My Best Mutual Funds 2018

I am investing in best mutual funds 2018 after doing a market research based on the present economy and performance of the mutual funds. I am also sharing with you about the mutual funds where I am investing this year. These will definitely give me a good return without taking much risk.

1. SBI Blue Chip Fund - Growth

Bluechip companies are all large companies, with significant market share & leadership in their relevant industries. They already have shown positive growth, good credit ratings and better brand equity amongst the public. Investing in such companies brings relative reliability to your portfolio.
This fund provides the opportunities for long-term growth in capital through a dynamic management of investments in a diversified basket of equity stocks of companies whose market capitalization is equal to or more than the least market capitalised stock of S&P BSE 100 Index. This fund is suitable for those investors who are looking for medium to long-term perspective.

The minimum investment amount required for a lump sum is Rs.5000, while for SBI Bluechip fund SIPs the minimum amount to be invested is Rs.1000 only.

•    Scheme Type: Open ended scheme
•    Fund Manager: Sohini Andani
•    Lock-In Period:    0
•    Entry Load: Nil
•    Exit Load: 1%
•    NAV as on 10th May 2018 = Rs 38.6820

Growth (Present) %
•    1 Week: -0.31%
•    1 Month: - 0.52%
•    3 Months: - 2.77%
•    6 Months: - 2.80%
•    1 Year: - 11.46%
•    3 Years: - 41.55%
•    5 Years: - 124.82%

2. HDFC Balanced Fund – Growth

It is one of the best mutual funds for investment in India.  This mutual fund is a regular performer in the mutual fund industry for a long time and has returned bigger profits to the investors. The main aim of this mutual fund is to provide capital growth and stable income so as to ensure financial soundness for the investors. This fund is best for the investors who are seeking financial stability and high growth of investments in the long-term.

The minimum investment amount required for a lump sum is Rs.5000, while for HDFC Balanced Fund SIPs the minimum amount to be invested is Rs.500 only.
•    Scheme Type: Open ended scheme
•    Fund Manager:    Chirag Setalvad
•    Lock-In Period:    0
•    Entry Load: NIL
•    Exit Load: Applicable
•    NAV as on 10th May 2018 = Rs 149.2410

Growth (Present) %
•    1 Week: -0.25%
•    1 Month: - 0.16%
•    3 Months: - 0.06%
•    6 Months: - 0.61%
•    1 Year: - 10.18%
•    3 Years: - 42.21%
•    5 Years: - 137.45%

3. Reliance Equity Hybrid Fund-Direct Plan – Growth

The main investment objective of this fund is to make steady return and appreciation of capital by investing in a mix of securities comprising of equity, equity related instruments and fixed income instruments. This fund was formerly known as “Reliance Regular Savings Fund - Balanced Option”. This fund is suitable for those who are seeking long-term capital growth and investment in equity.
Investment up to 50 percent of its assets in equities and equity-related securities and at least 25 percent of its assets in debt and money market instruments with an average maturity of 1 to 7 years.
Minimum Investment: Rs.500

•    Scheme Type: Open ended scheme
•    Entry Load: Nil
•    Exit Load: 1%
•    Fund Manager:    Sanjay Parekh & Mr. Amit Tripathi
Growth (Present) %
•    1 Week: -
•    1 Month: - 0.9%
•    3 Months: - 0.5%
•    6 Months: - 2.8%
•    1 Year: - 11.9%
•    3 Years: - 12.2%
•    5 Years: - 16.8% 

4. Axis Long Term Equity Fund (Growth)

Generating regular long-term capital growth from a diversified portfolio of equity and equity-related securities is the main aim of this fund. It invests in equity and equity-linked instruments such that it features a high degree of growth with the possibility of producing high returns to those investing the Axis Long-Term Equity Fund scheme.

This fund is designed to offer subscribers with tax savings benefits under section 80C of the IT Act 1961.

