Introduction to the Indian Capital Market
August 21, 2010 by Perfectoz
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There are 22 stock exchanges in India, the first being the Bombay Stock Exchange (BSE), which began formal trading in 1875, making it one of the oldest in Asia. Over the last few years, there has been a rapid change in the Indian securities market, especially in the secondary market. Advanced technology and online-based transactions have modernized the stock exchanges. In terms of the number of companies listed and total market capitalization, the Indian equity market is considered large relative to the country’s stage of economic development. The number of listed companies increased from 5,968 in March 1990 to about 10,000 by May 1998 and market capitalization has grown almost 11 times during the same period.
The debt market, however, is almost nonexistent in India even though there has been a large volume of Government bonds traded. Banks and financial institutions have been holding a substantial part of these bonds as statutory liquidity requirement. The portfolio restrictions on financial institutions’ statutory liquidity requirement are still in place. A primary auction market for Government securities has been created and a primary dealer system was introduced in 1995. There are six authorized primary dealers. Currently, there are 31 mutual funds, out of which 21 are in the private sector. Mutual funds were opened to the private sector in 1992. Earlier, in 1987, banks were allowed to enter this business, breaking the monopoly of the Unit Trust of India (UTI), which maintains a dominant position.
Before 1992, many factors obstructed the expansion of equity trading. Fresh capital issues were controlled through the Capital Issues Control Act. Trading practices were not transparent, and there was a large amount of insider trading. Recognizing the importance of increasing investor protection, several measures were enacted to improve the fairness of the capital market. The Securities and Exchange Board of India (SEBI) was established in 1988. Despite the rules it set, problems continued to exist, including those relating to disclosure criteria, lack of broker capital adequacy, and poor regulation of merchant bankers and underwriters.
There have been significant reforms in the regulation of the securities market since 1992 in conjunction with overall economic and financial reforms. In 1992, the SEBI Act was enacted giving SEBI statutory status as an apex regulatory body. And a series of reforms was introduced to improve investor protection, automation of stock trading, integration of national markets, and efficiency of market operations.
India has seen a tremendous change in the secondary market for equity. Its equity market will most likely be comparable with the world’s most advanced secondary markets within a year or two. The key ingredients that underlie market quality in India’s equity market are: exchanges based on open electronic limit order book; nationwide integrated market with a large number of informed traders and fluency of short or long positions and no counterparty risk. Among the processes that have already started and are soon to be fully implemented are electronic settlement trade and exchange-traded derivatives.
Before 1995, markets in India used open outcry, atrading process in which traders shouted and hand signaled from within a pit. One major policy initiated by SEBI from 1993 involved the shift of all exchanges to screen-based trading, motivated primarily by the need for greater transparency. The first exchange to be based on an open electronic limit order book was the National Stock Exchange (NSE), which started trading debt instruments in June 1994 and equity in November 1994. In March 1995, BSE shifted from open outcry to a limit order book market. Currently, 17 of India’s stock exchanges have adopted open electronic limit order.
Indian Capital Market The capital market is the market for securities, where companies and governments can raise long term funds. Selling stock and selling bonds are two ways to generate capital and long term funds. Thus bond markets and stock markets are considered capital markets. The capital markets consist of the primary market, where new issues are distributed to investors, and the secondary market, where existing securities are traded .The Indian Equity Markets and the Indian Debt markets together form the Indian Capital markets
Indian Equity Market at present is a lucrative field for investors. Indian stocks are profitable not only for long and medium-term investors but also the position traders, short-term swing traders and also very short term intra-day traders. In India as on December 30 2007, market capitalisation (BSE 500) at US$ 1638 billion was 150 per cent of GDP, matching well with other emerging economies and selected matured markets.
For a developing economy like India, debt markets are crucial sources of capital funds. The debt market in India is amongst the largest in Asia. It includes government securities, public sector undertakings, other government bodies, financial institutions, banks and companies.
Introduction to Investing – How Do I Choose and Use a Broker?
July 2, 2010 by Perfectoz
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Basics for Beginners
Full-service brokers work for large brokerage houses like Citigroup, Merrill Lynch, Smith Barney, and Morgan Stanley. All brokers will execute trades for their clients, but a full-service broker will also research various investments and give advice.
However, unless you’re very savvy about the ins and outs of investing, you won’t know whether you’re getting good advice or advice that will take money from your pocket and put it in the broker’s.
Another issue in choosing a broker is that there’s no guarantee that the broker or “Financial Consultant” is any better than you are at choosing investments.
