Pocketful

Blog

  • What is MACD: Definition, Meaning, Uses and Strategy

    What is MACD: Definition, Meaning, Uses and Strategy

    What is MACD?

    what is MACD

    MACD stands for Moving Average Convergence Divergence. It is a popular and versatile technical indicator used in trading and technical analysis. MACD is used to identify potential trends, momentum shifts, and trading signals in financial markets, particularly in stocks, forex, and commodities. Here’s an overview of MACD and how it works:

    The MACD indicator consists of three key components:

    1. The MACD line is the main component of the indicator. It is calculated by taking the difference between two Exponential Moving Averages (EMAs): a shorter-term EMA and a longer-term EMA. The most common settings are a 12-period EMA and a 26-period EMA. The MACD line represents the momentum of the stock’s price.
    2. The signal line is a 9-period EMA of the MACD line. It helps smooth out the MACD line and generate trading signals. When the MACD line crosses above the signal line, it may be a bullish signal, and when it crosses below, it may be a bearish signal.
    3. The MACD histogram is created by plotting the difference between the MACD line and the signal line. The histogram visually represents the convergence or divergence of the two lines. When the histogram is above the zero line and increasing, it indicates bullish momentum. When it is below the zero line and decreasing, it indicates bearish momentum.

    The Moving Average Convergence Divergence (MACD) indicator was developed by Gerald Appel, an American trader and technical analyst. He introduced the MACD in the late 1970s and published it in his book “The Moving Average Convergence-Divergence Method” in 1979. The MACD has since become one of the most widely used and recognized technical indicators

    What Is MACD

    Read Also: Moving Average Convergence Divergence, MACD

    How MACD is used?

    How is MACD used

    Traders and technical analysts use MACD in various ways to analyse price data and make trading decisions:

    • When the MACD line is above the signal line and both are above the zero line, it indicates a potential bullish trend. On the contrary, when the MACD line is below the signal line and both are below the zero line, it suggests a potential bearish trend.
    • Traders use MACD to confirm the strength of a trend. For example, if a stock is in an uptrend and the MACD is also rising, it represents strong bullish momentum.
    • The divergence between the MACD line and the stock’s price can provide early signals of trend reversals. A bullish divergence occurs when the price is making lower lows, but the MACD makes higher lows. Bearish divergence is the
    • MACD crossovers between the MACD line and the signal line can generate trading signals. A bullish crossover (MACD line crossing above the signal line) suggests a buy signal, while a bearish crossover (MACD line crossing below the signal line) suggests a sell signal.
    • Traders often focus on the MACD histogram. Rising histograms indicate strong momentum in the current trend while falling histograms suggest weakening momentum.
    • When the MACD line crosses above the zero line, it can indicate a shift from bearish to bullish momentum. On the other hand, a cross below the zero line can signal a shift from bullish to bearish momentum.
    • MACD is a useful indicator that can be used in combination with other technical tools and techniques. It provides valuable insights into a stock’s trend, momentum, and trading opportunities. However, it is necessary to understand that no single indicator should be used in isolation, and traders should consider other factors and indicators when making trading or investing decisions.

    Limitations of MACD

    limitations of MACD
    1. MACD is a lagging indicator, which means it reacts to price movements that have already occurred. It may not provide timely signals in instantly changing or volatile markets.
    2. Like other technical indicators, MACD can generate false & fake signals, especially in choppy or consolidated markets. It’s important to use additional indicators or tools for confirmation of the trend.
    3. Quick reversals in price can result in false MACD crossovers and misleading signals. 
    4. The MACD’s effectiveness is highly dependent on the choice of parameters, such as the number of periods for the EMAs. Different settings can result in different signals.
    5. MACD is solely based on price data and doesn’t consider fundamental factors. For a comprehensive analysis, combining it with fundamental analysis is sometimes necessary.
    6. The concept of MACD and its calculations can be complex for beginners. Understanding how to use MACD efficiently may require some time and practice.

    Strategies for MACD

    MACD Crossover Strategy

    • Buy Signal:

    When the MACD line crosses above the signal line, it generates a bullish (buy) signal. Traders often enter long positions at this point.

    • Sell Signal:

    When the MACD line crosses below the signal line, it generates a bearish (sell) signal. Traders often enter short positions at this point.

    Zero Line Cross Strategy

    • Buy Signal

    When the MACD line crosses above the zero line, it indicates a shift from bearish to bullish price movement. This can be a buy signal.

    • Sell Signal:

    When the MACD line crosses below the zero line, it indicates a shift from bullish to bearish momentum. This can be a sell signal.

    Other Strategies for MACD

    Combine MACD with other technical indicators, such as support and resistance levels, moving averages, or chart patterns, for more robust trading signals.

    Use MACD on multiple timeframes to confirm signals. For example, Traders may use a longer-term MACD on a daily chart to identify the primary trend and a shorter-term MACD on an hourly chart for entry and exit signals.

    It’s essential to back-test any MACD strategy on historical data and use proper risk management. No single strategy works perfectly in all market conditions, so be prepared to adapt and refine your approach based on changing market dynamics. Additionally, consider combining MACD analysis with other forms of technical and fundamental analysis for a better trading strategy.

    The formula for MACD

    The Moving Average Convergence Divergence (MACD) is calculated using the following formula:

    MACD Line (12-day EMA – 26-day EMA)

    1. Calculate the 12-day Exponential Moving Average (EMA) of the stock’s closing prices.

    2.  Calculate the 26-day EMA of the stock’s closing prices.

    3.  Subtract the 26-day EMA from the 12-day EMA to get the MACD line.

                     (12-day EMA – 26-day EMA) = MACD line

    Signal Line (9-day EMA of MACD Line)

    1. Calculate the 9-day EMA of the MACD line.

     2. This 9-day EMA becomes the signal line.

    MACD Histogram (MACD Line – Signal Line)

    1.   Subtract the signal line (9-day EMA of the MACD line) from the MACD line to get the MACD histogram. (MACD line – Signal line) = MACD Histogram

    In summary, the MACD is derived by taking the difference between two Exponential Moving Averages (EMAs) of the stock’s closing prices. The MACD line is the primary component, while the signal line and the MACD histogram are derived from the MACD line.

    Conclusion

    CONCLUSION

    To conclude, MACD is a valuable tool for trend identification, momentum confirmation, and generating trading signals. However, it should be used in combination with other technical indicators and analysis methods to improve signal quality and accuracy. Additionally, recognizing its limitations, that it is a lagging indicator and its sensitivity to parameters, is essential for informed trading decisions.

    Also, read about mutual funds and ETF

    FAQs (Frequently Asked Questions)

    1. What is the full form of MACD?

      MACD stands for Moving Average Convergence and Divergence.

    2. Who developed MACD?

      MACD was developed by Gerald Appel, an American trader.

    3. Is MACD a leading or lagging indicator?

      MACD is a lagging indicator.

    4. Mention three components of MACD.

      Three components of MACD are the MACD line, signal line and MACD histogram.

    5. Why is MACD beneficial?

      MACD helps us identify the strength of the momentum and the current trend of stock price.

  • Best Options Trading Chart Patterns

    Best Options Trading Chart Patterns

    In this blog, we will be discussing the technical trading chart patterns that are used by investors and traders to analyse the price movement of the stock.

    To explain,
    You must have heard the quote “History repeats itself”. In the same way, when it comes to the stock market, chart readers analyse the history of price movement on technical charts which are made up of certain red and green candlesticks in order to predict the future target price of that particular stock. This is known as technical analysis.

    • Now technical analysis comes with various chart patterns which are made up of candlesticks.
    • One can use these patterns while trading either in cash or in the options segment.
    • These patterns can help someone discover some of the best trading opportunities.

    First, we need to understand the meaning of cash and option segments.

    Cash Trading

    casg trading


    Refers to the buying and selling of financial instruments, such as stocks, bonds, commodities, or currencies, for immediate delivery and settlement.

    Options Trading

    It is a financial strategy that involves buying and selling options, which are derivative contracts that give the holder the right (but not the obligation) to buy or sell an underlying asset at a specified price (strike price) on or before a specified expiration date. There are two primary types of options: call options and put options.

    option trading

    The next question that would come to your mind would be, how patterns are formed on stock charts? So, the answer to this is, that patterns are made up of candlesticks. A candlestick consists of a rectangular area, known as the “body,” and two “wicks” or “shadows” extending from the top and bottom of the body. Candlesticks can be coloured to represent whether the price of the asset increased or decreased during the time frame. There are basically two types of candlesticks:

    Read Also: Ascending Triangle Chart Pattern

    Bullish And Bearish Candlesticks

    candlesticks

    A “bullish” or “up” candlestick is typically white or green and indicates that the closing price is higher than the opening price, signifying a price increase.

