Why Volume is Important in Intraday Trading?

Volume is simply the number of shares or contracts that trade over a given period of time, usually a day. The higher the volume, the more active the security. To determine the movement of the volume (up or down), chartists look at the volume bars that can usually be found at the bottom of any chart. Volume bars illustrate how many shares have traded per period and show trends in the same way that prices do.The data regarding volume of a share will be readily available on your online trading screen. Most financial sites carry data about volume.

For example if the Stocks volume for the day was 1,000,000 shares that means 1,000,000 shares were sold by someone and bought by someone on that day.

Volume as such may not be an attractive piece of information. But try to combine the volume data with support and resistance levels – you‘ll get the real picture.

For example – Say stock A ltd broke a ‘resistance level’ and went up further. Also since it broke through a critical level we would expect it to go up even more in the near future.

Now, let us also consider the volume traded on that day – say 3 lakh shares were exchanged.  On a normal day 1o lakh shares are traded. That means, Volume was way below average for that day. So, all the big investors were not trading.  They could come in the very next day and decide they are bearish on the stock. They sell and cause a panic. So the stock goes down the next day.

This is the importance of ‘volume’. Most traders will not buy a stock when it breaks a critical level unless volume is high. The reverse is also true. If a stock goes down with little volume it could mean the same thing.  The majority of investors were not trading.  When they come back they could see this stock and decide it is too low. So they buy it and the price goes up.

In short, Volume is a critical factor in technical analysis. Any support and resistance level is not valid unless it is backed by adequate volume. Volume should move with the trend. If prices are moving in an upward trend, volume should increase (and vice versa). If the previous relationship between volume and price movements starts to deteriorate, it is usually a sign of weakness in the trend. For example, if the stock is in an uptrend but the up trading days are marked with lower volume, it is a sign that the trend is starting to lose its legs and may soon end.

 

Sovereign Gold Bond

What is the Sovereign Gold Bond Scheme?

The government of India recently launched a Sovereign Gold Scheme to provide an alternate option when it comes to owning gold. This scheme aims to reduce the demand for physical gold, thereby keeping a tab on gold imports and utilizing resources effectively. With the Reserve Bank of India issuing these gold bonds, it brings in transparency and trust, providing an avenue wherein people can own gold without having to worry about its storage or safety.

How does Sovereign Gold Bond Scheme operate?

Under the Sovereign Gold Bond Scheme, the Reserve Bank of India will issue the bonds on behalf of the Government of India. The bonds will be sold at SHCIL, post offices and banks and issued in denomination of gram. They will issue these bonds on payment of money. Later on, the bonds will be connected to the price of gold. Investors have to pay the bond price in cash. From one person, the Sovereign Gold Bond Scheme would accept a minimum investment of 1 gm gold and a maximum investment of 500 gm in a single fiscal year. The bonds will pay a yearly interest of 2.5% to investors. Interest would be paid semi-annually based on the initial value of investments.

Key Features

Ø  The bond bears an interest at the rate of 2.50% (fixed rate) per annum on the nominal value.

Ø  Interest will be credited semi-annually to the investor's account and the last interest will be payable on maturity along with the principal.

Ø  Investors will earn returns linked to gold prices.

Ø  Bond carry sovereign guarantee both on redemption amount and on the interest

Ø  Minimum investment: 1 gram. Maximum investment: 500 grams.

Ø  Available in DEMAT and paper form.

Ø  Issuance through trading members of NSE.

Ø  Tradable on National Stock Exchange of India Limited.

Advantages

Cost: The biggest advantage is on the cost front when compared to buying physical gold or through gold ETFs. The 'making charges', akin to entry charge, is nearly 25 per cent for jewellery but in SGBs it's non-existent. In gold ETF, there's an expense ratio (fund management cost) of about 1 per cent in addition to the demat charges. However, there's no cost involved and no charges of any nature applicable on buying SGBs. Even the purchase price is the average of the gold prices of the previous week and a further discount of Rs 50 on that average price so arrived. So if the average price is arrived at Rs 3,000 per 10 gram, the SGB investor gets it at Rs 2,950. 

