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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

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.

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.

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	Stake	Industry	Acquisition year
Myntra	100%	Fashion	2014
Ekart	100%	Logistics	2015
Flipkart Wholesale	100%	B2B Cash & Carry	2020
Cleartrip	80%	Travel	2021
Shopsy	100%	B2C E-Commerce	2021
Flipkart Health+	75.1%	Healthcare	2021

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:

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:

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:

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

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.

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.

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3	TCS Case Study: Business Model, Financial Statement, SWOT Analysis
4	Hindustan Unilever Case Study: Business Model, Financials, and SWOT Analysis
5	Vedanta Case Study: Business Model, Financial Statement, SWOT Analysis

FAQs (Frequently Asked Questions)

When was Flipkart founded?
Flipkart was founded in the year 2007.
Who founded Flipkart?
Sachin Bansal & Binny Bansal founded Flipkart.
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.
What is the current annual revenue of Flipkart?
The current annual revenue of Flipkart is 4500 crore.
Which is the biggest sale of Flipkart?
BIG BILLION DAYS is the biggest sale of Flipkart.

October 11, 2023

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 1^st birthday celebration or, the 25^th 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.

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.

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.

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 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

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

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

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

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

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.

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)

When was Coca-Cola founded?
Coca-cola was founded in the year 1886.
Who founded Coca-Cola?
No, Coca-Cola is not an Indian brand. It is a USA-based brand.
How was Coca-Cola sold in the initial days?
Coca-Cola was sold through soda fountains initially.
How many drinks are served per day now?
1.2 billion drinks of Coca-Cola are served every day now.

September 30, 2023

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.

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.

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.

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.

FOR EXISTING BUSINESSES

2. FOR NEW BUSINESSES

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

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.

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

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).

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5	Vedanta Case Study: Business Model, Financial Statement, SWOT Analysis

FAQs (Frequently Asked Questions)

Who founded Dabbawala?
Dabbawala was founded by Mahadeo Havaji.
What was the main objective for starting Dabbawala?
The main objective was to provide home-cooked food to people at their workplaces.
What is Six Sigma?
Six Sigma is a quality control method that is used by businesses to make it cost-effective and errorless
Who founded Six Sigma?
Six Sigma was founded by Motorola.

September 28, 2023

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

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-

Ramalinga Raju, founder, and CEO of Satyam Computers, a Hyderabad-based software Company had accepted faking and changing company financials for years in 2009.
In February 2009, the Central Bureau of Investigation took charge of the investigation and filed three charge sheets against the company.
The company was then removed from the Indian stock exchanges NSE & BSE.
A new board of directors was formed after the intervention of the government.
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.
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

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.

Steps Taken By The 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).

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FAQs (Frequently Asked Questions)

When did the Satyam computer scam happen?
The Satyam scam happened in the year 2009.
What happened to Satyam computers?
It was later acquired by Tech Mahindra and was renamed Mahindra Satyam.
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
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)
Was Satyam computers listed on the New York Stock Exchange?
Yes, it was listed on the New York Stock Exchange.

September 28, 2023

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.

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:

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:

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.

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.

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)

How to predict Gap up and Gap down?
Gap up and Gap down generally depend on various technical and fundamental factors.
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.
What is meant by gap-filling?
Gap filling is when the price closes as the previous day closes.
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.
What is the Gap pattern Trading Strategy?
It is a simple and disciplined approach for buying and shorting stocks in the stock market.

September 25, 2023

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?

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 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.

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.

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).

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.

Investing- When they start to work, teach them about investing and financial markets. Explain to them how they should build assets.

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.

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)

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.
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.
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.
Is it necessary for children to learn how to wisely spend their money?
Yes, children need to learn to wisely spend their money.
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.

September 20, 2023

Amul Case Study, Business Model, And Marketing Strategy

All about AMUL

Amul is an Indian milk cooperative society based out of Gujarat. It is under the ownership of Gujarat Cooperative Milk Marketing Federation Limited, Department of Cooperation, Government of Gujarat. Today, it is controlled by 3.6 million milk producers. Mr. Tribhuvandas Kishibhai Patel laid the foundation of Amul in 1946. Later, Verghese Kurien joined Mr. Patel as the general manager to manage and assist the marketing and technical department of the cooperative. After Mr Patel died in 1990, Kurien became the chairman of Amul and the face of its success.

