Preliminaries of Online Share Trading in India



Some of you intend to invest online in shares and mutual funds. This write-up would throw some light on charges involved with online investing.

If you wish to invest in shares you need the following three apart from money.

Broking A/c with brokers registered with BSE(Bombay Stock Exchange), NSE (National Stock Exchange)

Demat A/c with Depository Participants ( Now a days most of the brokers themselves offer Demat services )

Bank A/c preferably with net banking facility to transfer and receive money.

Each one of the above three would involve some direct and indirect costs. Before contemplating to invest online, Please make sure to learn about these things.

Some of the reputed online broking houses are www.5paisa.com, www.sharekhan.com and www.motilaloswal.com. Before starting relationship with any of the broking firm, please do contact their existing customers and get feedback. This one step itself avoids you of later disappointment.
Charges involved in opening an online trading A/c

One time charges
This may be around Rs.500 – Rs 750. They term this as A/c opening charges or registration charges or documentation charges. This is negotiable for most of the brokers.

Recurring charges
It includes annual maintenance charges, brokerage commission, Security turnover tax, service tax, regulatory charges.
For broking A/c, none of the brokers charge annual maintenance charge. Brokerage commission varies with broker and type of transaction. For intra day trade, the range is 0.05% to 0.25% of total value of trade. For delivery trade, the range is 0.25% to 1.00%. Most of the brokers give concession ( or charge lower brokerage ) based on your volume of trade and deposit money. The Security turnover tax, service tax and regulatory charges are same for all brokers as it is imposed by the Union Govt.

Deposit
You need keep a minimum amount of Rs.10000 with your broker as deposit. Your exposure limit will be based on this deposit.

Charges involved with opening a Demat A/c

One time Charges
This is A/c opening charges typically involve Rs.500 to Rs.1000. If you register for demat A/c with your broker himself, most of the brokers waive this charge completely. It is advisable to open demat A/c with your broker as it is not only economical, also convenient.

Recurring charges
It includes annual maintenance charges ( Rs.250 to Rs.750), transaction costs and monthly holding charges. For every buy and sell transaction, you will be charged 0.01% of the value of your transaction with minimum of Rs. 20 to Rs.50 ( This is over and above brokerage). Some demat participants charge only sell transactions and offer you free buy transactions (Eg. Indiainfoline or 5paisa). Previously you are charged Re.1 /month/company held in your demat A/c. Now a days this holding charges were withdrawn. But check all charges before opening an A/c.

Bank A/c
To transfer and receive funds, you need net enabled bank A/c. Each broker has tie-up with different banks. Please make sure that your broker has tie-up with your existing bank else you need to open an new A/c.

Bob Prechter's Six Secrets of a Successful Trader


1. Find a method. 2. Be disciplined. 3. Get experience. 4. Accept responsibility. 5. Accommodate losses. 6. Accept huge gains.

The No. 1 requirement for being a successful trader is to get a method,
No. 2 РBe disciplined. You need the discipline to follow your method. Among the true professionals, this requirement is so widely understood that it's almost a clich̩. Nevertheless, it is such an important clich̩ that it cannot be sidestepped, ignored or excepted.
Any system with a decent track record will be profitable if you apply it rigorously and honestly. As I indicated before, using the 10-day advance/decline oscillator with reasonable parameters, you can make money seven times out of 10. But very few people have the discipline to do it. Discipline is much more difficult to obtain than a method.
Do you mean that a well-constructed system will work, but the investor often doesn't?
Bob Prechter: Well, certainly a lot of work is required. But that's not the only aspect of the task. Lots of workaholics fail at trading. What you need is the guts to do what is right when it feels wrong. That takes immense courage and discipline. It struck me one day that among a handful of consistently successful professional options and futures traders of my acquaintance, three of them are former Marines.
The few, the proud?
The few, for sure! Among my acquaintances anyway, this is a ratio way out of proportion to the ratio of former Marines as a percentage of the general population. This anomaly implies to me that discipline is extremely important. At some point in their lives, these guys volunteered to serve in an organization that requires discipline and stamina. These people knew they were "tough" and wanted the chance to prove it. Being "tough" in this context means having the ability to suppress a host of emotions in order to act in a manner that would cause most people to shrink back in fear.
Years ago while attending summer school with Georgia's Governor's Honors Program, I was given a psychological test and told that one of my skewed traits was "tough-mindedness." I didn't exactly know what that meant, but after trading and forecasting the markets since 1972, it is clear that without that trait, I would have been forced long ago to elect another profession. The pressures are enormous, and they get to everyone, including me. If you are not disciplined, forget the markets.
Can anyone follow rules if he or she puts a mind to it?
A lot of people will tell you that they have that discipline, but when it comes to actually doing it, they don't. The markets aren't merely an intellectual exercise. They're an emotional one as well. By the time the emotions have eaten away at you for several months, it's even physical. Trading is incredibly difficult to do, and it's one reason I do not like trading.
The most important factor in the market strategy is learning to stand fast if your system tells you to do so, even when the news, your friends and the tape are screaming at you to do the opposite. Outside forces don't really affect the market and never have. People hear horrible things on the news – the assassination of President Kennedy is a good example – and they panic and sell. A crisis may influence where prices go that afternoon, but not overall. You have to learn to avoid that natural human reaction to what looks catastrophic or hopeful. Stick with your system; never second-guess it; always follow it.
Does discipline mean you should stick to one or two markets?
Not in my opinion. One of the most important characteristics of a successful commodity trader is the flexibility to go into any tradable market. If traders are "married" to particular markets, they may find themselves forcing a trade where none exists. The flexible trader can ignore 80% of the charts that are saying nothing and concentrate on the 20% that are calling for action. On the other hand, if one's method is market-specific to some degree, then specialization can add value.

