‘Investments Should Be Diversified And Future-Focused’
VIJAY LAXMI A AMBALA of Stock Market Today says investment is subject to market risks. Higher the risk, higher is the potential reward. However, putting all your eggs in one basket is not advisable.
Stock Market Today (SMT) is a stock market research and mentorship platform headquartered in Nagpur, Maharashtra, India. It was founded in 2018 by Vijay Laxmi A. Ambala and Ashish N. Ambala. SMT offers research services and mentorship/consultancy to those interested in trading in the stock market. In this exclusive e-mail interview with B N Kumar, Editor – BizNewsConnect, SMT co-founder VIJAY LAXMI explains the platform and their role in financial literacy. Excerpts:
BizNewsConnect: What prompted you to start the platform SMT?
VIJAY LAXMI AMBALA: As the founders of Stock Market Today (SMT), we were motivated by the significance of financial literacy, specifically in the context of the stock market. We recognized that the stock market could serve as a means for individuals to combat rising inflation and generate additional income. However, we also observed a lack of even basic financial knowledge among the general populace in India, especially when compared to more developed countries like Japan and the United States. This knowledge gap was even more pronounced between major cities and smaller towns and rural areas in India.
With this in mind, we saw an opportunity for individuals to improve their financial situation by gaining a better understanding of the stock market. We believed that a more efficient reading and comprehension of price charts – a key tool used by major players in the market – would increase an individual’s likelihood of making successful trades and short-term decisions based on the chart. As a result, we launched SMT as a primary resource for learning about price action in the stock market.
BNC: How has been the journey so far since its inception in 2018?
VLA: It has been an incredible journey. With a strong background in financial education (M.Com & MBA), we realized early on the need to share our knowledge with those who require it. We started creating useful and informative videos on Youtube about Price Action and Possible Trending Stocks for tomorrow, based entirely on price action and technical analysis.
Our goal was to reach as many people as possible, but soon we discovered that we needed SEBI’s permission to do so. Luckily, we met all the criteria. We obtained SEBI’s approval for providing research services about stocks, derivatives, and commodities through my YouTube and Telegram channels. Despite my success, my first love remained teaching, which we continue to do free of cost.
“Many new retail investors and traders have entered the market with high expectations of making gains, but they should understand that investing requires balance and a long-term perspective.”
We started as a Price Action and Technical analysis learning YouTube Channel and Now we are SEBI Registered Research Analysts. We are happy that our efforts are benefitting more than 80,000 subscribers on YouTube https://www.youtube.com/@SMTSEBIRegistered & Telegram 1,15,000 subscribers on our Telegram Channel – https://telegram.me/StockMarketTodayUpdates.
BNC: Within a year of starting your platform, the pandemic has engulfed the world. How did you manage to cope with the crisis?
VLA: When the pandemic hit, it was certainly a shock to investors. However, for traders like us, it presented a significant opportunity. Thankfully, we have derivative instruments like Futures & Options in our country, which provide a shield against significant losses. As a result, we were able to protect our portfolio against the downturn. Unfortunately, many small investors were not aware of these tools and ended up selling their portfolios at a huge loss. We made sure to educate our audience about these instruments and their importance through special videos and resources.
As traders, we saw the pandemic as a once-in-a-lifetime opportunity. We were able to profit from the market’s sharp decline by using derivative trading strategies and price action with technical-based setups. In fact, we were able to make significant profits during this time. We also created special videos on how to use derivatives as a tool against big losses in the market, which were well-received by our audience.
Moreover, we have made a special video on how to use it as a tool against big Losses in the Market and as a portfolio holder- https://www.youtube.com/watch?v=Pg1ti4KV9Us&t=28s
BNC: Financial literacy in general and stock trading literacy in general are very low in India. Do you plan to spread the knowledge, if yes how?
VLA: I completely agree that financial literacy, especially stock trading literacy, is low in India. However, we are determined to change that by spreading knowledge through our platform. Thanks to the widespread availability of the internet and technology, we have been able to reach a large number of people on YouTube, who are constantly seeking reliable and practical knowledge that can yield good results in trading.
We offer a range of services that focus on the basics of price action and technical analysis chart reading, price action-based trading strategies, how to control trading psychology, how to manage risk in trading, and how to plan a trade setup, among others. In addition, we have a special mentorship programme where we teach our members our researched trading setup for futures and options and provide complete practical learning opportunities with us. Our aim is to develop self-dependent, confident traders who know how to manage risk while trading, which we believe is crucial for becoming a successful trader.
“For those who stay away from the stock market due to the risks involved, my advice would be to educate yourself thoroughly on the subject.”
BNC: There is an impression that trading is limited to big cities. What is your take on that?
VLA: Earlier, financial literacy was limited, but with the internet and affordable gadgets such as mobile phones and laptops, access to learning materials has become more widespread. Geography is no longer a barrier to learning, and there is now a wealth of information available online. Especially after the pandemic almost in every taluka or small village, you will find people (young crowd) talking about trading in stock market. in fact, the biggest broker house has doubled its demat account user base in the 2020-2022 period, and we are aware that a Demat account is the foremost thing required to start trading.
BNC: Gold, real estate, government securities, and postal savings are said to be among the popular investment options for a majority of the people. Have people started looking at stock trading as an option?