History of Amul

The main motive behind the commencement of Amul was not profit-making but a fight against the exploitation of Polson towards the Dairy farmers. Polson is the name of a dairy products brand that was started in India by Pestonjee Eduljee in 1915 in Mumbai. Dairy farmers of Kaira, along with Mr Tribhuvandas Kishibhai Patel, went up to Sardar Vallabhbhai Patel to get a solution for the exploitation they were facing by Polson because the prices of the milk were fixed arbitrarily by the Giant, making it very hard for the Dairy farmers to make ends meet. Sardar Vallabhbhai Patel advised the farmers to form a cooperative and sent Morarji Desai to organize the farmers.

After a meeting in Chaklasi, the farmers formed the cooperative and decentralised the whole milk pooling system. Most of the farmers were only able to provide 1-2 litres of milk daily. They were the ones who most benefited from the formation of the cooperative. Later, this cooperative was named AMUL (Anand Milk Union Limited) under the leadership of Mr.Tribhuvandas Kishibhai Patel.

Seeing the success of Amul in the Anand district, neighbouring districts of Mehsana, Banaskantha, Baroda, Sabarkantha, and Surat were set up with similar cooperatives, and this was sometimes described as the Anand Pattern.

White revolution & AMUL

White Revolution popularly, known as Operation Flood, was a government-led initiative with the Spearhead cooperative Amul. The main aim of the revolution was to increase the milk production in the country. Indeed, it was a significant success for India, since India ended up being the top producer of milk and milk products in India. In 1973, an apex body called the Gujarat Co-operative Milk Marketing Federation Ltd was set up to facilitate the marketing of these district cooperatives. The world’s biggest dairy development program, led by Dr. Verghese Kurien. ‘Operation Flood’, as it is otherwise known, transformed the dairy-deficient nation into the global leader in milk production. For the millions living in rural India, milk farming became the largest source of employment and income.

During the 1960’s India had the highest cattle population, & yet India stands among the lowest milk producers in the world. Between 1961 and 1970, the nation had to be dependent on imports to fulfil their dairy needs. The idea behind the white revolution was simple, eliminate the middle man, directly connecting the consumers with the dairy farmers. When farmers were getting a better price for their product they felt incentivized. Hence, they were willing to increase the production of milk, and other milk products. With the combined success of Amul and the white revolution, Mr. Verghese Kurien went on to be called as the milkman of India. The dairy engineering graduate transformed a dusty little town in Gujarat into the milk capital of India.

5 Key Factors That Led to the Success of Amul

1. Amul Girl

Utterly, buttery, delicious! I bet almost all of us have heard this jiggle at least once in our lives. Or have noticed that vivacious little girl on the packs of Amul butter? She became the ultimate advertising mascot for Amul to date. Amul has smartly used the girl mascot to advertise their brand associating it with humour and and how children like everything with butter. Hands down, even today, it is still remembered as one of the best marketing campaigns.

2. Decoding the Whole Supply Chain

One of the main and biggest reasons for Amul’s success was that they managed the whole supply chain of milk production so efficiently. Starting from the pooling of milk from various small dairy farmers to supplying it to the end consumer. Amul follows a three-tier cooperative structure which consists of a dairy cooperative society at the village level that is affiliated with milk unions at the district level, which in turn is federated to a milk federation at the state level. Milk is collected at the village dairy society, procured and processed at the district milk union and marketed at the state milk federation.

3. Constant Innovation

Today Amul has over 2000+ products under its brand name. Started just as a milk cooperative is today the biggest gaint in the milk and dairy product segment. And it’s not just about its product line but also its marketing campaigns and strategies. Their most recent social media campaign #BEMOREMILK is gaining popularity immensely.

4. Diversification

With daily constant efforts, Amul managed to carter every dairy-related segment. Making products for the needs of the kids, men, women, health conscious & taste conscious. You name it & they have it. Through consistent efforts, Amul has managed to have a diversified portfolio in terms of products & it is very hard for any new player to enter the market.

5. Trust Building

By delivering the best quality products at low rates, Amul has built trust and brand loyalty among its target market. Also, a fact to notice is that Amul was the first company to offer condensed milk at affordable prices and made a significant mark among the lower-income group.

Business Model of Amul

So Amul follows a three-tier business model to provide milk to us. The first tier is the village dairy cooperative society, next is the district milk unions & then there is the state milk federation.

Village Dairy Cooperative Society

This is the lower and the first tier of the business model of Amul. Here, local daily farmers come and pool their milk. Depending upon the quality of milk, it is segregated and accordingly is supplied ahead to the next tier i.e. district Milk unions.

District Milk Unions

The milk is then brought to the district milk union centres for processing and packaging. Here the quality of the milk is checked and tested, whether it is fit to be delivered to the market or not. Then the milk is graded depending on its properties like fat concentration, water concentration, nutritional value etc.

