Brief Introduction - Online Stock Market Trading

Stock Exchange

Stocks (Shares, equity) are traded in stock exchange. India has two big stock exchanges

(Bombay Stock Exchange - BSE and National Stock Exchange - NSE) and few small

exchanges like Jaipur Stock Exchange, Bangalore Stock Exchange etc. Investor can trade

stocks in any of the stock exchange in India.

Stock Broker

Investor requires a Stock Broker to buy and sell shares in stock exchanges (BSE, NSE etc.).

Stock Broker is a registered member of stock exchange. A stock broker can register to one or

more stock exchanges. Broker charges commissions (brokerages) for his service. Brokerage

is usually a percent of total amount of trade and varies from broker to broker.

Stock Trading

Traditionally stock trading is done through stock brokers, personally or through telephones.

As number of people trading in stock market increase enormously in last few years, some

issues like location constrains, busy phone lines, miss communication etc start growing in

stock broker offices. Information technology (Stock Market Software) helps stock brokers in

solving these problems with Online Stock Trading.

Online Stock Market Trading is an internet based stock trading facility. Investor can trade

shares through a website without any manual intervention from Stock Broker.

There are two different type of trading environments available for online equity trading.

1. Installable software based Stock Trading Terminals

This trading environment requires software to be installed on investor’s computer.

This software is provided by the stock broker. This software requires high speed

internet connection. These kind of trading terminals are used by high volume intra day

equity traders.

2. Web (Internet) based trading application

This kind of trading environment doesn't require any additional software installation.

They are like other internet websites which investor can access from around the world

through normal internet connection.

How do stock markets operate

Stock exchanges are like market places, where stockbrokers buy and sell securities for individuals or institutions. As per the SCRA (Securities Contracts Regulation Act) 1956, the definition of securities includes shares, bonds, stocks, debentures, government securities, derivatives of securities, units of collective investment scheme (CIS) etc.

The securities market has two interdependent segments: the primary and secondary market.

The primary market is the channel for creation of new securities issued by public limited

companies or by government agencies. New securities issued in the primary market are

traded in the secondary market. The secondary market operates through the over-the-counter

(OTC) market and the exchange-trade market.

Advantages of Stocks Trading

1. Better returns

Actively trading stocks can produce better overall returns than simply buying and holding.

2. Huge Choice

There are thousands of stocks listed on markets around the world. There is always a stock

whose price is moving - it’s just a matter of finding them.

3. Familiarity

The most traded stocks are in the largest companies that most of us have heard of and

understand - Microsoft, IBM, and Cisco etc.

Disadvantages of Stocks Trading

1. Leverage

With a margined account the maximum amount of leverage available for stock trading is

usually 4:1. Meaning a $25,000 could trade up to $100,000 of stock. This is pretty low

compared to forex trading or futures trading.

2. Pattern Day Trader Rules

It requires at least $25,000 to be held in a trading account if the trader completes more than 4

trades in a 5 day period. No such rule applies to forex trading or futures trading.

3. Uptick Rule on Short Selling

A trader must wait until a stock price ticks up before they can short sell it. Again there are no

such rules in forex trading or futures trading where going short are as easy as going long.

4. Need to Borrow Stock to Short

Stocks are physical commodities and if a trader wishes to go short then the broker must have

arrangements in place to borrow that stock from a shareholder until the trader closes their

position. This limits the opportunities available for short selling. Contrast this to futures

trading where selling is as easy as buying.

5. Costs

Although online trading costs for stock trading are low they still add considerably to the costs

of day trading. Online futures trading are about 1/4 of the cost for the equivalent value. In the

UK 0.5% stamp duty is also levied on all share purchases making trading virtually

impossible, hence the popularity of spread betting.

List of Stock Brokers of India

5Paisa.com

Advani Share Brokers

Anand Rathi Securities

Brescon Group

CIL Securities

CRN India

Churiwala Securities

DSP Merrill Lynch

Dalmia Securities

Gandhi Securities

Gogia Capital Services

Hasmukh Lalbhai

ICICIDirect

Idafa Investments

India Market Access

Investsmart India

Kisan Ratilal Choksey Shares

Kotak Securities

Manubhai Mangaldas Securities

Moneypore

Navia Markets

Parag Parikh

Parsoli Corporation

Pratibhuti Viniyog

Prudential

Quantum Securities .