MY BROKERS CALLS


Tue 09:56:06 a Buy Jain Irrigation at CMP with a SL of Rs 214 and tgt of Rs 225,228 - Biren
Tue 09:58:41 a Buy Ranbaxy at Rs 442.75 with SL Rs 440 and tgt expect at Rs 448+ Deepak
Tue 10:02:33 a Buy Cummins at Rs220 with Sl of Rs217 and tgt of Rs227 - Pritesh
Tue 10:07:00 a Buy Divis Lab at Rs 1740 with SL Rs 1735 and tgt expect Rs 1775 - Deepak
Tue 10:18:13 a buy dhampur sug cmp 223.5 with a sl of Rs 219 target 231 and 234 - biren
Tue 10:24:14 a Buy Colgate at Rs401 with SL of Rs396 and tgt of Rs410 - Pritesh
Tue 10:25:17 a Buy Ind Hotel at Rs 1257 with SL of Rs 1245 and tgt of Rs 1270+ : Deepak
Tue 10:26:00 a buy krbl cmp 183.5 with a sl of Rs 179 target 190 and 193 - Biren
Tue 10:28:13 a Buy IVRCL Infra at Rs 953 with SL of Rs 947 and tgt expect Rs 965+ : Deepak
Tue 10:33:33 a high risk trade buy ruchi soya cmp 308.00 with a sl of Rs 304 target 318 and 322 - biren
Tue 10:45:47 a Buy SRF at Rs293 with SL of Rs288 and tgt of Rs300 - Pritesh
Tue 11:07:01 a Buy Orchid Chem at 321 with SL of 316.50 and tgt of Rs330 - pritesh
Tue 11:13:40 a buy guj alkali cmp 158.25 with a sl of Rs 154 target 164 and 166 - Biren
Tue 11:16:29 a Our orchid Chemical call is going strong at Rs326.40 - Pritesh
Tue 11:18:58 a guj alkali bang on target 164 - Biren
Tue 11:20:36 a Buy Aurobindo Pharma at Rs582 with SL of Rs576 and tgt of Rs592
Tue 11:24:53 a our Ranbaxy call on tgt - Deepak
Tue 11:27:54 a Our SRF call is going strong at Rs298.80, close to acheiving the tgt - Pritesh
Tue 11:47:16 a Our BTST call given yesterday of PBA Infra has gained by over 6%
Tue 11:51:04 a Our Ind Hotel SL triggered - Deepak
Tue 12:06:44 p Buy Tata Power at 496 with SL of 493 and tgt of 505 - Deepak
Tue 12:09:03 p Buy Edu comp at 294 with SL Rs 292 and tgt expect Rs 300+: Deeapk
Tue 12:26:37 p Our second tgt acheived in Guja Alkali - Biren
Tue 12:46:56 p Buy Tata Steel at Rs405 with SL of Rs400 and tgt of Rs412 - Deepak
Tue 01:01:54 p Buy Maruti at Rs798 with SL of Rs791 and tgt of Rs809 - Pritesh
Tue 01:10:32 p Correction: Buy BHEL at Rs 1858 with tgt of Rs1874 and SL of Rs1849
Tue 01:26:21 p buy Satyam at Rs 759.50 with SL of Rs 755 and tgt of Rs768 - Deepak
Tue 01:48:23 p Our Colgate call has rebounded from lower levels and is at Rs404 - Pritesh
Tue 01:59:47 p BUY MONNET ISPAT CMP 240 WITH A SL OF RS 236 TARGET 249 AND 251 - Biren
Tue 02:00:48 p Our Satyam Call bang on tgt - Deepak
Tue 02:08:05 p DHAMPUR SUGAR BANG ON TARGET 331 - biren
Tue 02:21:29 p Buy India Cement at 135.75 with SL 132 and tgt 142, 145 - Deepak
Tue 02:26:20 p Ourtgt acheived in BHEL call
Tue 02:37:35 p HIGH RISK TRADE BUY BIOCON CMP 460.5 WITH A SL OF RS 456 TARGET 470 AND 473 - Biren
Tue 02:53:13 p our Maruti SL triigered - Pritesh
Tue 02:57:23 p Market is unable to sutain at higher levels, traders be cautious
Tue 03:01:34 p MONNET ISPAT SL TRIGGERED EXIT - BIren
Tue 03:02:29 p Our Auro Pharma SL triggered
Tue 03:07:34 p OUR IVRCL Infra SL Triggered - Deepak
Tue 03:11:47 p Our Buy Today Sell Tomorrow call: Buy Nagarjuna Constructions at Rs313.40
Tue 03:14:35 p Keep a SL of Rs309 for our Buy Today Sell Tomorrow call of Nagarjuna Constructions

