Share is a unit of ownership interest in a corporation. Ownership is determined by the number of shares owned relative to the number of shares outstanding. A shareholder has a claim to a part of the companies’ assets and liabilities
There are basically two types of shares:
Equity Share: Equity shareholders are entitled to voting rights in the 6d91b5. They receive dividend (if declared by the board of directors ) and are the last creditors to the 6d91b5 in case of bankruptcy.
Preference Share: Preference shareholders are given fixed dividend but have no voting rights. In case of bankruptcy, their claims over company’s assets are preferred over equity shareholders.
Primary Markets are where shares of company are sold to public for the first time in order to raise capital or expand its business. This is done by issuing IPO (Initial Public Offering).
Secondary Markets are where investors buy and sell shares that are already listed in stock exchange.
The two main stock exchanges in India are BSE (Bombay Stock Exchange) and NSE (National Stock Exchange).
Investors cannot buy shares directly from the exchange. They require intermediaries like stock brokers who can understand their needs and buy stocks on their behalf. They conduct transactions for the investor without actually owning the securities and charge brokerage commission in return.
Equity investment is subject to securities transaction tax (STT), capital gains tax and service tax. Under capital gains tax, Short term capital gain is charged when shares are sold within a year of purchasing it and Long term capital gain is levied when the time frame exceeds a year. Dividends earned on shares are tax-free.
Bid Rate is the price which a prospective buyer is willing to pay for a stock and Ask Rate is the price which a prospective seller is willing to accept for a stock.
Market Order is an order to buy or sell a security at the best market price available and Limit order is an order to buy or sell a security at a specified price. As market price keeps changing, a market order cannot guarantee a specific price and a limit order cannot guarantee execution of trade.
Stop Loss: Stop loss is an order to sell a security if it reaches a pre determined price called the trigger price. It is price defensive mechanism designed to limit investor’s loss on a security
Stop Buy: An order to buy a security which is entered at a price above the current offering price. It is triggered when the market price touches or goes through the buy stop price.
Demand & Supply: Stock prices change due to supply and demand based on the outlook of the company by people.
Growth Potential: Also, it depends on the further growth potential of the company based on its earnings and sales.
There is no fixed time horizon for investing in equities. But it is better to invest as early as one can because experts suggest that long term investments generally lead to better returns.
Trading on the equities segment takes place on all days of the week (except Saturdays and Sundays and holidays declared by the Exchange in advance). The market timings of the equities segment are:
Market Open: 09:15 hrs
Market Close: 15:30 hrs
Derivatives are financial instruments that derive their value from underlying assets like shares, commodities, currency, livestock, index, etc. The different types of derivatives are Futures, Forwards, Options and Swaps. Derivatives give you an opportunity to earn superlative profits by paying nominal amount of margin.
Futures are contracts obligating the buyer to purchase a financial instrument, at a predetermined future date and price. Futures are standardized to facilitate trading on a futures exchange. Some futures contracts may call for physical delivery of the asset, while others are settled in cash. Futures contracts are marked-to-market daily, which means that daily changes are settled day by day until the end of the contract.
Options are contracts which give the buyer (the owner) the right, but not the obligation, to buy or sell an underlying asset at a specified strike price on or before a specified date. An option which conveys to the owner the right to buy something at a specific price is referred to as a call; an option which conveys the right of the owner to sell something at a specific price is referred to as a put.
Option premium is the price paid by option buyer for acquiring the right to buy or sell an asset.
Currency Derivatives are Future and Options contracts which you can buy or sell standardized quantity of a particular currency pair at a future date. It is similar to the Stock Futures and Options but the underlying happens to be currency pair (i.e. USDINR, EURINR, JPYINR OR GBPINR) instead of Stocks.
On a currency exchange platform, you can buy or sell currency futures. Suppose, you are an importer, you can buy futures to “lock in” a price for your purchase of actual foreign currency at a future date. You thus avoid exchange rate risk that you would otherwise have faced.
Volatility Index is a measure of expected stock market volatility, over a specified time period, conveyed by the prices of stock / index options. It depicts the collective sentiment of the market on the implied future volatility.
It is the last day on which the contracts expire. Futures and Options contracts expire on the last Thursday of the expiry month. If the last Thursday is a trading holiday, the contracts expire on the previous trading day.
