Investing Basics - Feel free to ask the most basic questions

(manish) #42

Cash flow follows movement of cash. After earning profits from operations the company can invest the money in purchase of fixed assets and investments and may end up having a negative net Cash flow as per your example.
But reserves and surplus will include all those fixed assets and investments where the company has invested. Hence Reserves and surplus will rise.

(Vel) #43

can i attend the AGM if i bought the shares within book closure period? Book closure period starts alteast one or two weeks before AGM. Will the company allow me to attend the AGM if i bought the share in that one or two week duration?

(Abhishek Singhvi) #44

Thanks Donald Sir for starting this wonderful thread for naive investor like us.

I have a query that How can we get details of individual shareholder from ministry of corporate affairs website. What other information we can get on that website?
I have tried to find lot many times so it would be helpful if any of u guys can please tell me the procedure to get the details.

MCA Website: What kind of Information available & Procedure for same
(Donald Francis) #45

Hi Abhishek,

This thread was prior to our starting the Investing Basics Q&A category :smile:
We realised that 1 single thread becomes a) restrictive b) very difficult to search for existing answers - track and find the right Q&A portions

So you are encouraged to start a Topic - give it a proper title with your main question (so its easy to find), categorise it under Investing Basics Q&A, and post your query
Only caveat - before you post, ask yourself - Is this is a serious query that I have been trying to find answers to for some time; will this also benefit other new learners :smile:

Yes, we actually want you to create individual query threads. The good queries will surely get appropriate responses and over time will become a rich repository. Those that aren’t will get buried anyways.


(blazing_star) #46

First I like to understand techincally What does bonus mean ? Reserves get converted to share capital? Is it just a balance sheet gimmick? how does money get converted to new shares?

Second I would like to understand impact of bonus for investor? Does it really impact wealth creation? Could the reserves put to better use?


Bonus Shares & Impact of Bonus Shares for Investor
(Donald Francis) #47

Guys & Ladies,

The Last 2 Queries posted in this thread - I have branched them off as actual question posts under the Investing Basics Q&A Category. That was for illustration purposes :smile:

  1. This thread was started before we zeroed in on Investing Basics Q&A, Company Q&A and Portfolio Q&A threads. Please DO NOT use this thread anymore. A single thread doesn’t not serve the purpose - difficult to search for and/or track already answered questions from here

  2. You are encouraged to post any & every question you have - in the appropriate Q&A section
    Do take care to use the right category so Moderator work is minimised
    a) Personal Finance Q&A - how and where to start, Compounding, Mutual Funds, etc
    b) Investing Basics Q&A -
    c) Company Q&A
    d) Portfolio Q&A

(mahesh112) #49

Hi Guys,

Can anyone put light on :

How to decide entry point and exit point in any stock.
How to calculate intrinsic value of a stock.


(mahesh112) #50


Please share tax rate on stock selling before 12 months and after 12 months.


(Ravindra Mutyala) #51

Any body please share knowledge on different ways companies rise funds.
A company can raise funds by debt or by diluting equity.
Debt is easy to understand but there are different instruments to raise funds though equity like debentures, preferential shares etc. Please explain these in detail

(csteja) #52

Where can we see delivery volumes live (during market hours). In moneycontrol, only trading volumes are available.


Some answers can be found here -->

(jstocks) #54

Hi Donald,

I am a new investor. My financial knowledge is not much and I have based my investment strategy based loosely on the CANSLIM method. So what I do is I look at the EPS, Quarterly profit, annual profit, revenue and promoter holdings of a company and if they appear good I buy the stock. I don’t do extensive research on stocks as I don’t have the knowledge nor the time for it. I just read recommendations from various websites and then decide to buy them. I buy the stock in lots. Once I buy one lot I wait for it to reach to 2% from the previous buy price. I then buy another lot and then once it reaches 2% again above the average buy price I buy another lot. I sell the stock when it goes to 20% above the average buy price or if it goes below 8% to cut losses.

Can you tell me what you think of my strategy as I don’t hold stocks for long term which is contrary to what experts here recommend? Also what is a good price to buy a stock? What I do is after briefly going through the fundamentals of the stock, I look at the 52 week high and low of the stock and if the price is below the average of two I buy it.

(The Confused Consultant) #55

CANSLIM as you pointed out a combination of fundamental filters and
technical indicators. But before that let’s understand how CANSLIM is
developed by the great William O Neil:

  1. He went through 100 years of US stock markets.
  2. Red through all charts and developed patterns (cup and handle as he
  3. Tie up the fundamentals (more basic ones like ROE and growth).
    Does this work in India? We need to test patterns here:
  4. For example our performers (price rise) doesn’t require institutional
    holding, most of them have low institution, reasonable retail holding and
    high promoter holding. I used 25 performers for five years.
  5. O Neil found once fundamental kicks price start rising. In India price
    growth is ahead of return and earnings growth. This mean price is getting
    factored before fundamentals are reported.
  6. The factor “new” or N may be tricky in India. As announcements are not
    reported with Annual report (unlike 10K in USA) ours is voluntary and un

The fun and excitement is building method what is suitable to your
understanding. Start analysing few performers from past you would get
patterns. Of course a big caution, history may not be repeated. One has to
decipher business understanding still better than un tested method in
Indian market!

(Peabody) #56

Can somebody recommend a site where in we can get Top 500 Bse/Nse Companies along with their market cap.Most of the place either it is top 100 or just the names without marketcap numbers.

(The Confused Consultant) #57

Use screener and put a query MCAP>0. You can get all companies having in a
descending order, pick your 50 or 500.

(Equityvista) #58

In calcuating Gross Profit Marginof a manufacturing company is Depreciation included in Cost of goods sold.
How it is different in case of a software of services which items are included in cost of goods sold or cost of revenue.
Can anyone please show how to calculate gross profit margin of companies ftom different industries using real example.

(saikathalder) #59

Hi, can any one please help me out, I am new in share market.
I have identified a stock, for pretty much long term investment, as long as as I see the moat of the business, strong promoters, and corruption free, good governance.
But, the stock price is consistently rising,
the last dip in price was during demonitization, after that it is consistently rising, during demonitization time, i was not watching the stock, I started from february, since 2 months only.

and from 1st february to this date, it has risen approx 33%, how shall I enter in to the stock?
shall I enter now? or shall I wait for some event like brexit/ demonitization/budget/surgical strike etc…

asking this as I am new here. thanks.

(Sarabjeet Singh) #60

I am not an expert, however I can describe my way in such situation.

Good part is your aim is very long term and for a good company.
I would say start investing in smaller chunks, of the total amount you would like to invest, till you feel stock is overvalued. If lucky you may see some market event which bring down the valuation and you can allocate a bugger chunk or else if the company keeps delivering good results then its possible for a stock to remain overvalued for a long time and in such case your multiple investment points would help average out the entry price and in long run you wont feel over paying.

(csteja) #61

Is there any thread in valuepickr which talks extensively about pharma industry basic process like drug discovery->clinical trails -> application approvals (ANDA filings) -> FDA inspections ?

If a company has filed for Para IV, I read that there is a 180 day exclusivity. The requirement for para IV approval is that filing company should not breach the innovator patent. If that is the case, shouldn’t the generic company called the second innovator of the same drug. (why is this called generic medicine/company if they doesn’t copy/breach the innovator patent)

(MHS) #62