•    Scheme Type:  Open ended scheme
•    Fund Manager:    Jinesh Gopani
•    Entry Load: Nil
•    Exit Load: Nil
•    Minimum investment: Rs.500
•    Lock-In Period: 3 Years
•    NAV as on 16 May 2018: Rs 43.0670

Growth (Present) %
•    1 Week: -  0.67%
•    1 Month: - 1.48%
•    3 Months: - 6.13%
•    6 Months: - 10.12%
•    1 Year: - 18.63%
•    3 Years: - 12.17%
•    5 Years: - 22.73%

5. L&T Emerging Businesses Fund – Growth

The main aim of this open-ended fund is to generate long-term capital appreciation from a diversified portfolio of mainly equity and equity-related securities, including equity derivatives. This fund mainly invests in the small-cap stocks (emerging companies). Additionally, this fund also invests in Foreign Securities. Emerging companies are the companies those businesses which are typically in the early stage of development. They have the perspective to grow their revenues and profits at a higher rate as compared to the broader market. There is no guarantee that the Scheme will be realised and the Scheme does not assure or promise any returns.

•    Scheme Type: Open ended scheme
•    Fund Manager:    Soumendra Nath Lahir
•    Entry Load: NIL
•    Exit Load: NIL if purchased during the NFO period and during the 2 year period from the date of allotment.
•    Minimum Investment: Rs.5000
•    NAV as on 18 May 2018: Rs 27.52

Growth (Present) %
•    1 Week: -  0.77%
•    1 Month: - 1.75%
•    3 Months: - 1.03%
•    6 Months: - 3.94%
•    1 Year: - 18.31%
•    2 Year: 35.3%
•    3 Years: - 25.66%

6. Franklin India Smaller Companies Fund - Growth

It is an open-ended equity fund from Franklin Templeton Mutual Fund. As a predominant small-cap fund, it grasps a major portion of its investment in small caps and mid-caps along with a nominal portion into large caps. This makes appropriate for investors looking to boost of extraordinary returns generated by small caps. This fund is well known for strong investment processes, smart stock picking and sound risk management.

•    Scheme Type: Open ended scheme
•    Fund Manager:  R Janakiraman
•    Minimum Investment: Rs.5000
•    Entry Load: 1%
•    Exit Load: NIL
•    NAV as on 18th May 2018 = Rs.60.00

Growth (Present) %
•    1 Month: - 0.9%
•    3 Months: - 0.5%
•    6 Months: - 1.9%
•    1 Year: - 12%
•    2 Year: 20.9%
•    3 Years: - 16%
•    5 Years: - 28.8%

These are the mutual funds that I am looking to invest in this year. After study and research, I have found that these funds will provide me greater return in the near future.

Trading Tips and Ideas Using Bearish Candlestick Patterns – Reversal

In my previous blog, I have discussed the important bullish candlesticks reversal pattern for identifying buying points. Now here I am going to discuss the main bearish reversal patterns for selling your stocks. To maximize your return from stock market you have to learn bearish patterns as long with bullish patterns.

•    Gravestone Doji: 

It is a bearish candlestick and is similar to that of a gravestone. This type of candlestick can be found in an uptrend but it’s usually found in a bullish trend that’s about to reverse. This candlestick is formed when the open and close price of a bar is equal or almost equal and also open and close very near the low of the bar. The high of the day forms the long shadow and the long upper wick conveys you the bulls had control during the day. After that, the bears came in and drove the price back down to end the day.
-Opening, closing and minimum prices are the same or very similar
-Long upper shadow
-Appears on as a long line

•    Hanging Man:

It has its name because of its similarity to the hanging dead man. It may also mean that if you do not act upon this signal and still holding your position, then you are a dead man. It is a bearish signal and appears in an uptrend and cautions of a possible trend reversal. The long lower shadow of the hanging man is usually a bullish signal, showing that demand for the underlying security forced the price into the upper third of the price range for that period. For this reason, confirmation of a trend reversal is should be required. After that, the candlestick following the hanging man should close below the real body of the hanging man.

•    Shooting Star: 

Shooting star is look like almost inverted hammer in appearance.  This bearish candlestick pattern is composed of a single candle. The open, close, and low are near the low of the candlestick.

-    Small body candle either red (black) or green (white)
-    Shadow cannot be longer than the body
-    Upper shadow must be 2 times greater than the body 
-    Gap in either opening or closing makes this signal much stronger
-    Appears in uptrend

It indicates when it appears in the uptrend that the price has reached at the maximum of its current uptrend and will soon start falling. Mainly, the bulls were in command, pushing the prices higher. The bulls continued pushing higher after the market open, but then the bears marched in. The price was driven back to the down, and it closed near its beginning point.

