Prosperia https://prosperia.in/ Ethical Wealth Broker Thu, 27 Jun 2024 11:57:56 +0000 en-US hourly 1 https://wordpress.org/?v=6.7 https://prosperia.in/wp-content/uploads/2024/05/Prosperia-favicon-green-150x150.png Prosperia https://prosperia.in/ 32 32 The Growing Trend of Shariah-Compliant Investing in India https://prosperia.in/the-growing-trend-of-shariah-compliant-investing-in-india/ Wed, 26 Jun 2024 12:04:17 +0000 https://prosperia.in/?p=2124 The Growing Trend of Shariah-Compliant Investing in India Introduction The Indian stock market has seen a growing interest in Ethical and Shariah-compliant investing. This trend reflects a global shift towards responsible investing, driven by a desire for financial growth that aligns with personal values. This article explores the factors contributing to this trend and its […]

The post The Growing Trend of Shariah-Compliant Investing in India appeared first on Prosperia.

]]>

The Growing Trend of Shariah-Compliant Investing in India

Introduction

The Indian stock market has seen a growing interest in Ethical and Shariah-compliant investing. This trend reflects a global shift towards responsible investing, driven by a desire for financial growth that aligns with personal values. This article explores the factors contributing to this trend and its implications for investors.

Table of Contents

What is Driving the Growth of Shariah-Compliant Investing?

  • Rising Awareness: Increased awareness about ethical investing among Muslims and other faith-based communities.
  • Financial Performance: Studies show that Shariah-compliant stocks often perform well financially, attracting a broader investor base.
  • Regulatory Support: Regulatory frameworks are evolving to support ethical investing, providing more options for investors.
  • Global Trends: The global movement towards sustainable and responsible investing is influencing the Indian market.

How Shariah-Compliant Investing Aligns with Ethical Principles?

Shariah-compliant investing goes beyond avoiding haram activities. It promotes ethical business practices, financial stability, and social responsibility. This alignment with broader ethical principles makes it appealing to a diverse group of investors.

How to Start Your Shariah-Compliant Investment Journey

  • Research: Educate yourself about Shariah-compliant investing principles.
  • Choose the Right Platform: Select a broker that specializes in ethical and Shariah-compliant stocks.
  • Diversify: Build a diversified portfolio to manage risk and maximize returns.
  • Seek Professional Advice: Consult with financial advisors who have expertise in Shariah-compliant investing.

Conclusion

The trend of Shariah-compliant investing in India is more than just a passing fad. It represents a growing recognition of the importance of aligning financial decisions with ethical and religious values. As more investors seek out these opportunities, the market for Shariah-compliant stocks is poised for significant growth.

Expert Ethical Broker

Looking to invest ethically or according to Islamic principles? Expert Ethical brokers can help. Whether you need an ethical investment broker, a halal stock broker in India, or a Shariah-compliant broker, there are specialists available. Discover how to align your investments with your values and start your journey towards ethical wealth creation today through Ethical IAP or Ethical PMS.

Visit Prosperia.in to learn more about Ethical Investment Opportunities and start your journey towards ethical wealth creation today.

The post The Growing Trend of Shariah-Compliant Investing in India appeared first on Prosperia.

]]> Understanding Shariah-Compliant Stocks in the Indian Market https://prosperia.in/understanding-shariah-compliant-stocks-in-the-indian-market/ Wed, 26 Jun 2024 11:17:45 +0000 https://prosperia.in/?p=2092 Understanding Shariah-CompliantStocks in the Indian Market Introduction Investing in the stock market can be a rewarding way to grow your wealth. However, for those who follow Islamic principles, it’s essential to ensure that investments align with Shariah law. This article will guide you through the basics of Shariah-compliant stocks in the Indian market and how […]

The post Understanding Shariah-Compliant Stocks in the Indian Market appeared first on Prosperia.

]]>

Understanding Shariah-Compliant
Stocks in the Indian Market

Introduction

Investing in the stock market can be a rewarding way to grow your wealth. However, for those who follow Islamic principles, it’s essential to ensure that investments align with Shariah law. This article will guide you through the basics of Shariah-compliant stocks in the Indian market and how you can start your  Ethical investment Journey

Table of Contents

What are Shariah-Compliant Stocks?

Shariah-compliant stocks are those that adhere to the principles of Islamic law. These principles prohibit investing in businesses involved in activities considered haram (forbidden), such as alcohol, gambling, and interest-based financial services. Additionally, companies must meet certain financial criteria to be deemed compliant, including limits on debt levels and interest income.