    A “bearish” or “down” candlestick is typically red or black and indicates that the closing price is lower than the opening price, signifying a price decrease.

    Traders often look for specific candlestick patterns, such as “doji,” “hammer,” “engulfing,” and “morning star,” to make trading decisions. These patterns can provide insights for upcoming trend reversals in the market.

    After having some basic idea about the technical analysis, it is important to go through some terminologies that are linked with chart patterns.

    First and foremost, one must identify the support and the resistance lines in order to understand the basic price movement.  

    • A resistance level is a price level at which a stock encounters selling interest, preventing it from rising further. It acts as a “ceiling” for the price, where the supply of the stock increases, and buying interest diminishes.
    • A support level is a price level at which an asset tends to find buying interest, preventing it from falling further. It’s like a “floor” for the price, where demand for the stock increases, and selling interest diminishes.

    Support and resistance are fundamental concepts of technical analysis and play a crucial role in the same.

    Best Options Trading Chart Patterns

    Reversal Patterns

    Reversal patterns in technical analysis are chart patterns that suggest a potential change in the direction of an existing price trend. These patterns are valuable for traders and investors seeking to identify points at which an asset’s price may reverse from an uptrend (bullish) to a downtrend (bearish) or vice versa. Reversal patterns can help in making informed decisions about buying or selling a stock.

    Read Also: Triple Top Reversal Chart Pattern

    Continuation Patterns

    Continuation patterns are technical chart patterns that suggest a temporary consolidation or pause in an existing price trend, followed by the continuation of the prior trend. Some of the examples of continuation patterns are listed below

    This is the most basic and widely used flag pattern in trading. The pattern above that you are seeing is known as the bullish flag pattern

    The pattern begins with a strong and sharp upward price movement called the pole of the flag. Following the flagpole, there is a period of consolidation or sideways price movement. This consolidation takes the form of a rectangular or parallel channel as one can see in the image, sloping downward slightly. This is the flag portion of the pattern. Then comes a bearish flag pattern. The bearish flag pattern is characterized by a flagpole that continues in a consolidation phase. The pattern is considered complete when the price breaks out to the downside, indicating a trend reversal.

    Now, our readers must be aware a bit about the target and stop loss. We will also explain through this blog how you can set your estimated target and stop loss while using chart patterns and for this, you need to understand the meaning of target and stop loss. Traders typically place a stop-loss order just below the lower boundary of the flag pattern. This helps protect against potential losses if the price unexpectedly changes its direction.

    The price target is usually calculated by measuring the length of the flagpole and adding it to the breakout point.

     Descending Triangle

    This is a continuation pattern with a flat support level and a declining resistance line. The price is expected to break down below the support level, leading to a bearish trend continuation.

    descending triangle

    Symmetrical Triangle Pattern

    Symmetrical triangles do not have a specific bullish or bearish bias by themselves. The breakout direction provides the bias for the pattern. It is considered a continuation pattern, indicating that the price is likely to continue the existing trend after a period of consolidation.

    symmetrical triangle pattern

    Head And Shoulders

    The head and shoulders pattern consists of three peaks. The middle peak (the head) is higher than the two outer peaks (the shoulders). This pattern suggests a potential trend reversal from bullish to bearish.

    head and shoulders

    Wedge Pattern

    It is a technical chart pattern used in technical analysis to identify potential trend reversals or trend continuations in the price of a stock, currency pair, or commodity. Wedge patterns are named for their shape, as they resemble a narrowing or converging pattern on a price chart. There are two primary types of wedge patterns: rising wedges and falling wedges.

    wedge pattern
    downward wedge trend

    The above figure displays the falling and rising wedge chart patterns respectively.

    Read Also: High-Wave Candlestick Chart Pattern

    Conclusion

    It is better to trade with chart patterns since they provide the trader with better market insights and a competitive advantage over those who use technical analysis tools while trading. Chart patterns represent a comprehensive approach and its analysis can help in a deep understanding of market psychology.

    FAQs (Frequently Asked Questions)

    1. What is Options Trading?

      Options trading involves buying and selling options, which are derivative contracts that give the holder the right (but not the obligation) to buy or sell an underlying asset.

    2. Is Cash Trading different from Options Trading?

      Yes, Cash trading is different from option trading.

    3. What is the resistance level?

      A resistance level is a price level at which a stock price faces difficulties in continuing its trend.

    4. What is a candle stick?

      A candlestick consists of a rectangular area, known as the “body,” and two “wicks” or “shadows” extending from the top and bottom of the body.

    5. What is a reversal pattern?

      Reversal patterns in technical analysis are chart patterns that suggest a change in the direction of an existing price trend.

  • What is ATR (Average True Range): Calculation, Advantages & Disadvantages Of ATR

    What is ATR (Average True Range): Calculation, Advantages & Disadvantages Of ATR

    In our previous blogs, we have discussed about stocks and technical analysis.

    For reference, here are some insights into technical analysis.  

    Technical Analysis

    Technical analysis is a method of analysing financial markets and making trading or investment decisions based on the historical price. It is primarily focused on studying past price movements and chart patterns to predict future price direction. Technical analysts identify support and resistance levels, which are price levels where an asset tends to find buying or selling pressure, respectively. Various technical indicators, including moving averages, Relative Strength Index (RSI) and Moving Average Convergence Divergence (MACD), provide quantitative measures of price momentum. The average true range is one such technical indicator. Let us go through an in-depth analysis of ATR.

    What Is ATR (Average True Range)

    What is ATR?

    ATR Average true range

    The Average True Range (ATR) is a technical indicator used in the analysis of stocks, primarily for estimating the volatility and price range of an asset. Developed by J. Welles Wilder in his book “New Concepts in Technical Trading Systems.” ATR is a valuable instrument for traders and investors to measure market conditions and manage risk.

    Here are the key points about the Average True Range:

    1. The ATR is designed to measure the volatility of an asset, representing the average range between the daily high and low prices. A higher ATR value indicates greater volatility, while a lower value indicates lower volatility.
    2. The ATR is derived from the True Range, which is the greatest of the following three values:
    • The current day’s high minus the current day’s low.
    • The absolute value of the current day’s high minus the previous day’s close
    • The absolute value of the current day’s low minus the previous day’s close.
    1. To calculate the Average True Range, a moving average is taken of the True Range values over a specified period. The most commonly used period is 14 days, but traders can adjust this period as per their preferences.
    2. Higher ATR values imply that the asset is going through greater price fluctuations, which can be understood as increased uncertainty or risk. Lower ATR values indicate relatively stable or less volatile market conditions.
    3. A rising ATR can confirm the strength of a trend, especially when in combination with other technical indicators. It suggests that the market is experiencing strong price movement.
    4. The choice of the ATR’s look-back period depends on the trader’s goals and time period. Shorter periods provide more responsive values, while longer periods offer a smoother, more stable measure of volatility.

    The Average True Range is a multipurpose tool of technical analysis that when used in combination with other indicators and strategies can help in making informed trading decisions. It helps traders better analyse and manage the risks linked with market volatility, allowing for more precise stop-loss and position sizing.

    Read Also: Best Options Trading Chart Patterns

    Calculation of ATR.

    calcualtion of ATR

    The Average True Range (ATR) is calculated by following a specific formula. It involves several steps and the use of True Range values for a selected number of periods.

    Here’s the formula and a step-by-step explanation of how to calculate the ATR:

    Step 1:

    Calculate True Range (TR)

    True Range represents the greatest of the following three values for a given trading period.

    1. The difference between the current day’s high and the current day’s low.
      (Current Day’s High – Current Day’s Low)
    2. The absolute value of the difference between the current day’s high and the previous day’s close
      (Current Day’s High – Previous Close)
    3. The absolute value of the difference between the current day’s low and the previous day’s close. (Current Day’s Low – Previous Day’s Close)

    Step 2:

    Calculate the Average True Range (ATR)

    The ATR is calculated as a moving average of True Range values over a specified number of periods (usually 14 days is the default period).

    Here’s how to do it:

    1.   Select the number of periods (e.g., 14).

    2.   For the first True Range value (TR1), simply take the TR of the first period.

    3.  For the next ATR calculations, use the following formula:

    • ATR = [(Prior ATR x 13) + Current TR] / 14
    • Where “Prior ATR” is the ATR value calculated for the previous period, “Current TR” is the True Range value for the current period, and “14” represents the selected number of periods.