•    Bearish Engulfing: 

The bearish engulfing candlestick pattern specifies a bearish move ahead. It usually forms at uptrend and directs that bears are no trying to take control from bulls. It is stronger if it gets formed at any prevalent strong resistance zones. It is mainly composed of two candles. It can be identified by a large red (black candle) engulfing the previous bullish green (white) at the uptrend. The red candlestick started to form when buying pressure force to open the stock price above the previous close. Later the seller steps up and forces to close the stock price below the previous open for a potential reversal. Wait for the next day signal. If it’s bearish then go for selling that stock.

•    Identical Three Crows:

In an uptrend, it signals the continuation of the bearish trend in the same direction.  If we compare with other bearish reversal patterns this signal is not strong enough. The two candlesticks next to the first candlestick close at lower prices than the previous ones. Three significant, consecutive and boosting red (black) candlesticks encompass this formation. The former candlestick paves the way for the new successive candlestick.

•    Darkcloud Cover:

 

 

 

It is a simple and very effective candlestick pattern to look for when trading short-term up and down swings within a price channel. This bearish reversal pattern appears at the end of a uptrend. The first candlestick must be a green (white) candlestick with a large real body and the second candlestick should be red (black) and should below the above of the preceding candlestick. The last candlestick must be closing below the middle of the real body of the first candlestick, with the deeper it pierces the first candlestick the more substantial the pattern becomes. Traders also need this to form in context with another bearish trade setup as trade confirmation.

•    Bearish Harami Cross:

 

 

 

This bearish reversal candlestick pattern also appears in the uptrend. The previous candlestick must be green or white and the very next candlestick must be a doji. The low of the Doji must be lower than the open of the previous candle. The low of the Doji must be lower than the close of the previous candle. When a Bearish Harami Cross candlestick pattern is recognized after a bullish move, it can signal a reversal in the price action.

•    Abandoned Baby Top:

The Bearish Abandoned Baby or Abandoned Baby Top is a bearish candlestick pattern that helps traders to identify a reversal in a bullish price action. This bearish pattern is opposite of the bullish abandoned baby pattern. This candlestick pattern is formed by three specific candlesticks that meet the following qualifications:

-    The first candlestick must be a bullish green candlestick located at the top of a uptrend.
-    The second candlestick must be a small-bodied candle, sometimes a dojo that gaps above the close of the first candlestick.
-    The third next candlestick is a large bearish red or black candlestick that opens below the second and generally closes around where the first candlestick opened. This particular candlestick identifies the change in the price trend.

These are the main bearish reversal patterns. You can always use this signals for trading either for short term or long term. Always compare these patterns with RSI (Relative Strength Index) and use a stop loss to become a successful investor.

For bullish reversal patterns please visit my blog - Candlestick Patterns Explained with Examples – Bullish Reversal Patterns

Candlestick Patterns Explained with Examples – Bullish Reversal Patterns

Candlestick patterns are most popular commonly used by the traders nowadays. These patterns are a form of technical analysis and charting used in the stock market, forex market, commodity market and all other markets. Candlesticks patterns can be used in all time frames. You can use these patterns for long-term, mid-term, short-term, and day trading and even for swing trading.  Candlestick patterns have been in use since the 17th century. Japanese traders used to follow candlesticks patterns in the rice markets. You should always remember that these patterns are only useful when you understand what is happening in each pattern. You must combine with other technical chart patterns to get the result.

What do Candlesticks Look Like?

Candlesticks charts are more visually attractive than the standard two-dimensional bar chart.  There are 4 elements necessary to construct standard bar chart, OPEN, HIGH, and LOW & CLOSING price for a given period of time. Whereas, in the Candlesticks charts the body of the candlestick is called the real body and represents the range between the open and closing prices.

The red body represents that the close in that time period was lower than the open, it’s normally considered as bearish and when the body is green, it represents the closing price was higher than the open is normally considered as bullish.  A thin vertical line can be seen above or below the real body known as upper or lower shadow which indicates the high or low price extremes for the period.

Bullish Reversal Patterns

 

 

 

• Dragonfly Doji:

The stocks prices open and close at or near its high. It consists of a comparatively long lower wick, no real body, and no upper wick. It is generally seen at the bottom of a move. This reversal signal is more bullish than a hammer.

Prices typically open at a high, sell off and then return back to opening price during the period of dragonfly doji. It does not occur frequently, but when you find the dragonfly doji near the bottom that means it’s giving a strong signal for buying that stock. But keep in mind before buying any stock after viewing dragonfly dozi you should always wait for the next day candle sign. If it’s positive then you can go for it.