VLA: According to reports, an average of 39 million options contracts were traded daily in 2021, which is a 35% increase from the previous year. Interestingly, retail investors now account for more than 25% of this trading activity, which shows a growing interest in stock trading among general public. In addition, there has been a record surge in the daily volume of the largest e-brokers, with December 2021 seeing an average of 6.6 million shares traded, while January 2022 recorded a 23% increase with an average of 8.1 million daily trades, with options trading also seeing a significant increase.
However, it is important to note that options trading is just one type of stock trading, and individuals need to consider other factors when deciding on investment options. Factors such as personal financial goals, risk tolerance, and investment time horizon should be considered. Trading is a business where you buy and sell something with the intention of making gains in the short term. Each stock has its unique nature, such as volatility and range which traders can use to make profits in the short term.
Investment is subject to market risk, and the higher the risk, the higher the potential reward. However, putting all your eggs in one basket is not advisable, and investments should be diversified and future-focused. Many new retail investors and traders have entered the market with high expectations of making gains, but they should understand that investing requires balance and a long-term perspective.
BNC: Many stay away from the stock markets due to the risks involved. What is your advice to such people?
VLA: For those who stay away from the stock market due to the risks involved, my advice would be to educate yourself thoroughly on the subject. Start by understanding the basics of investing, such as the different types of stocks, how to read financial statements, and how the stock market works. There are many resources available online and offline that can help you learn about investing.
Next, research the companies you intend to invest in and analyze their financial performance. Look for companies with a strong track record and a history of consistent growth.
It’s also important to diversify your investments, which means investing in a variety of companies across different sectors. This helps to minimize your risk in case one company or sector experiences a downturn. It’s essential to have a long-term investment strategy and to stick to it. Don’t let short-term market fluctuations or emotions drive your investment decisions.
“Staying informed about policies, global events, and company and sector performance can help investors make informed decisions. However, it is also important to be aware of manipulative events that could lead to short selling due to panic in the market.”
BNC: Then, we get to hear about scams which generally scare away people, particularly after watching Big Bull on OTT. How does one secure one’s investment?
VLA: To protect your investments from fraud, it is important to take certain steps. Firstly, you should assess the financial stability of the company you are considering investing in. It is advisable to avoid highly volatile and penny stocks. Investing in companies that are part of the Nifty 50 and Nifty 100 can be a good option for new investors due to their stable growth and reputable business. Before investing in any company, it is recommended that you research its management, past performance, and future plans. Following the rule of taking calculated risks and using diversification in investments can also be beneficial.
BNC: SIPs and Mutual Fund investments are said to be the steppingstone for stock trading. Do you advise first-time investors to go for them? But then even MF investments are market-risk driven. Your comment?
VLA: Investing is a great habit that helps individuals stay ahead of inflation. SIPs or Systematic Investment Plans and mutual fund investments are both good options for first-time investors. The choice between the two depends on an individual’s income source and flow. SIP is ideal for low-income and salaried people as it helps mitigate risks, build investment discipline, and is hassle-free.
Mutual funds also offer the same benefits but with a higher percentage of charges. Mutual funds have dedicated fund managers who manage the portfolios of investors and ensure they receive capital gains or dividends from the returns of purchased stocks. Mutual funds are ideal for investors who don’t have time to micromanage their portfolios and cannot arrange regular fund transfers to their SIP investments.
A good combination of both SIPs and mutual fund investments can be favourable. SIPs can be used for regular, low-value investments while mutual funds can be used for larger investments that require professional management. This combination helps investors build a diverse portfolio while minimizing risk.
BNC: From policies to global markets to company and sector performance impact stocks. Sometimes, the markets react to short selling and profit booking. How does a common investor gauge the market scene and protect his money? Please explain.
VLA: Various factors such as policies, global markets, and company and sector performance can impact stocks, leading to short selling and profit booking. For instance, the Hindenburg Report had a significant impact on Adani Group stocks, while FED REPO rate hikes directly impacted banking stocks, and UAE oil production cuts affected oil and fuel sector stocks. In such cases, it is important to understand the difference between profit booking and short selling and how to gauge the market scene to protect one’s money.
Profit booking occurs when an investor is already in a position, typically in stocks, and realizes that the price has reached a certain level or there is news that it could fall further. In such cases, the investor sells the stock to book profits. In contrast, short selling is when an investor anticipates that a particular stock or instrument could fall in the future. In this case, the investor sells the stock when the price is going down and buys it again at a low price, earning the difference as profit.
To gauge the market scene and protect one’s investments, it is important to keep a close eye on various factors that can impact the market. Staying informed about policies, global events, and company and sector performance can help investors make informed decisions. However, it is also important to be aware of manipulative events that could lead to short selling due to panic in the market.
ALL YOU NEED TO KNOW ABOUT…
Profits booking Example- PQR stock CMP 800 and you have the view It will go till 1000
You could buy it for 800 and when the price reaches 1000 you just sell it and book your profit in it. (Here this 200 is your profits with your bullish view.)
Short Selling For example- ABX Stock CMP 1000 & You have the view It will go down till 800. So here you sold (because you are a seller and have a view price to fall) it at 1000 and when the price went to 800 you bought it again. Here is 200 if you profit from your bearish view.
In India Intraday short selling is valid in cash/equity however F&O gives you an opportunity to trade your bearish view in derivatives.