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Vasudhaiva Kutumbakam

The human beings follow one or other religion. More than ninety five percent of the human beings they follow the religion in which they took birth and remaining are converted into new religion either forcefully or voluntarily. From the childhood they are customized to follow the religion.  Now the question is how these religions would have come into existence?  As per me the religion would have come into existence because of customs enforced by a human being or group of human beings who had a command over the society or group of individuals or geographical area.

There are two objectives of the person or group of person would have created a religion:

  1. A person or group of person of noble character wanted to improve and implement the good things among the human beings so to maintain the welfare of the society would have created a religion.
  2. A person or group of people of evil character or bad character wanted to rule the human beings either geographically or community wise would have created a religion with some set of guidelines which becomes later holly books of religion.

Hence, the religions are created or enforced by human beings. Now the question is about how to harmonize the ideology of different religions. There are many methods adopted to harmonize the religions. Many religions in the world have divided into countries. Some countries in the world adopted the religion of the nation. However, due to globalization and due to the effect of low importance given to religion among the new youths resulted in mixture religions. The people in the world started not bothering about the religion but they bother about the quality of life and safety. They started the concept of Vasudhaiva Kutumbakam, an ancient Hindu philosophy of the world is one family.  This concept is required to be followed by all the human beings in the globe.  By adopting the concept of entire family is one will result in many benefits to mankind.

  1. There are no boundary disputes among the different countries of present world.
  2.  One economy
  3. One Currency prevails in entire world
  4. Ninety percent reduction in defence expenditure presently spent around the world and can be utilized for welfare of mankind.
  5. There is no chance of war as entire world is one country.
  6. Supply of goods and service across becomes easier.
  7. There are no visa and passport issues.
  8. The present economic surplus can be utilized to entire part of the world where there is deficit.

Start Successful Business

How to start business?

The following considerations are important:

  1. Financial

The capital investments required for the business to commence the business. Not less than sixty percent of the amount required for the capital investments must be sources out of ownership funds and not more than forty percent of the funds required for this purpose may be sourced through borrowings which have term of more than seven years. The equal balance of funds used for working capital for period of five years must be maintained from ownership funds and borrowed funds.

  1. Technical

The promoter of the business must have knowledge of the technology required to set up and operate the business. The promoter of a business must have expert or practical knowledge on the technology of the business is to be implemented and operated on.

  1. Marketing

The promoter of the business must have knowledge of the product or services to be launched in the market. The promoter need have in depth study of the market for the product or services to be launched including quality, design, pricing, cost of production, sales promotion incentives and so on. The promoter need to conduct market survey for the product or services by appointing at least five survey agencies and get the report for this purpose.

  1. Cost of Production

Cost of production is an important factors required to be considered before plan any manufacturing business. The margin on sales should cover the variable and fixed cost of production and sales. If the at initial stages such hundred percent absorption may not be possible but at least over period of three years of project implementation such margin need to be absorbed with cost.

  1. Break-even-point

The break-even-point implies that level of sales required for absorbing the cost. The point where there is no loss and no profit. The promoter need to understand that the minimum level of production and sales required recovering the variable and fixed cost of the business. The production and sales above the point of break-even the promoters of the business will be able to generate the operating profit in business. For this purpose the promoter need to calculate the variable cost of production and fixed cost of business. The sales price per unit minus variable cost per unit of productions becomes the gross margin per unit. The total fixed cost of the business is to be divided by gross margin per unit. This will give the figure of units of production required to reach break-even.

  1. Legal and Tax Considerations

The legal consideration on the set up of the business applicable to the entity is an important factor. For example to open banking business the laws of banking regulations and Reserve Bank of India Act and guidelines are important to adhered to. Furthergoods and services tax and income tax laws need to be complied before or the date of starting of the business as to registration, license and so on. Again labour laws on ESI, EPF, Shops and Establishment and so on need to be considered at the early stages of commencement of business. The promoter of the business need consult Chartered Accountant to get an expert knowledge on the legal tax aspects of the business.

  1. Other considerations

The other consideration of pollution control and environmental clearance, availability of the manpower and raw materials required for the business and soon is also important factor on the start of the business.

TradeMark

A Trademark is generally referred to as a “brand” or “logo”.

A Trademark can be a word, symbol, logo, brand name, wrapper, packaging labels, tagline or a combination of these and are used by manufacturers or merchants or service providers to identify their own goods and/or services. It is used to distinguish the owners’ goods or services from those of its competitors and is something that will be distinctive of just one trader. Properly used and promoted, a Trademark may become the most valuable asset of a business.

