Reality shows in the Indian entertainment space hold a different meaning. Over the years shows like Roadies, Dance India Dance, and Big Boss has shown interest in participants whose absurdity can increase the TRP levels. But, Shark Tank India seems to have broken the narrative. For the first time in Indian television, Shark Tank India has stood out to become a reality show that has showcased the entrepreneurial side of Indians through its unique ideas with a purpose to solve larger problems of mankind and simplify the lives of people. This was the first time a TV show threw a spotlight on the world’s third-largest startup ecosystem where established D2C startup founders became sharks to fund the mushrooming startups based on the pitches made by the startup owners. Out of a pile of applications, the show showcased 198 startups that identified unique problems and offered solutions. Some received applause and funding while some returned empty-handed. The show with its season one complete has given Indians a chance to dream and think about starting a venture and generating wealth. In addition, to this, it has left numerous Dos and Dont’s for budding entrepreneurs. Here is a list of them.

The time dates back to 2010 when Indians are at the cusp of becoming online shoppers and Flipkart already three years into e-commerce is into developing the habit of shopping through screens among Indians. While we could buy electricals, electronics, books, shoes, apparel anything through platforms like Jabong, Myntra, Snapdeal and Flipkart, but buying spectacles online surprised Indians as it requires touch, feel, and trials to purchase one.We are talking about Lenskart Founder Peyush Bansal, who disrupted the eyewear market in India by establishing an organised eyewear retail brand for a niche category that for long has been dominated by unorganised players with minimal reach.

Online Eyewear purchases are unique that require personalised service to reach consumers at their doorsteps. Lenskart has successfully cracked the code of eyewear retail for which it enjoys a customer base of seven million customers annually through its omnichannel shopping experience. Today, Lenskart stands at a $5 billion valuation and has remained profitable despite the tough times of the pandemic by registering revenues worth Rs 967 crore in 2020 with a profit of Rs 18 crore. On the occasion of India’s 73 rd Republic Day, it scripted history by launching 73 stores across 46 cities and 19 states and has ambitious plans to set up 400 stores by 2022, aiming to bolster its foothold in more tier-II and tier-III cities of India.

Its founder Peyush Bansal rose to become the favourite shark by winning the hearts of several Indians at the Shark Tank India show by investing and believing in ventures whose vision was purpose-driven intending to solve bigger problems of mankind. Let us understand how his venture became profitable and what he did right to drive Indians purchase their pair of glasses online.

Government bonds, also known as government securities, are debt instruments that are issued by the central or state government to collect funds from the public at regular intervals at an agreed rate of interest to finance their various projects. The money raised from the issued securities is utilised in spending on new projects such as infrastructure, flyover, roads, schools, water canals, etc.

Investing in government bonds is considered one of the most preferred low-risk investment options for investors. It creates a well-diversified portfolio and cushions the risk of the overall portfolio.

Investment in government bonds can happen in various ways. Below are some of the methods by which we can invest in government bonds

5 Ways to invest in government bonds

• Gilt funds

Gilt funds are a type of debt mutual fund that invests only in government bonds issued by the RBI on their behalf. These debt securities are being issued from both state and central government and are heavily invested by institutional investors. It is also a retail investor-friendly investment option. Investing in the Gilt fund has no credit risk since the chances of the government going out of business are nil, thereby safeguarding the capital. Gilt funds generate good returns as well and anticipate interest rate movement in the market. An investor is taxed on a short-term capital gain basis and can be held for less than 36 months. If the funds are held for more than 3 yrs then the investor is liable to pay 20%.

• Sovereign gold bonds

Investors can invest in gold at a minimum price with a guarantee of safety from the government. The sovereign gold bonds go in a lock-in period of 8 years and have the option to redeem the same from the 5th year into the investment. It carries an interest rate of 2.5 % per annum. Investors can start investing from as low as 1 g to 4kg of gold. These bonds can be used as security while applying for loans.

