Archive for August 2011

Key to Successful Investing

by Rajesh Narayanan · 2 Comments

mas-successful-investing
Investing your money can be a great way to ensure your financial future. With the right investment choices, you can be sure to have money for emergencies, to put towards the education of your children, and to have available when the time comes for you to retire. There is a key word in the preceding phrase however- “right”. If you make the wrong investment choices, you may just end up where you started or worse than that.Most people who invest wisely by making the right decisions with their money, follow the same basic investment pattern, although they may define it by another name. The following are simple but valuable investing rules, which have withstood the test of time and by following these, one can be successful in their investing venture.

Allocation: First of all, make sure that the money you choose to invest is indeed earmarked for the purpose. Do not put up money that you cannot afford to lose,in case the market takes a downturn and remains in a bear market for a longer time.

Know the Basics: Believing that with a little understanding they can work the market themselves, they do not entrust another person with their money. This is incorrect. In the first place, most people will not be able to begin to unravel the complicated graphs, charts, and statistics by which the investment world relates its information.

In order to understand what the numbers mean, you will need to have some basic training. There may come a time after you have had some experience in the market that you will be able to make sound decisions on your own, but the initial get-your-feet-wet phase is not the time to attempt it.

Think long term: Unless you invest millions of dollars initially, it will take time for your investments to mature and begin to accumulate substantial gains. The best investments are proven over time, and thus it is best to place your funds in long term choices.

Diversification: A good portfolio will include cash and cash equivalents (Fixed Deposits), growth investments (Stocks), and growth and income investments such as Mutual Funds. Diversification ensures that you do not have all your eggs in one basket should any part of the market experience a downturn. Note that diversification means not only investing in several areas, but also making sure that no single avenue contains a disproportionate percentage of your funds.

Be a wise investor !

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NSE Dow Jones futures and S&P 500 futures

by Rajesh Narayanan · 2 Comments

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S&P 500 and Dow Jones Industrial Average(DJIA ) indices are two of the world's most followed indices and are considered as the barometers of us markets. These indices have displayed historic resilience in holistically capturing the movements of the US markets. NSE is introducing rupee denominated future contracts on S&P 500 and DJIA indices. This is the first time in the world that futures contracts on S&P 500 index are being introduced and listed on an exchange outside USA.


S&P 500 is a free-float capitalization-weighted index 500 leading companies of the us economy and widely regarded as the best single gauge of the us equities market. Dow Jones Industrial Average (DJIA) is a price weighted index having 30 large and liquid blue chip stocks traded on U.S. exchanges.

Contract Details:

The contract size for the S&P 500 is 250 units and DJIA is 25 units, which approximately works out to 2.5 lakhs per contract. There are four quarterly expiry contracts in the mar-jun-sep-dec cycle and will be traded during Indian market time.

For whom?

Indian investors are currently permitted to invest in foreign assets subject to the limits stipulated by the Reserve Bank of India. Futures on S&P 500 and DJIA, currently being introduced by NSE shall enable traders desirous of taking exposures to us market to do so, without taking any foreign currency risk as they are rupee denominated contracts.

These contracts enable those invested in the us markets to hedge their equity exposure. Also, they can also be used as hedging tool by investors having a high exposure to stocks in sectors whose financial performance depends significantly on the prospect of the U.S. economy.

Other than the above mentioned investors/traders, market participants who can understand the dynamics of the U.S. markets can have directional views on the movement of the indices. As far as small investors  are concerned, this would be a avoid in the better interest of them.

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