• Hammer:

Hammer is a simple candlestick pattern made of a single candle line. They are bullish in nature. Hammer candlestick develops during the downtrend. The long lower shadow of the hammer shows a bullish signal irrespective of the colour of the candlestick's real body. The body of the candle may be either green (white) or red (black). This type of candlestick basically forms because of the overpowering of bulls over bears. After opening the market the sellers push the prices down by overselling of the stock. Bulls fought back and finished by winning back some ground. For buying confirmation you should check the next candlestick if it’s bullish or not. For buying, there must be a bullish candlestick after the hammer candlestick. It's finally confirmed that the bulls now have a strength and are taking control.

• Inverted Hammer:

Inverted Hammer also gives a trend-reversal signal. This type of candlestick pattern can be found after a downtrend. It has a small real body, either bullish or bearish, and has a large upper shadow with a small or no lower shadow. It appears in a market that opens at or near its low, forming a candle with a small real body. Throughout the day buyers rallied price fairly high but were incompetent to withstand the rally. Again, for buying there must be bullish candles stick after the inverted hammer candlestick.

• Bullish Engulfing:

The bullish engulfing candlestick pattern specifies a bullish move ahead. It usually forms at downtrend and directs that bulls are no trying to take control from bears. It is stronger if it gets formed at any prevalent strong support zones. It is mainly composed of two candles. It can be identified by a large green (white candle) engulfing the previous bearish red (black) at the downtrend. The green candlestick started to form when selling pressure force to open the stock price below the previous close. Later the buyer steps up and forces to close the stock price above the previous open for a potential reversal. Wait for the next day signal. If it’s bullish then go for buying the stock.

• Piercing Line:

It is a simple and very effective candlestick pattern to look for when trading short-term up and down swings within a price channel. This bullish reversal pattern appears at the end of a downtrend. The first candlestick must be a ref (dark) candlestick with a large real body and the second candlestick should be green (white) and should below the low of the preceding candlestick. The last candlestick must be closing above the middle of the real body of the first candlestick, with the deeper it pierces the first candlestick the more substantial the pattern becomes. Traders also need this to form in context with another bullish trade setup as trade confirmation.

• Morning Star:

Morning Star is a strong positive three-line reversal pattern which is bullish in nature and appears at the end of the downtrend. This star can be a lucky star for you.  The Morning Star is a sign of good fortune. The first candlestick should be bearish candlestick (red or black) and with a fairly large real body.  And the second candlestick must have a small body and it can be either bullish or bearish candlestick. Although a bullish candlestick with a small or no upper wick specifies more bullishness. The second candlestick is the star. The star indicates the sellers were not able to drive the price close much lower than the close of the previous period. It is then confirmed by the third candlestick that must be green or white colour.

• Bullish Harami Cross:

This bullish reversal candlestick pattern also appears in the downtrend. The previous candlestick must be red or black and the very next candlestick must be a doji. The high of the Doji must be lower than the open of the previous candle. The low of the Doji must be higher than the close of the previous candle. When a Bullish Harami Cross candlestick pattern is recognized after a bearish move, it can signal a reversal in the price action.

• Three White Soldiers:

In a downtrend, it signals the continuation of the bullish trend in the same direction.  If we compare with other bullish reversal patterns this signal is not strong enough. The two candlesticks next to the first candlestick close at higher prices than the previous ones. Three significant, consecutive and boosting white candlesticks encompasses this formation. The former candlestick paves the way for the new successive candlestick.

These are the main bullish reversal patterns. You can always use this signals for trading either for short term or long term. Always compare these patterns with RSI (Relative Strength Index) and use a stop loss to become a successful investor.

Please check my next blog regarding the bearish reversal patterns.

Technical Analysis of Stocks & Commodities

Technical analysis started out with pretty simple concepts. Formerly, it was about looking for directional trends in prices and divergences between related market indexes.  When the stock prices start moving in one direction either upper or lower, then they are more likely to follow that trend than to reverse. Technical analysis was just a way to visualize this perception.

When I started to trade in the market, I usually rely on the market moves driven by the news. But frankly speaking, I never made money after following this approach. But when I am started to learn and follow technical analysis I started to gain from the market.