State Milk Federation

This is the last and the final stage of milk production. Here, the packaged milk arrives, which is distributed to the suppliers for supplying it to the retailers. Here the manufacturing of the other dairy products takes place. And the final product is delivered to the market.

4P’s of Amul Marketing Strategy

1. Product Mix

Amul offers a wide range of products to its customers making it a trustworthy brand among consumers. The cheese and the ice cream segment of the amul are their cash cows. Contributing a significant share in the revenue of the business. Also Amul Ice Cream is among the top 10 ice cream brands in India. Recently amul has also entered the chocolates and lactose-free dairy product segment to cater for the needs of the changing India.

2. Price Mix

The pricing strategies of Amul include a combination of competitive and low-cost pricing. Amul began with the vision to provide the best quality dairy products at affordable prices. The pricing of different products is taken into account by different factors such as the price of raw materials, labour cost, farmer’s profit, transportation cost and storage costs.
Amul is pursuing a low-cost strategy for products commonly used like milk, ghee, butter and so on, where they offer these products at a lower price than their competitors. For products like Amulspray, Prolite, condensed milk and more the company adheres to a competitive pricing strategy, where the price of these products is similar to their competitors.

3. Promotion Mix

Amul is one of the few cooperatives that consistently deliver memorable brand promotions to the audience leaving a long-lasting impact. Like the world-famous Amul girl designed by Mr. Eustace Fernandes or the jingles like utterly buttery delicious Amul! And their iconic tagline the taste of India. The way Amul incorporates the humour of the cartoons in delivering heartfelt messages is commendable.

Their recent cartoon tweet to celebrate the success of Pathan a Shah Rukh film was also catchy.

4. Place Mix

Amul distribution channel takes place through 2 mediums. First is the procurement of the milk. Farmers provide milk to cooperatives, and milk is gathered in bulk and transported to the processing plant. That milk is used to produce the final goods at the production plant. The second channel is In charge of getting the finished product to the end-users. Carrying and forwarding agencies, distributors, dealers, and retailers are all part of the distribution chain.

Sustainability Practices

After its success in the dairy industry, Amul has recently focused on green energy initiatives. Some of its efforts to promote sustainability are:

In 2023, Amul announced that the cooperative has been working towards building a circular economy that will feature the collection of dung from farmers and convert it into biogas, which can be used as a fuel for cooking, automobiles, etc. Moreover, the leftovers from the biogas manufacturing can be used as natural fertilizers, thereby promoting organic farming practices.
3.6 million dairy farmers in Gujarat have been actively participating in the tree plantation campaigns and have planted more than 733 lakh trees between 2007 and 2019. The most amazing feature of the campaign was that it was not limited to the planting of the sapling; rather, the farmer who planted it took responsibility for the tree sapling until it grew into a tree.

Conclusion

Amul’s success story is a testament to the power of cooperative entrepreneurship and innovation. From its humble beginnings as a dairy cooperative in Gujarat to becoming a global leader in dairy products, Amul has revolutionized the industry. Through its efficient supply chain, diverse product range, impactful marketing, and sustainable practices, Amul continues to thrive, benefiting millions of farmers and consumers alike.

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FAQs (Frequently Asked Questions)

What is the full form of AMUL?
AMUL stands for Anand Milk Union Limited.
Who is the owner of Amul?
Amul is cooperative and is not owned by any single person.
Which state is associated with Amul?
Amul is a cooperative in association with the Gujarat Government.
Is Amul an Indian Brand?
Yes, Amul is an Indian brand.
How many products does Amul have?
Amul has roughly 2,000 products under its brand name.

September 18, 2023

Mutual Funds: Meaning, Types, Features, Benefits and How They Work.

In the last 10 years, the mutual fund industry in India has experienced a growth of ₹ 40,00,000 crore in the value of AUM (Assets Under Management). It implies that India is unleashing the full potential of mutual funds to grow their money. Investing directly in the stock market can be an overwhelming task. Thus, investing in mutual funds offers a more straightforward way to create long-term wealth.

Understanding What are Mutual Funds

As stated earlier, mutual funds pool the money from small investors and invest them in the securities of other companies listed on the stock exchange. Investment holders share the income earned through these investments of interest and dividends with the capital gains benefits. Thus, a mutual fund is the most suitable form of investment for the common man, as it allows them to diversify and invest in a more professionally managed security basket, without them being actively involved.

Mutual Funds as a concept first originated in Britain in the 19th century but developed in the U.S. in the late 19th and early 20th century at the principal money centres of the North-East. These funds were primarily close-ended and used to finance growth in the U.S.A. after the Civil War. However, the crash of stock markets in 1929 led to the demise of these close-ended funds. In 1940, the U.S. had about 68 funds; currently, there are several thousands of schemes. More significantly, in the year 1965 only 2 to 3% of U.S. households, owned fund shares. Nearly one-fourth of all U.S. households invest today in Mutual Funds.

