Hey everyone,
As you begin your journey into the world of investing, I want to share a fundamental principle that can guide you towards success:
Start Early, Start Small.
Think of learning to invest like learning to ride a cycle. Just like when you were a kid, it takes time, practice, and a few falls before you get the hang of it.
Similarly, Investing requires :
Patience,
Practice, and
Willingness to learn from both your wins and losses.
Let me stress this again:
Investing is not a sprint where you can expect instant results.
It's more like a cycle ride around the neighborhood – you need to learn how to balance, steer, and pedal before you can go on longer trips. And like cycling, it's a journey where you gradually get better over time.
So, Sir where do I begin?
First, educate yourself.
Start by learning the basics of investing, how the stock market works, and different investment strategies. There are plenty of resources online, like courses, books, and trustworthy financial websites, that can help you understand these concepts better.
Second, start small.
Just like when you first learned to ride a cycle, start with a small amount of money that you can afford to lose.
This way,
You're testing the waters without risking too much.
As you gain more experience and confidence, you can gradually increase the amount you invest.
But remember, the goal isn't to make quick money.
It's about building wealth over time through smart and disciplined investing.
So, to all the new investors out there,
Remember: Start Early, Start Small.
It's the best way to succeed in the long journey of investing.
Market Kya Keh Raha hai, Sir?
This week, you might have noticed a piece of news that made headlines: the India VIX fell by a significant 22%.
While this might seem like just another market term thrown around, understanding what India VIX signifies can greatly enhance your comprehension of market dynamics.
So, let's break it down in simple terms.
What is India VIX?
India VIX, short for India Volatility Index, is like a weather forecast for the stock market. Just as a weather forecast predicts storms or calm days, India VIX predicts market volatility – how much the market is expected to swing up and down over the next 30 days.
Why Does it Matter?
Imagine you're planning a picnic. If you know it's going to rain, you might change your plans or bring an umbrella. Similarly, knowing the expected market volatility helps investors plan their moves. When India VIX is high, it signals a stormy market ahead, prompting investors to tread cautiously. On the other hand, a low India VIX suggests smoother sailing.
Relation with Nifty:
While Nifty measures the market's direction based on stock prices, India VIX indicates the market's volatility. They have a seesaw relationship –
When one goes up, the other tends to go down.
How is India VIX Calculated?
Think of India VIX as a recipe with four main ingredients:
Time to Expiry: Calculated in minutes for precision.
Interest Rates: Considered the risk-free rate for 30 to 90 days.
Forward Index Level: Identifies options contracts based on the future index level.
Bid-Ask: Considers prices of options contracts.
Introduction of Derivative Contracts on Nifty Next 50 Index:
Last week, the National Stock Exchange (NSE) introduced Nifty Next 50 index derivative contracts.
These contracts had received approval from the Securities and Exchange Board of India (SEBI).
What is the Nifty Next 50 Index?
The Nifty Next 50 index represented 50 companies from the Nifty 100, excluding the top 50 companies listed in the Nifty 50 index.
Here’s the list:
It served as a bridge between the most significant and stable companies (Nifty 50) and the growing mid-sized companies (Nifty Midcap Select).
Why is it Important?
This move expands the range of financial products available to investors and traders.
It allows them to manage risks and speculate on the performance of the Nifty Next 50 index without directly owning the stocks.
Key Stats:
As of March 2024, the Nifty Next 50 index was dominated by companies from the financial services, capital goods, and consumer services sectors.
The index represented about 18% of the total market capitalization of all stocks listed on the NSE, with a combined market capitalization of Rs 70 trillion.
The average daily trading volume of Nifty Next 50 index constituents stood at Rs 9,560 crore, accounting for around 12% of the total cash market turnover in the financial year 2023-24.
Source: Business Standard
Recommendations:
Last week Ajay Devagn’s new movie released, Maidaan.
It is a film that will connect with you emotionally if you’re a football fan or sports in general.
Adding to the list, I saw this amazing video of Vikas Divyakirti sir where he breaks down the biases we all have when making decisions.
Watch this video and learn some of the important lessons that you can apply not only in your Investing journey but also in your daily life.
That’s it for this week,
Fit this one thing in your brain that your future depends on what you do today. Picture where you want to be in five or ten years, then ask:
Am I spending my time wisely to reach that goal?
Look at what helps you progress and what holds you back.
Before I go I want you all to watch this beautiful clip,
Always remember,
You can build the path to your dreams.
This is Parth Verma,
Signing off.
I was not aware that VIX and NIFTY are inversely proportion.
Thank you Sir, for your guidance.