Saturday 10 August 2019

The Curious case of Jammu and Kashmir: A state that's ageing backwards!



I still remember, when I was in class 5 one of my teachers narrated her trip to Leh-Ladakh. Till now, I remember her words loud and clear:

Image result for ladakh tea"Children! though Ladakh is a part of India and offers fantastic tea, for some reason the locals don't recognize themselves as Indians. As per them they have a country of their own and are proud of the fact that "their" tea is amazing and nowhere close to the "Indian" tea."


Image result for jammu and kashmirBut then I wasn't sure why they said so, as for me being an Indian was (and is) a matter of huge pride.
It was much later that I understood that those poor people were still suffering from Nehru-Jinah's divide and rule policy. It was because of these two selfish individuals, the region is never be able to fully integrate with rest of the country.


Today we know Kashmir as a major breeding grounds of terror, always on red alert, undeveloped and aloof from the rest of India. Prosperity is something that nobody talks about in the region - a region, blessed with the huge amount of natural resources.

Thanks to the article 370, opportunistic countries like Pakistan continues to dream about occupying Kashmir and spreading terror in the region.


Thankfully! sooner than later, the present government took a bold decision to undo the error made 70 years ago by scrapping the draconian article 370.
It was necessary as rightly pointed out by Mr. Mukherji -
"Ek desh mein do Vidhan, do Pradhan aur do Nishan nahi chalenge"


Image result for jammu and kashmir


Congratulations to the people of Jammu and Kashmir on their full integration with the country. May the region starts blooming, developing and prospering soon, like the rest of India.

वासुदेवा कटंबकुम! 🙏


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ISHIKA GUPTA


Wednesday 21 June 2017

Making Money through Stock Markets: Attractive?-Yes. Easy?-No. Quick?-May be.

                                                                                                                                
"It is not easy to make money in the stock markets, especially in a short period of time."


Many of us have already read these lines in one form or the other. But when one starts dealing in stock markets, they look way too attractive to make easy money. They are like those perceived oasis in the deserts.

So, here is the story of my attempt to search for what works best in these lucrative and dangerous stock markets.
 I have recently completed my MBA from IIM Calcutta this year. Since I opted for majorly finance and economics courses in year 2, I was naturally attracted towards stock markets.
I asked my father to manage his Portfolio of stocks. Trusting me, he gave me 100% liberty to make any changes in his portfolio as I deem fit.
There was a big challenge as well as an opportunity in front of me. I was my own boss.With the help of the knowledge I gained during the MBA, I carefully selected a set of stocks intended to be held for the long term (1-2 years).

*But this article is not about the long term investing techniques!*

I still was not satisfied after completing the task and wanted to explore more. Obviously, like many others, I fell for Intraday Trading! Intraday trading looked like a real beauty. A lot of money in just a matter of few hours! Sounded like a perfect plan to me!

All I had to do was Buy (Sell) the stocks when the prices were Low (High), and Sell (Buy) them as the prices went Up (Down). Book Profits. Done!

Wait. If all this was that easy then why the hell are people working their asses off the entire day? Why not we, our parents, their parents and everybody just sit on different terminals and cash in easy money daily from 9:15 a.m. to 3:30 p.m. and then just enjoy???            
              

Well! There are several caveats:

1) The transaction (i.e. buying/selling of stocks) is not free. A considerable amount of brokerage is involved when a person buys or sells a stock. (My broker charges me 0.03% brokerage for Intraday buying/selling of stocks). Hence, you need to make sure that the profits you are booking should be big enough to cover up for these costs.

2) Brokerage is not all what an Intraday trader is charged for. There are a lot of other taxes involved as well: Cess, Security Transaction tax (watch out for this one, it eats a lot of money), Service Tax etc.

3) Sometimes the stock prices don’t go in the expected direction. The reasons can range from wrong calculations/expectations to "it was not just your day". In that case, yes! You have to book losses as you have to compulsorily close your positions by the end of the trading day, else your broker will. The latter situation attracts penalty.

4) No matter whether you book profits or losses for the day, you have to pay the brokerage and other taxes. Hence, your profits appeared divided and losses multiplied.

