Month: August 2025

What Is Passive Income Through Stocks and How to Build It?

Posted on August 25, 2025August 25, 2025 by Pranav Lodh

Passive income is a prudent way to generate wealth and build stability amidst uncertain times. Hence, many consider renting out properties or investing in startups to earn it.

But did you know, you can earn passively even with stocks? Yes! Passive income through stocks is gaining momentum as more seek extra income without investing much time or effort.

Hence, many aspirants who inquire about or enroll in our stock market classes in Pune also discuss earning passive income through stocks. They are eager to learn how to earn money passively through stocks that generate income with minimal or no effort. If you are one among them, you’ve come to the right place. Whether you are a professional, student, or housewife, if you are actively looking to earn passive income, here is a blog that explains how you can do it through stocks.

What is Passive Income Through Stocks?

Passive income is money that flows in regularly without requiring an ongoing active effort. As for stocks, it often refers to income streams generated from stock market investments. Such stock investments don’t require you to trade actively or indulge in daily stock buying and selling. So, in a way, such stocks are a ‘set it and forget it’ kind of thing. Nevertheless, you must remember, passive income isn’t a get-rich-quick program. Careful analysis and informed choice play as important a role as they do while choosing other stocks you would trade regularly.

This is where share market classes in Pune play a role! But before you enroll for a share market course, here is an overview of some options that can help you generate passive income via the stock market.

How to Earn Passive Income Through Stock – 5 Popular Options

From dividends to growth stocks, here are five stock market options for passive income.

1. Dividend Stocks

This is the most popular option. Dividends are a portion of profits that companies share with their shareholders periodically. Shareholders receive a dividend per share. Thus, the more shares you own, the more dividends you receive.

Earning dividends requires investing in established companies with a dividend payment history. Accordingly, look for companies with increased dividend payouts for 25+ years. Now, instead of using the payout income, you can also reinvest it and buy more shares with your dividends. This will help you compound your earnings over a period.

2. Stock Lending

Some brokerage firms let you temporarily lend out fully paid shares of select stocks you own to other investors or institutions, usually for short-selling. It helps you earn interest on the shares you lend. But lending stocks requires a brokerage firm that finds borrowers and manages the loan. Any risks? Yes – Borrower defaulting! However, reliable brokerage firms generally have measures to mitigate the risk. Hence, the choice of the firm matters.

3. Index Funds and ETFs

There are collections of stocks to track the performance of market indices like the Nifty 500. These indexes don’t pay dividends directly to the investor. But they help you diversify and leverage long-term potential growth with a relatively low fee.

How do you build this investment? Select a broad-market index fund or ETF in line with your risk tolerance and investment goals. Some funds focus on high-dividend stocks through which you can earn income over time.

From dividends to REITs the opportunities are waiting, Let FinEarn guide you to build smart passive income.

4. REITs (Real Estate Investment Trusts)

Passive income through property renting or leasing is a proven option. However, not everyone has a spare property at their disposal.

So, does that close the real estate option? No! Instead, REITs open it. These are investment options that help you invest in diverse real estate assets, including commercial properties that produce rental income.

You can invest in Indian REITs listed on the stock exchange, making this option liquid and easily accessible for Indian investors. Besides, while investing in REITs, look for those with high rental yields and long-term growth opportunities. REITs usually offer quarterly distributions based on rental income from properties.

5. Bonds and Fixed Income Stocks

Bonds are another traditional choice. Some options include government bonds, corporate bonds, or debenture stocks that companies from various sectors issue in the market. Many of these instruments provide regular coupon payments (interest) that you can use as passive income.

While choosing bonds, you must look for high-quality bonds from reputable companies. Besides, look for interest rates, maturity periods, and credit ratings to reduce risk.

Want to Unlock the Path to Passive Income? Join Fin Earn Share Market Academy!

One of the best share market classes in Pune, FinEarn Share Market Academy offers comprehensive courses that offer in-depth technical and strategic understanding of various stock market topics. So, whether you are an active trader or someone looking to build passive income, we cover you with our learning programs. Call us at +91 95618 61818 to speak with our experts and learn more about our courses.

What Is Nifty 50 & Sensex? India’s Benchmark Indices Explained

Posted on August 20, 2025August 20, 2025 by Pranav Lodh

As an aspiring stock trader, you must have often come across the terms, the Sensex crossed 80,000 or Nifty fell by X points today! Ever wondered what these terms mean?