Trademarks should not be confused with trade names. While trade names can also serve as Trademarks, Registration of a company or business name under the Companies Act does not in itself give protection against others who might commence using identical or similar marks.

The advantages of obtaining Trademark Registration

  • Prima-facie evidence of ownership of the Trademark.
  • Important asset for your business or company and contributes to the goodwill generated.
  • Gives you stronger enforceable rights to prevent others from using the Trademark in connection with the goods or services for which it is registered.
  • Trademarks can be sold, licensed or assigned.
  • Registration usually covers the whole of India.

How to find out whether a Trademark / Brand name is already Registered in India?

A search of the Indian Trademark Registry database will indicate whether there are any marks identical or deceptively similar to your Trademark in India. The Trademark search can be conducted in the official Trade Mark Registry website in India in the link copied below:
https://ipindiaonline.gov.in/tmrpublicsearch/frmmain.aspx

The difference between Trademark Registration and Copyright Registration for logo

A logo can be protected both under the Trade Marks Act and Copyrights Act. Trademark Registration enables you to obtain protection for the brand name and also provides certain amount of protection to the manner in which the Trademark is represented. However, if you need exclusivity for the representation of your Trademark or logo, a copyright Registration is strongly recommended. Copyright Registration does not however offer any protection for the brand name.

Validity of a Trademark Registration 

Once the Trademark is registered, it is valid for a period of 10 years from the date of application. The Registration can then be renewed indefinitely as long as the renewal fees are paid every 10 years.

How long does it take to Register a Trademark?

Trademark Registration is a lengthy process and it takes around 18-24 months to obtain Registration in a straight-forward case, without any objections or oppositions. However, the Trademark application number is usually issued within one or 2 days after filing.

Stock Market

WHAT IS STOCK MARKET?

There are different categories of trading in stock market.

1. The delivery based trading in stocks. This is long term investment plan of investors to hold stock long to medium term. Many people make money on this way of investments. Investors make the investments hold it for long and gain money on the upward movements in stocks. In this case selection of stocks is more important. The steady growth companies stocks need to be selected for this purpose. This mode of investments is more advisable for the persons who wanted to park the money other than in bank deposits.

2. Intra-day trading in securities. The trading in stock can be made on daily basis with margin amount in the trading account. The open positions need to be closed by closing hours of the stock market. This trading is moderately risky. But we need to select the stock with events, news about the company, results, orders, major expansion, etc,. The trading can be made by buy and sell or sell and buy. Positive news about the company need to be utilized by buying stock and sell it and negative news about the company need to be utilized by selling and buying the stock.

3. There is trading called "futures”. The futures can be on individual stocks or as segment like banking stock - bank nifty futures, Nifty Futures, etc.  For example we can buy or sell the futures of State Bank of India Futures or Bank Nifty Futures. This type of trading has high risk and high returns. These futures has time period of one month - expires of last Thursday of the month. 

4. There is another category of trading in stock market, that options trading. There are two options - call and put options. These options can be on the stock or on the segment of stocks. For example options can be on Infosys stock or Bank Nifty Options. The call options need to be exercised when there is up word movements in stock or segment and put options need to be exercised when there is down word movements in stocks or segments. The bank nifty options are weekly basis. That means the expiry date is on every Thursday.  But other stocks options like nifty options are expiring monthly basis, which expires on last Thursday of the month. This type of trading is very high risk and very high return potential. 

5. There is another method to investment in stock market. That is investments in mutual funds. The mutual funds are managed by the Mutual Fund Company. They take the investments from the public and pool up the funds and invest in growth fund, debt fund and balanced funds. The categories of the funds are decided by the investors and the fund managed by the Mutual Fund Companies. This type of investments has low risk and high diversity of funds invested. This is advisable for the people who wanted to save money for long period of time and who does not have much knowledge of the market.

