are strongly and clearly upon us — severe rains, landslides, hurricanes to scorching heat.

The recent report by the Intergovernmental Panel on Climate Change (IPCC) notes that South Asia is very vulnerable and India may suffer more frequent and intense heat waves, extreme rainfall events,erratic monsoons and cyclonic activity in the coming decades.

As homes offer protection against the elements, there is also a need to have a shift in how we approach residential property. Home sales and prices are not yet impacted by climate change considerations, except in a few coastal regions.

Rising risks

Data from the IPCC show three scenarios of mean temperature rise in South Asia – 1.9º C, 2.9º C and 5.1º C. Besides higher average, there will also be more days of extreme heat — over 40º C temperature. The best-case scenario projected is a 50 per cent increase, from about 40 days in a year now, and the worst case is up to three months of extreme heat.

This change will push up cooling costs for homes. In fact, analysis by the International Energy Agency shows that the share of electricity demand by homes, mainly for cooling, will nearly triple by 2030 globally.

The other hazard is cyclonic storms. Analysis shows that the Arabian Sea is likely to be most affected and in the past decade the cyclonic systems in the region already increased from two to three. The storm intensity, too, is expected to increase.

Floods are an existing danger and data from the Geological Survey of India show that 12.5 per cent of the country are major flood-prone areas. Coastal regions – nearly 7,000 km long – face the risk of water inundation from cyclonic storms. Rising sea levels also pose a threat, though the immediate effect may be limited to a few low-lying places.

Flash floods from glacier run-offs will be a peril for those in the Himalayan region.

Unpredictable monsoon, leading to not just high precipitation, but also water-shortage is also another factor to consider for some regions.

How to manage

While the prediction is dire, there are at least three ways in which you can tackle these risks from a housing perspective. The first line of defence is to consider locations that are relatively safer.

For example, you can refer to the vulnerability atlas of India (https://vai.bmtpc.org/) published by the Building Materials and Technology Promotion Council . However, it is likely that you may have limited options in picking a location, due to career or other considerations.

You can still find places in the city that are not low-lying, have better water drainage systems and choose homes that are built on an elevation. Be sure to inspect the area during the monsoon to see how it fares.

Even with that, you must buy insurance to cover for any damages.

Your losses can run high — the 2015 Chennai floods led to total claims of about ₹4,800-5,000 crore and the Uttarakhand flash floods saw insurance companies paying out claims amounting to ₹1,500 crore.

Flood insurance is a subpart of regular home insurance, and if there is potential for flood, you must opt for it. Make sure the insurance cover is comprehensive and includes multiple calamities. In general, there are two types of cover – structural and content.

While content plan typically covers damages to possessions due to fire and flood, structural coverage also includes damage to structure due to storm, lightning and others.

Given that the losses may be high, do not skimp on the insured amount.

Also, make it a point to check the amount during renewal, as it may alter over the years, based on the policy. For instance, the plan may be based either on the reinstatement value or on the market value of the property to be insured.

The former considers the cost of re-constructing the structure after damage while the later deducts depreciation, based on the usage of the building.

Four, pay attention to the thermal comfort of the home. This includes analysing the layout of the house, green cover and choice of building materials used.

These factors can together make it cooler by a few degrees. You can also look at solar and wind power solutions, to reduce your power bill.

The author is an independent financial consultant

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Should you go for festive offers on your credit card?

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In a bid to play along the revving animal spirits this festival season, banks are offering many discounts and cashbacks for purchases made through their credit cards. Apart from the offers on the co-branded cards (with the e-commerce websites), banks have offers on other purchases (online or showroom) as well.

Here we give you a low-down of few of the offers to help plan your big ticket purchases this festival season wisely.

What’s on offer

For the ongoing festival sales on e-commerce websites, banks have provided their customers blanket discount on all purchases and certain other discounts and cashbacks for specific purchases as well. For instance, Axis Bank (all credit cards) and ICICI Bank (on Amazon pay ICICI Bank credit card only) offer a flat 10 per cent discount on all products bought during the great Indian shopping festival on Amazon.in. Even customers of HDFC Bank can avail of a flat 10 per cent discount on all purchases on the website made using the bank’s credit cards.