Joining stock trading classes in pune will help you acquaint yourself with them.However, before you begin your journey, learning the basics about the benchmark indices will help you make a more prepared and informed entry into the share market space.

What is Nifty 50?

Nifty means National Stock Exchange Fifty. It is the equity benchmark index of the National Stock Exchange (NSE). The difference between Nifty 50 and Sensex is the number of stocks each has. Nifty 50 comprises stocks from the top 50 of approximately 1600 companies that trade actively in NSE across 24 sectors.While the number may seem small, these 50 stocks constitute about 65% of the total free-float market capitalization of the index.

What is Sensex?

This is the market index of the Bombay Stock Exchange (BSE). The BSE introduced Sensex in 1986, a period when it followed the weighted market capitalization method.Then, in 2003, Sensex moved to the free-float market capitalization method. Sensex has a base value of 100 for calculation.

A significant difference between Sensex and Nifty is that of the base year used for calculation. Thus, the base year for calculation is 1978-79.

How Do You Calculate Nifty?

Nifty 50 uses a methodology weighted based on the free-float market capitalization. This refers to determining the weight of the stock in the index by its market capitalization. However, you must note that only shares publicly available for trade are considered. So, to calculate the Nifty, you must first derive the market capitalization of the constituents by multiplying the number of shares with their prices.

The formula is Market Capitalization = Outstanding Shares x Price

Next, to determine the free-float market capitalization, you must multiply the Investable Weight Factor with the original market capitalization. The Investable Weight Factor signifies the share proportion investors can freely trade in the stock market. So, in other words, it is the percentage of shares that a company’s directors or promoters don’t hold.

Free-float Market Capitalization = Market Capitalization x Investable Weight Factor

Eventually, you must calculate the index value by dividing the current market value by the base market value and later by multiplying it by the base index value (1000).

Index Value = (Current Market Value / Base Market Capital) x 1000

The index indicates the returns an investor can earn if they invest in a particular portfolio.

How to Calculate Sensex?

Sensex uses a free-float market capitalization weighted technique. Let’s see how to calculate the Sensex.

Market Capitalization: The total value of a company’s publicly traded shares, which is share price X number of shares.

Free Float Factor: This factor counts only the shares available for trading. It doesn’t count promoter or locked in shares, thus providing a realistic picture of liquidity.

Index Divisor: A number that maintains index stability during dividends or stock splits.

Let’s look at the formula.

Sensex = Sum of Free-float Market Capitalization of 30 companies / Divisor X Base Index Value. Thus, if the combined market cap of these companies is Rs. 20 lakh crores, and the divisor is 1,000, then Sensex will be 20,00,00,00,00,000 / 1,000 X 100 = 10,00,000 points.

Nifty 50 to Sensex secrets Your journey from stock market beginner to confident trader starts here

Who Makes up Nifty 50?

Some of the sectors that constitute Nifty 50 include:

Banking and Financial Services
Pharmaceuticals
Automobile
Fast Moving Consumer Goods
Metals and Mining
Energy and Utilities
Information Technology

To be part of Nifty 50, companies must be:

Amongst the top 150 companies by market cap on NSE
Adequately liquid and have regular trading volumes
Meeting domicile and listing rules
Consistently performing financially and have a solid market reputation

Additionally, there must be a balanced sector representation to prevent a few industries from dominating the market.

Who Makes up the Sensex?

Sensex tracks 30 blue-chip firms from sectors like:

Energy
Consumer Goods
Banking and Finance
Healthcare
Industrial
Telecommunications

To be part of Sensex, companies must have:

High liquidity
Robust market reputation
Proven financial track record
Significant free float market capitalization
Financial stability
Sectoral diversity for a balanced representation

Nifty and Sensex Differences at a Glance

Here’s what makes Nifty 50 and Sensex different.

Aspect	Nifty 50	Sensex
Number of Stocks	50	30
Base Year	1965	1978-79
Base Index Value	1000	100
Ownership and Exchange	NSE	BSE
Market Representation	Wider market exposure with more stocks	More focused on big players

Want to Champion the Concepts of Nifty 50 and Sensex Trading?

Join FinEarn Share Market Academy! We are one of the best share trading classes in Pune with a proven track record and a comprehensive course curriculum, providing practical exposure. Our learning setup comprises seasoned trainers, an active environment and post-course support to help you become an independent and confident share trader.