I have discussed few basics below about Technical Analysis which would help you to understand and trade in the market:

Price Trends:

Price Trends indicates the current direction of share prices. Is the price of the stocks moving upper or lower? How long has it been doing so? If the stock prices continue to rise higher, it is considered to be in an uptrend and when the stock prices continue to fall it is considered as a downtrend. Uptrend indicates increasing demand for shares, as buyers are willing to pay higher prices as supply diminishes. On the other hand, Downtrend indicates increasing supply of shares when not much buyers are interested to buy the shares. You can generate trend line by connecting the various high and low points on a chart. Now from this generated trend line, you can pinpoint support/resistance and direction of stock prices. For better understanding, you can compare your current trend line with the historical trend line of the similar stocks.

Trendline

Volume:

Volume tells us how strong the prevailing trend might be. Decreasing volume can be a signal that the trend might be on the edge of a reversal.  The number of shares or contracts that traded over a given period is called Volume. Volume is important because it helps us to confirm the reversal trend.

For example:

Suppose stock X is in a downtrend at the moment. If tomorrow it increases 5% high then traders can think the stock’s downtrend is over and they could start accumulating stock X. But for the confirmation traders should always check the volume of the stock on that particular day. If the volume does not increase subsequently then it is not a trend reversal. This might be a fluke.

Volume

Moving Averages:

Moving Averages are the most commonly used technical indicators. This indicator helps you to distinguish between typical market fluctuations and actual rate reversals. Moving averages make you easier to spot trends, something that is mainly helpful in volatile markets. They also form the building blocks for numerous other technical indicators and overlays.

Simple Moving Average (SMA)

The Simple Moving Average (SMA) is the most popular type of moving average and it is generated by calculating the average price of a financial market over a chosen period of time. To compute the simple moving average you need to do a fairly basic calculation. Firstly, you need to add a stock's closing prices over a set number of days, and then divide the addition by the total number of days. For example, stock X’s closing prices for 14 days –250, 240, 245, 242, 247, 255, 251, 260, 254, 262, 270, 280, 269, 271 respectively.

So the moving average is = (250 + 240 + 245 + 242 + 247 + 255 + 251 + 260 + 254 + 262 + 270 + 280 + 269 + 271/14) = 256.86

It indicates if the stock X stays above 256.85 then it can be considered as positive sign in short term say for 14 says.

With every new day, the latest closing price replaces the oldest closing price in the calculation.

Simple Moving Average

•    Moving averages help in the smoothing out of price action.

•    Moving averages are used not only to recognize the direction of the stock’s price trend but also for trade entry.

Weighted and Exponential Moving Averages

Weighted and exponential moving averages give greater significance to a stock's most recent closing prices rather than Simple Moving Averages.  Calculation of weighted moving average is almost similar with simple moving average calculation.  Heavier weightings are allocated to the utmost recent closing prices in the data set to confirm the moving average replicates recent trends and fluctuations.

Simple Moving Average VS Exponential Moving Average

 

SMV VS EMA

 

Notice how the green line (the 30 EMA) seems to be closer price than the violet line (the 30 SMA). This means that it more exactly represents current price action. You can perhaps guess why this happens. It’s mainly because of the exponential moving average places more importance on what has been trending lately. When trading, it is more important to see what traders are doing present days rather what they were doing last week or last month.

In this blog, I have only discussed few basics things about Technical Analysis. Please follow my future blogs for knowing more about technical analysis and how you can make a profit using this knowledge. My blogs on Relative Stock Index, Candle Stock Analysis are coming soon.....

Fundamental Analysis of Stocks

Fundamental Analysis – A Powerful Tool for Making Profit

You cannot invest in stock market blindly. Before investing your hard earned money to the stock market you should study the fundamental strength of those companies.

What is fundamental analysis?

Fundamental Analysis is a method, with this method you can evaluate the value of the underlying company. Basically, we do a fundamental analysis to understand the economic conditions and the industry along with the company’s financial condition and management performance. You can understand this by reading the balance sheet, the profit and loss statement, financial ratios and other data that could be used to forecast the future of a company. Generally, we use the real data to analysis a stock’s value. This method uses revenues, earnings, future growth, return on equity, profit margins and other data to define a company's underlying value and prospective for future growth.  The thinking behind the fundamental analysis is that as the company grows so will the value of the shares increase.

Fundamental Analysis Tools

Earnings Per Share

Earnings are profits. The most investors want to know about the earnings of the company before investing money in the company. Increasing earnings normally leads to a higher stock price and, in some cases, a regular dividend. Companies generally report about their earnings on a quarterly basis to their shareholders. Increasing earnings leads to a higher stock price and decreasing earnings leads to price fall of the shares. It works as an alarm. Factors defining earnings of the company are such as sales, costs, assets and liabilities. A basic view of the earnings is EPS (earnings per share). This figure of the earnings signifies the amount of earnings for each outstanding share.