Margins refer to the cash or securities required to be deposited by an investor with his brokerage firm as collateral for the investor’s obligation to buy or sell the underlying security, or in the case of cash-settled contracts to pay the cash settlement amount.
All the Futures and Options contracts are settled in cash on a daily basis and at the expiry or exercise of the respective contracts as the case may be.
Commodities are goods that are used for further production of other goods and services. Some examples of commonly traded commodities are oil and natural gas, gold, copper and nickel, sugar, coffee, soybean, etc. Commodities not only offer a good way to diversify a portfolio of stocks and bonds, but also offer better returns. The returns on commodities futures “positively correlate” with inflation and so their returns do better in inflationary times.
These are contracts between two parties to buy or sell commodities at a pre-determined price at a future date. Commodity futures are different from forwards as they are standardized and exchange traded.
Commodity Market is regulated by Forwards Market Commission (FMC) under the guidance of the Ministry of Consumer Affairs, Food, & Public Distribution.
The major exchanges for Commodity are Multi-Commodity Exchange of India (MCX), National Commodity and Derivative Exchange of India (NCDEX) and National Multi Commodity Exchange (NMCE).
Different costs involved in commodity trading are:
Yes delivery of commodities is available but it is not compulsory, cash settlement is also available. However, the intention of physical delivery should be informed beforehand.
No, presently Commodity Options are prohibited under Section 19 of the Forward Contracts (Regulation) Act, 1952.
Trading on the Commodity Futures takes place from 10 am – 11.30 pm from Monday to Friday.
IPO (Initial Public Offering) is when an unlisted company issues its shares to general public for the first time. When a company wants to raise capital or expand its operation, they issue an IPO.
FPO (Follow on Public Offer) is a process by which a company, which is already listed on an exchange, issues new shares to the investors or the existing shareholders, usually the promoters. FPO is used by companies to diversify their equity base.
Book Building IPO: It is an offering in which the company sets a price range i.e. Floor Price & Cap Price. The final price is decided after the closure of the issue based on the bids received.
Fixed Price IPO: It is an offering in which shares are allotted at a price, which is known to the subscribers at the time of making an application.
We send emails regarding the issue of IPO to our clients. The information about the same can be found on our website by clicking here.
It is a process of assigning a grade to the IPO of equity share by a Credit Rating Agency registered with SEBI. The grade which is a five point scale represents a relative assessment of the fundamentals of that issue in relation to other listed shares in India.
The allotment process depends on the demand of the issue. The basis of allotment is decided by the Book Running Lead Managers (BRLM) within two weeks from the date of closure of the issue and is publicly declared.
A full refund is made to those who do not get any allotment. And for others, refund is made as per their allotment status.
As per the requirement, all the public issues of size in excess of Rs.10 crores, are to be made compulsorily in the demat mode. Thus, if an investor chooses to apply for an issue that is being made in a compulsory demat mode, he has to have a demat account and has the responsibility to put the correct DP ID and Client ID details in the bid/application forms.
The three types of investor categories are:
Retail Individual Investor (RII): An investor who applies or bids for securities of or for a value of not more than Rs. 1,00,000/-
High Net worth Individual (HNI): If retail investor applies more than Rs. 1,00,000/- of shares in an IPO, they are considered as HNI.
Non Institutional Bidders (NIB): Individual investors, NRI’s, companies, trusts etc who bid for more than Rs. 1,00,000/- are known as Non-institutional bidders. They need not to register with SEBI like RII’s.
Qualified Institutional Bidders (QIB): Financial Institutions, Banks, FII’s and Mutual Funds who are registered with SEBI are called QIB’s. They usually apply in very high quantities.
Book Building IPO allotments usually completes within 15 days of IPO subscription closing date. Once allotment is done, it takes another 3-5 working days to receive shares. Fixed Price IPO takes around a month for allotment and then 3 to 5 days to receive.
All rules, regulations and procedures relating to an IPO issue is governed by SEBI. Any company planning to go public in India is required to get approval from SEBI before opening its IPO.
Mutual fund is a professionally managed investment scheme that pools money from different investors having same financial goals. Mutual funds may invest in variety of instruments like stocks, bonds, money market securities, gold or a combination of these which provides diversification to your investments.
Depending upon the instruments in which a mutual fund invests, there are three types of mutual fund.
Equity Mutual Funds: Equity Mutual Funds invest in stocks of listed companies.
Debt Mutual Funds: Debt Mutual Funds invests in bonds of reputed corporation and government.