Ideally, a full-service broker thoroughly researches various investments and keeps you up-to-date with market trends, stock performance, and tax laws, while providing you with investment ideas and recommendations.
You pay a healthy fee for these services, so brokers are most suited for those who have a significant investment portfolio and don’t have the time or desire to manage their own investments. Even so, it’s important for you to have the final word on any investment changes. Beware of wording to the contrary in your written agreement.
In return for these services, full-service brokers charge high fees when you buy or sell stocks. For example, you could expect to pay as much as $150 for an average trade with a full-service broker, where the same service would cost between $5 and $30 online with a discount broker.
Full-service brokers also typically charge annual service charges or maintenance fees on your account. Most disturbing, because most full-service brokers receive commissions every time they execute a trade for a client, their compensation is largely determined by how many times they buy and sell stocks in your account. Those who are less scrupulous may be buying and selling stocks in your account, not because the decision is wise, but because the benefits to the broker are greater.
This is not to say that you shouldn’t use a broker, but if you do, go into it with your eyes wide open, thoroughly check the broker out, and never give anybody carte blanche to invest your money.
Discount Brokers
Some of the best-known discount brokerages are E-Trade, Sharebuilder, Fidelity, Charles Schwab, and TD Ameritrade. Discount brokers often make more sense for the average investor because they’re more affordable, and if you want to make your own decisions, a discount broker may be the way to go.
Before you sign up, make sure the broker deals in the type of investment you plan to make (stocks, bonds, mutual funds, options, or whatever it may be). Review the schedule of fees to find out what you’d be paying for commissions, account maintenance, and other fees. Check out the list of other services the brokerage offers. Some of them may be important to you, such as the ability to write checks on your account, the ability to make trades over the telephone, or the availability of research information about different stocks, bonds, and mutual funds.
Opening a Brokerage Account
Once you choose a brokerage, whether it’s full-service or discount, download the application forms from the brokerage’s Web site, and send in the completed forms with a check to fund your account. As soon as the account is open, you can begin trading.
Brokerages may require a minimum balance of anywhere from $500 to $2,000. If you’re opening an IRA, they may waive the minimum requirement.
What Is Forex Online Currency Trading? the basics of forex online currency trading
May 8, 2010 by Perfectoz
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A lot of people are surprised to find out just how easy it is to learn even the basics in relation to Forex online currency trading. You will be surprised just how quickly you can actually start to make a profit through this type of trading, but at the end of the day this will depend a lot on which type of trader are you.
Through this article I will be explaining just how easy it is to learn about the basics of forex online currency trading and how easy it is to make a profit.
Certainly if you are someone who is looking to invest some money in order to make a little extra income then Forex currency trading may be what you should be thinking of. However it is vital that you first learn a little bit more about Forex online trading before you do. There are literally hundreds of sites on the internet which can provide you with tips and courses on how to make money from Forex trading.
There are a number of different tutorials now available online which can help explain everything a person needs to know about the Forex market and is ideal for the complete novice. These tutorials will show a person how the Forex market works, what is a Forex technical indicator, plus the types of economic indicators that a trader should be aware of when trading in Forex. Plus there are a number of different Forex trading systems now readily available for people to try and use which will help to make their Forex online currency trading much more successful.
What is extremely important if you really are interested in getting involved in Forex trading is that you do some training first. Forex currency trading is not something a person should dabble in without learning everything that they can about the subject. Certainly, you should depend on luck or based on someone’s insider tips as well.
The great thing about many of the Forex online currency trading courses that are now available is that those running them understand what an enormous risk someone is taking getting involved in this type of trading. The people running these courses have made it extremely easy for those who want to learn as they offer their members free training, free demonstrations as well as tutorials and simulations of Forex trading accounts. The great thing about these simulations is that you can try them out without actually placing any of your money in to them and will help you learn the basics of Forex currency trading. Actually finding a course or tutorial is extremely simple all you need to do is key in “Forex currency trading online courses” and you will be amazed at the results that appear.
Why Most Forex Traders Base Their Foreign Currency Trading On Technical Analysis
May 8, 2010 by Perfectoz
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For many years Forex traders used fundamental analysis as the basis for their trading but today more and more traders are choosing to use technical analysis. But just why are we seeing this move away from a time-honored, tried and tested system?
Traditionally Forex traders have based their trading decisions on fundamental analysis which looks at both past and present political and economic events to predict future movements in currencies.