Taxation: Another big advantage is on the tax front. Physical gold, when sold after holding it for 36 months, will result in capital gains tax of 20 per cent after indexation. The redemption of SGBs will not result in tax. The 2016-17 Budget had proposed that the redemption of the bonds by an individual be exempt from the capital gains tax. Therefore, holding till maturity has its tax advantage. 
Redeeming in stock exchange may, however, result in capital gains or loss and one may have to pay tax accordingly. Interest on the bonds is, however, fully taxable as per the tax rate of an investor. For someone in the 10, 20, or 30 per cent tax bracket, the post-tax return comes to 2.47 per cent, 2.18 per cent, and 1.9 per cent respectively. 

Interest: SGBs, unlike physical gold or gold ETFs, earn interest on the investment made. The government has fixed interest of 2.50 per cent per annum (till tranche 5, it was 2.75 per cent) on the investment, payable half-yearly. This is a direct advantage, though nominal when compared to holding physical gold or gold ETF units. 

Safest: Zero risk of handling physical gold.

Assurance of Purity: RBI will announce the price before the issue date which will be fixed on the previous week's simple average of closing price of gold of 999 purity (24 carat) published by IBJA less Rupees 50 per gram.

Sovereign Guarantee: Both on redemption amount and on the interest.

Easy Exit Option: The tenor of the bond is for 8 years with an option to redeem from 5th year onwards on the date on which interest is payable.

Traded on Exchange:  All earlier issuance of SGB are available for trading on NSE.

Ease of Borrowing Loan: Can be used as collateral for loans.

Comparison of Physical gold, Gold ETF and Sovereign Gold Bond

Points	Physical Gold	Gold ETF	Sovereign Gold Bond
Returns	Lower than actual return on gold	Lower than actual return on gold	Higher than actual return on gold
Safety	Risk of handling physical gold	High	High
Purity of Gold	Purity of Gold always remains a question	High as it is in Electronic Form	High as it is in Electronic Form
Capital Gain	Long term capital gain applicable after 3 years	Long term capital gain applicable after 3 years	Long term capital gain applicable after 3 years. ( No Capital gain tax if held till maturity )
Collateral against Loan	Yes	No	Yes
Tradability / Exit Route	Conditional	Tradable on Exchange	Tradable on Exchange. Redemption- 5th year onwards with GoI
Storage Cost	High	Very Low	Very Low

Risk associated with Sovereign Gold Bonds

Gold is traditionally a very safe investment, and typically the risk associated with Sovereign gold bonds is very low. However, given the fact that gold rates depend on market performance, any drop in gold rates could put the capital at risk, which would be the case even if one owned physical gold. Regardless of market rates, an investor should take solace in the fact that the amount of gold he purchased doesn’t change.

KYC Documents required

The following KYC documents are required to invest in Sovereign Gold Bonds:

Proof of identity (Aadhaar card/PAN or TAN /Passport / Voter ID card)

KYC process will be carried on by bond issuing banks, agents or post offices.

Conclusion 
Linking any investment to one's long-term goal is important. It helps in not only earmarking savings towards an identified goal, but also avoiding the temptation to make any early exits, thus jeopardising the goal. SGBs may prove handy in accumulating gold as an alternative to buying physical gold. However, linking savings in SGBs to children's education, marriage or any other specific goal might not serve the purpose, hence invest accordingly. 

Most financial planners suggest gold allocation of not more than 10 per cent of one's investment portfolio. One may keep investing in various tranches of SGBs as and when they are issued by the government. SGBs suit those who are dedicated buyers of physical gold and keep accumulating it through their savings. 

Every SGB issue will have a lock-in of five years and hence linking it to one's long-term goal may not help much, unless one buys SGBs in lump sum. Although they are listed on stock exchanges and provide liquidity route, the secondary market transactions and the tax impact, thereby, may not suit all investors. 

Why Mid-Cap Mutual Fund

Mid-Cap Mutual Fund Its Feature, Advantage and Disadvantage

Mid-cap mutual fund is a type of mutual fund which invests money in medium and small sized companies. There is no specific classification of the size of the company. But according to a general classification, a medium-sized company has a market capitalization of more than Rs 500 crores but less than Rs1000 crores, and a small-sized company has a market capitalization of up to Rs 500 crores. Mid-cap funds are high-risk funds. They generate high-returns if there is a positive movement in the index. Mid-cap are readily available for investment because they belong to less recognized companies. The growth opportunity is higher in mid-cap funds when compared to large-cap funds.

