Investing Stock, Online Stock Trading, Share Market » 2010

Online Trading India

admin — Mon, 04 Oct 2010 14:46:14 +0000

Online trading India is an activity through which you can directly invest in shares through internet without any mediator like broker. You can trade in biggest stock houses like National stock exchange (NSE) and the Bombay stock exchange (BSE) in India with the help of leading online trading portals. These portals provide online platforms. In financial year 2003-04 the total turnover of online trading sector of India was 3% which increase to 16% in financial year 2006-07.

Online trading Facilities in India

For investors it is necessary to register with an online trading portal. The investors should enter into an agreement and the terms and conditions with a firm before trading with different securities. The servers of the registered online trading portal are connected to the stock exchanges and designated banks 24*7. The investors through e-mail or through the interface can easily get the updates on the trading and also check the latest position of their orders. Investors also get guideline from brokerages providing research content on their websites so that investors before investing can take proper decision on stocks.

Online trading Products and Services in India

In India the big online trading service and financial products are equities, life insurance, general insurance, mutual funds, share trading, commodities trading, portfolio management, loans and financial planning.

National stock exchange and Bombay stock exchange in India

At present in India many private stock houses are involved and providing online trading, but among them NSE and BSE are the largest exchanges. The online trading automated system used by the National Stock Exchange are NEAT, NIBIS or NSE’s Internet Based Information System and BSE On-line Trading System or BOLT for the Bombay Stock Exchange. These portals handles and transact with investors daily in huge volumes providing support and manage large amount of data possessing network all over the India. Following are other well-known Online Share Trading Portals which are involved directly with nationalized banks or financial institutions in India:

http://www.sharekhan.com/

http://www.moneycontrol.com/

http://www.religareonline.com/

http://www.kotaksecurities.com/

http://www.indiabulls.com/Securities/

Weapon to fight Inflation

admin — Sun, 22 Aug 2010 15:41:27 +0000

Weapon to fight Inflation

We normally play three roles saver, borrower and investor; keep on switching between these three.

Savers: the saved money is used in future for satisfying needs when the earnings get stop and rainy days starts.

Borrowers: spends more than his earnings. He hopes in future he will earn enough to fulfill his primary requirements and also repay his creditors.

Investors: have sparkles in their eyes. He invests in his business and figures out that he has taken up the biggest challenge and has to prove himself.

Let’s see the example to see the relationship between the borrower, saver and investor.
You have Rs 500; you have two options either buy shirt or buy it after six months. It’s true that the same shirt will cost you Rs. 550 after six months. So, what to do? First answer will be to buy a shirt today; thereby you will save money by buying shirt of Rs. 500.

Now, assume that your friend needs that Rs 500 urgently and willing to return Rs 550 after six months. What will you do then? You will give him Rs. 500 and buy the same shirt when he returns money back.

Now, assume that your friend promises to return you Rs. 600 instead of Rs. 550 after six months. You will give him Rs. 500 without a second thought and buy same shirt after six months at Rs. 550 and save Rs. 50.

In the example, borrower is willing to repay higher sum to compensate lender for the loss of his purchasing power. Hence, from this we learnt that:

• Savings does not make any sense if it does not compensate inflation.
• You need to be compensated at least for the loss of your purchasing power to boost you saving instinct. Here you compensate for inflation.

Now, let’s have a look on simple arithmetic:

In first assumption, you lend Rs. 500 to your friend and he returns Rs. 550 after six months; thereby he gives you Rs. 50 extra when he returns your money. While in second assumption, he returns Rs. 100 extra. The money you lent him is “principle” which Rs. 500. And the extra is the “interest”. Interest paid on the principal is the percentage of the principal. In first assumption, interest rate is Rs. 10% and in second it is 20%.

Hence Interest Rate is the aid to the saver by compensating the damages caused by inflation. While borrower has to think twice before borrowing as he has to pay the cost.

Now, what is the relation of Investor with the borrower in inflation? Investor uses his money to invest in his business. In above example, we have seen that investing is uncertain as many things may go wrong. Hence investor will go ahead expecting rewards offset the risk. Hence he will opt to lend his money to borrower to make as much as profit out of interest.

Conclusion:

Borrower rush to borrow more to spend now; Investor finds higher profit from its business. Saver is at the receiving end and insists on higher Interest Rate reestablishing the balance. Borrower and Investor have a distinct advantage when Inflation rises and interest swings the balance of power back in Saver’s favor.

What are mutual funds?

admin — Tue, 17 Aug 2010 13:05:50 +0000

Mutual funds are collection of money came from investors with an intention to invest into the industries having better prospectus. It is a pool of money invested in stocks, bonds, securities, infrastructure, telecommunication, energy, short-term money-market instruments and so on.

In eighties, process of economic liberalization brought dramatic changes in Indian industry, corporate sectors and the capital market. With this there was a demand for new financial services such as issue management, corporate counseling, capital restructuring and loan syndication. In eighties, UTI was holding the monopoly in mutual funds market but in nineties several public and private organizations took permission to setup mutual funds.

There are large number of investors who does not have enough time, knowledge, experience and ability to take financial risk to play a monetary game in stock exchange and earn income from the same. They do not have capability to manage their money. Mutual funds came into the market and penetrated so quickly to satisfy the investment need of these investors. Investors can seek a guidance of portfolio manager to minimize financial risk and ensuring safety and steady returns on investment. Portfolio managers are the professional fund managers who work on behalf of Asset management Company (AMC), guide you and manage your investments. AMC gives a management fees to these managers. Investors make money by earning dividends or on the investments and by selling securities that are appreciated in value.

There are two types of mutual funds: Open-Ended and Close-Ended funds. Investors can buy or sell open ended mutual funds at any time for the market price i.e. it does not have any locking period; they does not have a set of numbers of shares, they are always open to accept investment from investors. Normally, fund managers are the major players in open-ended mutual funds. Whereas Close-end mutual funds has a fixed number of shares and the value of shares fluctuates with the market. The investors can go for close-end mutual fund at the time of launching or buy from the current investors. Mutual fund is a piece of investment portfolio, investors’ gains and losses in share and expenses in amount of proportion of their investment.