Fundamental analysis is not easy and requires the trader to have considerable knowledge of political and economic events and experience in analyzing both. It also requires the trader to work with a hue quantity of data. In addition, there is considerable disagreement amongst traders over just what political and economic data is important when it comes to predicting currency movements and, where agreement does exist, there is still often argument over how much weight each factor in the equation should be given.
Today however traders have the option to abandon fundamental analysis in favor of technical analysis. Many people believe that technical analysis is nothing more than a modern day extension of fundamental analysis and it is based upon three principles:
First, many things produce movements in currency prices, including political and economic events, but the effect of these forces has already been absorbed into a currency’s price at any moment in time. In other words, there is no need to look at the reasons for the movement in a currency price but to simply focus on the price movement itself.
Second, the price of a currency will follow a clearly defined trend which can be seen by examining the patterns which emerge in the market over time.
Third, the price of a currency does not simply follow a trend when looking at historical market data, but will also follow this trend in the future. This principle reflects the technical analyst’s view of human psychology and is based upon a belief that past movements in currency prices are the result of the manner in which people have reacted to certain circumstances and that people will continue to react in the same manner, and currencies move in the same way, in the future.
There is often great argument about whether or not technical analysis could possibly work since, in the view of many people, it really does not have any sound basis. However, the truth of the matter is that technical analysis does work. No system can predict currency movements with one hundred percent accuracy but, compared side-by-side, both fundamental and technical analysis do a pretty good job.
Without going into too much detail here (because that would take a very long article all of its own), technical analysis is essentially a computer-based system of analysis which takes historical price data and looks for patterns in that data which can then be presented to the trader in the form of a chart or graph. At the same time the system also looks at a chart or graph of the current price movements of a currency and compares the present pattern of movement with past patterns in order to find a match and thus predict the future direction in which the currency will travel.
Given this picture, it is not too hard to see why younger people who have grown up in today’s computer age choose to adopt technical analysis as the basis upon which to make their foreign currency trading decisions.
LearningForexTradingOnline.com provides information on everything from finding a foreign currency exchange rate to the Forex mini account and is the perfect place to learn Forex currency trading online.
Stock Market Trading Secrets Tips Tricks Advice Trends Stock Market of India
May 8, 2010 by Perfectoz
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Online Stock Market Trading tips tricks and techniques Secrets Advice Trends stock market of India for beginners. How to get success in stock market trading.
While making an investment in Indian stock market there are lots of thing you should consider before it. I will guide you most important thing and tips that you can implement while making any investment in stock market of India. These stock market tips and tricks are based on many years of expertise experience and as a professional expert in Indian stock market. These are the Stock market secrets ……..
Buy at low and sell at high: – This is way to make money in stock market that you should buy at lower prices and should sell at higher prices. It determines the success and failure of an investor in stock market of India. Stock Market Trend: – If you want to be a successful investor in stock market of India you should have perfect idea of stock market and what is going on in the stock market. For this you should have up to date with Indian stock market news.
If stock market is going up try to search out reason behind it. If market is going down then also try the same. Make your mind calculation with these points and than come to a final decision whether you should keep sell or buy. Down and up it is the duty of stock market of India. Stay longer with stock market may result in profit or may be results in loss, it’s totally depends upon the reason why these major up downs have been taking place in stock market. In case you have got the right point than you will get other wise loss.
Current Trend of Stock Market: – As per current trend of stock market it has been seen that once stock market rise at higher speed it down also with same speed and if stock market have gone down there is more possibilities of getting up. This is the current market trends but it can be change in future.
Keep patience: – Patience is also plays a vital role in your winning and losing. In stock market many peoples take immediate decisions which can result in big losses later on. This is the nature of stock market every step should be take after a deep thinking and consideration.
Find more stock market tips and money making tips and tricks. You will find stock trading as well as other money making ideas tips and tricks.
Online Stock Market Trading Investment Stock Market Of India Tips Tricks Advices
May 8, 2010 by Perfectoz
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Want to jump in stock market, there are some factors which should be consider first before jumping in stock market. First you should know the basics of stock trading. What are stock trading and how much minimum investment it requires for stock trading? Proper research is needed while making any investment in stock market. You should learn about the company in which you are going to invest. Search about companies business in which it is involved and what types of business carried out by that company.
If you are satisfy with your research and found profit in investing in that company. It is safe to invest otherwise not. In business there is always a risk factor, so be careful about companies and market trends to maintain your profit.
One always purchases stock to earn profit. One gains when he purchase stock at low cost and sales when the market is up and the stock prices grows. Make stock market research and decide which share is profitable one, which company can grow in future and which can down. Accordingly plan your stock market investment.
