- More news/rumors about the company.
- Manipulations by traders (specially in small stocks). For a stock with market float of 100 Crore one can create volatility by 10 crore itself.
- Expectation from the company based on other companies in the same industry like all IT companies stock go up based on Infosys results.
- News about the promoter or related companies.
Tuesday, April 15, 2014
Monday, October 21, 2013
Portfolio tracker application helps you to keep track of your investments and helps in future decision making. There are many websites offering online portfolio tracking application and it is difficult to identify which portfolio application is most suitable for individual. Though most of the applications are similar in providing the basic functionality, there are few which try to differentiate themselves from others by providing more advanced features to its user. This blog talks about the best online portfolio tracking applications available for the Indian stock markets and how they are different from each other. This should help the user in choosing the portfolio tracker that best suits his need.
I would request the investors to share their views on the portfolio tracker applications available in the Indian Stock Market.
Please note your comment is valuable, because your experience will help a lot of other investors in choosing the right portfolio tracking application. It would also help the portfolio trackers to improve their service.
I have following portfolio trackers in my list:-
- Compares portfolio performance with Index for different time frame.
- Individual stocks and funds against benchmark indices.
- Allows portfolio for stocks, mutual fund, ULIP, bullion, fixed income,loans, property, other assets and debt.
- It calculates Capital gains and tax status for current year as well as past years.
- Displays the financial snapshot & latest quarterly results of stocks in your portfolio along with the growth in sales and net profit.
- Automatic calculation & email alert on triggered corporate actions such as bonuses, splits and dividends
- Portfolio v/s benchmark performance over a period.
- Shows monthly performance of the the Portfolio and compares it with Nifty performance.
- Realized/Unrealized profit/loss summary for current as well as past years.
- Short/long term capital gains tax summary.
- Share portfolio with others in read only mode.
- Receive weekly & monthly performance report over email.
- Yearly and monthly dividend summary.
- Displays transaction history on stock price chart as well as in tabular form.
- Allows more than one portfolio for a user
- Track investments capital gains tax, profit/loss, dividend income & corporate actions transactions.
- Allows user to set custom alerts.
- User can get the latest update news on portfolio.
- Allows portfolio for stocks, mutual fund, real estate, gold, silver & fixed income transactions.
- It displays portfolio performance against benchmark on daily basis of current week.
- It provides consolidated view of all stocks and mutual fund transactions all in one place.
- Easily create and manage multiple independent portfolios but get a unified view.
- It provides consolidated view of stocks, mutual fund, ULIP & bullion transactions.
- Flexible alert system that notifies you when your stock/mutual funds values reach preset limits.
- It provides information & calculate the total short term capital gain tax liability.
- It tracks stocks and mutual funds transactions.
- User can create multiple portfolio using a single account.
- It provides quick investment summary & easy to understand reports on performance of your investments.
- User can add stocks, mutual fund, insurance, deposits, bonds, forex, real estate & deposits transactions.
- User can track their investments short/long term capital gains tax, profit/loss, dividend income.
- It allows user to add stocks & mutual fund transactions.
- It provides reports & charts that enable user to make smarter investing decisions.
- User can set email alerts for both his equity and mutual fund portfolios.
- It is a paid service.
Wednesday, October 9, 2013
Stock EvaluationMany investors are looking for feature to verify their stock selection to know if it is safe and will be able to create wealth for them. Investors are also looking for this feature before taking position in new stock.
Many websites provide this feature in different ways, some provide a score to a company and some compare the stock performance against Index, some provide the alternative stocks within its industry. Below is the summary of available options on various portfolio websites.
It lets you compares one stock from your holding to a Indexes at a time and you will get in Idea if the stock performed better then Index
Their XRay feature provides you the view of a stock and give you an idea if stock is strong enough for long term holding. Stock X-ray is based on its financial performance.
Monday, September 30, 2013
Human beings have developed numerous ways to evaluate different aspect of life. Like school grades in childhood, manager’s appraisal in jobs, return on equity for shareholders, etc. You name the aspect, I bet there will be a measure associated to evaluate it.