5) It is very important for the trader to know where to stop her losses. One of the most difficult and the most important tasks a trader has to undergo is to book losses at the appropriate time. It is crucial to contain and stop losses whenever they cross a certain point (the point varies according to the loss bearing appetite of the trader). Traders simply just don't want to register losses and keep on trying to average out their losses. This generally results in over-trading with traders ending up making even more losses.
Can't blame them, its basic human nature. Who likes making financial losses? So, as a day trader you need to learn to keep greed, hope and fear at bay. Decisions should be governed by logic and not emotion.

The above 5 points makes it very difficult to cover up losses once your balance goes negative. Also, you have to be very sure of the stock and the direction you are betting on. This is necessary as you might be able to earn from luck for may be a day or two in weeks, but if you go slightly out of luck on even one day, you can suffer huge losses. These losses can probably be big enough to wash off all your gains accumulated over a period of time. Remember you are paying those taxes and transaction costs anyway.

*Coming back to my story*

By the time I knew all of the above stuff through practical experience and theoretical knowledge, my net Intraday trading balance had been already negative.I thought the same thing as many of you may be thinking right now:

"Is there any technique/analysis that can guarantee me profits?"
                                    OR
"Can I perfectly predict the fall/rise of a stock?"
    
I continued my search for the answers. I found several established and well tested methodologies that predict the direction of the stock movements. I back tested every one of these techniques on certain day trading stocks (the one with high trading volumes, volatility and liquidity) for a long period of time. I then separated out the techniques which perfectly worked for at least 85%-90% of the times.

Two of the simplest yet effective techniques I successfully back tested on certain choice of stocks are*:
a) Day's first Candlestick approach**: At 9:30 a.m. notice the high and low points of the day's first candlestick (DFC). Now, compare the close points of the subsequent candlesticks with the high and low points of the first candlestick. The moment a candle stick closes below (above) the low (high), short sell (buy) the stock. Post this wait for either your profit target or stop loss point to trigger and then close your positions. (P.S.: As a stop loss point you can use the low (high) point of the first candlestick in case you are holding a buy (short sell) position.)


DFC Approach**

b) Comparison with the previous day high**: If a stock opens up at 9:15 a.m. at a price higher than its previous day high then buy the stock. In case it opens up at a price lower than the previous day's low, short sell the stock. Post this wait for either your profit target or stop loss point to trigger and then close your positions.

Opening at less than the previous day low**

Opening at more than the previous day high**

*By no means I am endorsing these techniques

Hence, next Monday I was all charged up and determined to cover up my losses via these techniques. I did precisely as the techniques suggested and only for the stocks I used for back testing. 
Surprisingly! the results were perfect. I made good money on all my transactions that day. But sadly at the end of the day I realized that the transaction costs ate more than 60% of my day profits.
Also, unlike that day all these techniques did not always work well. It was just that they worked well for most of the stocks on most of the days. But then there is no guarantee.

Hence, No, there doesn't exist any magic formula that can give you sure shot returns.

After all this I realized how easy it was to lose money, but so difficult to make up for it. Hence, I deeply thought about the point 5) mentioned above and decided to book losses and gave up the Intraday trading. There were several reasons for my decision apart from the 5 caveats I already mentioned (Hence, I will start from the serial no. 6):

6) Intraday trading is too much time consuming and stressful. Trust me! It's neither easy nor a pleasant feeling to sit continuously in front of the computer screens for 6 straight hours watching the stock price charts going up and down. Though it's a great feeling to look at the stock prices going in your direction, but extremely stressful the other way. I felt like I was wasting my time which could have been used for much more productive purposes.

7) It is not easy to compete against hi-tech algorithmic machines, banks and high frequency traders. All of them have a super quick access to any news that can have a big impact on the stock markets. They are extremely fast and accurate in using this information in their favor. Plus owing to their huge capital, expertise and knowledge, it is possible for the big trading firms to move the trades in their direction. Hence, if you want to beat them, you have to be better than them (which necessarily requires a man + machine combination).