Regular investors and foreign investors have switched to mid-cap companies from large-cap companies because the market prices of large-cap funds are continuously increasing. Mid-cap companies are those companies which are under research by the investors. They are yet to be identified in the market. So the growth potential is always higher in funds provided by mid-cap companies. The investors also have the chance of earning double than their expectations at times. These companies are also termed as "Wealth Creators" by some investors. They also have the capability to become a large-cap company if these companies are regularly progressing. But mid-cap funds are volatile in nature so they have the tendency to fall just like a pack of cards when the market crashes. So it is important to be cautious when you decide to make investment in a mid-cap mutual fund. However, it is a good investment option if an investor wishes to have a diversified investment portfolio.

According to a mutual fund tracking entity, it is believed that mid and small cap mutual funds have generated an average return of 19.71% for three months, which is higher than large capability mutual funds that gave an average return of 14.86%. It is good to compare both the types of mutual funds because they are opposite to each other. Sometimes the mid cap and small capability companies follow the footsteps of large capability companies, but sometimes it is exactly the opposite. However, it is truly believed by many experts and investors that mid capability and small capability funds can boost the performance of the investment portfolio.

At times the mid and small cap funds tend to outperform large cap funds, but that does not mean that an investor should substitute all the large cap funds by mid and small cap funds in the portfolio. The upswing in the mid and small cap companies in the recent times is only because of lower valuation made in December 2011. However, the difference between the valuations of large and midcap companies has been reduced substantially. The large cap funds are valued lower than their average returns in the long run. Therefore these funds are more attractive for investment than mid cap funds when the funds are compared only on the basis of its value. But if your investment objective is high-growth than mid and small cap funds are a good option.

Mid cap fund may performance better than large cap funds in the future because they are undervalued funds. Investors should buy mid cap funds after making a Systematic Investment Plan (SIP) as it will help them to minimize the timely risk especially when they are planning for a long-term investment.

Features of Mid-cap Mutual Funds
Below mentioned are some of the basic features of a mid-cap fund.

They provide long-term growth potential

The market price of mid-cap funds fluctuates frequently in a short-term

These funds tend to reinvest the earning into the company in order to boost the company growth

They give very little dividend to their investors.

They are volatile in nature

They are less risky than large-cap mutual funds

These funds belong to companies that are less recognized in the stock market.

Advantageous of Mid-cap Mutual Funds
The benefits of investing into a mid-cap mutual fund are mentioned below.

They belong to companies that are under research by the market so they have high-growth potential.

These funds may provide high returns if the market price of the fund is continuously rising. It might generate returns which are double than your expectations at times.

They are considered to be a low-risk type of mutual fund when compared to large-cap mutual funds.

Mid-cap mutual funds have more chance to prosper than large-cap mutual funds

Mid-cap and small-cap funds are low profile and safer than large-cap mutual funds. They are a good option for investors who's investment objective is to have long-term benefits rather than short-term gains.

Risk of Investment
Mid-cap funds belong to those companies which are not well know in the stock market so chances of many investors buying the funds of that particular company are quite less. Secondly mid-cap companies are more prone to the risk of manipulation and fraud because these companies tend to neglect the risk control measures. Another risk involved in a mid-cap mutual fund investment is the risk of default. This is an uncontrollable risk which comes with every type of stock market investment. Risk of default is the risk of interested rate fluctuation and sudden changes made by the government in the economic and financial policies of the country.

Best Performing Mid-cap Mutual Funds in India
If you are thinking of making an investment in some mutual funds, then here is a list of some of the best performing mid-cap mutual fund companies in India.

Birla Sun Life MNC Fund (G)

HDFC MidCap Opportunities Fund (G)

SBI Magnum Emerging Busi (G)

Birla Sun Life Dividend Yield Plus

IDFC Premier Equity-A (G)

Tata Dividend Yield

HDFC Equity

HDFC Growth

Tata Equity PE

Quantum Long Term Equity

The investors should read the offer document provided by the fund carefully before finalizing the investment decision. According to the experts, the mid and small cap companies perform better and rise faster when the market is returning back. They return to the phase of growth when the economy comes back to the normal position. That is the reason why more investors seek to invest in mid cap or small cap companies. These funds are less risky and do not harm your portfolio as much as large cap funds do.

Mid-cap mutual funds are best investment option for those investors who are not risk-takers. These funds generate moderate returns over a period of time. They are considered best for long-term investment rather than short-term investment. This is because mid-cap funds take a long time to perform well as they belong to a less recognized family of mutual funds. 