Key Criteria for Shariah Compliance

  • Business Activities: Companies must not engage in haram activities.
  • Debt Ratio: A company’s total debt should not exceed 33% of its total assets.
  • Interest Income: Interest-bearing investments should not make up more than 5% of total revenue.
  • Liquidity: Liquid assets should be less than 70% of total assets to avoid excessive speculative behavior.

How to Identify Shariah-Compliant Stocks in India

Several indices track Shariah-compliant stocks in the Indian market, such as the Nifty 50 Shariah Index and the S&P BSE 500 Shariah Index. These indices include companies that meet strict Shariah compliance standards. Additionally, there are financial advisors and platforms that specialize in ethical investing, making it easier for you to identify suitable stocks.

Benefits of Investing in Shariah-Compliant Stocks

  • Ethical Investment: Align your investments with your faith and values.
  • Financial Discipline: Companies that meet Shariah criteria often have strong financial health.
  • Diversification: Shariah-compliant investing can diversify your portfolio with high-quality stocks.

Challenges and Considerations

  • Limited Options: The pool of Shariah-compliant stocks is smaller compared to the overall market.
  • Continuous Monitoring: Companies’ compliance status can change, requiring regular review.
  • Market Volatility: Like all investments, Shariah-compliant stocks are subject to market risks.

Conclusion

Shariah-compliant investing offers a way to grow your wealth ethically and responsibly. By understanding the principles and criteria for Shariah-compliant stocks, you can make informed investment decisions that align with your values.

Looking to invest ethically or according to Islamic principles? Expert Ethical brokers can help. Whether you need an ethical investment broker, a halal stock broker in India, or a Shariah-compliant broker, there are specialists available. Discover how to align your investments with your values and start your journey towards ethical wealth creation today through Ethical IAP or Ethical PMS.

Visit Prosperia.in to learn more about Ethical Investment Opportunities and start your journey towards ethical wealth creation today.

Expert Ethical Broker

Looking to invest ethically or according to Islamic principles? Expert Ethical brokers can help. Whether you need an ethical investment broker, a halal stock broker in India, or a Shariah-compliant broker, there are specialists available. Discover how to align your investments with your values and start your journey towards ethical wealth creation today throughEthical IAP or Ethical PMS.

Visit Prosperia.in to learn more about Ethical Investment Opportunities and start your journey towards ethical wealth creation today.

The post Understanding Shariah-Compliant Stocks in the Indian Market appeared first on Prosperia.

]]> Requirements for Investing in the Securities Market https://prosperia.in/requirements-for-investing-in-the-securities-market/ Sat, 01 Jun 2024 04:04:05 +0000 https://prosperia.in/?p=1599 Investing in equity shares requires opening 3 accounts. Bank Account Trading Account Demat Account A trading account, also known as a broking account, is needed with a SEBI-registered stock broker from a recognized stock exchange. This account is used to buy and sell securities on the stock exchanges. To open a trading account, you must […]

The post Requirements for Investing in the Securities Market appeared first on Prosperia.

]]>

Requirements for Investing in the Securities Market

Investing in equity shares requires opening 3 accounts.

  • Bank Account
  • Trading Account
  • Demat Account

A trading account, also known as a broking account, is needed with a SEBI-registered stock broker from a recognized stock exchange. This account is used to buy and sell securities on the stock exchanges. To open a trading account, you must complete an ACCOUNT OPENING FORM and submit signed Know Your Client (KYC) documents.

Precautions for filling out the account opening form

  • When indicating your trading preferences for different exchanges, remember to sign.
  • Make sure to take note of all the charges, fees, and brokerage applicable to your accounts
  • Choose the segments you want to trade in, such as cash, F&O, Currency Derivative, or others. Trading in derivatives requires understanding derivative products.
  • If you want to access additional facilities like a Running Account facility or the execution of a Power of Attorney, you must provide specific authorization to your stock broker. This helps prevent any potential disputes in the future.
  • keep a copy of the account opening form for your records

Know Your Client (KYC) Process

When you open a Demat, Trading, or Bank Account, you have to give Know Your Client (KYC) documents. Let’s see what KYC means and why it’s important.

KYC is required by the Prevention of Money Laundering Act, 2002 and the Rules made under it. When you open a Demat, Trading, or Bank account, you need to submit Officially Valid Documents (OVDs) as proof of identity and address. These documents are part of the KYC requirements. You can prove your identity and address with documents like PAN card, UIDAI-Aadhar, Passport, Voter ID card, or Driving license.