Reliance Money

Sivan Securities

Skindia Finance

Stock Holding Corporation of India

StockMarkit.com

Sunidhi Consultancy

Valia Consultancy

MAIN STOCK BROKERS:

ICICIDirect (or ICICIDirect.com) is stock trading company of ICICI Bank. Along with stock

trading and trading in derivatives in BSE and NSE, it also provides facility to invest in IPOs,

Mutual Funds and Bonds.

Type of Account

ICICIDirect offers 3 different online trading platforms to its customers:

i. Share Trading Account

Share Trading Account by ICICIDirect is mainly for buying and selling of stocks in

BSE and NSE.This account allows Cash Trading, Margin Trading, Margin Plus

Trading, Spot Trading, Buy Today Sell Tomorrow and Call and Trade on phone.They

also provide installable application terminal based application for high volume trader.

ii. Wise Investment Account

Along with stock trading and IPO investing in BSE and NSE, Wise Investment

account also provide options to invest in Mutual Funds and Bonds online.Online

Mutual funds investment allows investor to invest on-line in around 19 Mutual Fund

companies. ICICI Direct offers various options while investing in Mutual Funds like

Purchase Mutual Fund, Redemption and switch between different schemes,

Systematic Investment plans, Systematic withdrawal plan and transferring existing

Mutual Funds in to electronic mode. This account also provides facility to invest in

Government of India Bonds and ICICI Bank Tax Saving Bonds.

ICICIDirect.com website is the primary tool to invest in Mutual Funds, IPOs, Bonds

and stock trading.

iii. Active Trader Account

Active Trader account gives more personalized investment options to the investors. It

allows investor to use online and offline stock trading. It also provides with

independent market expertise and support through a dedicated Relationship Manager

from ICICI. Active Trader also provides commodity trading.

Brokerage and fees

1. Account opening fees : Rs 750/- (One time non-refundable)

2. Brokerage : ICICIDirect.com brokerage varies on volume of trade and inclusive of

demat transaction charges, service taxes and courier charges for contract notes. It

ranges from 0.1% to 0.15% for margin trades, 0.2% to 0.425% for squared off trades

and 0.4% to 0.85% on delivery based trades.

Advantages of ICICIDirect

1. 3-in-1 account integrates your banking, broking and demat accounts. All accounts are

from ICICI and very well integrated. This feature makes ICICI the most interesting

player in online trading facility. There is absolutely no manual interfere require. This

is truly online trading environment.

2. Unlike most of the online trading companies in India which require transferring

money to the broker’s pool or towards deposits, at ICICIDirect you can manage your

own demat and bank accounts through ICICIdirect.com. Money from selling stock is

available in ICICI bank account as soon as the ICICIDirect receive it.

3. Investment online in IPOs, Mutual Funds, GOI Bonds, and Postal Savings Schemes

all from one website. General Insurance is also available from ICICI Lombard.

4. Trading is available in both BSE and NSE.

Disadvantages of ICICIDirect

1. Getting access to ICICIDirect.com website during market session can be frustrating.

2. ICICIDirect brokerage is high and not negotiable.

3. Not all stocks are available under Margin Plus.

Reliance Money, A Reliance Capital Limited company, is the financial services division of

the Rs 10'000 Crore Reliance Anil Dhirubhai Ambani Group. Reliance Money has

over 22 lakhs customers and more then 10'000 branches in around 5000 cities in India.

Company is among the largest broking and distribution house of financial products and

having share of more then 3% of total stock market volume at BSE & NSE.

RelianceMoney.com enables its customer to invest & manage most of the services provided

by Reliance Money including Equity (Stock) Trading, Commodity Trading, Derivatives,

Mutual Fund Investment, IPO Investment, Life Insurances, General insurances, Money

Transfer, Forex exchange, Gold Coins and Credit Cards Services. Company recently entered

in to Wealth Management with tools like investment in equity-linked portfolio management

services, structured products, insurance and mutual funds.

The Reliance Money stock trading websites uses special security features 'Security Token'

which makes online trading more secure without complexity.