However, many of these come with varying conditions such as a mandatory minimum transaction value and an upper limit on the discount value.

The discount on Axis bank cards is available for up to ₹1,500 for a minimum transaction value of ₹30,000. For electronics bought on the website, the discount is available up to ₹4,000 provided the minimum transaction is for ₹80,000. Further for the purchase of your mobile phones, you can avail an additional 10 per cent discount (up to a maximum of ₹1,250), for a minimum transaction of ₹5,000 on Amazon, using Axis bank cards.

Apart from e-commerce websites, banks also have lucrative offers on purchases made from retail outlets such as Croma, Reliance digital, Vijay sales, etc – on their online and offline stores alike. But it does come with terms and conditions.

For instance, ICICI bank credit card holders get a discount of ₹5,000 on minimum purchase of ₹1 lakh in Reliance Digital (valid through Dec 31, 2021, on purchases made on weekends only) or Vijay Sales (valid through November 20, 2021, on all days).

The EMI lure

SBI Card holders get an instant 7.5 per cent discount on their purchases from the outlets of Sathya for a minimum purchase of ₹20,000. Valid until November 10, the discount amount is, however, capped at ₹3,500 per card account, in this offer.

Similar discount of 7.5 per cent is also offered on purchases from outlets of Vasanth & Co (up to a maximum of ₹3,000 per card, for a minimum transaction of ₹15,000) for purchases made through EMI (on 6,9,12,18 or 24 month tenures).

For non-EMI transactions, the discount is limited to 5 per cent only. However, before jumping to avail the higher discount, you must consider the additional interest outgo on your EMI transactions. For EMI transactions opted on SBI cards , interest is charged at 14 per cent on monthly reducing balance for 3, 6, 9, or 12 month EMI transactions (interest at 15 per cent for 18 and 24 month EMI).

Even the no-cost EMI transactions that come with additional discounts carry additional charges. For instance, customers of HDFC Bank get a cashback of up to ₹7,000 while purchasing Apple products using the bank’s cards or through no cost EMI option. The EMI transactions come with a convenience fee of ₹199 plus GST. Customers should hence consider weighing such charges against the discount or cashback offered.

Besides, a few banks also offer the option of converting some purchases into EMIs instantly when buying in certain outlets. SBI cardholders, for instance, can use an EMI option with tenures ranging from 3, 6, 9 or 12 month EMI on purchases made in Croma stores. The attraction here is that unlike a traditional loan, there is no documentation required and no processing fee charged for availing of this EMI offer. But if you intend to use the option for bridging your short-term needs (say, until the next paycheck), it might not still be a great idea. This is because, aside from the 14-15 per cent rate of interest charged, these EMI options come with a 3 per cent foreclosure charges.

For the brand-savvy

If you are keen on specific brands, do run a check on the discounts and cashbacks offered by some banks on their credit cards. However, the donwside is that these are mostly available only on converting your purchases to EMI.

For example, SBI offers its cardholders cashbacks of up to 10-15 per cent on certain Bosch products, when purchased through the EMI option. The entire list of product range on which such offer is applicable, and the discount amount are specified on the bank’s website. Similar offers are available on other electronic brands such as Samsung (up to 27.5 per cent), Lenovo (flat ₹5,000 cashback on laptops) and Mistibushi Electric (5 per cent cashback on ACs), on EMI transactions made through SBI cards.

HDFC Bank, too, offers similar brand-specific cashbacks and discounts on its Easy EMI or no-cost EMI purchases. Customers who opt for such EMI options get up to 20 per cent cashback on the purchase of television, home theatre systems and camera & lens, from Sony outlets.

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Jewellery Stocks That Delivered Up To 574% RetuMultibagger Jewellery Stocks That Delivered Up To 574% Return In The Last 1-Yr.rn In The Last 1-Yr.