After you submit the KYC form, you’ll get a unique KYC Identification Number (KIN) through SMS or Email. KYC is a one-time process and it’s valid for all intermediaries. You don’t need to do KYC again when you open an account with another intermediary in the securities market.

E-KYC: Investors can finish the KYC process using the e-KYC facility with UIDAI-Aadhaar or DigiLocker.

  • Fill out the account opening form online on the stock broker’s website.
  • Submit scanned images of the mandatory documents/POA (Proof of address) /
    POI(Proof of Identity).
  • Complete IPV (In Person Verification) process over video call.
  • Sign the document Digitally
  • Account Will Be Activated

Basic Services Demat Account (BSDA)

A Basic Services Demat Account is for individuals who have only one demat account (across all depositories) and the value of their holdings doesn’t exceed Rs. 2 lakhs each for non-debt securities (like equities) and debt securities at any time.

The Annual Maintenance charges (AMC) structure for BSDA is as mentioned below:

Security TypeSlabsCharges
For Non-Debt SecuritiesUp to Rs. 50,000/-No AMC
For Non-Debt SecuritiesRs. 50,001 to Rs. 2,00,000/-Up to Rs. 100/-
For Debt SecuritiesUp to Rs. 1,00,000/-No AMC
For Debt SecuritiesRs. 1,00,001 to Rs. 2,00,000/-Up to Rs. 100/-

Please check SEBI’s website or the relevant depository’s website for the latest rules. When you have a bank account, a demat account, and a trading account together, it’s often called a “3-in-1” account. You can open these three accounts separately with different brokers or institutions, or you can choose a single broker or institution that offers all three accounts together. You can find the list of SEBI registered stock brokers and depository participants on SEBI’s official website (www.sebi.gov.in) or on the websites of the respective Stock Exchanges or depositories.

Power of Attorney

Power of Attorney (PoA) is a crucial document as it grants someone else the authority to manage your accounts and finances. In the securities market, you may grant PoA to your stock broker or depository participant to operate your demat and bank accounts for share transactions and fund transfers. However, signing a PoA is optional according to SEBI guidelines. If you find it beneficial, you can sign it, and you have the right to revoke it at any time.

If your stock broker transfers shares in your account without authorization, you should immediately raise the issue with them. If you are not satisfied with their response, you can escalate the matter to the Depository/Exchange.

If you decide to execute a PoA in favor of your stock broker or depository participant, refer to the guidelines provided by SEBI, Stock Exchanges, or Depositories on their official websites.

Nomination

Nomination is a feature that allows an individual investor to appoint someone who can claim the securities held in their demat accounts or the redemption proceeds of mutual fund units in the event of the investor’s death.

The post Requirements for Investing in the Securities Market appeared first on Prosperia.

]]> Introduction to Securities Market https://prosperia.in/introduction-to-securities-market/ Sat, 01 Jun 2024 02:39:51 +0000 https://prosperia.in/?p=1530 Are you an investor looking to invest in company shares and mutual funds within the securities market? If so, you may want to familiarize yourself with the basics of investing in the securities market. This blog provides fundamental information about the securities market but is not a guide for specific investments. It does not cover […]

The post Introduction to Securities Market appeared first on Prosperia.

]]>

Introduction to Securities Market

Are you an investor looking to invest in company shares and mutual funds within the securities market?
If so, you may want to familiarize yourself with the basics of investing in the securities market. This blog provides fundamental information about the securities market but is not a guide for specific investments. It does not cover investments in entities regulated by other authorities such as the Reserve Bank of India (RBI), the Insurance Regulatory and Development Authority of India (IRDAI), the Pension Fund Regulatory and Development Authority (PFRDA), or the Ministry of Corporate Affairs (MCA).

Framework for Regulating Securities Markets

The regulation of buying, selling, and trading in securities—such as company shares, mutual fund units, derivatives, and operations on stock exchanges, commodity derivative exchanges, and depositories—falls under the jurisdiction of the Securities and Exchange Board of India (SEBI). Established on April 12, 1992, SEBI operates under the SEBI Act, 1992, along with various SEBI regulations, circulars, guidelines, and directives. SEBI’s primary mission is to safeguard investors’ interests, foster the development of the securities market, and ensure its proper regulation.

