Safe Haven Investment in Trouble Times

Commodity prices will likely rise again once the world economy starts growing and we suggest you to invest some of your money in commodities. It is must for you to be mastered before you begin trading because futures trading involve complications like margins and mark-to-market. Investing in commodity futures is not suited for an investor who is new or inexperienced.

Another option for you is to buy gold directly or through gold exchange traded funds (ETFs). Investors used to buy gold in a troubled economy because it is perceived as a safe investment. But gold may give only average returns whenever economy recovers.

Perhaps the best way to invest in commodities is through a commodity based mutual fund. Here the investment is in the companies that are related to commodity business – e.g. metals, oil, gas and more. The prices of commodities increase the profits of these companies and their share prices will also rise. Thus it is relatively safe and diversified way where an investor is indirectly investing in commodities. Following are some advantages of investing through mutual funds rather than directly through individual commodity based stocks:

1.       Diversification– You are exposed to a wide range of companies in different commodities.

2.       Relying on Expertise of Funds – This is for the analysis of demand and supply conditions in several commodity markets to determine which have the greatest potential upside.

The safest and most convenient way of investing in commodities for the average investor is “Commodity-based Mutual Funds”.

Founded in 2005, ABans Group has grown from being a trading house to a dynamic and diversified business group. We provide expertise in Broking Services, Merchant Banking, Non-Banking Financial Dealings, Gold Refining and Realty and Infrastructure. In a nut shell AbansGroup is a comprehensive Financial Services and Solution Provider, which aims to provide an end-to-end financial solution to all its clients.

Gold – A Strategic Asset

Gold is one of the oldest asset known to mankind. The price of Gold is derived by the quantum of demand for the lustrous metal. T In market downturns, Gold has always acted as a portfolio hedge and the recent pullback was no exception. The longer corrections or wider corrections in the market improves the effectiveness of Gold. Gold as a Commodity has shown that it is the only secure refuge for investors in years 2008, 2011 and 2015. As per your risk profile, the allocation of your portfolio to gold may be around 5% to 10% and this is possible through a variety of instruments such as gold equity funds, sovereign gold bonds, gold exchange-traded funds etc. As a safe haven, gold typically benefits from the flight of quality flows. Gold has the widespread acceptance and Indian households hold one of the highest quantities of gold in the world.

There are four advantages of Gold in any investor portfolio:

1.       Delivers positive long term returns.

2.       Improves Diversification.

3.       Especially in downturns, it provides much needed liquidity.

4.       Enhances portfolio performance through higher risk adjusted returns.

Gold is better than treasuries and stocks because it has gained over four percent in less than three months (year to date). Gold has been the best-performing asset classes year-to-date. Investors can actually enjoy price appreciation and fixed interest rates if they buy Sovereign Gold Bonds (SGBs). The transaction cost for gold ETFs is comparatively low but unlike gold bonds, gold ETFs cannot be used as collateral for loans. Gold deserves a rightful place in the portfolio of any investor.

Founded in 2005, ABans Group has grown from being a trading house to a dynamic and diversified business group. We provide expertise in Broking Services, Merchant Banking, Non-Banking Financial Dealings, Gold Refining and Realty and Infrastructure. In a nut shell Abans Group is a comprehensive Financial Services and Solution Provider, which aims to provide an end-to-end financial solution to all its clients.

ABans Commodity India Pvt Ltd (ACIPL), Founded by Mr. Abhishek Bansal is a SEBI registered Co, ABans Group of Companies, Comprises of companies having businesses like commodity trading, futures trading, gold futures and futures market, operating on platforms like BSEL, MCX, NSEL and more, which constitute the Indian share market.

Abhishek Bansal NSEL

SEBI the Regulator for Commodity Exchanges, Spot Exchanges, and the prominence of NSEL

In today’s demanding world it is very necessary for a financial service conglomerate to have an overall portfolio of services. Today’s Investor is not just investing in the traditional mediums like gold, stocks and FD’s but has expanded his portfolio to trade in Commodities &  also currency. 

There are various ways to trade in these markets like Futures trading, Forwards trading and also trading in spot.