The Indian mutual fund industry began with the formation of Unit Trust of India (UTI) in 1963 with the introduction of its first biggest scheme ‘Unit Scheme ’64’. The UTI then introduced several schemes for different sections of people. The public sector monolith operated under monopoly conditions and in an over-regulated economy till the mid-eighties. In 1987, commercial banks and insurance companies were also permitted to launch schemes.

Read Also: Types of Mutual Funds in India

Features of Mutual Funds

Professional management

Mutual funds are managed by professional experts, who are experienced in their respective fields. It gives the investor a sense of satisfaction that their hard-earned money is in good hands. These professionals are highly skilled and know when to enter and exit the market and accordingly churn the portfolio depending on the market dynamics.

Diversification

Mutual Funds let you invest in a more diversified portfolio without setting in much time. The main idea behind diversification is the simple reason given by the investor Mr. Warren Buffet, that never put all your eggs in one basket. Diversification helps to lower the risk of the investor. Diversification in mutual funds is done based on the objectives of the investors.

Liquidity

The liquidity of any asset shows how quickly it can be converted into cash. Assets that take less time to convert are highly liquid and the assets which take more time to convert into cash are less liquid. Mutual funds allow the investors to withdraw their money anytime until there are some restrictions by selling them at the current NPV.

Time-Saving

People who want to grow their money but do not have time to be actively indulged in the financial markets invest in mutual funds. Since mutual funds are managed by professionals investors do not have to spend their time researching every single company they want to invest in.

Types of Mutual Funds

There are various types of mutual funds present in the market. A person can invest in diverse mutual funds depending upon their needs. Mutual Funds could be differentiated based on their structure, choice of asset class and financial goals. Let’s try to understand each one of them one by one.

Based on the choice of the asset class

1. Equity Mutual Funds

Equity Mutual Funds are the one wherein the pooled money of the investors are invested in different companies listed on the stock exchange. They are expected to yield more returns as compared to debt and hybrid funds. Therefore, the risk associated with them is also higher. The investment holders earn through dividends and capital gains in Equity mutual funds.

2. Debt Mutual Funds

When the pooled money of the investors is invested in the debt securities of the company they are called debt mutual funds. Debt mutual funds are suitable for investors who do not want to bear high risk and want consistent returns. Investors earn an interest income on them and also capital gains.

3. Hybrid Mutual Funds

Hybrid mutual funds are a mix of both debt and equity funds. The money of the investors is invested in such a way that they could earn higher returns compared to debt funds & the risk involved is less than the equity funds.

Based on the Financial Goal

1. Growth Mutual Funds

When the majority amount of the investor’s money is invested in growth companies or equity funds, they are called growth mutual funds. The investor should have a high-risk tolerance to invest in growth mutual funds.

2. Income Mutual Funds

People who want a consistent stream of passive income generally invest in Income mutual funds. Funds that fall under this category generally invest in securities like bonds, corporate debentures and Government securities.

3. Balance Mutual Funds

Investing in balanced mutual funds provides the best of both worlds. The basic objective of the portfolio manager handling balanced Mutual funds is to provide the investors with a steady income flow along with growth.

Based on their structure

1. Open-ended Mutual funds

Open-ended mutual funds do not have any kind of restrictions over them. Restrictions could be the number of units sold, or having a maturity date. Open-ended funds are very flexible and allow the investors to exit anytime at the given NPV.

2. Close-ended Mutual Funds

Close-ended mutual funds have some restrictions over them like no repurchase facility and a pre-defined maturity period. With all the restrictions they have lost their significance among the investors and now are hardly in any use.

Benefits of investing in Mutual Funds

Convenience

Mutual funds are a convenient form of investing. You can start investing in mutual funds with as little as Rs.500 per month through an SIP investment. You can invest in mutual funds depending upon your convenience. Investing in mutual funds can be done through either SIP or lumpsum investment.

Financial discipline

It is very important to have financial discipline nowadays. Because today life is more unpredictable than ever before. Everyone wants to give a secure future to their loved ones and investing in mutual funds is one way of doing it. Doing early financial planning not only helps oneself but also ensures a secure future for the people who are dependent on you.

Low-cost

Since so many investors pool their money to invest in mutual funds, therefore, the cost of mutual funds per investor comes out to be less. The expense ratio of managing mutual funds is also less as compared to when an investor invests his money directly into the markets.

