What is Forex Market...?

The
foreign exchange (forex) market is a global market where one can buy and sell
any of the currencies of all countries in the world. The price of one currency will
have counter to another currency based on the law of supply and demand. The
huge quantity of forex trading transaction carried out every day in a nonstop movement
make the forex market one of the most liquid monetary markets in the world.

Based
on several research studies, the volume of money traded in the forex market amounts
to almost five trillion US dollars per day, You can conduct forex trading from
anywhere in the world through both telecommunication networks and the Internet. The stock market operates during the traditional business
hours, but in case of forex exchange market it operates 24 hours a day, five days each week.

For
better understand how forex transactions are quoted, you just need to remember
that a base currency is always quoted as a unit equivalent to the exchange rate
of the quote currency. For instance, if you see the quote EUR/USD = 1.3212, it
means that the base currency is the EUR, and one unit of EUR is equal to 1.3212
USD (which is the quote currency).

Each
forex trading transaction is completed through separate contracts, which are referred
to as “lots.” The typical size of one contract or lot is 100,000 units. This signifies
that if you acquire one typical sized contract, you will be able to control the base currency with a total quantity of 100,000 units. Each contract is then
subdivided into “pips,” which pertains to the minimum price increment. Standard
lots or contracts normally have a pip value of $10, but if you are just
starting with forex trading, you can try the mini-accounts that some forex
companies offer, wherein the lot size can be as low as 10,000 units with pips
amounting to just $1 or even less.

Volume Indicators

The
volume indicator is also a significant index aside from its own price. It is very
beneficial in the stock market because it shows how much stocks have been
traded (both selling and buying) at any given time. As it is systematized in Forex,
you cannot determine the figures as to the amount of money that has been bought
or sold during a particular time. You can determine the figures of the volume
indicator using the movement of the price as your base.

 

This
bar chart uses two different bars, the green, and the red bars. These bars are used
to show whether you have a greater value or a lower value. When you see a green
bar, it shows a greater value than what the bar previously indicated while the
red bar means the current value is lower than the previous value. With the bars
displaying a color green, it means that there are more people participating in
the stock market at that particular time.

 

The
volume indicator can analyze how strong the trend is. The price follows the trend,
whether it is going upwards or downwards. If the volume increases, it shows a strong
trend. However, when the price starts fluctuate while the volume begins to decrease,
then it shows a trend that is getting weaker and will probably stop. What follows
this is a reversal or a rather quiet market. Still, you will need other
indicators to confirm the current situation.

 

Volume
indicators are also used in sorting out the validity of breakouts. When a low
volume centralized market showed a single high bar in the volume indicator, it
can mean that a possible break out is expected at any moment. When it happens,
the volume indicator displays high values, which is considered more accurate.
When the indicator displays a low interest, the breakout is considered not
valid.

 

The
volume confirms the most significant movements in the market. When the traders’
activity becomes higher than usual, these are confirmed by having higher volumes.
Nevertheless, a volume indicator can be considered accurate and reliable if there
is access to the information from the actual turnover in the market.

Moving Averages

Moving Averages

Moving averages are tools that are designed to determine the direction of a
trend. Since prices in the Forex market tend to fluctuate around an average
value, it is easy to tell whether the prices are within or away the market
average value. In addition to telling whether the prices are within or away
the average value, you are able to calculate the prices that are above or
below the average value.

 

Usage of Moving Averages

One of the practical and efficient ways to measure a trending market’s
action is through moving averages. You can use crossovers, divergences, and
the trends of moving averages in order to examine and define the signals
that we extract from the action of the market. Afterwards, these can be
utilized to direct our succeeding decisions regarding trades.

Types of Moving Averages

·        
Simple Moving Average

·        
Exponential Moving Average

·        
Smoothed Moving Averaged

·        
Linear Regressed Moving Average

 

There is a sizable quantity of moving averages at the disposal of traders.
These are some of the examples:

Simple Moving Average

As one of the simplest tools, it tallies the costs within a particular
time, and split them based on span of time, extending to the indicator’s
value. There is no need for weighting or applying of smoothing factor.

Exponential Moving Average

This provides more value to up-to-the-minute prices by weighting in an
exponential manner. While we are moving to the charts left and in the
direction of past values, the weighting drops quickly relative to linear
progression. Thus, the most notable when it comes to resolving the
indicator’s value are the most current prices.

Smoothed Moving Averaged

This is comparable to EMA apart from the fact that it considers every data
available. The initial price values are not eliminated, rather they get
lesser weighting and play little role when it comes to concluding the
indicator’s value. It is usually utilized to have a smooth price action and
to eliminate the short-term variability. In this way, you have a better
comprehension of the long-term market action.