    The process is repetitive for each subsequent period. Then continue to calculate the ATR by using the prior ATR and the current True Range.

     Here’s an example to illustrate the calculation of the ATR:

    Let’s say we want to calculate the 14-day ATR of a stock:

    Day 1:

    ATR1 = 2 (True Range for the first day)

    Day 2:

    ATR2 = [(2 x 13) + 4] / 14 = 2.07

    Day 3:

    ATR3 = [(2.07 x 13) + 3] / 14 = 2.01

    Day 4:

    ATR4 = [(2.01 x 13) + 6] / 14 = 2.06

    The ATR value provides an indication of the average price range and volatility over the selected number of periods. Traders use it to assess the level of price volatility, set stop-loss levels, and determine position sizes based on their risk tolerance.

    Advantages & Disadvantages Of ATR

    Pros and cons ofusing ATR

    The Average True Range (ATR) is a widely used technical indicator in trading and investing. Like most tools, it comes with its own set of advantages and limitations.  

     Here are the advantages and disadvantages of using the ATR:

    Advantages of ATR:

    • ATR is a purely mathematical indicator, which means it provides objective data. It’s not influenced by subjective opinions or emotions, making it a reliable tool for risk management.
    • Traders can adjust the look-back period for the ATR to match their specific trading strategies and time horizons. Common periods include 14 days, but you can choose longer or shorter periods based on your needs.
    • A rising ATR often indicates increased price volatility, which can confirm the strength of a trend. This is especially useful for trend-following traders.

    Disadvantages of ATR:

    • ATR is based on historical price data, and it doesn’t predict future price movements. It provides information about past volatility, which may not always reflect current or future market conditions.
    • Like many technical indicators, the ATR is a lagging indicator, which means it reacts to price movements that have already occurred. This lag may limit its effectiveness in rapidly changing or highly volatile markets.
    • ATR can generate false signals, especially in choppy or sideways markets. Traders need to use it in conjunction with other indicators or tools to minimize false signals.
    • For beginners, the concept of ATR and its calculations can be complex. Understanding how to use ATR effectively may require some time and practice.
    • ATR provides information on volatility but doesn’t offer insights into other important factors like trend direction, market sentiment, or the potential impact of news events.

    Conclusion

    CONCLUSION

    To conclude, the ATR is a valuable tool for traders and investors looking to measure and manage volatility and risk. However, it’s essential to use it in combination with other indicators and analyse it carefully to create a comprehensive trading or investment strategy. Additionally, identifying its limitations can help the investor to use it effectively and in a much better way.

    Read Also: Rising Window Candlestick Pattern

    FAQs (Frequently Asked Questions)

    1. What is the full form of ATR?

      ATR stands for Average True Range.

    2. What is prior ATR?

      Prior ATR” is the ATR value calculated for the previous period.

    3. Who developed ATR?

       ATR was Developed by J. Welles Wilder in his book “New Concepts in Technical Trading Systems”.

    4. What is the default period of true range for calculating ATR?

      The default period of the true range for calculating ATR is 14 days.

    5. Is ATR a leading or lagging indicator?

      ATR is a lagging indicator.

  • Wipro Case Study and Marketing Strategy

    Wipro Case Study and Marketing Strategy

    Today’s blog dives into the intriguing world of Wipro as we bring you an in-depth Wipro Case Study, analyzing the journey of one of India’s leading tech giants.

    Before diving into Wipro marketing strategies, let’s have some basic ideas about the company and how it became India’s leading tech service provider.

    Wipro Overview

    Wipro Limited is a leading global information technology, consulting, and business process services company based in India. It provides a wide range of services to clients worldwide, including IT consulting, application development and maintenance, infrastructure management, business process outsourcing, and more. Wipro serves various industries, including technology, healthcare, financial services, and manufacturing.

    Founder of Wipro

    Azim Premji

    Azim Premji is an Indian billionaire entrepreneur and philanthropist who is widely recognized for his significant contributions to the Indian information technology (IT) industry. He is the chairman of Wipro Limited, one of India’s largest and most prominent IT services companies. Here are some key details about Azim Premji

    Azim Premji was born in Mumbai, India, on July 24, 1945. He studied Electrical Engineering at Stanford University in the United States but returned to India in 1966 following his father’s untimely death to take over the family business.

    Azim Premji took charge of Western India Vegetable Products Limited (Wipro’s precursor) in 1966, primarily dealing with vegetable oil production. Under his leadership, the company diversified into IT and eventually became Wipro Limited. He played a pivotal role in transforming Wipro into one of India’s leading IT services companies. His strategic vision and leadership steered the company’s growth, and it expanded its global footprint, offering a wide range of IT services and solutions.

    He has been featured on various Forbes lists of billionaires. His philanthropic efforts have also earned him recognition, including being named one of Time magazine’s 100 most influential people worldwide. In July 2019, Azim Premji retired as the chairman of Wipro Limited after leading the company for several decades. His son, Rishad Premji, succeeded him as the company’s chairman.

    His contributions have not only made a significant impact on the IT industry in India but also on social and educational initiatives aimed at improving the lives of people across the country.

    Having known about the person behind creating one of India’s biggest tech giants, let us know the marketing strategies adopted by the company to evolve itself among its competitors.

    Read Also: TCS vs Wipro: Comparison Of Two IT Giants

    MARKETING STRATEGY OF WIPRO

    MARKETING STRATEGY OF WIPRO

    Wipro serves clients across various industries, including technology, healthcare, financial services, manufacturing, retail, energy, and more. Its services help organizations leverage technology and innovation to enhance efficiency, improve customer experiences, and achieve business goals.

    1. Product

    product

    Wipro is a well-known and globally recognised company that aims to provide the best of the best services to its customers

    it has several products ranging from automobile, consumer goods, retail, professional service, product engineering, and many more.

    When it comes to IT services, the company provides us with:

    • Application Development and Maintenance
    • Infrastructure Services
    • Cybersecurity Services
    • Quality Engineering and Testing
    • Blockchain Services
    • Artificial Intelligence and Machine Learning
    • Data Analytics and Business Intelligence

    Not only this, it also provides us with services like Finance and Accounting Services, Customer    Relationship Management (CRM) and Customer Experience Management, Supply Chain Management

    2. Pricing

    MARKETING STRATEGY OF WIPRO

    Wipro Limited, a large and diverse IT services company, employs various pricing models and strategies depending on the services and solutions offered to clients. Pricing in the IT services industry can be complex and customized based on factors such as the scope of work, the difficulty of the project, the duration of engagement, and the client’s requirements. Below are some common pricing models and factors that may influence Wipro’s pricing policy are below. Under the time and materials model of the company, clients are billed based on the actual hours worked and the cost of materials or resources used. This is generally used for projects where the scope is not properly defined.

    In a fixed-price model, the project scope, deliverables, and costs are agreed upon upfront. The client pays a predetermined, fixed price for the entire project. His model is suitable when the project requirements are well-defined and stable.

    In a Subscription Pricing model, clients pay recurring fees for ongoing services or access to software solutions. This model is commonly used for software-as-a-service. Apart from the above-mentioned major pricing policies, various other models comprise the overall prices of the company’s products.

    Various factors influence the pricing policy of the company. Some of them are listed below.

    • Difficult projects may have higher pricing.
    • Long-term contracts with other companies can lead to heavy discounts or different pricing structures.
    • Pricing of the products offered by other tech companies also leads to variations in the pricing policy of Wipro.

    3. Promotion

    MARKETING STRATEGY OF WIPRO

    We all know that promotion plays a significant role when it comes to the growth of the company. Wipro maintains a strong online presence through its website and social media channels. It uses these platforms to share news, updates, success stories, and thought leadership content. Regular engagement with followers helps foster a sense of community.

    Wipro frequently shares case studies and success stories highlighting its collaboration with clients. This eventually impacts the further onboarding of clients. The company also always fulfils its corporate social responsibility.

    Partnerships with technology partners and other organizations are highlighted in its advertising strategy. These partnerships help Wipro provide complete solutions and reach a wider audience. The company also has occasionally used industry experts as brand ambassadors or spokespersons to increase brand visibility. The company also involves itself in environmental awareness initiatives. Not only this but also the company adopts a client-centric approach in its advertising, highlighting its dedication towards the existing client base. 