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Planning

oi-Roshni Agarwal

|

For some time now amid festivities and gains in the bullion prices which got its prime trigger as the weakening dollar and inflationary concerns, gold and jewellery company stocks in India have been on the northward journey. In a month’s time, some of these counters meted gains to the tune of up to 27 percent.

Multibagger Jewellery Stocks That Delivered Up To 574% Return In The Last 1-Yr.

Multibagger Jewellery Stocks That Delivered Up To 574% Return In The Last 1-Yr.

Much like other sectors and in the run up to historical high prices of gold seen last year and other stock-specific fundamentals, some of the counters in the space have multiplied investors wealth. Here we list such stocks from the space that boosted investors’ wealth.

1. Goldiam International:

The stock last closed at a price of Rs. 955.80 per share. The stock is included in the category of Diamond cutting and jewellery and precious metals company. The stock last a year back closed at a price of rs. 142 implying gains of 573% in a year’s time.Goldiam International is a Mumbai-based exquisite exporter of diamond jewellery. The company is amongst the leading jewellery maker that is fully backward integrated.

This is a small cap scrip which zoomed substantially after its board proposed a buyback of shares of up to 3.8 lakh equity shares at a price of Rs. 1200. This is again a gain of 26 percent from the current price levels.

2. Thangamayil Jewellery:

This stock in a 1-year time has given a return of 237 percent while on a YTD returns are at 125%. This company holds a chain of retail jewellery showrooms across Tamil Nadu and offers a complete range of gold, silver, diamond and platinum jewellery.

This is again a small cap scrip that has almost trebled investors wealth.

The company’s revenue have inched higher in the last fiscal and its debt to equity ratio has been at 0.9, while its RoE has been at 29.06 which is astounding given the returns in 2020 of 20 percent.

3. Renaissance Global:

This is again a diamond cutting and jewellery company with 1-year return of 284 percent. Over the years of its operations, the company has transformed from a jewellery manufacturer to a global lifestyle products company.

The company is a licensee for two brands- Disney and Hallmark. The company’s speciality jewellery retailer includes Fred Meyer, Helzberg, Joyalukkas, Malabar, Signet Jewellers among others.

4. Tribhovandas Bhimji Zaveri Ltd.

The company is a established retail jewellery chain in India with presence spanning some 156 years. This is again a small cap scrip that in a year’s time has given over 130 percent returns.

Promoter holding in the firm remains unchanged at 74.12% in Sep 2021 quarter. Also, FII/FPI have increased holdings from 0.78 percent to 1.38 percent in the September quarter.

5. Radhika Jeweltech:

The company’s stock which last closed at Rs. 86.3 per share gave 405 percent in the last one year. This company originally started as a proprietorship concern and MR Ashokkumar Zinzuwadia in the year 1987. They were in the business of Jewellery and continued upto June 302014. Later they started operations as a partnership firm for undertaking the business of manufacture resale export import of gold, silver.

Other than these there are stocks of Darshan Orna, Golkunda Diamonds, Goenka Diamond, Swarna Sarita Gems, Sovereign Diamonds etc. also produced multibagger returns during the bull run which continues till now..

Should you be investing in jewellery stocks?

Given the lost ground in the pack amid the Covid 19 outbreak, retailers have been on a strong footing captivating on the current festive season. Also, as the long term outlook for the bullion holds promise and also the near to medium outlook for gold is promising given the uncertainty, inflationary trend, gold investments shall in any form be a perfect inflationary hedge as well as store of value.

GoodReturns.in



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How you can enhance insurance with add-ons

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Term insurance has a simple premise amongst various insurance products — providing life cover against death with sum insured (SI) in return for yearly premiums. Premiums for ₹1 crore SI are relatively low at ₹10,000-12,000 annually for a non-smoking male of 30 years. The basic cover of term insurance can be enhanced with 7-8 different add-ons, significantly enhancing its utility for everyone. Add-ons grouped into family-related ones, the ones supplementing basic health insurance and insuring against unforeseen events, can be considered on a case-by-case basis.