Price to Earnings Ratio (PE Ratio)

Ratio analysis tool is the most commonly used tool in fundamental analysis. It is an indicator of the underlying value of a company in relation to the current share price and the reported earnings per share. It is calculated by dividing the current market price of an ordinary share by earnings per share.

The formula for calculating PE ratio:

PE Ratio =   Market Price per Equity Share                         

                         Earnings per Share

Example: The market price of XYZ Company’s share is Rs.500. And the earning per share is Rs.50. Then the PE ratio of that company will be 10. It refers the earnings per share of the company is covered 10 times by the market price of its share. Alternatively, you can say Rs.1 of earnings has a market value of Rs.10.

Now let’s understand how we can use PE ratio to analysis a stock

Suppose the market price of XYZ Ltd is Rs.600 and the earning per share is Rs.10. And the PE ratio of similar companies in the same industry is 8. It means the market value of XYZ limited should be Rs.800 (i.e., Rs.8 x Rs. 100). The market value of XYZ Limited is, therefore, undervalued by Rs.200. If the P/E ratio of similar companies is Rs.4, the market value of a share of XYZ Limited should have been Rs.400 (Rs.4 × Rs.100), thus the share is overvalued by Rs.200.

Price to Sales Ratio (PS Ratio)

Price to Sales ratio is another most popular fundamental analyzing tool.  Values below 1.0 often signal an undervalued company. A high PS ratio implies a high future revenue growth curve. Many stocks with high PS ratio have at least a few of quarters of demonstrated high revenue growth.

 

The formula for calculating PS Ratio

P/S Ratio = Price Per Share / Annual Net Sales Per Share

Let's assume company XYZ Ltd. reports net sales of 5,000,000 and it currently has 50,000 shares outstanding. The stock is currently trading at Rs.200.

Sales per share = 5,000,000/50,000 = 100

Price-to-Sales Ratio = 200/100 = 2

Now compare with company MNO Ltd.

MNO Ltd. reports net sales of Rs.5,000,000 and it also has 500,000 shares outstanding. The stock is trading at Rs.100.

Sales per share = 5,000,000/50,0000 = 10

Price-to-Sales Ratio = 100/10 = 10

Investors in MNO Ltd are willing to pay Rs.10 for Rs.1 in sales, while investors in XYZ Ltd are willing to only pay Rs.2 for Rs.1 in sales. MNO stocks are much more appealing here.

P/S ratio is suitable to use when valuing most types of stock. But note that P/S should never be the individual metric used when valuing a company.

Dividend Payout Ratio:

It works as an indicator of how the company is performing financially. The main motto of the companies is to maximize the wealth of the shareholders. When a company makes a profit then it becomes the duty of that company to pay dividends to their shareholders. When the profit is shared with their shareholders it is called dividend. And the percentage of the profit the company pays to their shareholders know as “dividend payout ratio”. 

Dividend Payout Ratio Calculation

Dividend Payout Ratio = Total Annual Dividends Per Share / Diluted Earnings Per Share

Let’s assume that Company X distributed four regular quarterly dividend payments of Rs.0.25 each, for a total annual dividend payment of Rs.1.00 per share. Over the same period, XYZ reported net earnings of Rs.10 per share. Company X dividend payout ratio is:

Rs.1 / Rs.10 = 10%

That means company X distributed 10% to the shareholders out of 100% as dividend and retains rest 90% as operating needs.

Dividend payout ratios offer valuable insight into a company's dividend policy.

Book Value:

Book Value is a key factor for measuring stock’s valuation. Book value means the total value of the company asset minus company's outstanding liabilities. Investors often look for the company’s book value. Investors find an opportunity to buy the shares when the shares traded below the book value.

Return on Equity:

It refers to how a company uses its valuable assets to produce earnings. This helps to evaluate the stocks.

ROE = Net Income / Book Value

A healthy company produces an ROE in the 14 to 15 percent range. You should not rely on this alone. Because a company might raise funds through borrowing fund rather than issuing stocks to the public. You need to consider at the ROE over a period of the past five years rather than just one year.

Always consider above all main fundamental tools for making investments in shares and get a healthy return on your investment.