THE GOLD-EN SCHEMES ARE HERE

THE GOLD-EN SCHEMES ARE HERE

Last week the cabinet finalized the 2 awaited schemes for the investors inclined towards the investment in the precious metal – THE GOLD. This will help the investors as they will get an alternative to invest in the metal indirectly.

The 2 schemes are –

      THE SOVEREIGN GOLD BOND SCHEME

      

      THE GOLD MONETISATION SCHEME

First let’s talk about the gold bond scheme in which the Reserve Bank of India will issue the bonds on behalf of the Government of India , and will be linked to the price of gold.

The bonds will be issued in denominations of 2,5 ,10 grams of gold and with a minimum tenor of 5 to 7 years. The best part is that these bonds can be traded and exchanged like negotiable instruments. People can also take loans against these papers.

T

he tax treatment of these bonds are still under examination, but if sources are to be considered then these will be treated as physical gold only, so that the investors are indifferent towards them.

Through this bond scheme the government is trying their level best to curb the physical need of the gold metal in our economy which is imported.

These bonds will have an upper limit of 500 grams per year per person. The interest will be valued in terms of gold but will be redeemable in rupees only.

On the whole this bond scheme looks like as huge success but the real questions lies that will it be able to deal with the highly priced imports for which it has been introduced. The answer lies in the future.

Secondly we have the infamous GOLD MONETISTAION SCHEME. Though the State Bank of India also has this kind of scheme with a minimum cap limit of 500 grams because of which this scheme could not take off as expected and could barely hold 8 tonnes so far.

But in the new scheme the minimum cap has been reduced to 30 grams. Under this scheme the gold will be melted and the certificate equivalent to the weight of the gold will be issued by the bank. The process of melting of the gold will be done by the authorized centers.

Both the principal and interest will be valued in terms of gold. The interest rate will be decided by the banks only. The investor will have the option to get the gold or the money equivalent to the gold at the end of the tenor.

According to the reports of the World Gold Council, more than half of the gold imported every year is converted to the gold ornaments.

The main motive of government behind this scheme is to get the yellow metal equivalent to 30000 tonnes out of the bank lockers and vaults of the high end individual and the temples.

But the real catch behind this is that will the Indians part way with the gold ornaments  given to them by their parents or which is associated with their marriage ; or the temples will give away the gold which they received as charity and donations and has a high religious value attached. And also the risk of tax scrutiny is there.

On the whole the Gold monetization scheme is really something to look forward to as its success rate doesn’t seem to be what government might be thinking.

WRITTEN AND POSTED BY

SAMIR DEWAN

EDITOR AT CHARTERED BLOOD

SENSEX AND NIFTY - THE BAROMETERS

The Barometers – SENSEX AND NIFTY

 

Sensex , a word we come across every day . scrolling down on the side bars of the news channel , stated on the top of the newspaper and at many other places . It becomes a heated topic of  discussion whenever we have to talk about the economy. 

But the exact working and meaning of the Sensex ( or any other index) is usually not known to people.

Let us first get a bird’s eye view of these two terms which acts as a barometer of the stock market.

Sensex ( or SENsitive index) was introduced by the Bombay Stock Exchange in January 1, 1986. It is one of the prominent and most sought-after stock market indexes in India in comparison to National Stock Exchange ‘s NIFTY and others.

Sensex ( indicator of Bombay Stock Exchange) is the index or the indicator which gives a general idea about whether most of the stocks listed on that stock exchange is going down or going up. It comprises of the 30 stocks of the companies which plays a significant role in our economy. So basically when the stock prices of these shares fluctuates ; it indeed fluctuates the Sensex.

Same process happens with Nifty ( National Stock Exchange ) which acts as a barometer of the stocks listed on the National Stock Exchange. Nifty comprises of the 50 listed stocks of the NSE.

Therefore ; the exchange can create different types of indexes and thatswhy the indexes such as BSE Mid Cap Index , index for FMCG stocks etc can be found.

Now let us find out how the figures can are brought in consideration which acts as indexes.

The method adopted for calculating Sensex is Market Capitalisation Weighted method.

In this the total value of shares in the market at the time of index construction is assumed to be 100 in terms of ‘points’ Now when the market price of the free floating shares (shares which can be sold or purchased free through stock exchange) rises the points of the barometer also rises and vice versa. The base year of sensex is 1978-79 and the base index is set to 100 for that period. Then when the prices of the shares rise then the index points also rise by a percentage calculated taking into consideration the stock fluctuations of the 30 shares.

Lets take a simple example.

Two companies X and Y,

Price of X is 1000 and price of Y is 2000 ; Now we assume that company X has 100000 shares and company Y has 500000 shares

Therefore we need to find out the market capitalisation which is

1000x100000  + 2000x500000  which is 1100000000 ( 110 crores)

The next day X prices fall by 20% (800) and Y prices rise by 45%(2900). The market capitalisation need to be reworked again which is

800x100000  +  2900x500000  = 153 crores  which is in comparison to the which has increased by 39%. Hence the index will increase by 39%.

Therefore ; through this article we have fairy got some basic knowledge about the meaning and working of the  Sensex and its counterparts.

