Stock Market Class notes –Commodities Exchange & Mutual Funds
(MCX / NCDEX): This is yet another trading platform which has only commodities like Agri commodities, spices, metals, gold, silver, etc…
Here the trading is done only in the futures segment.
But if you want to take the delivery then you also have the spot market there but, the minimum lot is 1 Gram or 8 Gram or 1 quintal (100 kgs) or 1000 kgs (1 ton). Whatever you are buying in the spot market you have to pay extra for the delivery charges, which is according to the weight.
Note: The commodities market has got nothing to do with the stock market, in fact, the commodity prices only depends on the monsoon rains, output, import/export, etc…
When there is not enough production or when the demand is higher, the price goes up and vice-versa.
Note: Commodities is much riskier than stock market also because the prices here are operated and manipulated by the big industries collaboration.
Exchange Market Timings:
Stock market: Monday to Friday between 9.15 AM to 3.30 PM.
Commodities: Monday to Saturday between 10 AM to 11:30 PM
Forex: Monday to Friday between 9 AM to 5 PM.
Both the markets are closed on national holidays except on the day of diwali, on Diwali the market is open for 1 hour, according to the mahurat and it typically termed as – ‘Mahurat Trading.’
The best website for referring the commodities is – www.commoditiescontrol.com and
Note: the prices that you see for various commodities is per ton based generally.
Mutual Funds are the companies who take the investment from you and invest in the shares according to their in-depth research, Generally, mutual funds give more returns when compared to the SENSEX.
The portfolio (stock holdings), is well diversified and possess the least risk. It is also a good platform to invest money.
The CMP of a mutual fund is called as NAV – Net Asset Value.
We have two types of mutual funds:
Open-Ended and Close Ended.
In an open-ended fund, you can buy and sell at any point in time but in a close-ended fund you have to wait till the lock-in period is over like three yrs, five yrs, etc…
Mutual funds are a good destination for investment when made from the long-term point of view. The IPO of the mutual fund is called – NFO – New fund offer.
While investing in mutual funds you must have a look at the ratio of funds allotment which is in the form of Debt: Equity; Debt is Debentures, when an MF is allocating more money in Debt than, the returns from it would be average but at the same time risk would also be less; and vice-versa.
Reference site: http://www.moneycontrol.com/mutualfundindia/
Note: Nowadays, one can also buy insurance + Mutual Fund together which is called as ULIP, it will give you two benefits: Insurance + Returns.
ULIP: Unit Linked Insurance Plan.
SIP: Systematic Investment Plan, herein instead of paying the whole money at the end of the year, you pay the premium every month on month just like the EMI.
In mutual funds you have two types:
G: Growth, D: Dividend
In Dividend Mutual Funds you get the net profit they make at the end of every year and its NAV remain the same but, the growth Mutual Fund will never give returns per annum basis, the profit they get, they reinvest to make more profits out of it and hence the NAV also rises accordingly.
Note: The maximum returns are from the mutual funds which have an investment in the small and Mid-cap companies.
Most Ideal Portfolio: Invest in the companies where mutual funds are investing (Midcap and Small cap), whenever the mutual funds of the above two categories have a company name in common and that too with high allocation you too can invest in those companies.
For best returns select the top 10 companies from the point above to get more returns that even mutual funds.
Note: One can buy the mutual fund through online or with any stock broker also.
The portfolio of the mutual funds should be checked on month on month basis, and accordingly, the changes have to be done in your portfolio also.
PMS: Portfolio Management Service
In this, your investment is managed by the stockbrokers; also the returns are good from the long-term point of view, but the commission is very high. They take away 10% – 30% of your returns every year as commission.