Currently, four key pieces of legislation govern the securities market:

  1. The SEBI Act, 1992: Grants SEBI statutory authority to (i) protect investors’ interests, (ii) promote market development, and (iii) regulate the securities market.
  2. The Companies Act, 2013: Governs the issuance, allotment, and transfer of securities and related public issue matters.
  3. The Securities Contracts (Regulation) Act, 1956: Provides for the recognition and regulation of securities transactions on stock exchanges.
  4. The Depositories Act, 1996: Facilitates the electronic maintenance and transfer of ownership of dematerialized (demat) shares.

What exactly are securities and the securities market?

A. Equity shares, commonly known as shares, represent ownership stakes in a company. Investors who purchase shares become shareholders and are entitled to corporate benefits such as dividends from the company’s profits. Shareholders also have voting rights in the decision-making processes of the company during general meetings.

B. Debt securities signify funds borrowed by a company or institution from investors, which must be repaid. They are often referred to as debentures or bonds. Investors in debt securities receive interest payments and the repayment of the principal amount invested. These securities have a fixed term, at the end of which they can be redeemed by the issuer. Debt securities can be either secured, backed by collateral, or unsecured.

C. Derivatives are financial instruments whose value is derived from the value of another asset, such as shares, debt securities, or commodities. The primary types of exchange-traded derivatives are futures and options.

D. Mutual funds are investment vehicles consisting of pooled money from multiple investors. These funds invest in various securities like shares, bonds, money market instruments, and other assets.

The market serves as a platform where companies can raise capital by issuing securities such as equity shares and debt securities to investors, and where investors can buy or sell various securities. Once securities are issued to the public, companies are required to list them on recognized stock exchanges. The securities market is an integral part of the capital market.

The primary function of the securities market is to facilitate the allocation of savings from investors to entities in need of funds. This process occurs when investors invest in securities of companies or entities requiring capital. Investors receive benefits such as interest, dividends, capital appreciation, and bonus shares. Such investments contribute to the economic development of the country.

Primary Market and Secondary Market

The Primary Market, also known as the new issues market, is where companies and institutions raise capital by issuing new securities, such as shares, debentures, and bonds, to the public. There are two primary types of issuers in the Primary Market:

  1. Corporate Entities (companies): These entities issue equity instruments (shares) and debt instruments (bonds, debentures, etc.).
  2. Government (Central and State): Governments issue debt securities, including dated securities and treasury bills.

Types of Issues in the Primary Market:

Public Issue:

1. Initial Public Offer (IPO): An IPO is the first public offering of shares by a company. It can take several forms:

Securities are issued to the general public, allowing anyone to subscribe to them. Public issue of equity shares can be Fresh Issue of shares, Offer for Sale, Follow on Public Offer (FPO)

In the Fresh Issue of shares, new shares are issued by the company to public investors. In this type of issue, the funds invested by investors go directly to the company, to be utilized for the intended purpose of the issue.

In an Offer for Sale, existing shareholders like promoters, financial institutions, or other individuals offer their holdings to the public. In this scenario, the funds invested by investors go to the sellers of the shares, rather than to the company.

Follow-on Public Offer (FPO) is conducted by a company that has previously completed an IPO and is now issuing additional securities to the public.

2. Preferential Issue: In this method of issuance, securities are allocated to specific groups of investors, such as promoters, strategic investors, employees, and other identified parties.

3. Rights Issue: A rights issue occurs when a company offers its current shareholders the opportunity to purchase additional shares, typically in proportion to their existing holdings.

4. Bonus Issue: A bonus issue refers to the issuance of additional shares to existing shareholders, distributed proportionally to their current holdings, without any extra cost.

To raise capital from the public, companies must submit an offer document to SEBI, known as the draft red herring prospectus or draft prospectus. This document includes the company’s history, promoter details, business model, financial history, risks, purpose of fundraising, terms of issue, and other relevant information to help investors make informed decisions. Securities issued in the primary market are listed on recognized stock exchanges within six working days of the issue’s closure. Once listed, shares are traded on these exchanges.

Shares allocated by the company are credited to investors’ Demat accounts held with a depository via a SEBI-registered Depository Participant (DP). Investors can sell shares on stock exchanges through a SEBI-registered stockbroker and receive funds.

In the secondary market, securities issued in the primary market are listed on stock exchanges, allowing investors to buy or sell them. Stock exchanges typically comprise a Cash Market segment and a Derivatives Market segment.

 

Who are the Market Infrastructure Institutions and Market Intermediaries within the securities market?

Market Infrastructure Institutions: The infrastructure that facilitates transactions in the securities market, such as issuing, purchasing, and selling securities, is provided by Stock Exchanges, Depositories, and Clearing Corporations. These are collectively known as Market Infrastructure Institutions (MIIs). A list of SEBI-registered market infrastructure institutions can be found at this link: SEBI Intermediaries.