Tue 12:16:51 p ONGC to meet Saturday to decide on Tide Water acquisition
Tue 12:21:35 p Traders are advised to keep booking profit in the market
Tue 01:47:13 p ONGC to restore Mumbai High's Full output by June
Tue 01:55:06 p SBI to open its first barnch in China
Tue 02:57:21 p Market is unable to sutain at higher levels, traders be cautious
Tue 03:00:27 p Videocon plans to start making plasma TVs at Italian plant
Tue 03:09:15 p HCL Tech to partner Savaje Technologies
Tue 03:29:33 p Siemens India buys 50% stake in Flender

Entry & Exit


It is very easy to say exit at the right time and re-enter at lower levels, practicing this concept is not all that easy. It is a futile exercise trying to exit at the top or buy at the bottom on a consistent basis as it is very difficult.
But, there is loads of money to be made by capturing the major part of a particular trend on a consistent basis. It is always better to adopt a strategy of exiting at different levels on a phased manner.
Investors may sell a portion of their holdings once their minimum target return is achieved. Another lot may be sold at the next desired level of return. Hold a portion of the exposure with a trailing stop-loss, as this would ensure that you participate in unusual price run-ups that one gets to see in a few stocks.
A similar graded approach may be used when it comes to buying a particular stock. While buying, never let the losses run beyond your zone of comfort.
Exit from long positions when the stock declines by a margin, which is just within your tolerable limits, and never hang on to a losing trade in the hope of a recovery, which invariably would turn out to be elusive.
Investors should not hold a loss making position beyond a threshold limit of about 10-12 per cent. Any stock would struggle to recover to its earlier highs after having recorded a decline in excess of 12-15 per cent. Unless you are convinced about the long-term prospects and fundamentals, never hold on to a position, which has dropped by over 15 per cent.

With inputs from The Hindu Business Line

Is your life insurance portfolio complete?

People believe that buying life insurance is a one-time activity, which is not the truth. Evaluating life insurance needs should be an ongoing activity conducted by individuals irrespective of their profile. In this article, we explain the rationale for conducting this activity.

Let us take an individual who is in his mid twenties and has just begun his career. At a young age, when he has just started earning, buying a term plan makes sense. A term plan is a pure risk cover plan where only the administration expenses and mortality charges are recovered from the individual. There's no savings element, hence no returns are received on maturity.

A term plan provides individuals with a high sum assured at a low cost (i.e. premium). And given that the individual's income stream has just begun, the earnings may not prove high enough. This is where a term plan fits in. Also since the primary function of life insurance is to indemnify the ‘financial loss' to the nominees/beneficiaries in case of an eventuality, a term plan performs this role to perfection.

Besides a term plan, the individual can also build a corpus for himself for the future by investing some money if possible in other insurance products. The savings may be for various reasons like buying a house or your own retirement. He can invest money in an endowment or a pension plan depending on his needs.

However, it merits discussion that regular endowment/endowment type plans generally offer lower single digit returns. If invested with a long-term horizon, we believe that unit linked plans (ULIPs) with higher equity proportion have the ability to offer better returns as compared to regular plans. However, selection of the plan should be in tune with the individual's risk appetite as most ULIPs offer a range of options with varying exposure to equity market.