Hybrid Mutual Funds: Hybrid Mutual Funds invest in both shares and bonds.
Open Ended Scheme: These schemes are available for subscription and repurchase on daily basis and hence provide greater liquidity. They do not have a fixed maturity and its unit can be brought or sold at NAV which are declared daily.
Close Ended Scheme: These schemes have a fixed maturity, i.e., 5 to 7 years. They are only available for subscription during a specified period from the time of launch. Investors can invest in the scheme at the time of the initial public issue and thereafter they can buy or sell the units of the scheme on the stock exchanges where the units are listed.
Benefits of investing in a mutual fund:
Professional Investment Management Professional Fund Managers having in-depth knowledge and skills make sound investment decisions and keep monitoring them.
Increased Diversification Mutual Funds invest in various stocks and bonds and hence provide better diversification and lower risk.
Highly Regulated – Mutual Funds are registered with SEBI and so all activities of Mutual Fund are monitored by SEBI.
Transparency Open Ended Scheme declare NAV on daily basis and regular updates on value of the investment are also available.
Higher Liquidity – Open end scheme provide option to redeem on demand making the investment highly liquid.
Affordability Mutual Funds makes investing in many stocks and bonds in small units affordable.
SEBI formulates policies and regulates the mutual funds to protect the interest of the investors. SEBI notified regulations for the mutual funds in 1993. Thereafter, mutual funds sponsored by private sector entities were allowed to enter the capital market. The regulations were fully revised in 1996 and have been amended thereafter from time to time. SEBI has also issued guidelines to the mutual funds from time to time to protect the interests of investors.
Net asset value (NAV) represents the market value of all assets per unit, held by the fund. For an investor, it simply signifies the current value of his or her investment in the fund.
A Systematic Investment Plan (SIP) is a convenient method of investing in mutual funds. Under this plan, an investor contributes a fixed amount towards the mutual fund scheme at regular intervals, and gets units at the prevailing NAV.
Except for Exchange Traded Funds, investors do not need a demat account to invest in MF.
Fund Managers are professionals responsible for making investment decisions related to Mutual Funds. They implement funds’ investment strategy and manage their trading activities. Fund managers are paid a fee for their work, which is a percentage of the fund’s average assets under management.
Fund of Funds Scheme invest in other schemes of same or different mutual funds that provide greater diversification to the investors and in return charge a higher fee.
Yes. However, no change in the nature or terms of the scheme, known as fundamental attributes of the scheme e.g. structure, investment pattern, etc. can be carried out unless a written communication is sent to each unit holder and an advertisement is given in one English daily having nationwide circulation and in a newspaper published in the language of the region where the head office of the mutual fund is situated.
There may be changes from time to time in a mutual fund. The mutual funds are required to inform any material changes to their unit holders. Apart from it, many mutual funds send quarterly newsletters to their investors.
Performance of a mutual fund scheme can be assessed by looking at its Net Asset Value (NAV) that is declared daily for open ended scheme and weekly for close ended scheme.
Tax-Saving Schemes offer tax rebates to the investors under tax laws prescribed from time to time. Under Sec.88 of the Income Tax Act, contributions made to any Equity Linked Savings Scheme (ELSS) are eligible for rebate @20% for a maximum investment of Rs. 10,000 per financial year.
The deposit placed by investors with companies for a fixed term carrying a prescribed rate of interest is called Company Fixed Deposit. At the end of deposit period principal plus interest is returned to the deposit holder.
Cumulative FDs: In this type of investment, Earned interests are added to Principal and so investors earn interest on interest. This is a good option for investor, if they are not looking for regular income from the FD. Non Cumulative FD: In this type of investment, interest is received on regular interval and further interest is calculated on the original principal.
Companies registered under Companies Act 1956, such as:
A Non-Banking Non-Finance Company (Manufacturing Company) can accept deposits up to 10% of the aggregate of paid-up share capital and free reserves if the deposits are from shareholders or guaranteed by the directors, otherwise up to 25% of the aggregate of paid-up share capital and free reserves.
A Non-Banking Finance Company can accept deposits up to following limits: An Equipment Leasing Company can accept four times of its net owned fund. A Loan or Investment Company can accept deposit up to one and half times of its net owned funds.
Interest is paid on monthly/quarterly/half yearly/yearly or on maturity basis and is sent either through cheque or ECS facility
TDS is deducted if the interest on fixed deposit exceeds Rs.5000/- in a financial year.