Portfolio return is one such measure or ‘the’ most important measure, to measure a portfolio’s performance. It measures the performance of portfolio manager, or yours if you happen to manage the portfolio by yourself.
Among the many available variant for portfolio return below three are most commonly used variants
- Simple Rate of Return (SRR)
- Money Weighted Return (MWR)
- Time Weighted Return (TWR)
Let us understand the difference between these three measures:-
Simple Rate of Return - As the name implies it is the most simple way to calculate portfolio return. It is simply return of the current holdings in the portfolio. But unfortunately it is not correct measure of the portfolio return as it does not take into account the performance of past holdings in the portfolio. Most brokerages only provide the return of the current holdings in the portfolio which is not the true return of the portfolio.
Money Weighted Return – MWR or IRR (Internal Rate of Return) takes into account the portfolio cash flows for return calculation. It is the return which equates the external cash flows and the ending value of the portfolio with the initial investment made into the portfolio. However, this return is affected by the size and the timing of the cash flows and is not the recommended way for measuring portfolio’s return.
Time Weighted Return - TWR is considered to be the true measure of the portfolio return. It calculates the portfolio return after eliminating the impact of cash flows from the portfolio. TWR actually measures the performance of the underlying assets in the portfolio. TWR is recommended by the Global Investment Performance Standard (GIPS) for measuring portfolio’s performance. This return can be used for goal setting and comparing the performance of the portfolio with different benchmarks.
Basic fundamental behind TWR calculation is to break down the holding period into smaller periods such that each period’s start date and end date correspond to any cash flow that occurred in the portfolio. Then the return for each sub period is calculated by eliminating the effect of cash flow from the portfolio’s ending value for that period. After that the returns of each sub periods are multiplied to come up with the true holding period return for the portfolio.
Lets try to understand TWR calculation using a sample portfolio.
Step 1. Lets start by adding some transactions in the portfolio
Table 1. Transaction Table
Step 2. Now using above transactions we will create the portfolio valuation table.
Create portfolio valuation for each date on which there was a transaction in the portfolio.
Table 2. Valuation Table
|Date||Beginning Value||Buy||Sell||Ending Value|
Note - For simplicity I have assumed same beginning and ending price on any given day
Sample Calculation –
Beginning Value on 14-Apr = Portfolio holdings at the beginning of 14th Apr * Price
= 10 (Stock A) * 120 (Price of A) = 1200
Ending Value on 14-Apr = Portfolio holdings at the end of 14th Apr * Price
= 5 (Stock A) * 120 (Price of A) + 20 (Stock B * 200) = 4600
Step 3. Calculate return for sub periods by eliminating the effect of cash flows
Table 3. Sub Period Return
|Period||Beginning Value (Last period’s Ending Value)||Adjusted Ending Value (Ending Value + Sell – Buy)||Return (Using Adjusted Ending Value and Beginning Value)|
|10-Jan to 14-Apr||1000||1200||20|
|14-Apr to 31-Jul||4600||3700||-20|
Step 4. Compute total time weighted return by multiplying sub period holding period returns
|TWR = (1 + .2) * (1 – .2) – 1 = – 4%|
So the total time weighted return for portfolio comes out to be – 4%
Annualized Return – We can apply the above approach to calculate the annualized return for the portfolio as well. For e.g lets say the TWR for a portfolio with holding period of 3 years comes out to be 40%. Then we can use the compounding return formula to calculate the annualized return. Therefore, if ‘r’ is the annualized return for each year, then
((1 + r) ^ 3 – 1) = 40
therefore, r = 12% approximately
In next post I will show how we can further improve portfolio return by daily valuing the portfolio. This would also help in measuring the volatility of the portfolio and thus help in comparing the performance of the portfolio with the benchmark as well as other portfolios.
Tuesday, September 17, 2013
What is Capital Gains Tax?
Capital Gains tax is the tax that an investor has to pay on the income earned from his investments in a given financial year. These include income from selling stocks, mutual funds, bonds etc.
There are two categories of capital gains:-
- Short Term Capital Gains - Gains earned from securities that were held for less than a year
- Long Term Capital Gains - Gains earned from securities that were held for a year or more.