Stock Exchanges: Stock Exchanges offer a nationwide computerized trading platform that enables the buying and selling of securities through registered stock brokers at market-determined prices in a fair manner. The list of SEBI-recognized stock exchanges in India is available at this link: SEBI Stock Exchanges. Major nationwide stock exchanges include BSE Limited (BSE), National Stock Exchange of India Limited (NSE), and Metropolitan Stock Exchange of India Limited (MSE).

Clearing Corporations: Clearing Corporations play a crucial role in guaranteeing the settlement of trades executed on Stock Exchanges. They ensure that every buyer receives the securities they purchased and every seller receives the money for the securities they sold.

Depositories: Depositories are institutions that hold investors’ securities in dematerialized (electronic) form and provide demat services through their Depository Participants (DPs). In India, there are two depositories: National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL). Each depository has registered DPs (similar to bank branches) that offer various services to investors, such as opening and maintaining Demat accounts, and the dematerialization of shares.

Market Intermediaries: Market Intermediaries play a vital role in the smooth functioning of both primary and secondary markets. They facilitate the execution of buy and sell orders, deal in securities, and provide relevant trading information. Key intermediaries include stock brokers, depository participants, merchant bankers, share and transfer agents, and registrars. All intermediaries are registered with SEBI and must adhere to prescribed norms to protect investors. A list of SEBI-recognized market intermediaries can be accessed at this link: SEBI Market Intermediaries.

The post Introduction to Securities Market appeared first on Prosperia.

]]> Investment Risks in Stock Market https://prosperia.in/investment-risks-in-stock-market/ Fri, 31 May 2024 11:09:29 +0000 https://prosperia.in/?p=1569 Before you start investing in the securities market, it’s crucial to understand and identify your investment goals, objectives, and risk appetite (the level of risk you are willing to take). Every investment decision should align with your personal needs and preferences. For example, consider whether you prefer safe investments that offer steady returns or if […]

The post Investment Risks in Stock Market appeared first on Prosperia.

]]>

Investment Risks in Stock Market

Before you start investing in the securities market, it’s crucial to understand and identify your investment goals, objectives, and risk appetite (the level of risk you are willing to take). Every investment decision should align with your personal needs and preferences. For example, consider whether you prefer safe investments that offer steady returns or if you’re willing to take on higher risk for the potential of higher returns. Each investment carries the risk of changes in its inherent value. For instance, investing in shares of the automobile industry involves risks associated with that sector, such as fluctuations in sales or the varying popularity of different car brands.

Once you have defined your goals and assessed your risk appetite, decide on the amount you want to invest and the time period for your investment. Risk tolerance varies among investors and can depend on individual goals and age.

Investors should be well informed about their rights, responsibilities, and the Do’s and Don’ts of investing.

Before investing in a company’s shares, investors should make informed decisions by thoroughly reviewing all relevant information about the company, such as disclosures about the company, its promoters, project details, and financial information. These details are available on the stock exchanges’ websites.

Investors can also seek guidance from SEBI-registered Investment Advisers. A list of these advisers can be found at the following link: SEBI Investment Advisers.

Key Risks in Investing in Securities Market

  • Market risk or Systematic Risk: It denotes the risk encountered by investments stemming from factors that influence the collective performance of securities and the broader economy of the nation.
  • Unsystematic Risk: Unsystematic risk, also known as company-specific or industry-specific risk, is the risk associated with a particular company or industry.
  • Inflation risk: Inflation risk, often referred to as purchasing power risk, is the possibility that the future cash flows from an investment may diminish in value due to a decrease in their purchasing power caused by inflation.
  • Liquidity risk:  Liquidity risk occurs when an investment cannot be swiftly bought or sold.
  • Business Risk: It denotes the risk that a company’s business operations could be impacted or halted due to unfavorable operational, market, or financial circumstances.
  • Volatility Risk: Volatility risk emerges from the potential for fluctuations in a company’s stock prices over time.
  • Currency Risk: It denotes the risk of potential losses resulting from fluctuating foreign exchange rates that investors may encounter when they have invested in foreign currency or made investments traded in foreign currency.

How to Mitigate the Risk?

Investors can endeavor to reduce risk through various methods. Asset allocation stands out as a strategy whereby investors can mitigate risk by diversifying their investments across different companies and asset classes.

The post Investment Risks in Stock Market appeared first on Prosperia.

]]>