📕 HOW CREDIT CYCLE WORKS

One day a man visits a debt ridden hotel.

1⃣ He gives the owner ₹10,000 as advance for booking his one week stay in the hotel.

2⃣ The hotel owner takes the ₹10,000 and goes to pay his debt to his food supplier.

{1/4}
3⃣ Food supplier rushes to pay the farmer and dairy.

4⃣ Farmer runs to pay the land lord from whom he took a loan for his crop.

5⃣ The land lord rushes to pay the event manager who managed his daughter’s wedding on credit.

{2/4}
6⃣ The event manager then runs to pay for the wedding event which was hosted in the same hotel.

7⃣ The hotel owner receives ₹10,000 from the event manager.

8⃣ The man who had booked the hotel, cancels his booking and takes a refund of ₹10,000 from the hotel manager.

{3/4}
⭐️ SO WHAT REALLY HAPPENED?

A lot of transactions happened between multiple parties, no one actually made any money but everyone was cleared off their debt! That’s the magic of a credit cycle!

Economy of a country works exactly in the same cycle repeated over and over.

{4/4}

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More from @stocktalk_in

1 Sep
⭐️ SEBI SELLING MARGINS

Here's the logic behind SEBI's new rule to impose margins on selling shares from your holdings.

Say you sell shares from your holdings on Monday.

As per the current settlement cycle of T+2 days, the shares will be debited from your demat on Wed.

{1/5}
But that T+2 days cycle leaves a possibility of you transferring those shares to someone on Tuesday i.e. before the shares are debited from your demat on Wednesday.

This creates a short delivery settlement risk.

Brokers already have systems in place to avoid this.

{2/5}
But still this might happen for about 5% of the times whereas 95% of the times the settlement is done correctly.

Now, SEBI's new rules will make sure that those 5% cases are also taken care of and the risk is completely avoided.

There's a workaround for this.

{3/5}
Read 5 tweets
31 Aug
📕 #SEBI GUIDELINES FOR MARGINS

1⃣ As per new SEBI rules, buying and selling of shares will require upfront margin.

Eg: If you want to buy shares worth ₹1 lakh then you must have ₹20K margin cash in your trading account & the balance of ₹80K to be paid within 2 days.

{1/5}
2⃣ If you want to sell ₹1 lakh worth of shares from your holdings then too you must have minimum ₹20K margin cash in your account, failing which penalties will be levied.

You can keep extra cash / or can pledge your other holdings for the stipulated margin required.

{2/5}
3⃣ Buy Today Sell Tomorrow (BTST) closed.

Shares bought today cannot be sold tomorrow.

Eg: If you bought shares on Monday then you can sell those shares only after recieving the delivery of shares in your demat account i.e. you can sell on T+2 day, Wednesday.

{3/5}
Read 8 tweets
28 Jul
⚡️ #YESBANK RESULTS DECLARED!

FINANCIAL HIGHLIGHTS (Q1-FY21)

🟢 Interest Income: ₹1908 Cr

🟢 Total Income: ₹2529 Cr

🟢 Net Profit: ₹45 Cr

🟢 Interest Margin: 3%

🔴 Advances: ₹1,64,510 Cr

🟢 Deposits: ₹1,17,360

🔴 Balance Sheet: ₹2,55,485

🔴 CASA: 25.80%
⚡️ #YESBANK RESULTS DECLARED!

ASSET QUALITY (Q1-FY21)

🔴 Gross NPA (%): 17.30%

🟢 Net NPA (%): 4.96%

🟢 Provisions (%): 75.10%

🟢 CET-1: 13.40%

🟢 CAR: 20%

🔴 Book Value: ₹14.60

🟢 EPS: ₹0.04

🟢 ROE: 0.8%
⚡️ #YESBANK RESULTS DECLARED!

PRELIMINARY ANALYSIS (Q1-FY21)

🔸 The bank has reported fair result as a starting point post the management reshuffle and moratorium saga of last quarter.

🔸 Biggest issue of capital adequacy is now sorted. The bank is now well capitalized.
Read 5 tweets
27 Jul
📕 A Quick Guide on SUPPORT LEVELS & DEMAND ZONES

🔸 Have you ever noticed how a stock quickly moves up after it drops to a certain price level?

🔸 People say "the stock has taken support" or "bounced back from support level"

Let's understand why the bounce happens;

{1/7}
🔸 The basic logic behind support level (also known as demand zone) is related to how big institutional investors buy shares.

🔸 When institutional investors take a position they have a huge qty of shares to buy & so they want the order to be filled at a particular price.

{2/7}
🔸 Let's say the stock of XYZ Ltd. is currently trading at ₹525.

🔸 But institutional investors want to buy 5 crore shares of XYZ Ltd. at ₹500.

🔸 So they put in a buy limit order of 5 crore shares at ₹500.

🔸 This order now remains pending in the order book.

{3/7}
Read 7 tweets
24 Jul
📕 A Quick Guide on OPEN INTEREST (OI)

1⃣ What is OI?
OI is simply the number of outstanding contracts (open positions) for a given stock

For eg: A stock having OI of 1 lakh means there are 1 lakh open positions (long & short)

* OI data is available only for F&O segment

(1/7)
How is OI calculated?

2⃣ As the name suggests OI represents the "interest" of traders in a given stock

For eg: If trader A has 10 long positions and trader B has 7 short positions then the total OI will be 17

That means buying interest is more than selling interest

(2/7)
3⃣ What is Put Call Ratio (PCR)?

In F&O terminology;
🔸 Long positions = Calls
🔸 Short positions = Puts

PCR = Puts / Calls

4⃣ Calculating PCR in the above eg:
Calls = 10
Puts = 7

So PCR = 7/10 = 0.7

(3/7)
Read 7 tweets
21 Jul
📕 THE SATYAM SCAM

🔸 On the morning of 7th January 2009, Ramalinga Raju, Chairman of Satyam Computers submitted a letter to the board of directors.

🔸 In the letter, he openly confessed of committing a fraud of ₹7,000 crore over a period of 5 yrs.

Here's the letter 👇

{1/4}
🔸 Satyam Computers was a company listed on Indian as well as US stock exchanges (ADRs).

🔸 When the news of the letter broke out, it sent out shock waves throughout the stock markets.

🔸 Satyam stock fell 80% that day from ₹185 to ₹35.

🔸 Next day, stock fell to ₹6.

{2/4}
🔸 As part of the scam, Raju generated fake invoices to show inflated revenues.

🔸 He showed bank balances of ₹5,000 crore that was non-existent.

🔸 He kept on rolling money in rounds and kept doing the scam for 5 years.

🔸 He was immediately arrested by the police.
{3/4}
Read 4 tweets

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