Family related add-ons

Securing a cover for your spouse and creating an additional cover for your child’s needs are beyond the scope of SI and can be achieved with add-ons. Term insurance for one’s spouse need not be a separate policy. For an additional premium which ranges from 50-75 per cent of the original premium, a similar cover for one’s spouse can be created.

Bajaj Allianz’s term plan has a Joint Life Rider add-on which adds 75 per cent to the primary premium and provides term insurance to the spouse. A similar add-on from PNB Metlife costs less than 50 per cent of the primary premium. The latter also waives off all future premiums on death/disability or critical illness to the primary life insured, compared to the former that waives premiums only on death.

On the other hand, Edelweiss Tokio provides an extra 50 per cent cover for the spouse starting at just ₹58 for the add-on.

For child benefit option, these three insurers and another one, Canara HSBC OBC, provide a child support benefit (CSB) add-on. Upon termination of the policy on death of the primary life insured, an additional CSB-related SI will be paid alongside the basic SI. The add-on costs 25 per cent more with term insurance from Canara HSBC, 5 per cent with PNB Metlife, 10 per cent with Bajaj Allianz and 6 per cent with Edelweiss Tokio.

The SI in this segment is different from that for the life insured and is dependent on each individual policy, and hence the different pricing.

Critical illness covers

Term insurance is largely not triggered upon diagnosis of a critical illness (CI). This is seen as one of its shortcomings compared to health insurance. Most insurance providers have hence added a CI rider which provides an amount on diagnosis of an illness which falls under their CI definition.

For instance, HDFC Life provides ₹5 lakh on the policyholder being diagnosed with any one of 19 critical illness with an add-on which costs 15 per cent more, while term insurance from Max Life costs 25 per cent more to cover 64 illnesses and providing the same amount.

Edelweiss Tokio, on the other hand, provides ₹10 lakh to cover against 36 CIs with its rider which costs 62 per cent more than the basic premium. PNB Metlife has the most comprehensive package in this regard.

An accelerated payout add-on which costs 75 per cent more,, provides 25 per cent of the SI upon diagnosis of any of the covered 50 CIs.

Few other insurers including Max Life, Tata AIA and Aditya Birla Sun Life provide early payout of SI on diagnosis of a terminal illness (different from critical illness) as a no cost option.

An existing health insurance makes this add-on an incremental cover for critical illness, but the need for a comprehensive health insurance cannot be served by term insurance even with this add-on.

Accident disability, death

In case of permanent disability, term insurance premium can be waived off either as a no cost feature (ICICI Prudential) or as an add-on which costs in the range of ₹500-800 for most other providers. Some providers also tag critical illness condition with the waiver of premium add-on, considering a policyholder’s inability to meet yearly premiums in both cases.

Meeting hospital expenses in case of an accidental death or even disability can place significant financial burden on one’s family, essentially negating the benefit of term insurance payout (in case of death).

Extra payout, in case of accidental death, is a popular add-on featured by most insurance providers. For an additional sum of ₹500-1,000 most providers ensure additional ₹10 lakh in case of accidental death. HDFC Life’s term plan provides an additional ₹1 crore payout in case of accidental death but the add-on would increase premium by 35 per cent. A similar add-on to cover for accidental disability is also available with costs in the range of ₹200-500 to provide an additional sum insured of around ₹10 lakh.

Based on one’s needs and circumstances, the utility of term insurance can be enhanced by purchasing the right add-on to complement the basic life cover.

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HDFC Securities Gives Buy On A PSU Bank And Infra Stock

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1. ABB India:

This is one infra sector stock recommended for gains of 11%. The stock’s recommended target price is Rs. 2120. ABB is given a buy for a period of 3 months and the stop loss suggested is Rs. 1750.

Technical Observations:

After showing a larger range bound action for the last seven weeks, the stock price has witnessed a sustainable upside bounce in this week so far.

The stock price is currently making an attempt to stage upside breakout of the sideways consolidation at Rs 1930-1940 levels.