Capital Gains Tax Structure
Following table summarizes the current capital gains tax structure:-
|Direct Equity||Mutual Funds|
|Short Term||Long Term||Short Term||Long Term||Short Term||Long Term|
|15.45% = 15% + 3%*||Nil||15.45% = 15% + 3%*||Nil||Applicable Income Tax Slab + 3%*||10.30% (Without Indexation) = 10% + 3%*|
20.60% (With Indexation) = 20% + 3%*
* = Education Cess
Indexation helps in reducing the tax liability by taking into account the effect of inflation on the purchase price of a security.
Dividend Distribution Tax
Apart from Capital Gains tax there is tax implication on the dividend earned on held securities. Following table summarizes the dividend distribution tax:-
|Direct Equity||Mutual Fund|
|Equity||Debt Schemes||Money Market and Liquid Schemes|
|Nil||Nil||13.519% = 12.5% + 5%** + 3%*||27.0375% = 25% + 5%** + 3%*|
* = Education Cess, ** = Surcharge
Capital Gains Tax Computation
Capital Gains Tax Computation is three step process.
1. Determining the holding period for the security
First step in calculating the capital gains tax is to determine the duration for which the security was held before it was sold. This is simple if there was only one buy and one sell transaction in a security. In this case it would simply be the difference between sell and buy dates. But when there are multiple buy and sell transactions in the same security then the principle of First In First Out (FIFO) has to be applied.
Lets try to understand using the following diagram
In the diagram above, there were three buy transactions and two sell transactions. First sell transaction occurred on 15-Jan-13. Shares sold under this transaction would be adjusted against shares bought on 15-Feb-12. Since the holding period for these shares was 11 months therefore, it would be considered as short term capital gain. Second sell transaction of 100 shares happened on 15-Mar-13. Now first 50 shares out of the 100 would be adjusted against 50 shares bought on 15-Feb-12. Since holding period for these was 13 months, therefore, it would be considered as long term capital gain. Second 50 would be adjusted against 50 shares bought on 10-May-12. Since holding period for these was 10 months, therefore, they would be considered as short term capital gains.
2. Computing the Capital Gains
After computing holding periods for all the security transactions we would compute the capital gains earned for each of the transaction. Following table summarizes the capital gains earned in the example above.
|Sell Transaction Date||Corresponding Buy Transaction Date||Holding Period||Capital Gain Type||Capital Gain|
|15-Jan-2013||15-Feb-12||11 Months||Short||50 * 350 – 50 * 200 = 7500|
|15-Mar-2013||15-Feb-12||13 Months||Long||50 * 400 – 50 * 200 = 10000|
|15-Jan-2013||10-May-2012||10 Months||Short||50 * 400 – 50 * 250 = 7500|
3. Computing Tax Liability
|Financial Year||Capital Gain Type||Capital Gain||Tax Liability|
|2012-13||Short||7500 + 7500 = 15000||15000 * 0.15 = 2250|
Same procedure can be applied for all the instruments held in the portfolio to determine the capital gain type and the actual capital gain tax for the overall portfolio.
I hope this would help the investors in clarifying the tax calculations for their portfolio.
Tuesday, September 3, 2013
|Corporate Action Adjustment (Splits/Bonus/Dividend)||Automatic||Automatic||Automatic||Automatic||No||No|
|Securities/Assets Handled||Stocks |
|Transactions Handled||Buy |
|Tax Calculation (Long/Short Term Capital Gains)||Yes||Yes||Yes||Yes||No||No|
|Bulk Upload/Import Transactions||Yes||Yes||Yes||No||No||No|
|Realized/Unrealized Profit/Loss Summary||Yes||Yes||Yes||Yes||Yes||No|
|Email Alerts on Triggered (Bonus/Dividends/Splits)||No||Yes||No||No||No||No|
|Alerts (News/Price Targets)||Yes||No||Yes||Yes||No||No|
|Email Reports (Portfolio Summary)||No||Yes (Weekly & Monthly)||Yes (Weekly)||No||No||No|
|News on stock||Yes||Yes||Yes||Yes||No||No|
|Transactions History on Chart||No||Yes||No||No||No||No|
Following are the links to the portfolio websites:-