All the 7 points mentioned above makes the idea of Day Trading extremely RISKY and difficult. High risk not only means a high upside potential, but also a high downside potential. Moreover, once commissions and slippage are taken care of, most Intraday trading systems fail. And even if you do find an edge, it usually won’t last long.

Hence, at this point in time I have finally realized that the road Mr. Buffett suggested despite being more thorough, time consuming and requires a lot of patience, is way better. It encourages you to build the foundations. There is no way in which one can make fast, risk free and easy money.                                                                     

This entire blog post indicates my personal point of view. If you think otherwise or have any comments, please feel free to share.

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ISHIKA GUPTA



 

Friday 12 May 2017

What happens in Tihar Jail: No! Bollywood Movies are misleading

A few weeks back, I visited The Central Jail Headquarters, Tihar (fortunately as a researcher). It reminded me of my detailed visit to the place a couple of months back for the educational purposes.

As a part of my MBA (OK! Post Graduate Diploma in Management) from IIM Calcutta 2015-17 batch, I rarely got any opportunity to study cases about government institutions’ management styles (especially in a positive light). We used to focus most of our cases towards private sector firms.
Reason being, we (most of the Indians) always tend to think that if it's a government institution, then its management is most likely to be messed up. However, it's not all our fault as government institutions are best known for their inefficiency, scams, NPAs etc. So, obviously B-schools are not entirely wrong when they think that our government's management style is not the best thing to teach to the young minds and future business leaders.

*Coming back to my visit*

One day I happened to read an article about Tihar jail, the largest prison complex in South Asia. It disclosed surprisingly very interesting facts.
The institution is running approximately 2 times its sanctioned capacity of 8098. And the total number of escapes in the past 50 years is just SIX (whoa!! And we were talking about inefficiencies).
These facts were enough for me to request the authorities for an official visit to the prison complex. I wanted to know about how these people are managing the institution which is running double its capacity, so well.

Tihar jail

By the way there are 9 central prisons in Tihar complex, 1 district prison in Rohini and 6 in Mandoli.
Since there are so many jails, you must be wondering about the Jail-wise lodging policy. So, here’s a quick look at the same:

Jail No. 1: All the prisoners whose name start with alphabets ‘S’, ‘Y’ and ‘X’. All detenues except NSA
Jail No. 2: All the convicts sentenced to 10 years and above. All detenues under NSA, PSA and civil prisoners
Jail No. 3: All the prisoners whose name start with alphabets ‘B’, ’V’, ‘C’, ‘D’, ‘E’, ‘F’ and ‘G’
Jail No. 4: All the prisoners whose name start with alphabets ‘A’ and ‘R’
Jail No. 5: All the convicts sentenced for less than 10 years
Jail No. 6: All the female prisoners
Jail No. 7: All the adolescent prisoners whose age group is between 18 to 21 years. Such prisoners shall be shifted to their respective jails as per the lodging schedule, on completion of 21 years of age.
Jail No. 8/9: All the prisoners whose name start with alphabets ‘J’, ‘Z’, ‘L’, ‘M’, ‘N’
District Jail, Rohini: All prisoners whose name start with alphabet ‘H’, ‘I’, ‘K’, ‘Q’, ‘O’, ‘P’, ‘T’, ‘U’, ‘W’

*I know that you all secretly looked out for your alphabets ;)*

Luckily I got the opportunity to visit one of the Jails there. To my surprise there were around 2000 prisoners in that single jail.
As told by an official, every jail Superintendent (A jail Superintendent heads each jail and Deputy Superintendents, Assistant Superintendents, Head Warders and Warders assist him/her) is allowed to organize recreational activities in his/her jail as he/she deems fit.
So, this jail was famous for its IGNOU learning centers (high level study facilities).
At first I was deathly scared to enter the ward. But once I entered the place, I soon forgot that the people I was surrounded with were once criminals.

Let me tell you, it was NOTHING like we are used to see in the movies. There were no stripped uniforms, no dingy cells. Though the complex was holding prisoners multiple times its capacity, there was enough space for everyone. The environment looked quite clean and green.