    For the information of our readers

    MARKETING STRATEGY OF WIPRO

    Wipro Limited, primarily an IT services and consulting company, is not a manufacturer of consumer goods like household products or consumer electronics. Instead, Wipro provides information technology services, consultancy services, and digital solutions to businesses and organizations across various industries. It’s essential to differentiate between Wipro Limited, the IT services company, and Wipro Enterprises, a separate entity within the Wipro Group, which manufactures and sells consumer goods, lighting products, and healthcare products under various brand names. Wipro Enterprises includes businesses like Wipro Consumer Care and Lighting and Wipro GE Healthcare.

    NOTABLE ACQUISITIONS OF WIPRO:

    • Appirio (2016):   Wipro acquired Appirio, a cloud consulting company based in the United States, for approximately $500 million.
    • Info SERVER (2017): Wipro acquired InfoSERVER, a Brazil-based IT services provider, to strengthen its presence in the Latin American market.
    • International TechneGroup Incorporated (ITI) (2019): Wipro acquired ITI, an engineering solutions and services company based in the United States, to enhance its engineering and manufacturing solutions capabilities.
    • Capco (2021) – Wipro acquired Capco, a global management and technology consultancy, for approximately $1.45 billion.

    Also, read our success story of Mumbai Dabbawalas.

    Read Also: Maruti Suzuki Case Study: Business Model and Marketing Strategy

    Conclusion

    We assume that by now, our readers must have a basic idea about the company, its services and the acquisitions made by the company. Now, let us conclude today’s blog by updating you with the company’s current market price and returns because our readers feel like investing after reading these company insights. The company has traded for 406 with above-average returns over the past few years.

    The company is constantly developing and evolving to new heights. 

    S.NO.Check Out These Interesting Posts You Might Enjoy!
    1D Mart Case Study: Business Model and Marketing Strategy
    2Gillette India Case Study: Business Model, SWOT Analysis, and Financial Overview
    3Nykaa Case Study: SWOT Analysis, Business Model and Marketing Strategy
    4Varun Beverages Case Study: Business Model, Financials, and SWOT Analysis
    5Coca-Cola Case Study and Marketing Strategy

    FAQs

    1. Who is the founder of Wipro?

      Azim Premji founded Wipro.

    2. When was Wipro founded?

      Wipro was founded in the year 1945.

    3. What are the major services provided by Wipro?

      Major services provided by Wipro are consultancy services.

    4. What is the current market price of Wipro?

      The current market price of Wipro is 406.

    5. Is Wipro Limited and Wipro Enterprises the same?

      No, Wipro Limited and Wipro Enterprises are different.

  • Flipkart Case Study- Business Model and Marketing Strategy                                          

    Flipkart Case Study- Business Model and Marketing Strategy                                          

    Welcome to our yet another blog, today we bring you yet another success story of a startup.

    When it comes to online shopping or e-commerce businesses, in recent years various platforms have evolved. Some of the most widely used sites for online shopping are Amazon, Flipkart, Myntra etc.

    One of the primary reasons for the popularity of online shopping is convenience. Shoppers can browse and make purchases from the comfort of their homes using computers, smartphones, or tablets. There is no need to visit physical store hours to consider, making it accessible 24/7.

    In today’s blog, we shall be focusing on one of the above-mentioned online shopping apps, how it evolved, the people behind its success, what is the business model and the efforts that the app makes to keep its position intact in the market.

    So, let us talk about FLIPKART.

    How Flipkart Originated

    Flipkart, an e-commerce company was founded in the year 2007, by Mr Sachin Bansal and Binny Bansal. Both were alumni of the Indian Institute of Technology, Delhi. They had been working for Amazon earlier. With a desire to start something new and of their own, they launched Flipkart with a capital of Rs. 4 lakhs. The plan was simple – customers would place an order for books online through Flipkart and would receive them at their doorstep

    sachin bansal- founder of flipkart

    Now, Flipkart functions entirely in India, with headquarters in Bangalore, Karnataka and earning 4500 crores annually. In no time, Flipkart also started offering other products like electronic goods, stationery supplies, fashion, home essentials and groceries.

    The company now gives employment to around 22,000 people. It has a registered consumer base of more than 400 million and the company claims to deliver more than thirty thousand parcels per day.

    Currently, Flipkart stores its products in its warehouses across the country. They have a delivery network across 27 cities. It helps the company to deliver orders to their customer within an appropriate time.

    With passing time, internet penetration has grown across the world, hence it also acts as a booster for e-commerce platforms as it provides a secure payment option to customers.

    What led to the growth of Flipkart was increasing internet connectivity in rural and urban areas.

    Availability of a wide range of products from anywhere and that too at the customer’s doorstep with feasible and affordable prices.

    Equipped work schedules of the young population led to more online and indoor shopping which eventually helped Flipkart grow at a faster pace.

    Though, Flipkart currently faces tough competition from Amazon, what remains is the main objective is to create a unique image in the consumer’s mind.

    After having an idea about the company’s evolution and how it created its own space in the Indian e-commerce markets, let’s dive deep into what are the marketing strategies that Flipkart adopted.

    Flipkart Case Study

    Business Model of Flipkart

    The Flipkart business model is a comprehensive framework that leverages diverse revenue streams and strategic innovations, making it a leader in India’s e-commerce industry.

    • Marketplace Operations: Flipkart connects millions of sellers and buyers, earning commissions on each sale. Sellers list products on the platform, while Flipkart facilitates transactions.
    • Logistics Services: Flipkart’s subsidiary, Ekart, ensures efficient deliveries and returns. Sellers can use these services for packaging, storage, and shipping, contributing to Flipkart’s revenue.
    • Advertising Solutions: Flipkart provides sellers with advertising options like sponsored product listings and banner ads. These services boost visibility and drive sales.
    • Subscription Model: Flipkart Plus offers benefits like free delivery and early sale access, fostering customer loyalty and generating subscription revenue.
    • Financial Services: In 2024, Flipkart introduced UPI services in partnership with Axis Bank, streamlining transactions and expanding financial offerings.
    • Technological Innovations: AI-powered tools like Flippi enhance customer engagement, while Flipkart Green promotes sustainable shopping.

    Despite challenges, including regulatory scrutiny and competitive pressures, Flipkart maintains a 48% market share. Its blend of marketplace efficiency, logistics, and innovation continues to define the Flipkart business model, solidifying its leadership in the Indian e-commerce landscape.

    Read Also: Nykaa Case Study: SWOT Analysis, Business Model and Marketing Strategy

    Subsidiary Companies of Flipkart

    Flipkart has acquired controlling stakes in numerous companies over the years, turning it into an e-commerce giant. Some of the prominent companies are:

    Name StakeIndustryAcquisition year
    Myntra100%Fashion2014
    Ekart100%Logistics2015
    Flipkart Wholesale100%B2B Cash & Carry2020
    Cleartrip80%Travel2021
    Shopsy100%B2C E-Commerce2021
    Flipkart Health+75.1%Healthcare2021

    Most of the companies have been acquired after Walmart took a controlling stake in Flipkart in 2018. Over the years, Flipkart has made 22 acquisitions and 27 investments in businesses operating in different industries.

    Did you know?

    Flipkart Health+ was formerly known as SastaSundar Healthbuddy Limited before being rebranded after its acquisition by Flipkart in 2021. It is also one of the only companies under the Flipkart group that has been listed on the Indian stock exchanges. It trades under the name “Sastasundar Ventures Limited” and has a market price of ₹241 and a market capitalization of 768 crores as of 19 March 2025.

    Marketing strategies of Flipkart

    The “Flipkart Marketing Strategy” focuses on diverse product offerings.

    1. Product:

    product

    The company generally offers its customers with wide range of products. It deals in almost all segments except for automobiles. Flipkart has recently started a grocery store to increase its market share.

    The major reason Flipkart for being the most used app for online shopping is that the app is user-friendly which gives the user a phenomenal experience while browsing.

    2. Pricing:

    price

    The company provides several filters for the products as per the price range selected by the customer, and easy payment options. Flipkart was the first company to provide. cash on delivery option to its users in the year 2010. The products are delivered on time and are of good quality since they are packed with utmost care to avoid any sort of damage.

    The 15-day exchange policy of the company gains consumers’ confidence in buying products. Recently launched pay later option with a minor convenience fee, helps the customer to easily convert their buying into EMIs. The company also offers exclusive discounts and price drops on the occasion of Indian festivals and sales.