A larger degree of higher bottoms is intact on the weekly chart and the recent swing low of Rs 1790 could be considered as a new higher bottom of the sequence.

Volume has started to expand while the stock price shows upside breakout of the hurdle.

Weekly 14 period RSI has turned up from near 60-62 levels, which signal further strengthening of upside momentum for the stock price ahead. The overall chart pattern of ABB indicate a long trading opportunity.

2. Indian Bank:

2. Indian Bank:

The buy call has also been given on Indian Bank for a target price of Rs. 205. This implies gains to the tune of 12 percent from the current price level of Rs. 182.5 per share.

Technical observations:

Stock has broken out from ascending triangle on the weekly charts.

Stock price has shown throwback towards previous breakout levels, which can resume primary uptrend after running correction.

Nifty PSU Bank Index has broken out from medium term downward sloping trend line on the weekly charts.

Stock price has surpassed the previous two tops on the weekly chart Price breakout is accompanied by higher volumes.

Primary trend of the stock has been bullish with higher tops and higher bottoms Stock has been holding levels above its medium to long term moving averages

Disclaimer:

Disclaimer:

The above stocks are picked from the brokerage report of HDFC Securities. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage house are not liable for any losses caused as a result of decisions based on the article.



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Top 6 Best DeFi Tokens By Market Capitalization To Buy In 2021

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What are DeFi tokens?

They are blockchain-based decentralized financial applications that resemble successful principles in traditional banking and finance. The DeFi token is causing a stir in the marketplace. The main aim is to decentralize financial services and eliminate the necessity for a third party, such as a bank, in the middle. People can use DeFi platforms to lend or borrow money from others, trade cryptocurrencies, insure themselves against hazards, and earn income in savings accounts. A layered architecture and highly composable building components are used in DeFi. Some DeFi apps advertise huge interest rates, but they come with a lot of danger.

DeFi is based on decentralised applications, or DApps, that conduct financial activities on blockchains, which are distributed ledgers popularised by Bitcoin and have now been used more widely. Transactions are made directly between participants, mediated by smart contract programmes, rather than through a centralised middleman like a bitcoin exchange or a regular Wall Street equities exchange. These smart contract programmes, also known as DeFi protocols, are often run on open-source software created and maintained by a developer community.

Why DeFi Tokens Are Fascinating?

Why DeFi Tokens Are Fascinating?

DeFi tokens, for example, allow consumers to borrow and lend inside a peer-to-peer network or take out insurance directly without the use of intermediaries like banks.DeFi coins are an intriguing application of the concepts pioneered by projects like Ethereum, which allow decentralized apps to run on their network infrastructure. DeFi tokens are another milestone in making investing and commerce opportunities available to individuals who may not have been able to participate up until now, pioneering an economic paradigm shift, thanks to decentralised platforms.

Terra- LUNA

Terra- LUNA

This is the most valuable DeFi coin right now in terms of market capitalization. Terra’s native cryptocurrency, LUNA, is described as a “mining token with consistent payouts that are designed to absorb volatility from changing economic cycles.” LUNA, based in South Korea, is critical to maintaining the price stability of Terra’s stablecoins. Trading between the LUNA and Terra stablecoins is subsidised, so LUNA holders can stake their tokens and receive a percentage of the transaction fee from the Terra payment network.

Uniswap -UNI

Uniswap -UNI

Uniswap is a leading decentralised exchange that dominates the DeFi market at the moment. It uses an Automated Market Maker system (AMM) to ensure that the ERC20 tokens sold on its platform have enough liquidity. Because of its crypto-asset solutions, the Uniswap protocol has a devoted following. It gives you complete control over your private keys, allows you to trade with cheap costs, and interacts with external wallets.

Uniswap went a step further in September 2020, establishing and giving its own governance token, UNI, to former protocol users. This increased both the possibility for profit and the ability for users to control the destiny of the entity – a desirable feature of decentralised entities.