In India the regulator SEBI, has authorized commodity Exchanges to trade in Futures and Forwards. The prominent commodity exchanges are MCX , NCDEX. For spot trading the exchanges have set up specialized spot trading entities. The most prominent amongst the spots exchanges in India are National Spot Exchange Limited, NSEL and NCDEX Spot. NSEL and NCDEX Spot compete with each other to again share of the Spot trading market. NSEL is having an overall spread in the Spot markets while NCDEX is focused towards agricultural commodities.

Commodity Trading drives interest from the investors and traders based on the type of commodity:

Precious commodities: Gold commodity trading, Gold Futures, Silver commodity trading etc are a subset of Precious metals commodity basket.

Base Metal Commodities: Trading in metals like Iron, Copper, Nickel, Aluminum, and Zinc are part of Base metal commodity basket.

Agricultural commodity Trading: All Commodity Trading in farm produce of agricultural goods are from the agricultural commodity basket.

Energy commodities: All commodity contracts which are based on on crude oil, heating oil, natural gas and gasoline are Energy Commodities.

SEBI is one of the most dynamic market regulators that the Futures trading market has seen, SEBI is always very agile and vigilant for keeping the market healthy and Scam free and introduces regulations and methods that can develop and grow the market.

Commodity Trading Companies are companies that deal with commodities market. Nowadays, many of these companies are offering traders with several attractive benefits. ABans Commodity (I) Pvt ltd , ACIPL as a commodity trading company relays on latest technology, market research, Information and Innovative trading techniques to keep its customers updated with latest strategies to invest in the market.

ACIPL is the flagship company of ABans Group of companies , which was founded by Mr Abhishek Bansal, Founded in 2005, ABans Group has grown from being a trading house to a dynamic and diversified business group. We provide expertise in Broking Services, Merchant Banking, Non-Banking Financial Dealings, Gold Refining and Realty and Infrastructure. In a nut shell Abans Group is a comprehensive Financial Services and Solution Provider, which aims to provide an end-to-end financial solution to all its clients.

Voluntary Disclosure: ABans Commodity India Pvt Ltd (ACIPL), Founded by Mr. Abhishek Bansal is a SEBI registered Co, ABans Group of Companies, Comprises of companies having businesses like commodity trading, futures trading, gold futures and futures market, operating on platforms like BSEL, MCX, NSEL and more, which constitute the Indian share market.

Abhishek Bansal Awarded as the Most Enterprising Leader of the Year

We at ABans Group truly believe that excellence is, “potential chiseled into a more perfect state through vision, dedication and determination”.

Abhishek Bansal, the Chairman of ABans Group of Companies was presented with the Most Enterprising Leader of the year (Stock Broking and Commodity) in an astounding Award ceremony held at the Ramada Plaza Palm Grove in Mumbai.Looking at few of the awardees in other category it really feels as a matter of pride for ABans Group that it’s Chairman Mr. Abhishek Bansal having shared stage with some imminent achievers.

ABans Group comprises the following companies:

1.       ABans Broking Services Pvt. Ltd. – ABSPL Company is now ISO 9001:2015 Certified and is the SEBI regulated entity authorized to conduct dealing in Indian Commodities segment.

2.       ABans Commodities (India) Pvt. Ltd. – ACIPL is a registered Self clearing member of MCX (Multi Commodity Exchange of India Ltd.) and provides you commodity brokerage services to harness the immense potential of commodities market.

3.       ABans Securities Pvt. Ltd. – This private limited company incorporated in 2007 under Companies Act, 1956, has its registered office in the financial hub of India – Mumbai.

4.       ABans Jewels Pvt. Ltd. – The manufacturing unit of ABans Jewels Pvt. Ltd. is located in the prime business district of Lower Parel, Mumbai and it has a dedicated customer base of domestic as well as international clients.

5.       ABans Finance Pvt. Ltd. – AFPL, an NBFC is registered with the RBI in the category of non-acceptance of public deposits vide dated 12^th August 2013 and is engaged in advisory services.