    3. Promotion:

    promotion

    Flipkart can target every age group of audience irrespective of what product they are looking for online. The smart marketing strategy of Flipkart grabs the attention of its viewers who hold the power to buy and are aware that online shopping is better than offline shopping since it provides them with much better options to explore than any retailer would ever give them.

    You must have heard about the term SEO; it stands for search engine optimisation.

    Now what exactly is SEO It is a set of strategies and practices used to improve a website’s visibility in search engine results pages like Google, Bing, and Yahoo. The primary goal of SEO is to increase non-paid traffic to a website and boost its overall online presence.

    As per the latest findings, Flipkart tops the online search results with a total of 55.6 million searches, out of which 11.3 million were mobile searches and 44.3 million were desktop searches. Also, when it comes to SEO, the loading speed of the site plays an important part since it will decide if the users will visit your site or not. Flipkart does this job great. It just takes 2 seconds for the site to load the content for its consumers.

    To promote the app Flipkart has also collaborated with various Indian celebs who act as influencers for people who search for online products.

    4. Advertising campaigns launched by Flipkart

    advertising

    One of Flipkart’s most significant annual sales events is the “Big Billion Days.” Flipkart runs wide-ranging marketing campaigns, offering discounts and deals across various product categories. These campaigns feature engaging advertisements to build eagerness and attract customers.

    Flipkart ran an advertising campaign centred around our toddlers and teenagers —a voice search for kids. The campaign showcased how kids could use their voices to search for toys and other products on the app, making it easier for parents to shop for their children.

    Flipkart often runs campaigns emphasizing mobile phone exchange offers, encouraging customers to upgrade their phones by exchanging their old ones. These campaigns ensure that consumers should get cost-efficient and best deals.

    Flipkart introduced “Flipkart Plus,” a loyalty program offering benefits such as free and faster delivery, early access to sales, and reward points for regular customers.

    Flipkart’s marketing team has a great quality of analysing consumer behaviour and based on this, they started a sort of advertising campaign which you guys must have seen while scrolling through the app, “Frequently Bought Together”. In this Flipkart suggests the buyer the product which is frequently bought by the audience.

    There are various other marketing strategies that Flipkar̥t tries to implement to promote the app globally.

    By now our readers must have got an idea why Flipkart holds an essential place in the market and gives tough competition to Amazon.

    Read Also: Amazon Case Study: Marketing Strategy, Product Portfolio and Pricing Strategy

    Conclusion

    Flipkart’s business model depends on simplifying transactions between buyers and sellers, charging fees for various services, and constantly inventing to improve the customer experience and seller support.  

    Flipkart operates as a recognized e-commerce platform in India with a business model that revolves around being an online marketplace. It connects a wide range of sellers with consumers, offering diverse products and services. Flipkart’s marketing strategy is essential in establishing its brand, attracting customers, and maintaining a competitive edge in the e-commerce industry. 

    S.NO.Check Out These Interesting Posts You Might Enjoy!
    1Zara Case Study: Business Model and Pricing Strategies
    2CAMS Case Study: Business Model, KPIs, and SWOT Analysis
    3TCS Case Study: Business Model, Financial Statement, SWOT Analysis
    4Hindustan Unilever Case Study: Business Model, Financials, and SWOT Analysis
    5Vedanta Case Study: Business Model, Financial Statement, SWOT Analysis

    FAQs (Frequently Asked Questions)

    1. When was Flipkart founded?

      Flipkart was founded in the year 2007.

    2. Who founded Flipkart?

      Sachin Bansal & Binny Bansal founded Flipkart.

    3. Is Flipkart an Indian company?

      Yes, Flipkart is an Indian company with its headquarters in Bangalore. Later it was acquired by Walmart in 2018 taking over 80% stake in the company.

    4. What is the current annual revenue of Flipkart?

      The current annual revenue of Flipkart is 4500 crore.

    5. Which is the biggest sale of Flipkart?

      BIG BILLION DAYS is the biggest sale of Flipkart.

  • Coca-Cola Case Study and Marketing Strategy

    Coca-Cola Case Study and Marketing Strategy

    Welcome to yet another blog. Hope, you enjoyed our Satyam Scam case study. Today, we bring you the success story and market strategy of another giant business in India. Guess??

    Yes, you guessed it right. It’s Coca-Cola, the most loved soft drink in human history. The black drink has its journey to motivate you.

    In today’s blog, we will be focusing on some of the below-mentioned points:

    • How does Coca-Cola originate?
    • With changing times, what business model was opted by the company to keep the business going at the same pace?
    • And lastly, how does the black soft drink never miss a chance to make its consumers happy?

    So be it your kid’s 1st birthday celebration or, the 25th anniversary of your parents or your friend’s promotion party, coca-cola is the first thing to cross our minds when it comes to aerated drinks.

    Over the past few years, coca-cola has captured the market with some of the best advertising techniques and has a monopoly in this sector.

    Now without wasting much time let’s start our today’s blog.

    First of all, we need to know what was the idea behind Coca-Cola and who started it

    Introduced almost 120 years back, coca-cola is the most widely used beverage of all time.

    It is currently consumed in more than 200 countries. It is the world’s largest manufacturer of non-alcoholic drinks.

    History of Coca-Cola

    Coca-Cola was founded by a pharmacist Dr. John S. Pemberton from Atlanta. He wanted to make a different-tasting soft drink that could be sold. He made a flavoured syrup and mixed it up with carbonated water. Later on, his partner Frank M. Robinson named that water-mixed drink Coca-Cola. The first newspaper ad for Coca‑Cola soon appeared in The Atlanta Journal.

    History of Coca-Cola

    Dr. John gradually sold his business in portions and before he died in 1888, Coca-Cola was finally sold to Asa G. Candler.

    Starting from 9 servings in a day, now it serves around 1.9 billion drinks per day.

    Read Also: Varun Beverages Case Study: Business Model, Financials, and SWOT Analysis

    MARKETING STRATEGY OF COCA-COLA

    Although every brand has its way of advertising its products, Coca-Cola has been one of the most recognizable brands now for over a century because the company first experiments with the strategy that it plans and then implements. For any strategy they make, customer satisfaction for the company comes first. Let’s discuss the widely used strategies in detail.

    Coca Cola Case Study

    Worldwide Advertising

    Worldwide Advertising

    Coca-Cola every time comes up with a different and creative idea to advertise their product. At first, they analyse their global consumer base and their demands. For example, initially, coca-cola was sold through soda fountains but then two talented minds secured exclusive rights to selling coca cola in bottles. This eventually helped them to leave an imprint in their consumer’s minds since the bottles were sold globally and that too with labelling done in regional language.

    Branding

    Branding

    Branding generally means how the consumers perceive the product visually i.e., identification of any product when first seen. Seems like Coca-Cola has already mastered the art of branding. The brand needs to maintain the logo that they are using and also update it from time to time as per the consumer’s taste and preferences. Coca-Cola did it so well by trademarking its logo.

    Diversification of products

    Diversification of products

    Coca-Cola does not limit itself after inventing one soft drink. They have expanded their bucket of products over the years. Some of the products of Coca-Cola are Sprite, Diet Coke etc. and companies like Maza and Fanta depended on Coca-Cola for their growth.

    Pricing 

    Pricing

    With increasing recognition, more competitors came into the picture. Coca-Cola still kept their products cost-effective and maintained the quality of the product. This helped them in keeping their customers loyal and intact.

    Promotion 

    Promotion 

    Coca-Cola promoted its products through different advertising media such as newspapers, radio, television, billboards, banners, and magazine covers. The company also used artistic taglines like “Things go better with coke”.

    Partnership

    Partnership

    The company used partnerships as brand visibility to increase their market share and consumers. This helped them grow rapidly. Coca-Cola sponsored the Olympics, FIFA, Basketball tournaments and other reality shows such as American Idol. The company also bought various other businesses.

    Personalisation

    Personalisation

    Coca-Cola always tries to connect with customers at a personal level.

    Labelling their bottles in regional languages helped them increase their sales. They targeted their audience as per their age groups.

    Secret of Coca-Cola’s Success

    Before getting to any conclusion, you must know the secret of success for Coca-Cola’s marketing strategies. They follow a rule of 70:20:10 rule. As per this rule, 70% is the total allocation of the marketing budget of the coca-cola into their existing marketing strategies like Google ads and Facebook ads which are currently giving them good results, 20% is the allocation of the total marketing budget to the current trending marketing strategies like promoting their products on Instagram reels, YouTube shorts etc. remaining 10% they allocate into risky yet innovative marketing idea. Chances are likely that this 10% allocation will give them amazing results.