Indian Derivatives Market

As the initial step towards introduction of derivatives trading in India, SEBI set up a 24–member committee under the Chairmanship of Dr L C Gupta on November 18, 1996 to develop appropriate regulatory framework for derivatives trading in India. The committee submitted its report on March 17, 1998 recommending that derivatives should be declared as ‘securities’ so that regulatory framework applicable to trading of ‘securities’ could also govern trading of derivatives. Subsequently, SEBI set up a group in June 1998 under the Chairmanship of Prof. J R Verma, to recommend measures for risk containment in derivatives market in India. The committee submitted its report in October 1998. It worked out the operational details of margining system, methodology for charging initial margins, membership details and net worth criterion, deposit requirements and real time monitoring of positions requirements. In 1999, The Securities Contract Regulation Act (SCRA) was amended to include “derivatives” within the domain of ‘securities’ and regulatory framework was developed for governing derivatives trading. In March 2000, government repealed a three-decade-old notification, which prohibited forward trading in securities. The exchange traded derivatives started in India in June 2000 with SEBI permitting BSE and NSE to deal in equity derivative segment. To begin with, SEBI approved trading in index futures contracts based on S&P CNX Nifty and BSE–30 Sensex index, which commenced trading in June 2000. Later, trading in Index options commenced in June 2001 and trading in options on individual stocks commenced in July 2001. Futures contracts on individual stocks started in November 2001. In July 2012, SEBI has granted permission to MCX-SX to deal in equity derivatives.

Products in Derivatives Market

  • Forwards

It is a contractual agreement between two parties to buy/sell an underlying asset at a certain future date for a particular price that is pre-decided on the date of contract. Both the contracting parties are committed and are obliged to honour the transaction irrespective of price of the underlying asset at the time of delivery. Since forwards are negotiated between two parties, the terms and conditions of contracts are customized. These are OTC contracts.

  • Futures

A futures contract is similar to a forward, except that the deal is made through an organized and regulated exchange rather than being negotiated directly between two parties. Indeed, we may say futures are exchange traded forward contracts.

  • Options

An Option is a contract that gives the right, but not an obligation, to buy or sell the underlying on or before a stated date and at a stated price. While buyer of option pays the premium and buys the right, writer/seller of option receives the premium with obligation to sell/ buy the underlying asset, if the buyer exercises his right.

  • Swaps

A swap is an agreement made between two parties to exchange cash flows in the future according to a prearranged formula. Swaps are series of forward contracts. Swaps help market participants manage risk associated with volatile interest rates, currency exchange rates and commodity prices.

Market Participants

There are broadly three types of participants in the derivatives market - hedgers, traders (also called speculators) and arbitrageurs. An individual may play different roles in different market circumstances.

  • Hedgers

They face risk associated with the prices of underlying assets and use derivatives to reduce their risk. Corporations, investing institutions and banks all use derivative products to hedge or reduce their exposures to market variables such as interest rates, share values, bond prices, currency exchange rates and commodity prices.

  • Speculators

They try to predict the future movements in prices of underlying assets and based on the view, take positions in derivative contracts. Derivatives are preferred over underlying asset for speculation purpose, as they offer leverage, are less expensive (cost of transaction is generally lower than that of the underlying) and are faster to execute in size (high volumes market).

  • Arbitrageurs

Arbitrage is a deal that produces profit by exploiting a price difference in a product in two different markets. Arbitrage originates when a trader purchases an asset cheaply in one location and simultaneously arranges to sell it at a higher price in another location. Such opportunities are unlikely to persist for very long, since arbitrageurs would rush in to these transactions, thus closing the price gap at different locations. 

Types of Derivatives Market

In the modern world, there is a huge variety of derivative products available. They are either traded on organized exchanges (called exchange traded derivatives) or agreed directly between the contracting counterparties over the telephone or through electronic media (called Over-the-counter (OTC) derivatives). Few complex products are constructed on simple building blocks like forwards, futures, options and swaps to cater to the specific requirements of customers. Over-the-counter market is not a physical marketplace but a collection of broker-dealers scattered across the country. Main idea of the market is more a way of doing business than a place. Buying and selling of contracts is matched through negotiated bidding process over a network of telephone or electronic media that link thousands of intermediaries. OTC derivative markets have witnessed a substantial growth over the past few years, very much contributed by the recent developments in information technology. The OTC derivative markets have banks, financial institutions and sophisticated market participants like hedge funds, corporations and high net-worth individuals. OTC derivative market is less regulated market because these transactions occur in private among qualified counterparties, who are supposed to be capable enough to take care of themselves. The OTC derivatives markets – transactions among the dealing counterparties, have following features compared to exchange traded derivatives:

  • Contracts are tailor made to fit in the specific requirements of dealing counterparties.
  • The management of counter-party (credit) risk is decentralized and located within individual institutions.
  • There are no formal centralized limits on individual positions, leverage, or margining.
  • There are no formal rules or mechanisms for risk management to ensure market stability and integrity, and for safeguarding the collective interest of market participants.
  • Transactions are private with little or no disclosure to the entire market.