Stock Trading through RelianceMoney.com is available for BSE and NSE stock exchanges.

Offline trading is also available through Reliance Money partners in more then 5000 city

across India and through phone by dialling 022-39886000.

The investment options available with Reliance Money online portal are as below:

1. Equity (Stock) Trading at BSE, NSE and NSE F&O

2. IPO Investment

3. Derivatives Trading

4. Forex Trading

5. Commodity Trading(Gold, Silver, Crude etc....) at MCX, NCDEX and NMCE

(FAQ's)

6. Mutual Fund Investment

7. Life & General Insurance

8. 'Pure Swiss' Gold Coins (99.99% pure, 24 carat)

Trading Platforms

Reliance Money provides 3 different trading platforms for equity trading:

1. Insta Trade

2. Fast Trade

3. Easytrade

Reliance Money Technical Analysis (A paid service)

Relance Money offers a simplified, automated, sophisticated technical analysis to Indian

retail broking consumers with the help of Recognia's Technical Analysis tools. Recognia, a

Canada based company, has proprietary pattern recognition technology capable of

recognizing patterns in the price charts of any publicly traded financial instrument including

stocks, bonds, funds, commodities, currencies and indexes.

The technical services are available for introductory free 7-day trail period to Reliance

Money users. Post the trail period, this service is available to users at a nominal subscription

of Rs. 99 for 3 months/ Rs. 179 for 6 months/ Rs. 299 for a year, i.e., less than Re 1 a day.

Reliance Money Brokerage and fees:

Reliance Money offers lowest brokerage rates in today's online stock trading industry in

India. The brokerages are as low as 0.075% for delivery based trading and 0.02 for now

delivery. For more detail about Reliance Money’s brokerage and fees visit the below section

of this webpage.

Reliance Money Demat Account Charges:

Fee Head DP Charges

Annual Services Charges - For Individuals / HUFs / Trust Rs. 50/-

Annual Services Charges - For NRIs / Foreign Nationals, Corporates / Others Rs. 1000/-

Transaction Charges - SELL (Market & Off Market)

For instructions given in physical form.Rs. 25/-

Transaction Charges - SELL (Market & Off Market)

For instructions received through Internet/ online trading through Reliance

Securities Ltd.

Rs. 12/-

Note: The brokerage & fees on this webpage may not accurate, please contact your nearest

Reliance Money broker for latest available information. Also check rates of Securities

Transaction Tax

Advantages of Reliance Money

1. Extra security features with 'Security Token'', which is the most secure and tested

technology in computer world.

2. Simple, easy and fast online stock trading.

3. Almost all investment options are available under one account including Equity

Trading, Derivatives, Forex, Commodity, IPO, Mutual Funds and Insurance.

4. Branches are available in all major cities and the number is growing.

Benefits of having a Reliance Money account:

1. It's Cost-effective

You pay comparatively lower transaction fees. As an introductory offer, we invite

you to pay a flat fee of just Rs. 500/- and transact through Reliance Money. This fee

is valid for two months or a specified transaction value*. See the table for details.

Validity (wichever is earlier) Turnover limit

Access Fee

(Rs.)

Time

Validity

Turnover

Validity

Non-delivery

turnover

Delivery

turnover

500 2 months Rs. l Cr. Rs. 90 Lac Rs. 10 Lac

1350 6 months Rs. 3 Cr. Rs. 2.7 Cr. Rs. 30 Lac

2500 12 months Rs. 6 Cr. Rs. 5.4 Cr. Rs. 60 Lac

2. It offers Single Window Access to almost all financial products.

3. Its Convenient - Reliance Money's services are through the Internet, Transaction

Kiosks and over the phone.

4. It's Safe

Accounts are safe guarded with a unique security number that changes every 32

seconds. This number works as a dynamic password to keep your account extra safe.

5. It provides you a 3...in...l facility

of Banking, Trading and Demat Account through a single window and transfer funds

across accounts seamlessly!

Sharekhan is online stock trading company of SSKI Group, provider of India-based

investment banking and corporate finance service. ShareKhan is one of the largest stock

broking houses in the country. S.S. Kantilal Ishwarlal Securities Limited (SSKI) has been

among India’s leading broking houses for more than a century.