    Read Also: Flipkart Case Study- Business Model and Marketing Strategy                                          

    Conclusion

    By now you must have an idea of how Coca-Cola has placed itself differently in the market even after facing tough competition from competitors since its establishment. With different promoting and pricing techniques, the company is reaching new heights every day. Coca-Cola has also upgraded itself with advancing technologies to satisfy its consumers.

    To conclude the iconic brand COCA-COLA is still in every heart, no matter how many competitors enter the market. Their efforts of “THANDA MATLAB COCA-COLA” are irreplaceable.

    FAQs (Frequently Asked Questions)

    1. When was Coca-Cola founded?

      Coca-cola was founded in the year 1886.

    2. Who founded Coca-Cola?

      No, Coca-Cola is not an Indian brand. It is a USA-based brand.

    3. How was Coca-Cola sold in the initial days?

      Coca-Cola was sold through soda fountains initially.

    4. How many drinks are served per day now?

      1.2 billion drinks of Coca-Cola are served every day now.

  • Mumbai Dabbawala Case Study And Sucess Story

    Mumbai Dabbawala Case Study And Sucess Story

    You might already be familiar with today’s tale, but some stories are too inspiring not to share again. This case study on Mumbai dabbawala delves into the fascinating world of these men who, in the bustling city of Bombay, ensure that a ‘dabba’—a simple lunch box—becomes the most important part of a corporate employee’s day. They are responsible for collecting, organizing, and transporting these tiffins between homes and workplaces with remarkable precision. Originating during British rule in the 19th century, this concept was pioneered by MAHADEO HAVAJI and has since become a symbol of Mumbai’s culture and reliability.

    Mumbai Dabbawala Case Study

    Who Was Mahadeo Havaji?

    In the late 1800s when people used to relocate to Bombay from different cities for work, they found that there was a lack of proper hygienic food. Everyone kind of missed their home-cooked food. So, here comes in picture of the hardest working and dedicated, Mahadeo Havaji. He started delivering lunch boxes and hired about 100 people for this and his business soon started growing.

    mahadeo havaji

    Around 50% of dabbawallas at that time were uneducated or 2nd-grade drop out of school. A charitable trust named “Nutan Mumbai Tiffin Box Suppliers Trust” was established in the year 1956. It was also registered as a commercial organisation in the year 1968 as the Mumbai Tiffin Box Suppliers Association. It was headed by Raghunath Medge.

    Background Of Dabbawalas

    These tiffin providers were responsible for carrying lunch boxes from the homes of employees to their workplaces. This service has been in operation for over a century, and it involves thousands of lunchbox deliveries every day. You must have come across the word Six Sigma while reading about dabbawalla stories.

    history of mumbai dabbawlas

    Now what six sigma is?  Let’s understand Six Sigma in detail. Six Sigma is a quality control method that was launched in the year 1984 by Motorola engineer Bill Smith. The main objective of this method is to reduce the number of faults in a company’s product with only 3.4 defects per million opportunities so that the income and profit margins of the company can be increased along with the satisfaction of the consumer. To summarize, work faster with fewer mistakes.

    There are two methods for Six Sigma, one is for existing businesses and the other one is for new products or services that a company wants to launch.

    1. FOR EXISTING BUSINESSES
    FOR EXISTING BUSINESSES

    2. FOR NEW BUSINESSES

    for new business

    The concept of Six Sigma can be implemented not only in companies with big organisational structures with skilled people but also in small businesses.

    Read Also: Case Study on Starbucks Marketing Strategy

    How This Was Implemented In The Dabbawala Business

    Approximately 2 lakh tiffin are delivered daily by this popular tiffin service provider of Bombay and with 100% accuracy without any error. You must be shocked that, is this even possible.

    So Dabbawallas picks up the tiffin from the residence of the respective customer and brings it to Andheri station. All the dabbas are then transported via train to their final destinations. Dabbas are then unloaded sorted and finally delivered to the customers. Empty Dabbas are then recollected at the later part of the day and are again transported to their substations at which they were initially unloaded. Then they are again transported to their original destination from where they were picked up and are finally returned to the customer by the evening. This complete process is repeated every day and the fun fact is that a specific time and spot is pre-decided for all the pickup, loading, unloading, and drop tasks.

    For our reader’s convenience and a better idea of the whole process let’s explain this with the help of a flow chart.

    the whole business process model

    By now you must have got an idea about the daily working of the dabbawalla business. Their main motive is to improve the process and methods to minimise the error. 

    Dabbawalla adopted colour coding for their lunch-box i.e., there are different colours imprinted on the boxes. Yellow colour for the street code of the residential station, orange colour for the substations at which the boxes are dropped, and red colour is for the destination code including floor numbers and building numbers and this is how Six Sigma was implemented in Dabbawalla business.

    REWARDS AND RECOGNITIONS

    The Mumbai Dabbawallas have received numerous rewards, and recognition for their exceptional service and efficient lunchbox delivery system. Some of the awards and recognition they have received include

    • Six Sigma Certification: The Dabbawallas have been certified as a Six Sigma organization for their remarkable accuracy and efficiency in delivering lunchboxes.  
    •  Prince Charles’ Visit: In 2003, Prince Charles of the United Kingdom visited Mumbai and met dabbawallas to learn about their journey.
    •  ISO Certification: The Mumbai Dabbawallas received ISO 9001:2000 certification for quality management.
    •  Recognition by Harvard Business School: Harvard Business School conducted a case study on the dabbawallas, which further raised their global recognition  
    •  Featured in Documentaries and Books: The dabbawallas’ unique system has been featured in several documentaries and books.
    •  Apart from this, Dabbawallas have also been invited to speak at various international events and conferences.
    • The Indian government has recognized the Mumbai Dabbawallas for their contribution to providing employment opportunities to many individuals.
    • The dabbawallas have received attention from global media, including newspapers, television channels, and magazines, which has helped promote their work internationally.
    • Various business and industry associations have presented awards to the dabbawallas for their outstanding work in the field of logistics and supply chain management.
    •  Social and Cultural Recognition: The dabbawalla plays an important role in Mumbai’s social and cultural fabric. They are often invited to participate in local events and festivals, where they are recognized and celebrated.

    Must read unveils the truth of the Satyam Scam

    Read Also: Coca-Cola Case Study and Marketing Strategy

    Conclusion

    These rewards and recognitions highlight Mumbai Dabbawalla’s dedication, commitment, and the extraordinary accuracy of their lunchbox delivery system, which has become an inspiration for businesses and organizations around the world.

    See you in the next blog, until then don’t forget to share your thoughts on our today’s newsletter. By the time do not forget to share this article on WhatsApp, LinkedIn & X (formerly Twitter).

    S.NO.Check Out These Interesting Posts You Might Enjoy!
    1Zara Case Study: Business Model and Pricing Strategies
    2CAMS Case Study: Business Model, KPIs, and SWOT Analysis
    3TCS Case Study: Business Model, Financial Statement, SWOT Analysis
    4Hindustan Unilever Case Study: Business Model, Financials, and SWOT Analysis
    5Vedanta Case Study: Business Model, Financial Statement, SWOT Analysis

    FAQs (Frequently Asked Questions)

    1. Who founded Dabbawala?

      Dabbawala was founded by Mahadeo Havaji. 

    2. What was the main objective for starting Dabbawala?

      The main objective was to provide home-cooked food to people at their workplaces.

    3. What is Six Sigma?

      Six Sigma is a quality control method that is used by businesses to make it cost-effective and errorless

    4. Who founded Six Sigma?

      Six Sigma was founded by Motorola.

  • Satyam Scam Case Study: Know The Story Indians

    Satyam Scam Case Study: Know The Story Indians

    In today’s blog, we will explain how an IT company committed the biggest fraud of all time. The story was backed up in 2009 when the owner of an IT company came up front in the media and exposed himself.   

    The Information and Technology Industry is the industry that works on the model based on collecting, processing, distribution & use of Information. Also, there are few IT companies involved in the design, manufacturing & marketing of hardware such as processors, networking equipment and storage devices. One such tech company was Satyam Computers.

    About Satyam Computers

    quick summary of the satyam scam

    Satyam Computer  Ltd was started in 1987 in Hyderabad by two brothers, Rama Raju and Ramalinga Raju. The company started its working with 20 employees offering IT and BPO services.