Reliability

Mutual funds are very reliable as they are watched by the regulatory body SEBI (Security Exchange Board of India). There are various mutual funds present in the market like the ICICI prudential mutual fund, SBI mutual fund, HDFC mutual fund etc.

How do Mutual Funds work?

First, many small investors come together who share a common financial objective. The objective could be, investing in growth funds or having a regular source of passive income.
Then, these small investors pool their funds together.
After that, these funds are transferred to the portfolio manager who will manage these funds.
He will then invest these funds in various financial securities depending upon the financial expectations of the investors.
After investing, the portfolio manager analyses how the investments are performing and accordingly sells and buys the new and existing mutual fund units.
Then, the returns generated on investments are returned to the investors.
Bonus tip mutual fund units are deposited in the investor’s Demat account. Open your Demat account today with Pocketful.

Conclusion

Thus, after reading the above article, you must be clear that investing in mutual funds is a simple and easy way to invest your money in the stock market. Investing in mutual funds lets you experience the massive potential of the stock market without devoting much time to it. But one thing that you should keep in mind is that investing in mutual funds is subject to market risk so invest accordingly. As stock market is highly volatile and reacts aggressively to market news.

FAQs (Frequently Asked Questions)

How to invest in mutual funds?
To invest in a mutual fund, you need to have a demat account. Open your Demat account today using Pocketful.
What is NAV in mutual funds?
NAV stands for Net Asset Value in mutual funds. It tells about the performance of the mutual funds.
What is SIP in Mutual Fund?
SIP in mutual funds is a way of investing in mutual funds. Wherein you invest a small amount regularly in mutual funds.
Can I invest Rs. 2000 in mutual funds?
Yes, you can invest Rs.2000 in mutual funds using SIP.
What are Tax-saving mutual funds?
ELSS is an example of a Tax-saving mutual fund. Tax saving mutual fund is like any other regular mutual fund with added tax advantage.

September 16, 2023

What are ETFs? Are ETFs good for beginner investors?

Recently, Exchange Traded Funds abbreviated as ETFs have gained popularity among investors. For the various benefits they offer. ETFs are a good investment option for beginner investors as they offer a collection of stocks with similar characteristics in one place. Investing in ETFs enables investors to have a diversified portfolio without doing research for individual stocks. ETF helps to minimise the risk of the investor & maximise his return on his portfolio.
By the time you finish reading this article. You will have a clear idea of whether you should invest in ETFs or not.

What are ETFs or Exchange- Traded Funds?

In simpler words understand like, that it is a box filled with many pebbles,& these pebbles are individual stocks or bonds with similar characteristics. An interesting fact is that specific ETFs track the movement of indices like NIFTY50, SENSEX, etc. So, you expect the same returns on your investment as the index’s annual CAGR.

Looking into the history of ETFs in India, we see that. The first ETF in India was launched in 2002 by Nippon India Mutual Fund (erstwhile Benchmark Asset Management Company Ltd). Listed on January 8th 2002, it witnessed a trading of 1.30 crores on the first day. The journey to listing of the 100th ETF on NSE took more than 19 years. The last one-year period has seen a lot of activity in the ETF space, with 21 ETFs getting listed on the NSE. The assets under management of ETFs in India are now at Rs. 3.16 lakh crores (end of May 2021), witnessing more than 13.8 times increase in five years,  compared to Rs. 23,000 crores (end of April 2016).

ETFs offer the best of both worlds, like Mutual Funds, ETFs represent professionally managed collections or baskets of stocks or bonds. And just like individual stocks, they trade on the stock exchanges, which means you can buy and sell them like individual stocks.

Types of ETFs in India

There are different types of exchange-traded funds (ETFs) available in India, offering investors a variety of options to choose from according to their financial goals and risk tolerance.

Equity ETFs : Equity ETFs track stock market indices such as Nifty 50, Sensex, or Nifty Next 50. They provide investors with broad market exposure and are suitable for the long term.
Debt ETFs : Debt ETFs invest in government or corporate bonds, such as Bharat Bond ETFs. These are known for stable income and low risk and are suitable for retirement or capital preservation. Investments in them can generate regular interest income.
Gold ETFs : Gold ETFs track gold prices and give investors an opportunity to invest in gold without buying physical gold. They are suitable for inflation protection and portfolio diversification.
International ETFs : International ETFs track stocks or indexes from foreign markets such as the US, China, etc. They offer global diversification and the opportunity to invest in foreign markets but also carry certain risks.
Smart Beta ETFs : Smart Beta ETFs move away from traditional index tracking and focus on tracking smart beta indices focused on value, growth, etc. They provide investors with an opportunity to earn better risk-adjusted returns.

