As the board considers a buyback, Paytm shares increase in Dalal Street.

Paytm stock is down 60% in 2022 following a much-watched debut in the latter part of last year because of concerns about profitability and expenses associated with marketing and employee stock options.

When stock is repurchased, shareholders receive the market value of their shares plus a premium from the corporation, which is a benefit to all shareholders. Additionally, stockholders who sell their shares on the open market will profit directly if the stock price increases prior to the buyback.

An effective stock buyback can maintain stock prices, streamline ownership, and replace dividends, all of which are advantages for companies. Although a repurchase doesn't always benefit investors, it can since investors get their capital back.

Share repurchase plans have always had benefits and drawbacks. The real worth of stock buybacks has been questioned recently, though, since their frequency has increased. According to some corporate finance specialists, firms take advantage of them to artificially boost certain financial figures, such as EPS, in the name of benefiting shareholders.

Although a stock price increase following a beat in earnings is common, this shouldn't be assumed always to occur. Even after exceeding analyst expectations for both sales and earnings per share (EPS), a stock's price frequently declines.

5 reasons for stock's low performance despite good quarters

1) Panic selling trend

 Investors may buy heavily before the earnings report is revealed when, for whatever reason. Now, even if the earnings exceeded expectations by a wide margin and met investors' expectations, the stock price could still decrease afterward. This could be due to the stock price being at an all-time high or 52-week high, or it could be due to investors' lack of expectation that it will rise further in the near future.

 In essence, this could result in a flood of selling and lower stock price.

2) Change in Board of Directors/Management

A senior executive, such as the CFO or MD, might be departing the company soon, the company might reveal on an earnings call. Despite beating expectations for earnings, this could lead to a decline in the stock price.

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We will discuss 3 points in next post 

Continue from the previous post...

PAT or profit after tax does not always ensure a bullish run of stock performance

1) Debt dive

If a firm meets profits expectations, but analysts and investors see that the company has taken on a lot of debt during its last quarter, to the point where it might be regarded as risky for the company, this would undoubtedly lead the stock price to decline dramatically on market opening.

2) Stock buyback

A stock price decline following an earnings surprise may also be brought on by the corporation repurchasing outstanding shares. The stock price of the company normally rises when it repurchases its own shares, and the financial statements also get better.

3) Liquidity adjustment

Large hedge funds try to enter and leave equities when there is greater liquidity, or in other words when a specific stock is seeing significant volumes of trade. They do this because they hold a substantial percentage of the company's stock and do not want to affect a stock's movement at times when trading volume is low.

After an earnings beat, a stock's price may decline due to news that not many investors are following.

Expleo Solutions Ltd has a record of 171% growth in 5 years. The stock was ₹501 on the pandemic-hit January 2021 and made a double growth now at ₹1248. The low-profile stock stun the market. The 24-year old company deals with tech and engineering. It spread business in the UK, US, and Persian Gulf region.

Borosil Ltd scaled up 42% to ₹422 in one year, whereas in January 2021, it was almost half of the current price. Its 5-year growth was considered 126%. The stocks made an upward rally from mid-2020. 

Promoters have the majority of shareholdings which is a good sign. The company had record revenue in the last three years, following the same trend in recent quarters, with nearly 644 cr revenue generated in 2022.

A debt-free low-profile stock, NOCIL Limited is a supplier of rubber chemicals. The 60 year old company has vast product portfolios, including antioxidants, antidegradants, and vulcanization stabilizers. The stocks returned 34% in 5 years; however, 2022 is set for marginal growth. Analysts issue a green signal to buy ahead of robust growth in FY23 quarters. 

The RBI increased interest rates by 35 bps today, the fifth time in a row.

"Will rise even more!" fund managers have been forewarned by S&P Global Ratings. There will be a big increase in borrowing costs worldwide in November. The central regulators of the top 6 traded currencies are imposing a significant 350 bps increase. In November, interest rates were raised by the US Federal Reserve, the BoE, the Australian Reserve Bank, and the Norway Bank.

The central banks of Sweden and New Zealand support the same tendency to control inflation, in addition to the other four banks.Irony is only Japan welcome inflation for growth!