Let us suppose that this individual now in his early thirties gets married. Marriage brings along with it, added responsibilities. The amount of the cover to provide for an eventuality will now have to increase. An additional term plan cover can act as a perfect solution for him.

In addition, he will also have to plan for his children's education and marriage. Children's ULIPs/endowment type plans can fit the bill over here. This need did not exist earlier when he was a bachelor.

The individual will also have to plan for his retirement. The retirement planning exercise should be started as early as possible. He can consider taking a pension plan from a life insurance company. Again, he has the option of buying ULIP/endowment type pension plans depending on his preferences and risk profile.

The individual may also need cover for liabilities in his absence. A classic example is that of home loans. The need for a home loan term cover plan will arise when the individual decides to buy a house. The individual's near and dear ones could be put through a lot of financial stress to make ends meet as well as pay off the outstanding home loan amount in his absence. This is reason enough for him to consider home loan insurance cover.

Despite having planned for most of his needs, the individual will still have to revisit his life insurance portfolio regularly. This becomes necessary if one accounts for the changing lifestyles, which are brought about by an increasing income as the years roll by. For example, in his early forties, the individual may be earning double the income than what he was earning say, 10 years ago. This will make a case for him to revisit his retirement/pension needs and his term cover.

Individuals will also need to revisit their portfolio in case they have not planned for their insurance needs minutely in the earlier years. It is never too late to buy insurance. All things considered, building a life insurance portfolio is an ongoing activity and the moot point of planning to cope with changing needs should not be lost.

From : HDFC BANK News letter

Equity Linked Savings Schemes (ELSS)


Equity Linked Savings Schemes (ELSS) is an ideal way to save on tax as well as enjoy benefits of staying invested in the equity markets. Though there is a plethora of tax-saving instruments available at the disposal of the investors, none of them is as attractive as the ELSS.

ELSS was introduced to promote investments in equity markets by giving tax concessions to the investors.

ELSS also comes with a lock in period of three years and operates just like any normal equity diversified schemes, as they need to invest 80% or more of their corpus in equity and equity related instruments.

Earlier investments upto Rs. 10,000 were only allowed for tax rebate under section 88. However, it has been changed in the last budget and now investors can invest the entire amount of Rs. 100,000 allowed under section the new section - 80C in ELSS.

ELSS schemes provide excellent investment opportunity when compared with other instruments as they provide decent scope of capital appreciation with added advantage of tax-free dividends.

The minimum investment amount in most of these schemes Rs. 500, which makes it very affordable even for a retail investor to invest from just the point of investment.
Instruments like Infrastructure Bonds throng the market when people need them most i.e., at the time of the close of the financial year. Also finding place in the list of tax saving instruments are National Savings Certificates (NSC), Public Provident Fund (PPF), LIC Policies among others. The investments in PPF and NSC are guaranteed by the Government of India and thus offer no risk to the investor. However, the lock-in period is relatively longer. Infrastructure bonds are locked in for 3 years but offer very low rate of return.

Though investments in mutual funds do not provide an assured return but when reviewed over a long-term horizon, they tend to give superior returns. As investments in ELSS schemes are locked in for a period of 3 years from the date of investment, it provides the fund manager to gain the maximum advantage from investments in the stock markets. The fund manager has the liberty to build the portfolio with a long-term approach without worrying for redemption pressures.
Systematic Investment Plan Under Equity Linked Saving Schemes:

Though SIP, an investor can invest a small amount and benefit from rupee cost averaging. As the market price of the investment is dynamic, more units are bought when prices are low and fewer units are bought when prices are high. SIPs make market timing irrelevant also help invest a fixed amount every month.

There is no entry load while investing into the fund.
How can one invest through SIP?

Identify the scheme to invest.

Give standing instruction/post-dated cheques for the amount one wants to invest (monthly/quarterly).

MF Units will be allotted based on the schemes selling price on the day of the SIP transaction.

SIP under ELSS should be for a minimum of Rs. 500 or in multiples thereof.
With inputs from HDFC Bank investment news letter

Millionaire Habits


Extracts from the Millionaire Next door: The surprising secrets of America’s Wealthy By Thomas J. Stanley and William D. Danko

If you earn a good income each month and spend it all, you are not getting wealthier; you are just living high. Wealth is what you accumulate, not what you spend. Wealth is more often the result of a lifestyle of hard work, perseverance, planning, and most of all self-discipline.
What are the three words that profile the affluent?

FRUGAL! FRUGAL!! FRUGAL!!!

Being frugal is the cornerstone of wealth-building.