A helpful staff member explained how a prisoner’s typical day at Tihar begins and ends with a jail prayer, while various productive activities are being carried out throughout the day. I was surprised to see that in each ward there were temples for Hindu prisoners, mats for Muslim prisoners and so on. A number of Volleyball & badminton courts, basketball courts and TT tables could be easily spotted.
I was amazed to see IGNOU learning centers the most. When I entered there, Whoa!! I was no more in a Jail, but a school. There were classes going on like I used to see in my school days. There were Painting, Stuffed toys making, Dramatics, Instrumental music and Vocal music classes, computer teaching facility, Cable TV, in-jail FM radio run by the inmates and what not. And then there was this huge library with a variety of books! (BTW, if anyone wants, he/she can donate his/her books here).
I got the opportunity to watch various dramatics and musical performances of the inmates and, was amazed by the talent that these people had. It was an epitome of the fact that there is a good side in each of us.

Musical Performance by inmates

As far as the interpersonal conduct at Tihar is concerned, I observed that everyone was talking to everyone with a lot of respect. It did not matter that whether the communication was flowing from an official to a prisoner, a prisoner to an official, between prisoners or between officials. The kind of positive environment Tihar jail complex provides while following all the rules, made even the prisoners behave quite cooperatively. I especially liked the concept of open and semi open jails. These are established as a reward for the good conduct of a prisoner with no pending cases.
In semi open prisons, prisoners are even allowed to run canteens for the administrative staff and then by the end of the day, these prisoners themselves would return to their cells.

And, how can I forget their kitchen! Again, unlike in movies, the dal was not just a cup full of water, but was thick and super tasty. Moreover, as a routine activity, the food was also checked by the doctors before being fed to the prisoners and was provided in enough quantity. Overall, the food was delicious, wholesome and hygienic.

Kitchen, Tihar Jail

Further, if you think this place is untouched by technology, then you are grossly mistaken. There were touchscreen kiosks for the prisoners giving them information on the probable date of release, remission earned, punishment, training, parole and furlough etc. Video conferencing facility between courts and prisoners was available. Smart cards were issued to carry out all the canteen transactions (Tihar is the first cashless jail in India). Besides all of this and much more, there were web based prisoner and visitor management systems in use.

Last but the most crucial thing I want to talk about is the security. The prison walls were high and towers were fully guarded by vigilant and alert police men. The complex possessed a 3 tier Security system.
Tier I: Peripheral and Tower security manned by Paramilitary forces with 4 mobile quick reaction teams (QRTs) equipped with automatic weapons and bullet proof jackets.
Tier II: Searching and frisking at the jail entrance by Tamil Nadu Special Police (this is especially done in order to create language barriers between prisoners and the security officers).
Tier III: Management of the internal security by prison staff.

With such a high class security in place, I don't think so a sane prisoner will ever try a Tihar jailbreak (This explains: “why only six escapes so far?”).

Tight security at Tihar Jail

All in all, there was so much positivity in the environment that I actually felt that the administration is trying its best to make Tihar jail a true correctional center.

*Time for some more Tihar Gyaan*

Just as this jail’s (the one I visited) specialty was its IGNOU centers, there are other jails in the complex at which various activities such as Carpentry, Weaving, tailoring, chemical, paper, spices, soaps, sweets and blankets are carried out. The combined annual turnover of these productive units is ~Rs. 21.25 crores. Similarly, the annual turnover of Tihar bakery is ~Rs. 7.47crores.
Besides their safe detention and release, Tihar jail prisoners are provided with all the basic minimum facilities required to maintain the human dignity. These facilities are not limited to, but include free legal aid and creche facilities for the children (up to 6 years of age) staying with female prisoners. There is a 24x7 hospital (200 beds) and a 24x7 dispensary in each jail.
Here, special care has been taken to ensure that the prisoners should gain employable skills. Around 1200 inmates will be trained by national skill Development partners in the trades like BPO, Data Entry Operator, Cookery Electrician, Beauty and Wellness etc. They will provide placement/job offer to the inmates, after their release.
Moreover, these prisoners are also enjoying the fruits of various PM schemes. Under Jan Dhan Yojna, the bank accounts of 3500 inmates are being opened with the Tihar branch of Indian Bank. Swachh Tihar Abhiyan was launched on 2/10/2014 and Aadhar cards have been issued to 6384 inmates (287 females).