Sharekhan's equity related services include trade execution on BSE, NSE,

Derivatives, commodities, depository services, online trading and investment advice. Trading

is available in BSE and NSE. Along with Sharekhan.com website, ShareKhan has around

510 offices (share shops) in 170 cities around the country.

Share khan has one of the best state of art web portal providing fundamental and statistical

information across equity, mutual funds and IPOs. You can surf across 5,500 companies for

in-depth information, details about more than 1,500 mutual fund schemes and IPO data. You

can also access other market related details such as board meetings, result announcements,

FII transactions, buying/selling by mutual funds and much more.

Type of Account

1. ShareKhan Classic account

Allow investor to buy and sell stocks online along with the following features like

multiple watch lists, Integrated Banking, demat and digital contracts, Real-time

portfolio tracking with price alerts and Instant credit & transfer.

a. Online trading account for investing in Equities and Derivatives

b. Free trading through Phone (Dial-n-Trade)

I. Two dedicated numbers for placing your orders with your cellphone or

landline.

II. Automtic funds tranfer with phone banking (for Citibank and HDFC

bank customers)

III. Simple and Secure Interactive Voice Response based system for

authentication

IV. get the trusted, professional advice of our telebrokers

V. After hours order placement facility between 8.00 am and 9.30 am

c. Integration of: Online trading + Bank + Demat account

d. Instant cash transfer facility against purchase & sale of shares

e. IPO investments

f. Instant order and trade confirmations by e-mail

g. Single screen interface for cash and derivatives

ShareKhan SpeedTrade account

This accounts for active traders who trade frequently during the day's trading session.

Following are few popular features of SpeedTrade account.

h. Single screen interface for cash and derivatives

i. Real-time streaming quotes with Instant order Execution & Confirmation

j. Hot keys similar to a traditional broker terminal

k. Alerts and reminders

l. Back-up facility to place trades on Direct Phone lines

Brokerage:

Some stock trading companies charge direct percentage while others charge a fixed amount

per Rs 100. Sharekhan charges 0.5% for inter day shares and 0.1% for intra day or you could

say Sharekhan charges 50 paise per Rs 100.

How to open account with Sharekhan?

For online trading with Sharekhan, investor has to open an account. Following are the ways

to open an account with Sharekhan:

Call them at phone number provided below and ask that you want to open an account

with them.

1. Call on Toll free number: 1-800-22-7500 to speak to a Customer Service

executive

2. If you are in Mumbai call on 022-66621111

Visit one of their branches. Sharekhan has a huge network all over India. Click on

http://sharekhan.com/Locateus.aspx this link to find out your nearest branch. Just

select the place near you and you'll find a manager to assist you there.

You can send them an Email on info@sharekhan.com to know about their products

and services.

If you wish to chat with customer service representative, you can join the chat

sesssion.

Advantages of Sharekhan:

1. Online trading is very user friendly and one doesn't need any software to access.

2. They provides good quality of services like daily SMS alerts, mail alerts, stock

recommendations etc.

3. Sharekhan has ability to transfer funds from most banks. Unlike ICICI Direct, HDFC

Sec, etc., so investor not really needs to open an account with a particular bank as it

can establish link with most modern banks.

Disadvantages of Sharekhan:

1. They charge minimum brokerage of 10 paisa per stock would not let you trade stocks

below 20 rs. (If you trade, you will loose majority of your money in brokerage).

2. Lots of hidden rules and charges.

3. They do not provide facility to book limit order trades during after-hours.

4. Classic account holders cannot trade commodities.

5. Cannot purchase mutual funds online.

Kotak Securities Limited, a subsidiary of Kotak Mahindra Bank, was set up in 1994. Kotak Securities

is a corporate member of both Bombay Stock Exchange (BSE) and National Stock Exchange (NSE).

Currently, Kotak Securities is one of the largest broking houses in India with wide geographical

reach.

Kotak securities online trading, is the online trading portal of the Kotak Securities Ltd, the

leading stock broking house of India. The online division of Kotak Securities Limited

provides services like internet broking services, online IPO and mutual fund investments.

Account Types:

Kotak offers different account types according to users requirement:

1. Kotak Gateway

Kotak securities gateway account opens the gateway to a world of investing

opportunities for beginners. Kotak gateway user can trade anywhere, anytime using

internet.Kotak also offers call and trade facility.