    The success enabled the company to list itself through Initial Public Offering (IPO) in the year 1991 on the Bombay Stock Exchange. After listing Satyam got its first major client. This further allowed the business to grow and it soon became one of the top software-exporting IT companies in the market after TCS, Wipro, and Infosys. 

    We will give our readers a summary of the Satyam Scandal that shocked India’s corporate world in 2009.

      We will be focusing on the below-mentioned points-

    1. Ramalinga Raju, founder, and CEO of Satyam Computers, a Hyderabad-based software Company had accepted faking and changing company financials for years in 2009.
    2. In February 2009, the Central Bureau of Investigation took charge of the investigation and filed three charge sheets against the company.
    3. The company was then removed from the Indian stock exchanges  NSE & BSE.
    4. A new board of directors was formed after the intervention of the government.
    5. The company was then acquired by one of the IT giants, Tech Mahindra and Satyam Computers was renamed Mahindra Satyam. All the operational activities of the company were brought to a close.
    6. A total of ten people were found guilty and convicted. All of them including Raju were sentenced to 7 years of imprisonment. Raju and his brother were penalised with a heavy amount of Rs 5.5 crore each.

    Having known some highlights of the scandal let’s dig deep into what happened in 2009.

    Series Of Events In The Satyam Computers Scam

    • 1987 – The company got incorporated & started its working in Hyderabad.
    • 1991 – The company listed itself on the Bombay Stock Exchange.   
    • 2001 – The company was listed on the New York Stock Exchange.
    • 2008 – Satyam Computer acquired 100% stakes in 2 companies owned by Ramalinga Raju’s son.
    • The deal of acquisition was cancelled by the shareholders in less than a day.
    • Due to the withdrawal of the deal, the share price of Satyam Computer fell around 55% on the same day on the New York Stock Exchange.
    • 2008 – In the same month company was also stopped from continuing its business with the World Bank.
    • 2009 – Ramalinga Raju resigned after admitting that he misrepresented the company’s financials. He claimed that the company’s cash and bank accounts on the balance sheet were shown way more than the actual amount.

    Satyam was trying to guarantee its clients and investors that it could keep the firm operational. However, U.S.-based law firms filed a case against Satyam Computers on behalf of its U.S.-based clients. Finally, the Indian Government took a decision to step in and appointed 3 persons to the Board of Directors thereby forming a new board in order to save the company.

    Now, our readers must be thinking why Satyam’s Raju all of a sudden out of nowhere came forward and took a decision to expose himself!

    The Satyam Computer scam was one of the most destructive events in the history of Indian tech companies. Mr Raju decided to confess instead of running away because there was a sharp fall in real estate properties he owned and his personal finances as well. Hence, he was left with no other option and was finally arrested and charged with criminal conspiracy, breach of trust, and cheating. 

    We updated our readers about the company, what the scam was, year-wise events of the scam and why Raju confessed, what’s left is, in the series of events how Raju and the auditors misrepresented the data, what all they did to show the good picture.

    The Role Of Raju

    ramalinga Raju

    The role of Raju was that he knowingly showed overvalued and fake assets that never existed which was around 1.47 billion dollars. He faked various bank statements for many years. Not only this but also, but he also created fake customer and employee identities and showed fake invoices and salaries in their names. Mr Raju transferred the company’s funds to other companies that he owned and also used the same for his personal benefits. Price Water House Coopers (PwC), a global auditing company, has been auditing Satyam’s records for many years. Satyam paid almost double the amount that any company would ever pay for auditing.

    The matter was finally discovered when one of the independent directors received an email from a whistle-blower and he forwarded the mail to S. Gopalakrishnan, who was a partner in the auditing company PWC.

    Read Also: Scam 1992: Harshad Mehta Scam Story

    Steps Taken By The Government

    role of government

    After this unfortunate event, the Indian government took some significant steps to avoid further scams like Satyam Computers. The then existing Company’s Act 1956 was removed and the new Companies Act 2013 was introduced and implemented. To brief the law stated that the director of every company should be changed after every 5 years. The government also formed a regulatory body (SERIOUS FRAUD INVESTIGATION OFFICE) The only objective of which was to look into business and accounting fraud activities in India.

    Read Also: BluSmart Shutdown & Gensol Scam

    Conclusion

    That’s all for today. Wrapping up our blog here and ending our reader’s curiosity that after all the mess that happened in 2009 what actually happened to the company?

    As a result, Satyam Computers was acquired by Tech Mahindra. The IT giant bought an almost 51% stake in Raju’s company and renamed it “Mahindra Satyam.” Later, in June 2013, Mahindra Satyam merged into Tech Mahindra thereby, bidding final goodbye to all the baddoings and immoral behaviour. The Satyam scam served as a wake-up call for India’s business sector.

    See you in the next blog, until then don’t forget to share your thoughts on our today’s newsletter.

    By the time do not forget to share this article on WhatsApp, LinkedIn & X (formerly Twitter).

    S.NO.Check Out These Interesting Posts You Might Enjoy!
    1TCS Case Study: Business Model, Financial Statement, SWOT Analysis
    2Vedanta Case Study: Business Model, Financial Statement, SWOT Analysis
    3Nestle India Case Study: Business Model, Financial Statement, SWOT Analysis
    4BPCL Case Study: Business Model, Product Portfolio and SWOT Analysis
    5Apollo Hospitals Case Study : Business Model, Financial Statements, And SWOT Analysis

    FAQs (Frequently Asked Questions)

    1. When did the Satyam computer scam happen?

      The Satyam scam happened in the year 2009.

    2. What happened to Satyam computers?

      It was later acquired by Tech Mahindra and was renamed Mahindra Satyam.

    3. Who was the main culprit behind the Satyam scam?

      The main person behind the Satyam scam was Mr Raju, founder and chairman of the company

    4. How the scam was identified?

      A whistle-blower mailed the independent directors about the two companies that Satyam Computers was planning to buy. (For our Reader’s reference whistle-blower is a person who informs about fraudulent activities)

    5. Was Satyam computers listed on the New York Stock Exchange?

      Yes, it was listed on the New York Stock Exchange.

  • What Is The Gap Up And Gap Down Strategy?

    What Is The Gap Up And Gap Down Strategy?

    Stock markets are very volatile, and people who actively trade in the stock markets know it well. Traders generally try to ride the trend or take advantage of the large price movements in the market to make profits. Every trader in the stock market uses their own set of strategies to trade the market. Some use chart patterns, price action, indicators etc. Among all these, one of the most famous strategies that traders use is the Gap up and Gap down strategy. Here, they try to book profits based on the gap up and gap downs in the market. Mostly gap up and gap down are seen, during the start of the trading sessions in the market.

    quick summary of GAP-UP and GAP-DOWN

    The given article gives a broad framework of the Gap up and Gap down strategy. After reading this article you will be thorough with what is in the stock market, why they occur, the types of gaps and the perfect strategy to trade the market using the Gap ups and Gap downs.

    What Are Gaps In The Stock Market?

    Gaps are the area of discontinuity in the price chart of a security. Gaps are the impact on the price of a stock because of the overrun activities in the previous day, seen in the next trading session. Gaps can be of two types in the stock market. One is Gap up and the other is Gap down.

    • Gap-up:
    gap up

    When the opening candle of the day has opened above the closing of the previous day then it is called a Gap up in the market. The candle could be a bulling or bearish candle. The colour of the candle signifies its type. A red candle is a bearish candle and a green candle is a bullish candle.

    • Gap down:
    gap down

    When the opening candle of the day has an open, below the closing of the previous day’s last candle, then it is called a Gap down in the market. The same rule applies to the Gap up. The candle could be bearish or bullish. A red candle is a bearish candle and a green candle is a bullish candle.

    Read Also: Downside Tasuki Gap Candlestick Pattern

    Why do Gaps Occur In The Markets?

    • Gaps generally occur because of the bidding in the pre-open markets. So, accordingly, we see Gap ups and Gap downs in the market. The actual trading in the stock market begins at 9:15 but, before that, there is a pre-open market session of 15 minutes wherein you can place your orders depending upon the pre-open prices in the market.
    • Earlier what people used to do was in case if the market opened with a Gap down they would make buy positions there, with the possibility that this gap would be filled in the coming market hours as the market always corrects itself. And in case of a Gap people generally make sell positions with the possibility that this gap will be filled in the coming market hours, as the market always corrects itself and the trend will reverse. 
    • Another reason for Gaps in the markets could be, companies disclosing their quarterly earnings. For instance, if the results of a company are declared in off-market hours, in case of good results the probability is high, that in the next market session, the stock will surely give a Gap up opening and vice versa in case of poor quarterly results.
    • Algo trading or automated program trading is also a new factor that affects or influences the Gaps in the market. For easy understanding let’s say, that the trading algorithm might indicate a large buy order because a prior high or the resistance level is broken. The volume of an algo trade might be such that it triggers a price gap in the market, breaking the recent resistance levels indicating other traders to the directional movement.