Investors should consider their investment goals, risk tolerance, and time horizon when choosing among these different types of ETFs. Choosing the right ETF can improve portfolio performance and help achieve financial goals.

What are the pros of investing in ETF?

Investing in ETF has several benefits, some of which are listed below.

1. Diversification:

ETFs enable the investor to diversify their portfolio without the hassle of individually picking out each stock. Investors seeking to invest in a specific type of sector or industry. ETFs are a go-to option for people who do not want to spend their time researching each company individually. They cover most of the asset classes and sectors for the most part.

2. Low expense ratio:

The expense ratio is the operating expense of the Security, divided by the value of that security. In other words, it is the expense that the investor has to bear for the Security. An expense ratio below 1 is good. And ETFs offer an expense ratio below 1.

3. Easily tradeable:

Investors can trade ETFs just like individual stocks, which makes them highly liquid, meaning you can sell and buy them anytime during market hours.

4. Tax-efficiency:

Due to its low turnover, ETF offers tax relief to investors. The investors are charged 15% on short-term equity gains. And 10% on long-term equity hains after the exemption of the first 1 lakh rupees.

5. Transparency:

ETFs typically have the same securities as the index or the benchmark they track. Some ETFs disclose their holdings regularly, while others disclose them on a monthly, or quarterly basis.

What are the cons of investing in ETFs?

Investing in ETF has several disadvantages, some of which are listed below.

1. Low trading volumes:

Even though ETFs have become popular lately, their trading volume is considerably low compared to the other securities listed. Volume is the total buying and selling of a specific security over the trading exchange.

2. Lack of liquidity:

Due to low trading volume, sometimes it becomes hard to sell the ETFs because there is no one willing in the market to buy them at the price you are offering at that time. Therefore, ETFs are not the most liquid asset to hold.

3. Composition risk:

Since ETFs are already tailored-made investment options. Sometimes, they may have some securities in the group that you do not want to hold. Therefore, you do not have a choice for customisation.

4. Issue of control:

ETFs offer less control as the investor does not choose the securities in the ETF by his own will. Also, the portfolio manager swaps or churns the portfolio depending on his expertise.

ETFs vs. Stocks vs. Mutual Funds: Which is Better?

Before starting to invest, it’s important to understand the difference between ETFs, stocks, and mutual funds and which option is suitable for whom.

Feature	ETF (Exchange Traded Fund)	Stocks	Mutual Funds
Risk	Moderate (Diversified portfolio)	High (Investment in a single company)	Low to High (Depends on type of fund)
Returns	Index-based, relatively stable	Can be very high or very low	Depends on fund manager’s performance
Cost	Low (Lower expense ratio)	Brokerage charges	Slightly higher (Includes fund management fee)
Liquidity	High (Traded throughout the day)	High	Lower (Redeemed at NAV, once daily)
Diversification	Yes (Index-based spread across many stocks)	No (Single stock exposure)	Yes (Diversified portfolio by fund manager)
Management	Passive (Tracks an index, no active manager)	Self-managed (Investor makes decisions)	Actively managed (By professional managers)
Ownership	Indirect (Holds a basket of underlying assets)	Direct (Ownership of shares in a company)	Indirect (Units of pooled fund investments)

ETFs are a better choice for those who want low costs and good diversification and are comfortable trading on their own.
Stocks are suitable for active traders and high risk takers.
Mutual funds are for investors who like the convenience of professional management and prefer regular SIPs.

Points to keep in mind before investing in ETFs

First, determine the assets, in which you want to invest. Choose the best possible ETF according to your risk appetite and availability of funds.
Go for those ETFs that offer a low expense ratio. So, you can save on your operating costs.
Invest in ETFs with high liquidity so you can sell them without any hassle whenever you want. Otherwise, it would be a hectic task.
Check the ETF disclosure reports to ensure that your financial goals align with the objectives of that particular ETF.
Lastly, regularly check the performance of the ETFs and take the required measures according.

Conclusion

From the above article, we can conclude that, as a beginner investor, ETFs could be an adequate option to start your investing journey. Keep in mind that everything has pros and cons & the same applies to ETFs. Keeping a check on a few things and investing with patience and discipline can yield lofty returns for investors.

FAQs (Frequently Asked Questions)

What are ETFs in the stock market?
ETFs or exchange-traded funds are financial securities that resemble the characteristics of both Mutual Funds and Stocks. In simpler words, a collection of different stocks to track the performance of a specified index.
How do ETFs work?
ETFs are like common stocks on the stock exchanges. They track the movement of the underlying asset and perform accordingly.
What are the types of ETFs?
Different types of ETFs are present in the market like index ETFs, sector ETFs, and commodity ETFs.
Which are the best-performing ETFs in India?
Kotak PSU Bank ETF, CPSE Exchange Traded Fund, UTI S&P BSE Sensex ETFETF are the top-performing ETF funds for the past year.
What are CPSE ETFs?
CPSE ETF (Central Public Sector Enterprises Exchange-Traded Fund). An investment instrument that allows you to invest in Central Government public sector enterprise.