Investing In Equity Mutual Funds

Mutual fund is a trust that pools money from a group of investors sharing common financial goals and invests the money thus collected into assets classes that match the stated investment objectives of the scheme. Equity mutual fund is a type of mutual fund. It is considered to be a more risky fund as compared to other fund types.

However, they also provide higher returns than other funds. It is a fund that mainly invests in stocks. These funds are categorized according to company size and the style of investment in the portfolio. They are specialty funds that mostly target business sectors like real estate, commodity sector, health care sector etc.

There are different types of equity mutual funds, each falling into different risk bracket. In the order of decreasing risk level, there are following types of equity funds.

Types	Investment Objectives	Portfolio Of Investment	RisK Associated
Aggressive Growth Fund	Capital Appreciation	These funds are invested in less researched shares. The shares are highly risky in nature.	Highly volatile
Growth Fund	Capital Appreciation	These shares are invested in companies that are expected to perform well in the future.	Comparatively less volatile
Specialty Fund	Capital Appreciation	They follow a particular criterion of investment. The portfolio includes only those companies that fulfill these criteria.	They are concentrated funds. Hence the risk is higher than diversified funds
Diversified Equity Fund	Capital Appreciation	A small portion of investment is made in the money market. However this type of fund mainly invests in equities. It does not concentrate on a particular sector.	This type of fund is well diversified so risk associated with sector-specific or company-specific investment is reduced.
Equity Index Fund	Capital Appreciation	The portfolio of this fund comprises of the same companies that forms the index. It is constituted in the same proportion as the index.	The risk associated is similar to the benchmark index. However a broader indice is less risky than a narrow indice.
Value Funds	Capital Appreciation	This fund is invested in those companies that have sound fundamentals. The share prices of these companies are currently undervalued.	It is a low risk fund if compared to growth fund or specialty fund.
Equity Income/ Dividend Yield Fund	The investment objective is to generate high recurring income and steady capital appreciation.	This fund is usually invested in companies which generate high dividend.	The risk associated with this fund is the lowest as compared to others.

Equity mutual funds are also classified according to their market capitalization. Market capitalization simply means the company's stake in the market. It is the value of the company on the stock market. Market capitalization can be divided into three categories i.e. large cap, Mid cap and Small cap equity funds.

Large Cap Funds
Large cap mutual funds are funds that are invested in large companies like Reliance, ONGC, Infosys, Tata etc. These companies are less likely to go bankrupt. So investing in large cap funds will not make you suffer huge losses. On the other hand companies like Reliance and Infosys are already well established in the stock market, so their chances growing further are less. These companies have reached a saturation point so do not expect huge profits from them as the scope is limited. Large Cap funds are also known as "Blue Chip funds" and "Mega Cap Funds".

Mid Cap Funds
Mid cap funds are funds that fall in the bracket which is between the large cap funds and small cap funds. These funds are invested in a medium scale company. The risk associated with these funds is comparatively lesser than large cap funds but higher than small cap funds.

Small Cap Funds
Small cap funds are invested in small companies. Small companies are more likely to go bankrupt. So the risk associated with this category of equity mutual fund is very high as compared to large cap and mid cap funds. Small cap funds are exactly opposite to large cap funds. Even though the risk is high, there are equal chances of the company to make huge profits. This is because small companies have a scope of growing into a big coming in the near future. So small cap funds can be rewarding too.

Sector Funds
These funds are invested in a particular sector. Sector funds are highly risky. Only sophisticated investors actively participate in investing into such funds. Sector funds are sensitive to various factors such as interest rate and currency rate. It is beneficial not to invest in a sector fund if you are not a regular investor. A utility sector fund invests only in utility sector. Other examples of sector funds are pharma, auto, petroleum, health and care, technology and FMCG.

Examples of some equity mutual fund in India

Birla Sun life Top (G)

Fidelity Equity Fund (G)

UTI Opportunities Fund (G)

HDFC Mid cap Opportunities Fund (G)

UTI Equity Fund (G)

IDFC Premier Equity A (G)

In India, the concept of mutual fund stands similar to equity mutual fund. In a country like India a common man usually ends up saving his earnings through a bank fixed deposit. F.D is a common form of investment for the people. It is a safe investment but money grows very slowly. If you are looking for a long-term investment which is more than 5 years and you also want faster money growth then equity mutual fund is a good option.