• Conservative mutual funds

These are mutual funds that require an investor to invest in securities issued by a state or central government along with other debt, money market instruments, and equity and equity-related securities. The feature of low risk makes conservative mutual funds to be an ideal option for low-risk appetite investors. Its taxation resembles the gilt mutual funds. 

Conservative mutual funds predominantly invest in securities that are state or central. 

Investing in the stock markets is only as successful as your due diligence in conducting research and analysis before going forward with the investment. One of the most critical aspects of designing an investment strategy is determining which stocks are performing well along with the diversification of portfolios. This is where one of the historically strongest stocks come into the picture- the banking stocks.

Most retail investors have banking stocks in their portfolios. Banks and financial institutions have significant free floats that give investors a sense of security and profitability in the stock market. However, with limited access to credit in India, financial companies still have a long way to go. This is reflected in the expanding popularity of banking and financial stocks.

Yet, a bank stock’s credibility differs significantly from the review of everyday companies or traditional industrial stocks. Unlike non-financial corporations, where metrics such as working capital cycle, gross margin and leverage are essential to analyse, banking stocks need to be analysed using completely different parameters.

Reading bank statements and documents as part of the fundamental analysis can be a dexterous task. Too many numbers cause more confusion than a clear understanding. And that is what we are here to discuss. To analyse a bank’s monetary statements, one needs to know the following metrics.

Current Account Savings account (CASA) Ratio

The Current Account Savings (CASA) ratio is the ratio of total bank deposits in current and savings accounts to net deposits of a bank. It is generally used to ascertain how much money is in a bank in the form of savings account and current account deposits. 

A high CASA ratio signifies that most bank deposits are liquid and linked to current and savings deposits. If a bank’s CASA rate is high, it usually shows that the net interest margin is very high, which means that the bank has an excellent operating capacity model. A high CASA ratio is what investors should look for before investing in a banking stock.

When the economy is under pressure, it is indicative of a liquidity crisis. In such situations, governments and the central banks use the most viable option to avert an economic crisis- buying pre-ordered government bonds and other assets to fill the economy with liquidity. This process is called quantitative easing (QE), and quantitative easing plays a vital role in the topic at hand here, i.e., Taper Tantrum in the stock market.

Recently, with the spread of the COVID-19 pandemic, economic hardship and destruction ensued in every economy worldwide. To tackle the monetary crisis, most central banks, including the Reserve Bank of India, took steps involving quantitative easing to revive the economy by lowering interest rates and sending monetary benefits to citizens.

In this light, the concept of tapering is linked to a central bank’s banking strategy involving the gradual completion of the quantitative easing process. 

The pandemic brought unprecedented challenges that caused disruption in the functioning of businesses giving jolt to India’s economy. Amid GDP showing dismal growth, research firm Morgan Stanley analysed cyclical stocks to outperform defensive stocks as soon as the economy opens up to trade and people’s consumption returns to normalcy. The firm projected the stocks of Havells, Crompton, and Voltas to go up while its sales were impacted in the pandemic due to government regulations pausing to sell non-essential goods.
In the above case, the stocks of the mentioned companies are expected to perform well as the economy begins to improve, such stocks are cyclical stocks. The defensive stocks are those whose prices remain stable irrespective of the economic condition. Let us delve a little deeper to understand what these are and the difference between the two.

What are cyclical stocks?

Cyclical stocks are the type of stocks whose price is impacted by macroeconomic factors or systematic changes in the overall economy. The performance of the stocks is directly proportional to the economic condition – it varies with the rise and fall of economic performance. Several investors find this to be an apt opportunity to purchase stocks at their low price to sell them at a higher price to earn maximum profits.
Let us take the companies mentioned in the beginning. Companies Voltas, Crompton, and Havells are consumer durable brands. If the economy is on a growth trajectory, individuals will have savings to purchase AC, refrigerators, kitchen chimneys, etc. Therefore, pushing their stock prices to go high.
The pandemic inflicted job losses and paycuts that impacted the savings of an individual. In such times, purchasing an AC, or a TV set will be considered as a luxury or any discretionary spending. With tightened purses, people will be conscious about spending on luxury goods thereby pushing the stock prices to go down. Such stocks are called cyclical stocks. Other than consumer durables, automobile sector stocks are cyclical.

