Category: Concepts

The Nifty Midcap 50 in a Stock Market Index designed to capture the movement of the top 50 most liquid ‘Midcap’ stocks listed in the National Stock Exchange (NSE). It is a Broad Market Index representing the various sectors of the economy. The following is the sectoral representation of the Midcap 50 Index as of November,…

Open Interest is the term which defines the number of outstanding contracts in the Futures & Options (F&O) segment as at the end of a particular day. Outstanding contracts are those unexpired contracts that are yet to be exercised.  How to Calculate Open Interest. Note that for any new contract to be initiated in the F&O…

Open Market Operations or OMO refers to one of the activities undertaken by the Reserve Bank of India to control the amount of liquidity in the economy.  Open Market Operations consists of the sale/purchase of Government Securities to/from the market by the Reserve Bank of India with an objective to control the amount of liquidity…

A call option is a derivative contract that gives you the right but not the obligation to buy (go long) a specified quantity of a security (a.k.a the underlying) at a pre-determined price on or before the contract expiry date.  The pre-determined price at which the call option can be exercised is known as the…

A put option is a derivative contract that gives you the right but not the obligation to sell (i.e short sell) a specified quantity of a security (a.k.a the underlying) at a pre-determined price on or before the contract expiry date.  The pre-determined price at which the call option can be exercised is known as…

Option contracts or simply ‘options’ are derivative contracts that give you the option (a right but not an obligation) to buy/sell a particular security or a ‘lot’ of securities at a predetermined price.  Options come with an expiry date on/before which they need to be exercised.  Option contracts are standardised products and hence the securities…

The Reserve Bank of India (RBI) uses instruments like the Cash Reserve Ratio (CRR) and the Statutory Liquidity Ratio (SLR) to regulate the availability, cost and use of money and credit as a part of its Monetary Policy. 1. Cash Reserve Ratio (CRR):  The CRR or the Cash Reserve Ratio is percentage or share of…

Ever wondered why the market price of a bond fluctuates from time to time?  Bonds are generally issued with a fixed interest rate known as the coupon rate. While this coupon rate is fixed, interest rates in general are not. They keep moving up and down. It is this movement in interest rates that influences…

Annuity Bonds, also known as self liquidating bonds, are bonds that pay out a fixed sum every year till maturity. This fixed payout incorporates both the interest payment and the principal repayment. The principal repayment is not made in lump-sum but throughout the tenure of the bond. So for example, if you invest 100,000 in…

In this article we look at the history and the different phases of development of Insurance Industry in India. Insurance Industry in India has come a long way since the Oriental Insurance Company first began operating in India – way back in the year 1818. The Government of India now allows upto 49% Foreign Direct…

A Mutual Fund is a professionally managed investment fund that pools money from various investors and invests them in a portfolio of securities in order to generate returns for its investors. Based on their contribution, investors are allocated ‘shares’ in the fund known as ‘units’. The portfolio of securities generally consists of stocks, bonds, money…

Onerous Contract is a contract in which the costs of meeting the obligations under the contract exceeds the economic benefits that are expected to be received from it.  A Contract, which can be cancelled without paying compensation to the other party, involves no performance obligation and hence can never be an onerous contract. The following…