If you have lots of share of a company and the company is growing consistently at a normal rate then there is no need of concern. On the other hand if a company growing fast at abnormal rate then search out the factors and investigate the reasons of its success. If you find positive results then further investment in that company will be profitable otherwise it may be loss. Stock market of India is consistently growing up and investors are earning with both hands. Make investment in stock market of India.
Let’s take another example where you make huge investment in a company and the company suddenly goes down. In this case most of the investors take quick decisions that may put them in trouble. So don’t make any big decision without proper awareness and investigation about the problem. First find out the correct reason behind it.
Undoubtedly stock trading is a good way to earn money, where you need not to devote much time or you need not to work. It is side business and also involves risk factor. It requires initial investment to get success. Stock trading is one of the best ways to make money but require some precautions. Find more about stock market of India or Indian stock market. Other ways to make money online without any investment check it out and make online money.
Online Stock Option Trading – What They Are and Where to Find Them Online
May 8, 2010 by Perfectoz
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Stock option trading is different than stock trading. When you buy a stock, you purchase ownership in the company. When you purchase a stock option, you are entering into a contract that gives you the right to buy or sell stocks at a set price before a specific date.
Two Types of Options
Calls – With the option of a call, you can purchase a stock at the strike price (fixed price of contract) before the option expires.
Puts – This is a contract that gives the right for the owner to sell a specific amount of an asset at a set price within a specific amount of time.
The internet is full of sites offering help for stock option trading and providing tools for stock traders. If you want to do your trading online, here are some sites that offer services and education in stock option trading:
OEX Options – For a fee, you can use this site for your online stock option trading. It also provides education for stock option traders.
Options Xpress – The tools are free, education is free and there are no hidden fees. More than 282,000 people used this service. The commissions you must pay are low.
Think or Swim – Voted best for option’s traders in March 2007, this site offers software for options trading as well as web-based options trading. You can even use this service to go mobile with your stock options trading.
Scottrade – This site has an area for stock options trading. It does not provide advice for options trading as it Scottrade is a discount brokerage firm. Only use this site if you know what you are doing.
NobleTrading – This site is not an educational site but does offer software for online stock options trading. It also offers a free demonstration of its stock options trading service.
Zecco.Com – Offers stock options trading, strategies, and an online forum for benefiting from the advice of others involved in the stock option trading market.
Online Broker Comparison – Questions Every Investor Should Ask
May 8, 2010 by Perfectoz
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What kind of investor are you? Are you an active trader, a buy and hold investor, or do foreign markets interest you? Finding out what kind of investor you are is the first step in comparing discount brokers. Each online broker you work with will have a specialty they’ve built their business around. Some specialties include customer service, mutual fund management, low cost trading, real time tools, user friendly interface, or having a network of traders interact with each other. Which of these specialties is the best? The best broker is one that fits your needs.
The best broker comparisons highlight the differences and make suggestions based on what kind of investor will be using the service. Some comparisons are worthless because they are comparing apples and oranges and they fault the apple for not being an orange. Each company is different and they have grown in different ways. For the majority of investors most online brokers have all the services they could possibly ever need. With that in mind what are the main areas to compare.
Ease of use. Websites that are easy to use will help you avoid a lot of headaches. Usually within a few minutes of trying to sign-up you will have an idea of how easy the rest of the company’s site will be like.
Minimum balance to start an account and avoid fees. Are you an active investor with access to enough cash to open an account. Do you have enough available to avoid account minimum fees? For most online brokers this is not an issue because they have eliminated all these kinds of fees.
Inactivity fees. What if your account is inactive? Will you be charged a fee? Some broker’s inactivity fees in are figured on a monthly basis. If you are a buy and hold investor they may penalize you for not actively trading. Again, this is usually not an issue. This is usually an issue with big name brokers that haven’t really caught on to the low cost mentality.
Customer Support. How easy is it to contact someone at customer support? If you needed something urgent could you talk to a real person about your account?
Investment Products. Are you wanting to invest in more than just regular stocks, bonds, mutual funds, and options? If you prefer mutual funds, does the broker have a wide range of no-load and load funds to choose from? Many brokers don’t like trading penny stock or excessively risky stock.
Timely Execution of Trades. How long does it take for the broker to execute an order after you’ve placed it? While most companies will be very close on time of execution some are worst than others. A search engine can make short work of investigating if a company has had problems in this area.
Does the Broker have Physical Locations? Many investors that are Internet savvy have never placed foot in a physical location and have traded for years. Other investors may take solace in knowing they can drive to a branch and talk to someone face to face.
