Stock Market Guide

The stock market is a creature in and of itself. At times it makes sense and at other times, no one can explain why it acts the way it does. What is clear is that, over the long run, the stock market will climb and climb faster than almost any other traditional investment. With that said, there are also moments (that sometimes last years) when the value of the stock market gets out of whack with the underlying companies and with the economy. I’ll try to explain my views below.

HOW TO START TRADING

1. Open a broking account with a registered stock broker. You can also open an internet trading account and start trading by click of a mouse. A large number of brokers such as ICICI Web-trade, Motilal Oswal Securities, Geojit Securities etc. are offering e-broking services. 2. Submit your details and sign the broker client agreement with your broker. This is mandatory. 3. Open a Demat account with any of the Depository particiapants registered with NSDL or CDSL. If your broker is also a DP, you can open the DP account with him also. Sign there levant papers and execute agreement. 4. Don't deal with unregistered intermediaries, as this would expose you to counter party risk and may lead to losses without any stock exchange recourse for remedy. 5. Give clear and unambiguous instructions to your Broker / Sub-broker. 6. Keep a record of all instructions issued to the Broker / Sub-broker. 7. Insist on a contract note issued for each day of trading and confirm the details printed therein about your transactions for the day. 8. Trade within your predetermined limits and financial capacity. 9. Promptly issue delivery instructions to your DP for transferring the shares sold by you to your broker's account. Failure to do so may result in huge losses for you. 10. Use the Investors' Grievance Redressal system of the stock exchanges and Depository to redress your grievances if any.

ONLINE TRADING IN INDIAN STOCK MARKET

The interest has opened a Pandora’s Box for the investors. Those who never thought about investing in stocks have now stated investing in the share and stocks. The internet trading has made it simpler and easy to understand, but the basic rules of trading or investing have not changed and you have to be smart enough to follow these rules so as not to have any losses. The basic rule of smart investing still holds. The rules and guidelines have to be followed to help them make money. The internet has opened a wide variety of websites and trading sites that gives an investor with daily market commentary, stock tips and trading fundamentals, it also provides trading and depository facilities. These services provided by the websites are not free and charge high rates. However, there are a few websites that offer opportunity for the new emerging group of willing investors to test their trading fundamentals and techniques and learn new ones. There are a few virtual stocks trading portal as well, which can help in learning the process of stock market well. These websites offer a new investor to experience the dynamics of real time stocks trading at zero cost and zero risk. You can learn to trade in equities of top Indian corporate in a virtual manner. You can learn and test main points of the online trading techniques and fundamentals. Generally, these sites offer virtual money through which they invest. They input the market data in real time basis and you can buy or sell order on both intraday and delivery basis in such websites. You can order at both limit and market rates. This way you can learn to trade without losing any money. The new generation Indian has lots of money that they want to invest as the lure of making money is there. The online websites has made it possible to them to make

IPOS- HOW TO MAKE MONEY

1. An informed investor is the one who can make money. Remember to carry out your own due diligence about the promoters of the company, their plans, their past track record etc. Read the offer document carefully. 2. Like all investments, IPOs are also not risk free. However you can manage the risk by carrying out due diligence and planning. 3. Never follow the herd mentality. Be yourself. Remember how much effort you make while making purchase decisions for your other needs. Investment in IPOs is no different. 4. During bull run, a number of fly by night companies tend to take investors for a ride. Beware. Remember we are in disclosure based regime and not merit based regime. This means that any company which meets the requirements can come out with a public issue provided adequate disclosures are made. So be careful about such operators. 5. Plan for a long term investment. Good investment for a longer period of time will give decent returns. 6. Not all issues coming with huge premiums are good and not all issues coming with low premiums are inexpensive. Pricing is an important factor and need to be considered carefully. 7. Remember to limit your investment within Rs. 100000/- if you want to be called as retail investor. There are quotas available for retail investors and which are not available for high net worth investors. So do your calculations correctly. 8. Also remember that not all shares you are bidding for would be allotted to you. Share allotment is based on proportionate allotment system depending upon the number of persons who have bid for that number of shares in which category you fall. In case of good issues, you may get far less number of shares than what you have bid for. 9. If you believe that adequate disclosures were not made by the company, you can make a complaint to the lead manager to the issue or SEBI against the company for misleading investors.

RULES AND REGULATIONS

A stock broker is a person or entity, which is a member of a stock exchange. A stock broker acts as a facilitator to carry out transactions of investors on a stock exchange. Thus if you want to buy say 100 shares of a company XYZ (which is listed on say National Stock Exchange) in the secondary securities market, he would have to go through a stock broker registered in NSE to carry out his transactions on National Stock exchange. Stock brokers are governed by SEBI Act, 1992, Securities Contracts (Regulation) Act, 1956, Securities and Exchange Board of India [SEBI (Stock brokers and Sub brokers) Rules and Regulations, 1992], Rules, Regulations and Bye laws of stock exchange of which he is a member as well as various directives of SEBI and stock exchange issued from time to time. Before start of trading with a stock broker, you are required to furnish your details such as name, address, proof of address, etc. and execute a broker client agreement. You are also entitled to a document called Risk Disclosure Document, which would give you a fair idea about the risks associated with securities market. Please go through all these documents carefully. Every stock broker is required to be a member of a stock exchange as well as registered with SEBI. Examine the SEBI registration number and other relevant details can be found out from the registration certificate issued by SEBI.