They provide sms alert, research report, free news and market updates. Best feature

of Kotak gateway is call and trade facility. Anybody can activate Kotak securities

gateway account with any amount between Rs 20,000 to 5, 00,000. This can be in

form of cash deposit or the value of the shares you buy. Brokerage will be charged

based on the account type. For intraday trading brokerage is .06% both sides for

less then 25 lakhs and .023% for more then 25 crores.

2. Kotak Privilege Circle

This is the premium account for its users. Along with kotak gateway account

benefits they provides independent market expertise and support through a

dedicated relationship manager and a dedicated customer service desk which

provides assistance in opening accounts, handling day-to-day problems, and more.

They provides KEAT premium which is an exclusive online tool that lets you

monitor what is happening in the market and view your gains and losses in real-

time.

One can activate Kotak securities privilege circle account with any amount more

than Rs. 10, 00,000/- as margin, by way of cash or stock. For intraday trading

brokerage is .06% both sides for less then 25 lakhs and .03% for more then 25

crores.

3. Kotak High Trader

This is the best offer for daily trader or intraday traders. This is an Auto Square Off

product where you can enjoy the benefits of intra-day trading. Trader can get the 6

times exposure on the margin. They provide all the benefits which kotak gateway

and privilege account provides. Trader can apply paper free order for IPO.

One can activate Kotak securities high trader with any amount less than Rs 5,

00,000/- as margin, by way of cash or stock. The minimum brokerage that is

applicable in the Kotak high trader account is 4 paisa on delivery and 4 paisa in the

cash segment.

4. Kotak Freeway

Frequent trader use this account type because freeway account enables it’s users to

trade as many times as they like - at a fixed brokerage.

One can activate Kotak securities freeway with any amount less than Rs. 1,

25,000/- as margin, by way of cash or stock. They charge fixed brokerage of

Rs.999/- a month and on delivery transaction brokerage is .59% on less then 1lakhs

and .18% on more then 2 crores.

5. Kotak Flat

This product is best suited for the needs of the Indian retail investor who actively

invests through the internet. Kotak flat introduces the international trend of

charging brokerages on per trade basis. Brokerage rate works up to 0.18% on

delivery trades and 0.018% for intraday trades.

6. Kotak Assist

This account most suits to long term investors. This account provides Complete

assistance on all your financial investment.

Brokerage and Account opening fees:

A trading account in Kotak requires you to have a minimum of Rs.1000 to start with, the

bank account to have a minimum of Rs.2500.

Brokerage:

1. For Intra-day trading, Kotak brokerage is around 0.05%.

2. For delivery trading, Kotak brokerage is around 0.45%.

Advantages of Kotak Securities Limited

1. Kotak provides a Call & Trade facility to its customers wherein they can place and

track their orders through phone when they are away from home.

2. They provides daily SMS alerts, market pointers, periodical research reports, stock

recommendations etc.

3. Kotak provides exclusive online tool to monitor what is happening in the market

and also investor can view gains/losses in real-time.

Disadvantages of Kotak Securities Limited

1. In online trading sometimes delay comes. So it can be frustrating.

Indiabulls is India's leading Financial Services and Real Estate Company having presence

over 414 locations in more than 124 cities. Indiabulls Financial Services Ltd is listed on the

National Stock Exchange, Bombay Stock Exchange, Luxembourg Stock Exchange and

London Stock Exchange.

Type of Account

1. Indiabulls Equity Trading Account

Indiabulls Equity Trading Account is standard Online trading account from India

bulls and along with online trading it also provides priority telephone access that

gives you direct access to your Relationship Manager and full access to 'Indiabulls

Equity Analysis'.

Application Trading Terminal(Need Installation)

1. Power Indiabulls

Power Indiabulls trading terminal is the most advanced new generation trading

platform with great speed. This trading terminal is built in JAVA.

Power Indiabulls is extremely reach in features including Live Streaming Quotes,

Fast Order Entry and execution, Tic by Tic Live Charts, Technical Analysis, Live

News and Alerts, Extensive Reports for Real-time Accounting.