Avalanche- AVAX

Avalanche- AVAX

Aave is a crypto loan service powered by an open-source DeFi technology. Its non-custodial liquidity technology lets you earn interest on your crypto assets while also allowing you to borrow them. The DeFi platform debuted in the bitcoin market in 2017.

The platform was originally known as ETHLend, and the native token was LEND. Its main function was to connect lenders and borrowers through a matching mechanism. The DeFi platform was rebranded Aave in 2018 to reflect the addition of new lending features.

Wrapped Bitcoin WBTC

Wrapped Bitcoin WBTC

WBTC complies with ERC-20, the Ethereum blockchain’s core compatibility standard, letting it to completely integrate into the ecosystem of decentralized exchanges, crypto lending services, prediction markets, and other ERC-20-enabled decentralized finance (DeFi) apps.

WBTC is likewise backed by Bitcoin at a 1:1 ratio through a network of automatically monitored merchants and custodians, ensuring that its price is always matched to Bitcoin and allowing users to transfer liquidity independently and autonomously between the BTC and ETH networks.

Dai- DAI

Cryptocurrencies and DeFi coins are notoriously volatile in the alternative financial industry. The DAI coin may be of interest to individuals who want to avoid price swings. In a word, this DeFi crypto coin is based on the Ethereum blockchain and is tied to the US dollar in terms of value.

DAI is, in reality, the first decentralised, collateral-backed crypto asset. The open-source software MakerDAO Protocol, which is one of the top DeFi platforms for using smart contracts to construct various decentralised applications, created this DeFi token.

DAI’s price is soft-pegged to the US dollar and is backed by a mix of other cryptocurrencies that are placed into smart-contract vaults whenever new DAI is issued.

Disclaimer

Disclaimer

The information on this website is not intended to be investment, financial, trade, or other types of advice, and you should not take any of the website’s content as such. GoodReturns does not advocate that you purchase, sell, or hold any cryptocurrency. Before making any investment decisions, do your own due investigation and talk with your financial advisor.



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What are Gold BeES? How Is This Gold Asset Beneficial To Investors?

Personal Finance

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How is Gold BeES beneficial for investors?

There are no storage and theft related issues with Gold BeES. Likewise, investors do not have pay that extra cost pertaining to gold designing as in jewellery making.

Other advantage with Gold BeES there is no risk with respect to the purity of gold as Gold ETFs deal in 99.5 percent pure gold.

Also, it is the most active traded as well as liquid form of gold investment.

Nonetheless for holding and remaining put in Gold BeES or Gold Benchmark Exchange Traded Scheme you need a demat account.

During the NFO period, there is a variable entry load structure based on the investment amount.

Also, in comparison to SGBs, gold BeES are available in high volume as there is immense volume unlike SGBs which are also offered in tranches for a limited timeframe.

There is no high margin cost involved in gold ETFs or gold BeES which for physical gold goes between 3-8 percent.

Exposure can be taken in very small quantity of gold.

Long-term capital gains (LTCG) tax at 20 per cent with indexation benefit is applicable on gold ETFs if gains on units are held for more than 36 months. Short-term capital gains (STCG) tax is imposed at the investor’s income-tax slab rate if gains on units are held for less than 36 months. This is similar to capital gains on SGBs sold in the secondary market.

Cost in transacting in Gold BeES

Cost in transacting in Gold BeES

Similar to stocks, trading in Gold BeES carrues brokerage cost which is 0.5 per cent of the transaction value and it may differ from broker to broker. Investors can trade in 1 unit of Gold BeES which is equivalent to 1 gm of gold.

Outlook on Gold BeES

Outlook on Gold BeES

So, as a perfect hedge and diversifier, one amid uncertainty such as in the current landscape can bank on gold BeES. Also, these BeES are offered at a lucrative cost structure, so investors basis their long term investment goals can stagger their investment into it.

Points to note when buying into Gold BeES

Points to note when buying into Gold BeES

1. One should factor in the fund’s assets under management as well as the average daily turnover

2. Impact cost which provides a sense of the liquidity that the instrument is offering.

3. Tracking error in comparison to the benchmark gold should be the least



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