6.       ABans Realty & Infrastructure Pvt. Ltd.– Providesreal estate and infrastructure development services in India.

7.       ABans Agri Warehousing & Logistics Pvt. Ltd. – A private limited company incorporated in 2014 under the Companies Act, 2013 provides warehousing, collateral and risk management services.

Founded in 2005, ABans Group has grown from being a trading house to a dynamic and diversified business group. We provide expertise in Broking Services, Merchant Banking, Non-Banking Financial Dealings, Gold Refining and Realty and Infrastructure. In a nut shell Abans Group is a comprehensive Financial Services and Solution Provider, which aims to provide an end-to-end financial solution to all its clients.

Money Management Guidelines

It is always hard for traders to know where to begin with respect to several money management strategies. There are traders who do not know the working of strategy with the other aspects of their trading and thus they choose a strategy at random. Before selecting a trading strategy, every trader should know the following few simple things:

An important part of any trading strategy is “Money Management”. The best way to limit risk and increase returns is incorporating money management into trading activities. This part will help you to manage the growth of your account over time. Money management is more valuable than fast account growth but with this, you can simply decrease your risk and increase your account size. Here the progress is slower than you would like it to be.

Traders should avoid martingale money management that might get you lucky once or twice. It is sure that your trading will take some time to find the best strategy but it is worth to wait for a good money management strategy. You should have enough capital to withstand so that any drawdown will not make you quit from trading. A trader can be gifted with the greatest return on investment only with a perfect position size. Money management can make good strategy great but could not turn a poor strategy into a winning one. Our team is always involved in research work so that the profits can be easily earned with commodity trading.

Founded in 2005, ABans Group has grown from being a trading house to a dynamic and diversified business group. We provide expertise in Broking Services, Merchant Banking, Non-Banking Financial Dealings, Jewellery manufacturing and Realty and Infrastructure. It is a comprehensive Financial Services and Solution Provider, which aims to provide an end-to-end financial solution to its clients.

Reliance Communication’s - Are you buying it?

There has been a lot of interest in Reliance Communication’s plans to reduce debt by 25,000 Cr. this year. The stock is up 10% since August 14, and investors seem to be buying into the turnaround story – Be it by merger, sale of assets, or financial restructuring.

Here are some numbers to think about:

Finance Costs: 3,500 Cr.

EBITDA = 5,392 Cr.

EBIT = 1,171 Cr.

EV = 57,973 (Debt) + 5,811 (Market Cap) – 1,300 (Cash) – 257 (Financial Investments) = 62,191 Cr.

EV/EBITDA = 11.53

Debt / Equity = 9.97

Now, with a 25,000 Cr. debt reduction (from sale of profitable business), 32,973 Cr. Debt will be left. Assuming a 40% loss of their revenue (equal to proportion of business sold to pay off the targeted 25,000 Cr. debt), no further deterioration in credit quality, and no further deterioration in operating margin:

Current Price = 23.50

EBITDA after sale of biz = Rs. 32,35 Cr.

EV after sale of biz = Rs. 37,191 Cr.

EV / EBITDA after sale of biz =11.49

Debt / Equity after sale of biz = 32,973 / 5,811 = 5.67

Okay, so it seems like the company will significantly deleverage its books, BUT these numbers do not include any operating liabilities, loss of revenue from transition, loss of synergy/integration, regulatory hurdles, interest accrued from non-payment of dues, increased competition, margin squeeze, business restructuring costs, legal fees, and potential for dilution of equity to fund future operations. Moreover, it assumes that the revenue contributed by the healthy portion of the business, which will soon be off the balance sheet, is equal in proportion to that from the portion of the business retained.

Evaluating the business in the rosiest possible scenario, the one that Mr. Anil Ambani is selling, it will still take more than 10 years for the company to redeem its debt on an EBITDA basis with the leftover business.

Let’s ‘get-real’ for a moment though – With the weak competitive, operating, bargaining, and financial position of the business, it’s highly unlikely that investors will ever see a positive bottom-line sans a (significant) dilution of their equity. So, the simple question is – Are you buying it?