September 12, 2023

How to use technical analysis on charts

If you are active in the stock market, you must have heard the term technical analysis quite often. Technical analysis is analysing the market movement and catching the trend. Technical analysis is used for short-term trading or investment. Wherein you gain by capturing the small price difference within a short period.

What is technical analysis?

Technical analysis is analysing the market based on historical data, price & volume primarily. The Main objective of technical analysis is to predict future trends & price movements. This objective goes against the past established theories. Like never trying to predict the markets, focusing on the long term, doing fundamental analysis and more, because for all these reasons Relevance of technical analysis gets questioned.

Technical analysis follows the ideology of history repeating itself. Following this principle, various techniques have been developed over the years. Like trading using price action, indicators, chart patterns and more. Patterns get identified using the past historical data of the companies and the indices present. To draw inferences for making the entry-exit decisions in a trade.

How to do technical analysis?

There are a few things you should understand before starting to do a technical analysis which are:

1. Trend:

The direction in which the market moves is called a trend. In the stock market Trends can be of three types. Upward, Downward and Sideways. Let’s understand each one of them:

Upward trend-
The market is in an upward trend when it keeps making new higher highs. And when the market is in an upward trend we say that the market is bullish.
Downward trend-
The market is in a downward trend when it keeps making lower lows. When the market is in a downward trend and keeps falling we call it a bearish sentiment.

Sideways trend–
When the market moves in a fixed range for some duration it is said to be sideways. We often say that the market is consolidating when it moves like this.

2. Price action:

If you are active in the Stock Market you must have heard the term Price Action. So Price Action is the process of analysing the price movement of a security or asset and determining potential entry and exit points for a trade. While trading with Price Action, the main task is correctly identifying the support and resistance levels on the chart.

Let’s briefly understand what support and resistance levels are:

Support –
Support is that level on the chart from where the price is likely to increase or reverse its trend. Support shows the minimum willingness of the buyers to buy the security. To make a support line on a chart you look for a common point from where the price is bouncing back. Support levels on the chart help to identify breakouts.
Resistance-
Resistance is the price level zone on the chart from where the price is likely to decrease or change its trend. Mark the points on the chart, from where the price is reversing. This way, You will see the resistance levels on the chart.

3. Chart patterns:

Chart patterns are the Figures and patterns that form on the chart of an asset. These patterns have been developed over a while, using historical data from the past 100 years. Chart patterns show or predict the price movements considering how the price has redacted in the past. Broadly chart patterns fall into three main categories that are listed below:

A continuous pattern indicates that a trend will continue for some time.
A reversal pattern indicates that the price may change its movement & there will be a price reversal.
A bilateral pattern may show that the market is highly volatile & the price could go either way.

4. Candlesticks:

Candlesticks are a type of price chart used in technical analysis. It is the most popular type of charts used by traders. It shows the High, Low, Open and Close prices.

A green candlestick depicts that the price is moving in an upward direction. The wick shows the maximum price level it had touched in that period. The upper part of the green body shows the closing. The lower part of the green body shows the opening of the price.
A red candlestick depicts that the price is moving in a downward direction. The wick shows the highs and lows it had made. The upper body part of the red candle indicates the price opening & the lower body part shows the closing price.

5. Indicators:

Indicators in the stock market are mathematical tools developed using advanced algorithms and historical data to predict price movements. Different charting platforms provide their users with several indicators to use. Some famous indicators are listed below:

RSI (Relative Strenght Index):
RSI is one of the most popular indicators among traders. It helps in identifying the overbought and oversold stocks. After reaching a saturation point potential exits and entries are forming in the trade.
MACD (Moving average divergence Convergence):
MACD was developed by ‘Gerald Appel’ in the late 1970s. It was designed to reveal changes in the strength, direction, momentum, and duration of a trend in a stock’s price.
VWAP ( Volume Weighted Average Price):
Vwap is a technical indicator that indicates the price movement based on the volume of the security. Volume is the total buying and selling of the financial asset. In case of high buying volume, the price falls. On the other hand higher buying volume, the price increases.

After understanding all these terms like Trend, Price Action, Indicators, and Chart patterns, it depends on the personal preference of the trader and which tools they use for technical analysis.