Asia is under pressure, as evidenced by the past month's rate increases in South Korea, Malaysia, and Indonesia. In the previous month, rate-setting sessions were skipped by the ECB, the Bank of Canada, Japan, and the Swiss.

The rate adjustments force the G10 central banks to raise interest rates by 2400 basis points. However, there is a weak indication that the Russia-Ukraine conflict should be avoided, giving the world economy some optimism. The US is becoming more optimistic about a slight decline in inflation, which could change the Federal decision made in 2013 and 2014.

A new decade with more opportunities for growth, personally and professionally, began in 2020. Several investment trends are emerging that are going to alter how the world operates. The next ten years are going to be full of new developments and technologies that will transform this planet into a whole new one, from the arrival of flying automobiles to AI taking over everything and everyone.

Advanced sensors

Global imaging satellites, drones, AR headsets, and LIDARs will provide people with instant access to information on everything happening in and outside of space. Through the Internet of Things, about 100 billion sensors will be able to monitor and detect every aspect of our surroundings at all times by the end of this decade.

AI/Human-like intelligence

As people look to invest in technologies that will enable seamless integration of our daily lives, AI is undoubtedly one of the other core investment trends. More like AR and VR, artificial intelligence is engulfing all relevant industries one by one. It has now reached parity with human intelligence and is gradually becoming capable of everything that humans can do.

Gene therapies

From AIDS to Ebola, gene treatments and CRISPR are reducing diseases, and this is becoming an appealing sector for investors, whether they are funding or trading stocks.

Tools used —

The main swing trading indicators are the Moving Averages, Bollinger Bands, the Stochastic oscillator, and the RSI.

What is Swing Trading?

Learning how to swing trade can be quite beneficial if you have begun to investigate the numerous stock trading choices. Swing trading, which bases trading choices on technical analysis, is one of the most popular trading strategies.

Swing trading is the practice of profiting from changes in stock price. Simply said, it is the process through which traders predict the direction of the price movement that will occur next for an asset, open a position, and collect gains from that particular movement.

Before making a deal, swing traders hold their positions for a brief period of time, such as a few days or even a few weeks. They don't study market trends as frequently as day traders do, but they quickly mark changes in the trend line and exit the market before things go the wrong way. 

The reason why swing trading is so named is that it seeks to profit from price fluctuation or swings, whether they be upward or downward. Swing traders, like day traders, only employ a variety of technical trading tools during the time most conducive to position trading.

Christmas is all about spending spree, who even cares about saving? Well, right you are. But we are talking about investing to let you have an even better Christmas in 5 years.

Without adding a heavy hit to your funds, let’s guide you with some very simple and incredible investment plans for which you don't need a fortune in your account. These will bear enough fruits for you, only if you are ready to hold them in your repository for a while.

1. Unit Linked Investment Plans – the money that you invest will be channelized into stock markets. It gives you life coverage and financial security plus lets you enter direct market investments. Hence, one of the best investment plans.

2. Direct equity – You get high returns in long term compared to other plans that are inflation adjusted.

3. Debt Mutual funds – Be a gainer with commercial paper, treasury bills, govt. securities and money market tools as fixed interest.

4. National pension scheme – Doesn’t matter when you plan to retire, keep some money into this account to help you in your superannuation days.

Well, we are still hovering in the mood of Thanksgiving and we are sure many of you have geared up on new changes in life.

Have you considered anything on financial independence front? With festivity spree being prominent in the air and whole lot of positivity around, time to set yourself up for some financial independence.

1. Take a journal this season and start right now

2. Mark your age and the journey starts from here

3. List down your current assets and liabilities

4. Start with savings of a fixed percentage of your income

5. Get atleast one Life insurance and Health insurance and get sorted

6. If you have no investments at all, stash away some part of your income into FD and/or Public Provident Fund. Even if the returns are not very lucrative as compared to MFs and stocks, they are stable and secured. You get guaranteed returns.

7. Next is to start with some risky, yet profitable investment ventures like Equities, SIP and Mutual Funds. This is only if you are up for it. Make sure you hire a professional to assist here or read up well about these before investing.

8. Do you not have much of assets, but yearn for these? start saving for it little by little from today and you will make great funds for car, property, jewellery or any of that sort soon.

9. Start with atleast one parallel stream of income – This is the most critical part of financial independence.