Trade Commissions. How much will it cost to trade? How many trades do you anticipate executing each year? How much of your total investment will the commission represent? Trading costs can add up quickly if you buy a number of individual stock, buy weekly, or sell regularly.
Research& Analysis Tools. Are you a technical investor? Free access to tools and research can save you hundreds of dollars each year.
Sophistication of trading tools. Can the broker perform the type of trades you are trying to execute? What kind of automation and customization are available to you?
Online Trading: Preparedness is a Key Factor to Your Success
May 8, 2010 by Perfectoz
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When you engage yourself in online trading, you need to come prepared. Many new traders are often under-equipped and they lack the necessary things needed to succeed. You see, in this line of business, you could earn so much but you can also go down hard.
Before you even try your hand at trading, it is essential that you arm yourself with sufficient knowledge of the market you are aiming at. This entails making sound judgment as to which market will be best for you to target on, and by this we don’t mean the ‘trend’ nowadays, but rather, a strong and stable market that suits you and your skills.
When it comes to trading style, you would learn this by going through trainings or courses that offer you a demo account- these things you can on the net. Moreover, you might want to consider getting yourself equipped with the innovations in technology that will help you better handle your trading business, such as calculators and software programs. While many successful traders make use only of a pen and a paper, they are backed with enough experience to let them get away without necessary gears. And unless you have that expertise, you need to stick to the essentials.
To be able to crunch in the numbers accurately, you need to use calculators or any device that makes you more efficient in dealing with figures. Why, you may ask? This is simply because every other trader who has enough sense does so. If you want to keep up, use systems that have been proven to work, over time.
Additionally, you need to develop a ‘trader mindset.’ This means that you need to be ready psychologically regarding what will happen. Along with this comes the ability to make sound decisions, and not just gamble your money away. Keeping your cool when things do not turn out the way you expected is another good factor. Even in stressful times, you should have the ability to relax and think things through.
A good trader, and one that will most likely succeed, is a person who can check out the trading room everyday, study the figures, and make right decisions. A bad trader, on the other hand, goes to the trading room and every time he sees that the trend is not good, he panics and makes careless decisions. Truly, there is a huge difference.
When you want to do online trading, it is important that you know trading inside-out, which market to tackle, and what gears you need to help you in trading. Success in trading is not about luck, it is about being smart, skilled, and of course, prepared.
Indian Stock Exchange & Online Trading : Bombay Stock Exchange and National Stock Exchange
May 8, 2010 by Perfectoz
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Bombay Stock Exchange and National Stock Exchange are major Stock Exchange is India. Like India there is uncountable investor’s puts their money to grow. Stock market is also one of those places which provide growth to investor’s money. Some of investors who want make money fast as they want they comes to stock market. Some times it is not shows growth due to some reason or factors otherwise it best way to give a chance to your money. Any stock market is also decides its countries growth u saw also in this world those country who have good stock market record they are leading.
Stock market always stay ahead from other resources if investments. It gives better return and as well as surety of your money but not all time because there are some factors are present at that place who really don’t want that stock market do well.
Some times this market become tumble down and investors get fear by it but if they keep patience they can make good money because according to market rule u should go for buying in crush time because when the market go up you can get good profit form those buying which u done at tumble time.
Now our stock exchange provides other facilities like online buying or selling. It really helps to investor who is stay from stock market just because of time. In these days Stock Exchange Board Of India also keep watching on Stock Exchange because in our past we saw some most powerful cases of cheating that why Stock Exchange Board Of India working for those investors who puts their blooded money in the market. Every one want earn maximum in minimum time but they have no maximum time to keep watch on stock market so we are providing online stock trading & this facility helps to their clients to focus on their work. If you run behind any broker or any other related person they always waste your time as well money as.
Many times people just want buy their stocks & shares on which price but they can’t do because of some communication gap but online stock trading facility enables that very one can buy or sales share’s or bond on that time when they want. Online stock trading is a way by which you can do safe buying or selling in sense of security no body can trust able. In crash time of stock markets it becomes more important to keep watch on market but through online stock trading you can do every things just on one click. It saves your brokerage money as well as. This is the easiest thing do to save your valuable time and money comes on the track of online stock trading.
The stability of stock market is not fixed so it many times its tumble down and sometime it raises high .It doesn’t affect the investment of individual only but also the economy at large scale. To come out from this situation many researches have been made in this direction to adopt several strategies such as “stop loss limit”&”value at risk limit” The crash is that in which the sharp declining in the prices of equities. The most popular crash is black Thursday which was started on 24 October, 1929.