Online Trading India

Education costs have gone through the roof. Now planning for your child’s future is not just a choice but a necessity. Consider these samples. An engineering or medical degree in a medical college will set you back by at least Rs.25 lakhs over five years. A 2 year MBA would approximately cost you an equal amount. That is if you are educating them in India. If you plan to send your daughter abroad for under graduation and post graduation, then you can multiply these costs by a factor of 5X. Obviously, there are various investment options in front of you to reach these goals but the condition is that you start early and invest in a systematic manner. Let us look at gold as an asset class to plan your child’s future and then look at other equally interesting options that can create serious wealth over the long run to pay for your child’s education. Investing in gold for child’s future – How good is that? There are different ways to invest in gold. You can invest in physical gold l...

In a span of just 45 trading sessions, the Nifty cracked from 12,340 down to 8469 resulting in a net loss of 31.5% in just a little over a month. But what should be the investment strategy now? It is simple to say that this is the right time to buy stocks but what stocks do you buy when stocks like HDFC Bank and TCS have lost 30% from their peaks and a stock like RIL has lost 40% in just one month? The easier answer is to go for buying the index. That is because; fishing in troubled waters is fraught with risks and it is hard to put a stop loss in such a volatile market. A simpler answer would be to start accumulating index ETFs. Let us first understand an index  ETF Did you know that the Sensex has appreciated from 100 to 42,000 in a span of last 40 years? That is a compounded annual return of around 16.5%. If you add the dividends, the annual returns would be closer to 18%. But you may wonder how to buy the Sensex? That is where an index ETF comes in handy. Of course, y...

Financial Harvesting! Just we have passed the crop harvesting season and its time to think of tax harvesting now. As we are nearing the financial year end, we are left with just few days to plan our tax. If you have not planned your tax yet, and are puzzled how to do it especially in the light of the proposals in Union Budget 2020, we present you one way to explore tax saving options and that is Tax Loss Harvesting. What is Tax Loss Harvesting? While investing in stock , all of us are bound to have some laggard in our portfolio where our hard earned money will be blocked due to negative returns from that stock. Many are left with no option but to hold on to the stock till it turns to be a profitable one. Tax loss harvesting is one tool wherein the stocks that are in loss in our portfolio can be sold and the loss can be set off against capital gains and reduce the tax outgo considerably. The short term loss from stocks can be adjusted against both the short term capital ga...

Over the decades India has moved to electronic trading in stock markets. A person interested to trade in stock markets should have a trading account. Trading account is the way of buying and selling of stock transactions. Whereas a demat account is the place to store the stocks bought by a person. For example: If you want to buy 100 shares of wipro and would like to sell it off when the market closes, you will need a trading account to do so. Or if you would like to hold the shares in your account, these 100 shares of wipro will be stored in our demat account. The buy transactions are done through the trading account but the shares will be stored in your demat account. Each trading account will have a trading ID which will be used by the exchanges to identify every transactions made. Check the above image to know in detail about the entire transaction works for a stock trader/ investor. How does the buying and selling of shares happen? Step 1:  A trader transfers ...

If you have looked at a broker’s short term report or daily trading report, you will find a section on pivot points trading. What exactly are these pivot points and how to do  intraday trading  using such pivot points. Remember, pivots are based on the concept of  supports and resistance  and hence it is a technical measure. But pivots only work in the very short term i.e. either for intraday or for a trade of 2-3 days. In fact, in pivot point trading, the less overnight risk you take upon yourself, the better it is. What exactly is meant by a pivot point? Pivot point, as we mentioned earlier, is a technical indicator which is popularly used to determine the overall trend of the market across different time frames. Mathematically, the pivot point is nothing but simply the average of the high, low and closing prices from the previous trading day. The interpretation of pivots is also quite plain vanilla. On the next trading day, if the stock or index trades abo...

Insider trading  is a largely misunderstood term in India. Historically, it has been quite hard to prove but with advanced methods of surveillance employed by the exchanges and  SEBI , many such cases get easily highlighted. However,  not all insider trades are illegal and not all insider trades amount to insider trading . Let us understand this subtle difference better. Insider trades versus insider trading An insider trade is referred to any trade in the stock market put by the  directors of the company, promoters, relatives of promoters, relatives of directors and KMPs (key management personnel) . The KMP refers to specific categories of employees like the company secretary, internal auditor, business heads etc who have access to privileged information. Hence all trades put by them above a threshold are classified as insider trades (on that particular stock). This is perfectly legal and it is only essential that the person must take prior approval of the b...

When dividend distribution tax (DDT) was introduced more than 20 years ago, the markets were shocked. Over the years, markets have not only adjusted to it but actually created tremendous wealth over the years. In a way, it was a positive move. It dissuaded companies from paying out heavy dividends and coaxed them to reinvest in their business. This led to a capital investment driven rally in the new millennium and that ran all the way to 2008. In the Union Budget 2020, the DDT was abolished and replaced by the withholding tax that individual  investors  will have to pay on their dividend incomes. Here is how it actually works and here is how it will impact the markets. How the DDT works currently and how it will work now? In India, DDT is applicable to equity and to equity funds. Currently, companies are required to pay DDT on the dividend paid to its shareholders at the rate of 15% plus applicable surcharge and cess (effective tax rate for DDT is 20.56%) in additi...

Discount broking  or no-frills broking is all about execution about orders at the lowest cost possible. Normally, brokers charge customers for the execution plus the research plus any advisory support that they provide. In addition, brokers also used to provide the benefit of proximity by bringing the broker close to the customer through branches and franchise offices. A lot of this old model changed with the arrival of discount broking. The  discount broker  offered a strictly online model with no frills like research, advisory etc. These lower costs were passed on to the customers who benefitted from the lower tariffs and the higher effective returns. Cost of trading and cost of execution makes a big difference to the returns that customers can earn. For example, in 2016, Warren Buffett had lauded the performance of Vanguard because it had saved trillions of dollars for customers through low fee index funds. One can extend a similar logic to trading too. By lowe...

The Delhi assembly elections have come and gone and the outcome was largely on the expected lines. The ruling AAP returned to power with a big mandate although the NDA did manage to grab more seats and also increase its vote share. Let us look at the impact of the outcome of the Delhi elections on the stock markets and how to interpret the outcome. Outcome of Delhi elections and the impact on markets There was some negative reaction to the exit polls that predicted a clear victory for the ruling AAP government. All the exit polls were virtually unanimous about the outcome although the actual numbers estimated did differ. In the aftermath of these polls, there was some disappointment in the markets as there late expectations that NDA could make a sharp comeback in the Delhi elections. However, the impact after the actual outcome was not very sharp and for the markets it was business usual. The limited disappointment after the exit polls had factored in the negatives and hence ...