On the contrary, exchange-traded contracts are standardized, traded on organized exchanges with prices determined by the interaction of buyers and sellers through anonymous auction platform. A clearing house/ clearing corporation, guarantees contract performance (settlement of transactions).

Significance of Derivatives

Like other segments of Financial Market, Derivatives Market serves following specific functions:

  • Derivatives market helps in improving price discovery based on actual valuations and expectations.
  • Derivatives market helps in transfer of various risks from those who are exposed to risk but have low risk appetite to participants with high risk appetite. For example hedgers want to give away the risk where as traders are willing to take risk.
  • Derivatives market helps shift of speculative trades from unorganized market to organized market. Risk management mechanism and surveillance of activities of various participants in organized space provide stability to the financial system.

Various risk faced by the participants in Derivatives

Market Participants must understand that derivatives, being leveraged instruments, have risks like counterparty risk (default by counterparty), price risk (loss on position because of price move), liquidity risk (inability to exit from a position), legal or regulatory risk (enforceability of contracts), operational risk (fraud, inadequate documentation, improper execution, etc.) and may not be an appropriate avenue for someone of limited resources, trading experience and low risk tolerance. A market participant should therefore carefully consider whether such trading is suitable for him/her based on these parameters. Market participants, who trade in derivatives are advised to carefully read the Model Risk Disclosure Document, given by the broker to his clients at the time of signing agreement.

Model Risk Disclosure Document is issued by the members of Exchanges and contains important information on trading in Equities and F&O Segments of exchanges. All prospective participants should read this document before trading on Capital Market/Cash Segment or F&O segment of the Exchanges.

Stock Index

Introduction to Index

Index is a statistical indicator that measures changes in the economy in general or in particular areas. In case of financial markets, an index is a portfolio of securities that represent a particular market or a portion of a market. Each Index has its own calculation methodology and usually is expressed in terms of a change from a base value. The base value might be as recent as the previous day or many years in the past. Thus, the percentage change is more important than the actual numeric value. Financial indices are created to measure price movement of stocks, bonds, T-bills and other type of financial securities. More specifically, a stock index is created to provide market participants with the information regarding average share price movement in the market. Broad indices are expected to capture the overall behavior of equity market and need to represent the return obtained by typical portfolios in the country.

Significance of Index

  • A stock index is an indicator of the performance of overall market or a particular sector.
  • It serves as a benchmark for portfolio performance - Managed portfolios, belonging either to individuals or mutual funds; use the stock index as a measure for evaluation of their performance.
  • It is used as an underlying for financial application of derivatives – Various products in OTC and exchange traded markets are based on indices as underlying asset.

Blog

Vasudhaiva Kutumbakam

The human beings follow one or other religion. More than ninety five percent of the human beings they follow the religion in which they took birth and remaining are converted into new religion either forcefully or voluntarily. From the childhood they are customized to follow the religion.  Now the q…

Read more

Start Successful Business

How to start business?

The following considerations are important:

  1. Financial

The capital investments required for the business to commence the business. Not less than sixty percent of the amount required for the capital investments must be sources out of ownership funds and not more than fort…

Read more

TradeMark

A Trademark is generally referred to as a “brand” or “logo”.

A Trademark can be a word, symbol, logo, brand name, wrapper, packaging labels, tagline or a combination of these and are used by manufacturers or merchants or service providers to identify their own goods and/or services. It is…

Read more

Stock Market

WHAT IS STOCK MARKET?

There are different categories of trading in stock market.

1. The delivery based trading in stocks. This is long term investment plan of investors to hold stock long to medium term. Many people make money on this way of investments. Investors make the investments hold it for …

Read more

Indian Derivatives Market

As the initial step towards introduction of derivatives trading in India, SEBI set up a 24–member committee under the Chairmanship of Dr L C Gupta on November 18, 1996 to develop appropriate regulatory framework for derivatives trading in India. The committee submitted its report on March 17, 1998 r…

Read more

Stock Index

Introduction to Index

Index is a statistical indicator that measures changes in the economy in general or in particular areas. In case of financial markets, an index is a portfolio of securities that represent a particular market or a portion of a market. Each Index has its own calculation methodol…

Read more