What Is Balanced Mutual Fund And Its Advantage & Disadvantage

Balanced Mutual Fund

A balanced fund is a type of a mutual fund that invests money in average performing stocks and bonds. The portfolio of the investor is a mixture of stocks and bonds of various securities. A balance fund is also known as "middle-of-the-road fund' because it produces moderate income and gives moderate capital growth. The funds are invested in common stocks, bonds and preferred stocks in order to seek high income and low risk of investment. These funds are sometimes termed as asset allocation funds because it gives the option of spreading your investment in various asset types by way of single investment. These funds are selected by investors who prefer to invest in safe and income generating securities.

It is a mutual fund where the portfolio consists of a stock component, a bond component and a money market component. It is a type of a hybrid fund which generally invests into moderate and conservative securities. In spite of being a part of the asset allocation family, the portfolio mix of balanced mutual funds dose not change with changes in the stock market. Most of the funds have a fixed proportion of stocks and bonds in the portfolio. However, some funds permit the fund managers to increase the proportion of bonds in the portfolio. Bonds are safer than stocks. They tend to protect the portfolio from being hit by drastic fluctuations in the stock market. Therefore, your balanced fund investment is saved from massive diminution of net asset value when the stock market crashes. Hence, balanced mutual funds are considered much more conservative than equity mutual funds. However, there are some funds that work on variable asset allocation policy. This means that the asset mix keeps on changing with changes in the stock market.

The performance of balanced mutual funds is unconventional. These funds under perform when the stock market is performing well, i.e., when the share prices go high. However, they perform quite well when stocks are not doing good. Investors keep a check on their investment and try to add more of bonds to the portfolio. This is because bonds are less risky and less volatile than stocks. Investors want to play safe so they optimize the portfolio by increasing the percentage of bonds and decreasing the percentage of stocks. It is true that some balanced mutual funds are restrictive in nature. This means that it only allows you to invest funds in the Ind Stock market. On the other hand, there are other funds which permit you to have investments in both traditional and international markets. Some portfolios also include investment holding in precious metals and other unconventional commodities.

Here is a list of some of the best performing balanced mutual funds in India.

HDFC Prudence

DSPBR Balanced

HDFC Balanced

Tata Balanced

Birla Sun Life

Reliance Regular Savings Balanced

FT India Balanced

Canara Robeco Balanced

Principal Conservative Growth

HDFC Children's Gift-Inv

Rolling-Returns-BSL-Balanced-Fund

Types of Balanced Mutual Funds

A balanced mutual fund comes with many advantages of investment. This type of investment caters to most of the requirement of an amateur investor. Following are some of the benefits of holding funds in a balanced mutual fund.

Simplicity
A single balance fund investment provides investors with the option of investing in varied securities. It is a portfolio consisting of stock component, bond component and sometimes money market component. This type of mutual fund is simple and easy to manage.

Diversification of Investment
An investment in balanced funds allows the investor to diversify his investment into stocks, bonds and money market instruments. It does not compel the investor to hold funds in a single type of market.

Low risk
A balanced fund investment comes with an advantage of low risk. The securities comprising the portfolio is a blend of stocks and bonds which brings down the risk factor attached with this type of investment. The portfolio is less volatile in nature.

Steady Income

It is a steady income generating type of a mutual fund. It might not give you huge income, but yes, it will surely generate moderate income over a period of time. Balanced funds mostly focus on the value and growth factors of the securities rather than making huge profit overnight.

Minimum Capital Requirement

A balance fund investment provides the investor with a flexibility of holding funds in the market with minimum or small investment. You don't need to invest large amount of money to have a balanced fund portfolio.

Disadvantages of Balanced Funds

It is true that balanced funds come with many advantages of investment. However, there are various arguments that are against this type of investment. Following are some of the disadvantages of investing funds in a balanced mutual fund.

Cost of Investment
Investors have to keep themselves updated with the stock market every time. This is because fund managers charge the same fees for a 60:40 and 40:60 ratio of stocks and bonds. If you forget to change the ratio of investment with market changes, then you may loose out on a lot of income.

Long-term Investment
A balanced fund investment is good for investors who are seeking long-term benefits. It is not a good option for people who wish to make huge income in a short duration.

Low Income
This type of mutual fund investment produces low income. So it is not a feasible option for investors who want to make more money in less time.

Mutual fund investments are subject to market risks. Similarly balanced mutual funds also suffer because of fluctuations in the stock market. However, patience brings you fruitful results. One should select a balanced fund as a part of the investment portfolio only if one has patience to wait long for fruitful results as this type of investment produces low income in small time.