If you are prepared to do what it takes to transform into a successful trader, call us at +91 95618 61818 and speak with our experts.

Top 5 Fundamental Ratios Every Indian Investor Should Use

Posted on August 12, 2025August 12, 2025 by Pranav Lodh

Are you looking to become a stock market investor? Then, remember, it is more than just picking stocks based on impulses or tips! Instead, it is about making informed decisions based on various techniques.

Learning fundamental ratios and using them appropriately is integral to stock investment. However, which fundamental ratios should you, as an Indian investor, know and use?

As providers of one of the top 10 best online share market courses, we consider this a crucial question. So, here is the answer to it.

5 Types of Fundamental Ratios Investors Must Learn and Use

From Price to Earnings to Debt-to-Equity ratio, here are the ratios to consider.

1. Price to Earnings (P/E) Ratio

It is the ratio of the current share price to the earnings of the company per share.

The ratio tells you if the company is undervalued or overvalued in the market.

For instance, a company’s overall earning is Rs. 3000, and it has 300 shares trading in the market. Thus, its earning per share is Rs. 10.

Next, let’s say the company’s shares are trading at Rs. 300 per share. Thus, the P/E ratio is,

P/E = 300/30 = 10

In simple words, you are paying Rs. 10 for earning Rs. 1 from the company’s earnings. Thus, you can confidently say that establishments with a higher P/E ratio are much overvalued.

Now, what should be the ideal P/E ratio? There’s no specific answer. While calculating the ratio, you must consider the industry benchmarks and assess the valuation.

2. Dividend Yield

This one is crucial if you are looking for regular income.

It signifies the yearly dividend payout as the current stock price’s percentage.

The formula is annual dividend per share/market price per share X 100.

It will show you the return you earn through dividends on your investment.

Let’s say you buy a stock at a market price of Rs. 10. A year or two later, you see the stock price hasn’t changed at all. So, are such stocks good to invest in?

A quick look will reveal they aren’t, as you’ve earned a zero percent return.

But have you considered the dividend before making a decision?

Usually, you would go for companies with high dividends. However, it might also signify a declining stock price or shaky payout ratio.

The key to making the right choice? Analyzing the company’s dividend history and the ability to maintain future payouts.

Decode P/E, P/B, and D/E Like a Wall Street Analysis – We’ll Teach You How

3. Price-to-Book (P/B) Ratio

This ratio compares a company’s market capitalization to its book value. It helps you determine if you are paying a reasonable price for the company’s net assets.

So, how do you calculate the P/B ratio?

P/B Ratio = Market Price Per Share / Book Value Per Share.

Suppose a company’s value is Rs. 100. It decides to close shop and gets Rs. 100. But out of this amount, it must pay Rs. 50 as a loan repayment. On the other hand, the company has some assets worth Rs. 20. Thus, the company’s total book value is 100-50 + 20 = Rs. 70

Now, let’s say the total number of outstanding shares was 35.

So, the firm’s book value per share is 70/35 = Rs. 2.

As for the P/B ratio, let’s say the company’s market share price is Rs. 30. Thus, the P/B ratio will be 30/2 = 15. Companies with a low P/B ratio are considered undervalued. Those with a higher one are overvalued.

4. Current Ratio

Although profitable, companies that cannot repay their short-term debts can face financial issues. Hence, calculating the current ratio is crucial. The formula is,

Current Ratio= Current Assets / Current Liabilities

A ratio greater than 1.0 means the company can meet its short-term liabilities with short-term assets. But a ratio above 1.0 might indicate that the company is accumulating money and not using it efficiently. A ratio below 1.0 signifies risk. It indicates that the company might struggle to cover its debts.

5. Debt-to-Equity (D/E) Ratio

Profits are one part. But what about debts?

That’s where the D/E ratio comes into play.

Debt-to-Equity Ratio = Total Debt / Shareholders’ Equity.

Too much debt can pose a risk.

The ratio shows you how much debt a company is carrying for every rupee of equity.

A high ratio shows that a company is more leveraged, resulting in a financial risk.

Want to Master Fundamental Ratios?

Although not the only one, the fundamental ratio is an important technique that helps you make informed investment decisions. But you must champion them with the right training. So, whether you are looking for share trading or futures and options classes in Pune, FinEarn Share Market Academy has got you covered. We are a reputed institute with a proven track record and successful alumni.

Want to discover more? Call us at +91 95618 61818.