Brokerage and fees :

1. Account opening fees : Rs 1200/- (One time non-refundable) as below:

250/- Equity Trading Account opening charge

200/- Demat Account opening charge

750/- Software changes

Advantages of Indiabulls Equity Trading Account

1. Brokerage is less compare to other online trading companies.

2. Provide trading terminal 'powerbulls', a java based software. It's very fast in terms of

speed and execution.

Factors That Affect The Stock Market:

There's such an excess of information these days: monthly investment magazines covering

the market, daily investment newspapers doing the same, and minute-by-minute coverage on

CNBC. They're all trying to tell, what's driving the stock market. Of all the factors that affect

the stock market, only two things drive the markets. The Two E's…

The Two E's…

The first "E" is earnings, and it is extremely important. The big question here is what is the

stock price in relation to the company's earnings? That tells, whether a stock is cheap or

expensive. This is what we need to know… and the information is easy to find.

What you need to realize here is that, unless stocks fall by over 50% - or unless earnings

more than double - you don't even need to check in with this number. You know that stocks

are expensive in relation to their earnings, and will be for a while.

The second factor that drives the markets is Emotions. Emotions are a huge part of investing.

It was earnings that drove the Nasdaq from 1,500 to 5,000, and then back to 1,500, all in four

years time? Emotions played a big part in this example.

Supply chain approach

Clients of the brokers can open savings, current accounts under specific product codes. The

opening of these accounts may facilitate faster movement of funds between the broker and

client. Considering the overall relationship with the brokers, the savings/ current accounts are

offered with special average quarterly balance requirements. These accounts are aimed at

various participants in the entire value chain viz. Investors, Sub-Brokers, Franchisees etc.

Career opportunities

All prominent stock broking houses such as Indiabulls, Kotak Securities, Reliance

Money and several other local players are expanding their networks. At the same

time, increasing trading on commodity exchanges has also fuelled the growth of the

markets resulting in demand for more manpower. Stock broking houses are likely to

create over 50,000 job opportunities in next one year for various functions.

They are also in need of customer relationship managers, dealers and analysts. Stock

brokers are also looking for sophisticated IT professionals to commission and

maintain their offices.

Portfolio managers are responsible for making investment decisions for clients with large sums of money to invest. They need to be well informed about the goals of the client.

Buying and selling securities demands good interpersonal and sales skills and being well-informed about various investment products.

Due to advances in telecommunications and computer technology, the securities and commodities industry has become highly automated. Consequently, computer scientists, computer engineers and systems analysts also find employment in the industry today.

Training

National Stock Exchange of India Ltd. (NSE) has evolved a testing and certification mechanism known as the National Stock Exchange's Certification in Financial Markets (NCFM) which is online and fully automated. It offers all certifications mandated by Securities and Exchange Board of India (SEBI), IRDA, National Securities Depository Limited (NSDL), AMFI and the NSE itself. Practical knowledge and skills are tested in nine securities market related modules. These tests ensure that a person dealing with financial products has a minimum knowledge of

them, the markets and regulations. Hence it is required that all new employees joining the intermediaries and all intermediaries joining the market should be certified.

The Association of Mutual Funds in India (AMFI) has started the AMFI Mutual Fund Certification (www.amfiindia.com / testingprogram.html). The AMFI Mutual Fund (Basic) Module is a general test and the second module is the AMFI Mutual Fund (Advisors) Module which all fund distributors or intermediaries and Mutual Fund employees engaged in selling and marketing of mutual fund schemes will be required to take.

BSE Training Institute (BTI), The Stock Exchange, Mumbai offers certification tests and training programmes.

Graduation may not be necessary for becoming a stock broker, but many are business administration or commerce graduates. Formal educational or training programme on securities markets is not easily available. This has necessitated the need for certification.

Economics and Commerce postgraduates, CFAs, MBAs in Finance, Chartered Accountants, Cost and Works Accountants, Company Secretaries and allied professionals may pursue stock market careers. They may or may not require certification as mentioned above depending upon the nature of their responsibilities.

Threats

The future of stock market careers depends immediately and directly on the success of the economy. When the stock market is riding high, customers play the market and there are lots of opportunities. When the economy slows down, people get out of the market and brokers lose their commissions.