Prisoners at work, Tihar Jail
                             

Automotive Manufacturing Unit run by inmates, Tihar Jail


*Time to Ponder*

As lawful citizens, we can’t help but think that “why so many facilities are being provided to these criminals?”.
I believe that the main reason behind this is to keep them mentally occupied and, give them a fair second chance to start afresh and become a good human being, who respects the law. But then, the topic is fairly debatable.

*Anyway*

At the end of my visit I knew how the authorities were managing so many prisoners, so efficiently.
My overall experience entirely changed the way I used to look at the prison complexes. At Tihar, rehabilitation and reform programs seem to be running quite successfully. Prisoners are being motivated to become better human beings by involving them in various vocational, spiritual, educational and recreational activities in association with reputed NGOs (like ISKON, Art of Living, Music one records, Panchwati Yogashram and many more). There, they are learning to become a useful citizen of the country, who respects the law. Obviously, nobody will feel happy to be a prisoner, but they (prisoners) all seemed satisfied.

The key learning I am taking away from this place is - Love and care can give any person a huge amount of motivation to become a better human being. But that doesn't mean that the faults can be ignored. A delicate balance is what needs to be struck.


Finally, I would like to give a big vote of thanks to the Tihar Jail staff for their cooperation. I am glad that I got such a golden opportunity to visit the place. I hope I would be able to make good use of my visit in the future (not only as a part of my management career, but also in life) and will try to give something back to the place as well.


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ISHIKA GUPTA

Saturday 31 December 2016

New Year, Old Decisions, New Challenges: A Chapter in the Indian Growth Story



Phew! At least there is still some time left before the next year and I hope am not too late to pass on my pearls of wisdom (as if anyone cares meh :/) on the much debated topic:

“D-E-M-O-N-I-T-I-Z-A-T-I-O-N!”

 

Since Didi, Kejru, Rahul baba all of their attempts have been failed to initiate a demonetization rollback, the time is ripe to analyze what could possibly be in store for the nation.

Apart from the obvious pains (short term slow down, discomfort, etc.), the popularly stated gains are: Curbing of the black money (especially used for funding terrorism activities) will unconditionally benefit the government (no matter if the black money is reported or not) and of course transition of the Indian Economy towards Digitization! (*tiding* here comes another much debated topic) 


So, what makes us think that digitization will curb illegal transactions?

I agree, the building up of a cash based black money will be a bit difficult after the planned withdrawal of the INR 2000 note. But I think it will become even easier for terrorists and frauds to steal our hard earned money when a plethora of our critical information is available right there on the database, in the absence of high online security mechanisms, which definitely can’t be built overnight!



Coming to the availability and accessibility.

Firstly, smartphones (the cheapest and the most convenient way to access internet) will become essential to make majority of the digital transactions possible. But only 17% (lowest among BRICS) of the total Indian population own smartphones.

Lastly, what about the availability of internet connectivity at affordable prices?

Umhh ok! Mukesh Ambani is taking care of that very well, but the actual results would be seen post 31st march (It’s highly in the interest of the government as well as the nation that the JIO juggernaut should keep on rolling in order to achieve sustainable digitization).



So, taking the figure of 17% and adjusting it for the literacy / willingness to migrate, (a highly optimistic guess) around 15% will be able to reap the benefits of digitization. (The JIO effects are yet to be seen in the numbers which would be clearer post the “Happy New Year” period comes to an end.)



Hence, though the intentions of the government are undoubtedly right, a no hush hush and proper, infrastructure and security mechanisms for digital transactions, are required in order to avoid another policy paralysis (and this time we can’t afford the paralysis given the huge amount of sunk cost involved!).



P.S.: It’s good to see how we, the Indians are trusting and supporting our Prime Minister. Now, the onus is on the Modi Government to make our nation walk the path of sustainable economic upliftment after taking this right, albeit a bold step towards making India a digital-corruption free nation.

Some People want it to happen, some wish it would happen, others make it happen.
                                                                         -Michael Jordan

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THANKS AND HAPPY READING, ADIEU.

ISHIKA GUPTA