SAMIR DEWAN

Editor at CHARTERED BLOOD

MUTUAL FUNDS

You must have heard of mutual funds on TV Advertisements but ever wondered what are they?

Mutual funds are a remarkably good way to invest in stocks,Bonds & other securities. These are a accumulation of stocks and bonds.
Investors can make money from DIVIDENDS on stocks and INTEREST on bonds and capital gains on selling securities (if price has increased thereof).

ALSO READ: ACCOUNTING STANDARD 1

ADVANTAGES:
1.) Mutual funds facilitates professional management of one's hard dough.
2.) Investor's risk diverges due to owning shares in a mutual fund instead of owning individual stocks/bonds.
3.) Mutual funds let investor to convert it into liquid any time.
4.) Acquiring mutual funds is as simple as ABC, almost all banks and even some companies have their own stream of mutual funds.

DISADVANTAGES:
1.) Mutual funds are at times thought out to be a pricey affair as selling of securities, provokes capital gains tax.
2.) Shareholder transaction costs and advisory fees involved are sky-high.

POSTED BY,

GARV AHLUWALIA

EDITOR AT CHARTERED BLOOD

STOCK MARKET ANATOMY-3

STOCK MARKETS
{3rd post}

Hello friends!!!!!

So this is it ,finally today we are sharing a really good video
with you on the working of stock markets ,its importance for a nation , how it encourages industry and efficient utilization of resources.

As we said in our first post that industry ,commerce and trade drives every invention on earth because new inventions are done for better utilization of present resources so that maximum utility is obtained from them.This reduces cost ,resulting in increased profits, better dividends,more wealth.

Therefore any kind of utility created in any form whether virtual or physical, whether it is in form of goods or service has a potential earning power.

If anybody has any question ,doubts or suggestions post in the comments

With due credit to its makers,here it is !!!!

STOCK MARKET ANATOMY-2

{2nd POST IN STOCK MARKET SERIES}
HELLO FRIENDS

Thank you for your response on our last post about stock markets
Today we’ll see how it all started ? why?

we are posting a video that will be helpful in understanding the origin of these markets

THE STORY GOES LIKE THIS

In the 1600s, the Dutch, British, and French governments all gave charters {grants} to companies with East India in their names. On the cusp of imperialism’s high point, it seems like everyone had a stake in the profits from the East Indies and Asia except the people living there. These countries used to set up colonies in the east and brought valuable goods with them in ships ,thus making a huge profit on every voyage. Sea voyages that brought back goods from the East were extremely risky – on top of Barbary pirates, there were the more common risks of weather and poor navigation.

In order to lessen the risk of a lost ship ruining their fortunes, ship owners had long been in the practice of seeking investors who would put up money for the voyage – outfitting the ship and crew in return for a percentage of the proceeds if the voyage was successful. It was diversification of risk i.e. instead of one man bearing all the cost of the voyage , many investors used to put money , who would reap profits if the ship returned or bear losses if it doesn’t. These early limited liability companies often lasted for only a single voyage. They were then dissolved, and a new one was created for the next voyage. Investors spread their risk by investing in several different ventures at the same time, thereby playing the odds against all of them ending in disaster.When the East India companies formed, they changed the way business was done. These companies had stocks that would pay dividends on all the proceeds from all the voyages the companies undertook, rather than going voyage by voyage.Basically east india company acted like a link between investors and the main business of getting valuable goods from east. They acted like managers. People gave money to them i.e. investors and they organised voyages to the east for goods and when ships returned or after certain period they gave dividends to the investors. In this way the risk was spread between many voyages rather than relying on one ship .These were the first modern joint stock companies.They are called modern because this is how business is today also. This allowed the companies to demand more for their shares and build larger fleets of ships . The size of the companies, combined with royal charters{grants} forbidding competition, meant huge profits for investors

HOPE YOU LIKE IT

STOCK MARKET ANATOMY-1

Hello friends!!!
from today we are starting off with our series about
“STOCK MARKET”
See guys/gals this is a very vast oceanic subject but we’ll be starting from scratch to where it takes us
So today let us first take a look at some of the basic terms that will be used daily in our series
1. STOCK – the capital raised by a company or corporation through the issue and subscription of shares.

2. STOCK MARKET – Stock Market is a market where the trading of company stock, both listed securities and unlisted takes place. It is different from stock exchange because it includes all the national stock exchanges of the country.

3. STOCK EXCHANGE – Stock Exchanges are an organized marketplace, either corporation or mutual organization, where members of the organization gather to trade company stocks or other securities. The members may act either as agents for their customers, or as principals for their own accounts. Stock exchanges also facilitates for the issue and redemption of securities and other financial instruments including the payment of income and dividends. The record keeping is central but trade is linked to such physical place because modern markets are computerized. The trade on an exchange is only
by members and stock broker do have a seat on the exchange

4. CAPITAL – wealth in the form of money or other assets owned by a person or organization or available for a purpose such as starting a company or investing.

5 TRADING – the action or activity of buying and selling goods and services.

“”””After reading these a question should strike your mind that is their any difference between stock and capital?”””””

THINK ABOUT IT !!!!!