Millionaire Habits
  1. They live well below their means
  2. They allocate their time, energy and money efficiently, in ways conducive to building wealth
  3. They believe financial independence is more important than displaying high social status
  4. Their parents did not provide economic outpatient care
  5. Their adult children are self-sufficient
  6. They are proficient in targeting market opportunities.


Checklist for using your NetBanking & password



Change your IPIN after your first login
Memorize your IPIN and destroy the IPIN mailer .
Do not write your IPIN for reference
Do not disclose your IPIN (password) to anyone , including Bank employees
It is advisable to change your password regularly
It is advisable to use a combination of letters and numbers in your password
It is advisable not to access HDFC Bank NetBanking from a shared PC ( e.g. Internet cafe , etc. ) . There could be a risk of capturing your keystrokes (including your Cust Id and IPIN) by certain programs running in the memory of the shared PC without your knowledge.
Net Banking

Always check the padlock symbol on the bottom right hand corner of your webpage to ensure that you are connected to a secure session with Bank. This is the VeriSign security symbol and confirms that the site you are interacting with is netbanking.bank.com ( View padlock symbol )
Beware of fraudulent websites which look similar to the your Bank NetBanking site. Ensure that you are on the Bank NetBanking site before disclosing any confidential information ( NetBanking password , Telephone Banking password , etc. ) by checking the URL of the webpage.
Beware of scam e-mails which may contain a virus or be linked to a fraudulent website inorder to elicit your confidential information.
Always log-out when you exit NetBanking to ensure that your secure session is terminated. Do not exit simply by closing the browser.
Do cross-check your last login information available in NetBanking regularly to monitor your NetBanking sessions

Please do not disclose any personal & confidential information to anyone , including Bank employees. This includes -
NetBanking password / IPIN
Phone Banking password / TIN
ATM / Debit Card / Credit Card PINs

Charlie Wright of Fall River Capital paints a true picture of risk management:

" I often tell the story of the great fish restaurant that opened up just down the street from my office. It opened with great fanfare and was ranked in the top five restaurants in the city. The food was outstanding. But it only took a little more than a year and this great restaurant was out of business. Why? Because the key to running a good restaurant is not the food--it is cash management and risk control. It is making sure your business is run efficiently, keeping your costs (risk) in control, and managing your staff effectively. If you believe that the taste of the food is what makes a great restaurant, think of how great the food is at your favorite fast food restaurant. But, someday, watch how well that restaurant is run. Just as in the restaurant business, the key to profits in trading is not in the prediction or the indicator, but how well the trading strategy is designed and executed. The ability to achieve risk control and cash management will make the difference between a successful trader and an unsuccessful trader. If you ever have the opportunity to watch a successful trader, you will see that they don't worry about where the market is going or about predicting when the next big move will take place. They aren't looking to tweak their indicator. They are worried about their risk on each trade. Is the trade being executed correctly? How much of their total account is at risk? Are the stops in the right place? And so on."

Disclaimer & Privacy Policies

(c) Mrs. Ruby Christy. This site and contents are owned by Mrs. Ruby Christy;
Use of this website and/or services offered by us indicates your acceptance of our Disclaimer& Privacy Policies.

Information and opinions provided on this website (www.investchips.com) has been independently obtained from sources believed to be reliable. However, such information may include inaccuracies, errors or omissions. Investchips.com and its affiliates, information providers or content providers and R.John Christy and his Family shall have no liability to you or third parties for the accuracy, completeness, timeliness or correct sequencing of information available on this website or feeds, or for any decision made or action taken by you in reliance upon such information, or for the delay or interruption of such information. Investchips.com,its affiliates, information providers ,content providers and R. John Christy and his Family shall have no liability for investment decisions or other actions taken or made by you based on the information provided on this website. Any action you choose to take in the markets is totally your own responsibility. Investchips.com and R. John Christy and his Family will not be liable for any, direct or indirect, consequential or incidental damages or loss arising out of the use of this information. This information is neither an offer to sell nor solicitation to buy any of the securities mentioned herein. Opinions expressed by R. John Christy are his own and not of his past, present and future employers.
The DoubleClick DART cookie is used by Google in the ads served on this websites displaying AdSense for content ads. When users visit this website and either view or click on an ad, a cookie may be dropped on that end user's browser.
  • Google, as a third party vendor, uses cookies to serve ads on this site.
  • Google's use of the DART cookie enables it to serve ads to your users based on their visit to this site and other sites on the Internet.
  • Users may opt out of the use of the DART cookie by visiting the Google ad and content network privacy policy.
  • www.investchips.com never collects any personal information of visitors.