    Types Of Gaps In The Market

    There are 4 main types of Gaps in the stock market which are listed below:

    Common Gap

    A common gap shows the area on the chart where the price gets discounted. Mostly when a gap is formed within the market range then it is called a common Gap. when the fluctuation is going on in the market common gaps are formed within the range of the supply and the resistance levels in the market.

    Breakaway Gap

    When the markets open the first candle of the day forms at the resistance or the support levels of the market, then this gap is called the Breakaway Gap. 

    Runaway Gap

    It is generally seen in a trending market either in a bullish trend or a bearish trend. Suppose that the market is going in an uptrend and the next day the the stock price shows a gap up following the previous day’s trend. 

    Traders check for volume at these levels. And if volumes are good they make a buy position here. The same thing applies in the case of the downward trend. 

    Exhaustion Gap

    This type of Gap is also mostly seen in a trending market but here you got to see a gap the next day. If you see a Gap in the trending market, then you have to check the volume. If volumes are less, then you can use a strategy. 

    You saw that the market opened a Gap up, volume is low, the next candle is bearish then it is an exhaustion Gap. 

    Island Cluster Gap

    When the Gap up and Gap down are adjacent to each other, a reversal pattern is observed here. This type of gap is called an Island Cluster Gap.

    Read Also: Upside Tasuki Gap Pattern

    A Strategy To Play The Gaps

    Below are some very simple ways that you can take into account to develop a trading strategy based on Gaps.

    A gap-up stock in an uptrend provides a good opportunity to buy and hold a long position. A gap-down stock experiencing a decline in price in an uptrend provides a good opportunity to buy. A gap-down stock in a downtrend provides a good opportunity to short-sell. 

    gap up gap down stratergy

    The most effective Gap stocks to trade in the share market are those that are volatile and thus have more price fluctuations. Therefore, you should consider the sector that you would like to trade in. For example, oil and gas, pharmaceutical and retail stocks are considered particularly volatile sectors to trade, especially in the face of adverse economic conditions or a national recession. 

    FAQs (Frequently Asked Questions)

    1. How to predict Gap up and Gap down?

      Gap up and Gap down generally depend on various technical and fundamental factors.

    2. How to trade Gap up and Gap down?

      In case of a gap down, traders generally set a buy position with the assumption that this gap will be filled by the market correction.

    3. What is meant by gap-filling?

      Gap filling is when the price closes as the previous day closes.

    4. How to start trading in the stock market?

      To start trading in the stock market, you need to have a Demat account. You open a Demat account using Pocketful.

    5. What is the Gap pattern Trading Strategy?

      It is a simple and disciplined approach for buying and shorting stocks in the stock market.

  • Why It Is Essential To Teach Your Children About Saving And Investing

    Why It Is Essential To Teach Your Children About Saving And Investing

    According to the Pew Analyzed Census Bureau data, only 24% of adults are financially independent before age 22, to that of 32% in 1980. Most adults today complain that they were, never taught about financial independence in schools or at home. It is because of this reason, they struggled with their finances in the later years of life. Financial knowledge is not something that you can learn in one day, month or year. It takes years of discipline and hard work to be financially independent. Parents must teach their kids the basics of financial literacy, like saving and investing, from a young age. 

    Addressing the above problem. Today, we will discuss about the importance of teaching your children about saving and investing.

    Why Do We Need To Teach Financial Literacy To Our Kids?

    quick summary of the Need To Teach Financial Literacy To Our Kids

    Have you ever seen the construction of a building? Laying a strong foundation for the building is important, to make it last for years. Similarly, to achieve financial independence, it is necessary to give financial literacy to children from a young age. 

    But, what exactly is financial literacy?

    Financial literacy

    financial literacy

    Financial literacy is understanding the behaviour and working of money to make sound financial decisions like budgeting, asset building, loan financing and debt repayment. Having financial knowledge helps a person to feel empowered. Moreover, people with better financial education are less likely to be financially vulnerable in future. According to research in India, only 27% of the people are financially literate. It means only 1 out of 5 Indians are capable of making their crucial money decisions by themselves. The numbers are bizarre because dealing with money is one of the most customary aspects of human well-being. 

    Thus, it is the responsibility of the parents to instil this basic human understanding in their children. 

    Why Build a Strong Financial Foundation?

    • To build a strong financial foundation, children should be made familiar with basic concepts like saving and investing from a young age. 
    • Saving is that part of your income that is left, after spending upon your consumption. Any person who has just started earning spends a prominent chunk of their income on consumption and saves little to no amount. 
    • But, as they grow professionally, they start saving more for their future & the people dependent on them. Saving helps to build a cushion to rely on during uncertain times.
    • Investing is putting your money to work. Heard this famous quote, “Rich doesn’t work for Money, Money works for them” Weird right? But true.
    •  By putting your money into Assets, you can make your money work for you even when you are not working. For example, investing in real estate could earn you a rental income and give you capital appreciation in the long run.

    Parents should focus on securing their children’s future financially but also focus on building and developing their characters. So that, in case of future uncertainties, they can fight through. 

    Preparing for Future Financial Challenges

    The majority of the people feel anxious when asked about their financial situations. As we grew, we realised that we weren’t ever, taught about financial education in our schools or colleges on which we’re supposed to make real-life decisions. How many of you have learned about finances in your schools or colleges? 

    I could confidently say that none. Our educational curriculum was never designed in a way to help us with our day-to-day problems. Most adults even today, don’t even know that there are options other than FD and mutual funds to invest in the markets. 

    Providing your children with early financial knowledge could help them to have a better future. 

    Introducing Financial Concepts to Children As They Grow

    First, introduce them to the notion of money at a young age. Its importance, how it works, why it is necessary & other things related to it

    • Rewarding- Reward them every time they progress in their work, like for every book they read. Give them a certain amount of money as a reward or when they complete their homework on time.
    Rewarding
    • Budgeting- Give them a monthly or weekly allowance and tell them to manage their expenses in that fixed amount. Explain how they should allocate their money towards their needs, wants and savings. 
    Budgeting
    • Savings- explain to your kids why saving is important and how it can help them. Encourage them to Save a portion of their allowances or paychecks (when they start working). 
    savings
    • Taxes- When they grew a little old and started doing part-time work. Teach them how taxes work and how employer deducts taxes from their paycheck. 
    taxes
    • Investing- When they start to work, teach them about investing and financial markets. Explain to them how they should build assets. 
    investing
    • Compounding- Teach them about compounding and the significance of early investing in life. Financial literacy is something that everyone should learn about. No matter your profession or field of interest, money is something that we all deal with daily. 
    compounding

    Therefore, every person needs to be financially independent & financially literate in life because life is very uncertain. 

    Conclusion 

    If you are a parent or a guardian to any child, now you know why you must teach them about finances. No parent wants to see their child. Therefore, they must teach kids about money, which they were never taught about by their parents. It is easy to instil good habits in children at a young age as they are growing. Apart from just giving financial learning, parents should also start to save and invest early to give their children a more secure future. 

    FAQs (Frequently Asked Questions)

    1. Why financial literacy is necessary?

      Financial literacy is necessary to make sound financial decisions in life. Money is something that we all deal with on a day-to-day basis.

    2. How to improve financial literacy?

      To improve financial literacy you can read finance books like ‘Rich Dad, Poor Dad, ‘Think and Grow Rich’, ‘And Intelligent Investor’ to learn about the stock market. 

    3. Why financial literacy is essential for students?

      Financial literacy is essential for students as it helps them understand how to make real-life money-related decisions once they start earning.

    4. Is it necessary for children to learn how to wisely spend their money?

      Yes, children need to learn to wisely spend their money.

    5. How to explain investing to a beginner?

      You can learn investing by understanding the basic technical jargon like return, risk, portfolio etc. After that, you consume content from different sources like books, online platforms & courses. 

    • Open Free Demat Account

    Join Pocketful Now

    You have successfully subscribed to the newsletter

    There was an error while trying to send your request. Please try again.

    Pocketful blog will use the information you provide on this form to be in touch with you and to provide updates and marketing.