Five simple steps of technical analysis for any beginner or a seasoned trader

1. Identify the trend:

The first thing in doing technical analysis is to identify the trend in the market. You can use trendlines to identify the Trend. To draw a Trendline join the higher highs or, the lower lows of the candles. Another way of identifying the trend in the market is by using indicators. Many indicators help to capture the Trend. Analyse if the market is in a downtrend. Up trend or sideways.

2. Make support and resistance levels:

After identifying the Trend in the market, make support and resistance levels. Look for the points from where the price is reversing its movement. Again, you can identify the support and resistance level by yourself or with indicators.

3. Look for breakouts:

A breakout indicates a trend movement in the price after breaking the support or the resistance levels. For example, if the resistance breaks, the price may move in a bullish trend for some time. However, if the support breaks, the price may move in a Downward Trend.

4. Identify entry and exit points:

After identifying a Breakout it’s important to determine your entry & exit prices. Sometimes, the markets are so volatile that you can’t get an entry in the trade at the desired price. In that case, you should not run after the Trade but look for another entry.

5. Pre-determining targets and stop loss:

The last and most crucial step is to pre-define your targets and stop loss even before entering the trade. When you enter a Trade & it’s going in your desired direction. It makes you overwhelmed and without a definitive target. You keep on trailing the trade and end up making a loss.

Conclusion

Thus, summarising the above read, we can conclude that Technical Analysis is also an important branch of investing. It helps us to invest and trade in the market in the short-term and medium-term. Doing technical analysis requires precision, perseverance and practice. While investing or trading one must keep their emotions under control to be successful in the market.

FAQs (Frequently Asked Questions)

What is technical analysis in the stock market?
Technical analysis in the stock market is the process of identifying the trends and predicting the price direction.

What are the best books for technical analysis?
There are so many good books in the market for technical analysis. Example Encyclopedia of Chart Patterns, Technical Analysis of the Financial Markets: and many more.
What is the difference between fundamental analysis and technical analysis?
Fundamental analysis assesses the financial health of the company. Technical analysis analyses the share price movement.

What is the Dow Theory of technical analysis?
Dow’s theory was taken from the editorials of Charles H. Dow. According to this theory, a shift in the bullish or bearish trend is confirmed by multiple indices.

September 7, 2023

Blog

How Flipkart Originated

Business Model of Flipkart

Subsidiary Companies of Flipkart

Marketing strategies of Flipkart

1. Product:

2. Pricing:

3. Promotion:

4. Advertising campaigns launched by Flipkart

Conclusion

FAQs (Frequently Asked Questions)

When was Flipkart founded?

Who founded Flipkart?

Is Flipkart an Indian company?

What is the current annual revenue of Flipkart?

Which is the biggest sale of Flipkart?

History of Coca-Cola

MARKETING STRATEGY OF COCA-COLA

Worldwide Advertising

Branding

Diversification of products

Pricing

Promotion

Partnership

Personalisation

Secret of Coca-Cola’s Success

Conclusion

FAQs (Frequently Asked Questions)

When was Coca-Cola founded?

Who founded Coca-Cola?

How was Coca-Cola sold in the initial days?

How many drinks are served per day now?

Who Was Mahadeo Havaji?

Background Of Dabbawalas

How This Was Implemented In The Dabbawala Business

REWARDS AND RECOGNITIONS

Conclusion

FAQs (Frequently Asked Questions)

Who founded Dabbawala?

What was the main objective for starting Dabbawala?

What is Six Sigma?

Who founded Six Sigma?

About Satyam Computers

Series Of Events In The Satyam Computers Scam

The Role Of Raju

Steps Taken By The Government

Conclusion

FAQs (Frequently Asked Questions)

When did the Satyam computer scam happen?

What happened to Satyam computers?

Who was the main culprit behind the Satyam scam?

How the scam was identified?

Was Satyam computers listed on the New York Stock Exchange?

What Are Gaps In The Stock Market?

Why do Gaps Occur In The Markets?

Types Of Gaps In The Market

Common Gap

Breakaway Gap

Runaway Gap

Exhaustion Gap

Island Cluster Gap

A Strategy To Play The Gaps

FAQs (Frequently Asked Questions)

How to predict Gap up and Gap down?

How to trade Gap up and Gap down?

What is meant by gap-filling?

How to start trading in the stock market?

What is the Gap pattern Trading Strategy?

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

Financial literacy

Why Build a Strong Financial Foundation?

Preparing for Future Financial Challenges

Introducing Financial Concepts to Children As They Grow

Conclusion

FAQs (Frequently Asked Questions)

Why financial literacy is necessary?

How to improve financial literacy?

Why financial literacy is essential for students?

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

How to explain investing to a beginner?