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Tuesday, February 3, 2009

What are the basics of Investment?

The money you earn is partly spent and the rest saved,
for meeting the future expenses. If you keep your savings
idle its nominal value remains the same but real value
decreases by prevailing inflation. This can be defined by
the following formula:

Real rate of return = Nominal rate of return - Inflation

Instead of keeping the savings idle, you park it somewhere
to get a return on this capital in the future. This is
called an investment. There are various avenues for investment.
You may invest in the bank deposits, postal deposits,
real estate, jewelry, paintings, life insurance, tax savings
schemes likes PPF/NSC or stock market related instruments
called securities like shares, debentures, bonds, etc.
However, the return from each investment option depends
on the associated risk. The riskier the investment, the higher
will be the return. For instance, stock market related
investments are risky, but makes you earn more returns than
other modes of investment.

Friday, January 9, 2009

Difference between book closure and record date

Book closure refers to the closing of register of the names or investors in the records of a company. Companies announce book closure dates from time to time.

The benefits of dividends, bonus issues, rights issue accruing to investors whose name appears on the company's records as on a given date, is known as the record date.

In case of a record date, the company does not close its register of security holders. Record date is the cut off date for determining the number of registered members who are eligible for the corporate benefits. In case of book closure, shares cannot be sold on an Exchange bearing a date on the transfer deed earlier than the book closure. This does not hold good for the record date

Tuesday, December 9, 2008

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Term : Mutual Fundz

An investment vehicle that is made up of a series of fundz collected from many investors for the purpose of investing in securities such as stocks, bonds, money market instruments and similar assets. Mutual fundz are operated by money managers, who invest the fund's capital and attempt to produce capital gains and income for the fund's investors.
One of the main advantages of mutual fundz is that they give small investors access to professionally managed, diversified portfolios of equities, bonds and other securities, which would be quite difficult (if not impossible) to create with a small amount of capital. Each shareholder participates proportionally in the gain or loss of the fund. Mutual fund units, or shares, are issued and can be purchased or redeemed as needed at the fund's current net asset value per share, which is sometimes expressed as NAVPS. A mutual fund's portfolio is structured and maintained to match the investment objectives stated in its prospectus.

Friday, December 5, 2008

What is Technical Analysis?

The methods used to analyze securities and make investment decisions fall into two very broad categories: fundamental analysis and technical analysis.Fundamental analysis involves analyzing the characteristics of a company in order to estimate its value. Technical analysis takes a completely different approach; it doesn't care one bit about the "value" of a company or a commodity. It is the study of historic price movements of securities and trading volumes.

Technical analysts believe that prices of the securities are determined largely by forces of demand and supply. Share prices move in patterns which are easily identifiable. Crucial insights into these patterns can be obtained by keeping track of price charts, leading to predictions that a stock price may move up or down. The belief is that by knowing the past, future prices can predicted.

technical analysis really just studies supply and demand in a market in an attempt to determine what direction, or trend, will continue in the future. In other words, technical analysis attempts to understand the emotions in the market by studying the market itself, as opposed to its components. If you understand the benefits and limitations of technical analysis, it can give you a new set of tools or skills that will enable you to be a better trader or investor.