Linear Regressed Moving Average

This is comparable to MA, but it has linear weighting factors instead of
exponential. An example is that the earliest period’s price (n) is
multiplied by one. Next, the newer one (n-1) is multiplied by the factor of
two. The succeeding period is multiplied by three. This goes on to the
current period is reached. In this particular situation, the newer prices
have more emphasis, and the latest rising or falling fluctuations are
characterized by significant clearness that helps the trader decisions.
Despite the great number of makeshift and expertly made techniques for
moving averages, three common methods form the foundation of a majority of
such strategies

 

Crossovers

Crossovers take place when the price moves up or down a moving average,
which indicates the start or conclusion of the current trend. These are part
of the most usual incident within technical trading, and do not allow a
significant amount of the anticipated power when it comes to the analysis of
market action. These are most useful when combined with additional
techniques and tools if we want to examine price action more
confidently.

Trends of Moving Average

Moving averages can include its particular trends from time to time, too.
It is plausible to make good use of such trends in order to determine
the entry or exit points. Even though its reliability is not comparable to
the price trend when used on its own, it can still be an effective way to
verify the price action if we use it together with the latter.

Divergence/Convergence

Divergence happens when a trend dominates, but a moving average decline.
Meanwhile, convergence arises when a market trend falls down, but moving
average counters it by recording top highs. Such circumstances are deemed to
signify a subsequent reversal. At a time that indicator values contradict
the price action, it is expected that a market is soon to exhaust its
energy, which could be a fine time to start a counter-trend position. It is
crucial to keep in mind that timing is vague in such formations, and the
expected reversal may not even happen ever. It is usually noted in the
phenomenon of divergence/convergence emerges steadily without resulting in a
single significant reversal, particularly in powerful trends. However, it is
the most favored technique configurations when it comes to interpreting
moving averages.

Credit Rating

Credit rating is the evaluation of
the credit worthiness of an individual or of a business concern or of an
instrument of a business based son relevant factors indicating ability and
willingness to pay obligations as well as net worth.

The main purpose of the credit
rating is to communicate to the investors the relative ranking of the default
loss probability for a given fixed income investment in comparison with of the
rated instruments.

Credit rating will be given by a
credit rating agency which is a body corporate engaged in or proposes to be
engaged in the business of rating of securities offered by way of public or
rights issue

Some of Credit Rating agencies are
below

1.      CRISIL (Credit rating and
information services (India) Limited)

2.      ICRA (Investment  (information) Credit Rating Agency)

3.      CARE (Credit analysis and research
limited)

4.      India ratings and research Pvt LTD

5.      Brickwork ratings pvt ltd

6.      SMERA (SME Rating Agency of India
limited)

These Rating Agencies are regulated
by SEBI (Credit Rating Agencies Regulations) 1999

The Credit Rating Process will be

·        
The
issuer of securities will request the rating agency for credit rating

·        
The
rating agency will assign a rating team

·        
The
Rating team will collect the required information about the security and issuer

·        
The
Rating team will meet the key officials and the 
management team

·        
Rating
committee will conduct a meeting for Rating

·        
Rating
agency will communicate the Rating to the issuer

·        
Publication
of the rating

·        
Surveillance
and annual review of the performance of the issuer operations

Factors to be considered for Rating

·        
Industry
Risk

·        
Companies
Market position

·        
Operating
Efficiencies

·        
Accounting
Quality

·        
Financial
Flexibility

·        
Earning
Protection

·        
Finacial
Leverage

·        
Cash
flow Adequecy

·        
Management
Evaluation

·        
Asset
Quality

Scheme of revival and rehabilitation

Sec 261 of the Companies Act 2013

 

(1) The company administrator shall prepare or cause to be
prepared a scheme of

revival and rehabilitation of the sick company after considering
the draft scheme filed along with the application under section 254.

 

(2) A scheme prepared in relation to any sick company under
sub-section (1) may

provide for any one or more of the following measures, namely:—

(a) the financial reconstruction of the sick company;

(b) the proper management of the sick company by any change
in, or by taking over, the management of such company;

(c) the amalgamation of—

(i) the sick company with any other company; or

(ii) any other company with the sick company;

(d) takeover of the sick company by a solvent company;

(e) the sale or lease of a part or whole of any asset or
business of the sick

company;

(f) the rationalisation of managerial personnel,
supervisory staff and workmen in accordance with law;

(g) such other preventive, ameliorative and remedial
measures as may be

appropriate;

(h) repayment or rescheduling or restructuring of the debts
or obligations of the sick company to any of its creditors or class of
creditors;

(i) such incidental, consequential or supplemental measures
as may be necessary or expedient in connection with or for the purposes of the
measures specified in clauses (a) to (h).