What are defensive stocks?

Defensive stocks are those stocks that deliver constant returns as dividends and remain resilient to the fluctuations in the stock market. The stability of the stock prices, irrespective of the economic condition, can be attributed to the nature of products that have a constant demand. For example – stocks of personal care, utilities, healthcare, FMCG remain unaffected by the swings in the stock market.
Having defensive stocks in the portfolio can prove to be beneficial since during a recession these stocks can deliver stable returns. However, there is a flip side to these stocks. The stocks tend to underperform while the economy is growing and will not deliver as high returns as cyclical stocks.

Cyclical stocks vs Defensive stocks

After spending hours watching stock market videos on YouTube and much discussions with colleagues, Parth decided to invest in the stock market hoping to make a huge fortune from it. Unfortunately, Parth learnt that those stocks failed to perform in the market as per the expectations and some stocks did not deliver the returns as estimated. He wondered what might have possibly gone wrong since a thorough study of fundamentals and research on basic details such as revenues, net profit, earnings per share (EPS), and price to earnings ratio (PE ratio) was done.

What happened to Parth is not a rare case. Many new investors decide to plunge into the stock market game on receiving tips and rumours and invest blindly. Being aware of the fundamentals as announced by the company in the quarterly report is not sufficient to trade. This is where the importance of reading the annual report steps in as it contains plenty of company information that is not available otherwise. It is a bulky report of 180-200 pages consisting of jargons that become an ordeal for an investor. At times, the pertinent content gets hidden making investors simply skip through the pages and invest based on the face value of a company. But, here we will talk about the essentials of the annual report that every investor should be looking into because knowing the fundamentals is not enough.

Coffee Can Investing is a low-risk way of making money by purchasing shares of outstanding companies for an extended period without actively trading. As we all know, the stock exchange can be a risky choice for investments and profits. Amidst the uncertainty, the Coffee Can Investment Strategy helps you reduce risk by investing in high-performance companies for over ten years and not selling them during that period.

Coffee Can Investing – Buy and Forget your shares

In simple words, the buy-and-forget strategy to investing in shares of companies that have consistently delivered adequately is referred to as coffee can investing.  Such investment in shares produces a coffee Can Portfolio. Those who invest in such shares develop a diverse collection of consistently performing companies, buy their stocks, and retain them for at least ten years.

But the questions that arise here are – is the Coffee Can investing strategy this simple? Can you invest in any stock using this method? If not, what are the stocks that you should invest in? 

Let’s answer these questions and understand the nitty-gritty of the coffee can investing method.

A Canned History

Veteran investment manager Robert G Kirby coined the term coffee can investing in 1984 on the concept where people used to hide their valuable assets, including gold and cash, in “cans” and hid them under the floor or stuffed them into mattresses. They used to forget about these savings, only to find them later to their surprise and joy of added wealth. 

By now, all those who have access to smartphones and are regular users of online services must have ordered food online at least once. It may not be a far stretch to say that they most probably would have used the online food ordering services of either Swiggy or Zomato, not that other such services are inferior to these brands. 

The reach of Zomato and Swiggy is so wide-ranging that they have virtually become synonymous with online food ordering. The fact that the names of these brands are used as verbs for ordering food online is proof of their mass appeal and reach.

But there is a catch. While the highly satisfying services, marketing models, user-friendly interfaces, and tonnes of new-age features of these companies cannot be discounted in gauging their success, there is more to it than what meets the eye. When people start doing something because everybody else seems to be doing it, a chain effect begins. 

As more people started shifting to online with the ease of technological access, they started using online services more actively. And this expansion of online services’ users boosted further user expansion for brands like Swiggy and Zomato to a significant extent simply due to the imitation effect.

The tendency of people to take specific actions or decisions primarily because others do the same thing is called the bandwagon effect. This phenomenon has been seen in various fields such as economics, politics, and psychology.