 

Appointment of interim administrator

Sec 256 of the Companies Act 2013

 

(1) On the receipt of an application under section 254, the
Tribunal shall, not later than seven days from such receipt,—

(a) fix a date for hearing not later than ninety days from
date of its receipt;

(b) appoint an interim administrator to convene a meeting
of creditors of the company in accordance with the provisions of section 257 to
be held not later than forty-five days from receipt of the order of the
Tribunal appointing him to consider whether on the basis of the particulars and
documents furnished with the application made under section 254, the draft
scheme, if any, filed along with such application or otherwise and any other
material available, it is possible to revive and rehabilitate the sick company
and such other matters, which the interim administrator may consider necessary
for the purpose and to submit his report to the Tribunal within sixty days from
the date of the order:

 

Provided that where no draft scheme is filed by the company and a declaration
has been made to that effect by the Board of Directors, the Tribunal may direct
the interim administrator to take over the management of the company; and

(c) issue such other directions to the interim
administrator as the Tribunal may consider necessary to protect and preserve
the assets of the sick company and for its proper management.

 

(2) Where an interim administrator has been directed to
take over the management of the company, the directors and the management of
the company shall extend all possible assistance and cooperation to the interim
administrator to manage the affairs of the company.

 

Companies (Winding up) rules 2020

Companies (Winding-up)
rules 2020

Part I

1. Short title commencement and
application

2. Definitions

Part II

Winding-up
by Tribunal

3&4. Petition for winding up&
statement of affairs

·        
for
the purpose of sec272(1) the said company is to be filed a petition of winding
up in Form WIN-1 or WIN-2 as the case may be, in
triplicate.

·        
Every
petition is to be verified by an affidavit made by petitioner or members
representing the body corporates in From WIN-3

·        
Statement
of affairs, as required to be filled in duplicate under sec 272(4)  or 274(1) shall be in form WIN 4and the information there shall
not be more than 30 days prior to the date of filling

·        
Statement
of affairs in duplicate duly verified by an affidavit and affidavit of the concurrence of the statement of affairs shall be in WIN 5

5. Admission of petition

·        
Upon
filing the petition it is to be posted before the tribunal for admission of
the petition and fixing a date for hearing thereof and for appropriate directions
as to the advertisements to be published. The petitioner shall bear all the
costs of the advertisement

6. Copy of petition:

·        
Every
contributory of the company is entitled to furnish with a copy of the petition with
in 24 hours of his requiring after paying Rs.5 per page.

7. Advertisement of the petition:

·        
Notice
of the petition shall be advertised in any daily newspaper in English and in a vernacular language where the registered office of the company is located
within not less than 14 days before the date fixed for hearing, subject to any directions of the tribunal. The advertisement
shall be in Form WIN-6.

8. Application for leave to withdraw
petition:

·        
A
petition for winding up shall not be withdrawn after the presentation, without the
leave of the Tribunal subject to compliance with any order of the Tribunal,
including as to costs.

·        
An
application for leave to withdraw a petition for winding up which has been
advertised in accordance with the provisions of rule 7 shall not be heard at
any time before the date fixed in the advertisement for the hearing of the
petition.

9. Substitution for original
petitioner:

·        
Where
a petitioner

                                 
i.           
is
not entitled to present a petition or

                               
ii.           
fails
to advertise his petition within the time prescribed or

                             
iii.           
consents
to withdraw the petition or

                            
iv.           
to
allow it to be dismissed or

                              
v.           
fails
to appear in support of his petition when it is called on in tribunal on
original day fixed or adjourned for hearing 
or

                            
vi.           
if
appearing does not apply for an order in terms of the prayer of his petition or

·        
where
in the opinion of the tribunal

                                 
i.           
there
is other sufficient cause for an order being made under this rule,

                               
ii.           
the
Tribunal may, upon such terms as it may think just, substitute as petitioner
any other person who in the opinion of the tribunal would have a right to
present a petition, and who is desirous of prosecuting the petition.

10. Procedure for substitution:

·        
if
the tribunal makes the substitution of the petitioner in a winding-up petition

                               
i.           
it
shall adjourn the hearing of the petition to the date fixed by the bench and

                             
ii.           
direct
such amendments of the petition as may be necessary

a.      such contributory shall within
7 days from making of the order amend the petition accordingly and

b.      File 2 legible and clean
copies thereof together with an affidavit in duplicate stating the grounds on
which he supports the petition.

·        
The
amended petition shall be treated as a petition for winding up of the company

·        
It
shall be deemed to have been presented on the date on which the original
petition was presented.

11. Affidavit-in-objection:

·        
Any
affidavit in objection of petition u/s 272(1) shall be filed within 30 days
from the date of order

·        
A
copy of the affidavit shall be served on the petitioner or his authorized
representative

·        
Affidavit
shall also be given to any contributory appearing in support of the petition that
require on paying Rs.5 per page within 3 working days.

12. Affidavit in reply:

·        
An
affidavit in reply to the affidavit in objection to the petition shall be filled
within 7 days before the day fixed for hearing of the petition.

·        
A
copy of the affidavit in reply shall be filled on the day of filling thereof to
the person affidavit in an objection was filled with his authorized representative.