All Indians (except NRIs) can buy Fixed Deposit through Eureka.
Eureka distributes FDs of HDFC ltd, DHFL, PNB Housing Finance Ltd, Mahindra Finance and Shriram Unnati on selection basis and other FDs are also distributed on request basis
Bonds are financial instruments in which the issuer owes the holder a debt and is obliged to pay interest at regular intervals and the principal amount at maturity.
A government bond is a bond issued by a national government, with a promise to pay periodic interest payments and to repay the face value on the maturity date.
A corporate bond is a bond issued by a corporation. It is a bond that a corporation issues to raise money effectively in order to expand its business. Generally; corporate bonds offer a higher yield than government bonds because their credit risk is generally greater.
Bonds provide regular income and higher returns compared to FDs, postal savings, etc. They are less volatile than stocks and therefore provide better stability. If a company is liquidated, bondholders usually have priority over stockholders in a company’s capital structure and are more likely to receive payment. Also, payments from some bonds are exempted from taxes.
Risk in investing in bond is that the issuer of the bond may not be able to make promised payments and hence default. Also, if inflation rises, the purchasing power of bonds’ coupon and principal will reduce.
Interest rate and Maturities are directly proportional to each other. In other words, the longer the maturity of a Bond, higher is risk of price fluctuation and so higher the interest rate.
Eureka distributes all bonds including tax free bonds, non convertible debentures (secured and unsecured) and perpetual bonds.
A depository is an organisation which holds securities (like shares, debentures, bonds, government securities, mutual fund units etc.) of investors in electronic form at the request of the investors through a registered Depository Participant. It also provides services related to transactions in securities.
Dematerialisation is the process by which physical certificates of an investor are converted to an equivalent number of securities in electronic form.
At present two Depositories viz. National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL) are registered with SEBI.
A Depository Participant (DP) is an agent of the depository through which it interfaces with the investor and provides depository services.
All the benefits of the dematerialized shares are given to the actual investor since the depository holds the securities in a fiduciary capacity on behalf of the investors who have opened a demat account with the depository. Hence, the actual investor is the “Beneficial Owner” (BO) of the securities.
A depository interfaces with the investors through its agents called DPs. If an investor wants to avail the services offered by the depository, the investor has to open a BO account with a DP.
The benefits are enumerated below:-
Change in address recorded with DP gets registered with all companies in which investor holds securities electronically eliminating the need to correspond with each of them separately; Transmission of securities is done by DP eliminating correspondence with companies; Automatic credit into demat account of shares, arising out of bonus/split/consolidation/merger etc. Holding investments in equity and debt instruments in a single account.
As per the Depository Act of 1996, you have an option to hold shares either in physical or dematerialized form.
It gets allotted to an investor’s DP account as per his/her option.
ISIN (International Securities Identification Number) is the identification number given to a security of an issuer when admitting such security in the depository system.
Demat Account or dematerialised account is an account where shares & securities are electronically held instead of investors possessing physical certificates. An investor opens a demat account while registering with an investment broker. The demat account number is quoted in all transactions to enable electronic settlements of trades.
A client submits a Dematerialisation Request Form (DRF) along with the physical share certificates to the DP with which it has opened its demat account, who in turn forwards it to the Registrar & Transfer agent for confirmation from the company whose shares the investor is holding. After confirmation, the client account is credited.
Once an NRI becomes a resident in India, he/she needs to open a new demat account in the non-NRI status and transfer all the securities from the NRI demat account to the new demat account and close the NRI demat account. NRIs who were also trading using their trading account need to open a new trading account and integrate it with the new demat account.
A Non Resident India (NRI) is a citizen of India who holds an Indian passport and has temporarily emigrated to another country for six months or more for employment, residence, education or any other purpose.
A person of Indian origin (PIO) is a person of Indian origin or ancestry who was or whose ancestors were born in India or nations with Indian ancestry but is not a citizen of India and is the citizen of another country. A PIO might have been a citizen of India and subsequently taken the citizenship of another country.
Yes, they can invest in shares of Indian Company through Stock Market under the Portfolio Investment Scheme.
Yes there is no restriction in opening accounts in different banks simultaneously.
NRIs can only make delivery transactions, intraday trading and short selling is not allowed as per RBI norms.
The types of Bank Accounts available to NRIs are:
Non Resident External (NRE) account is a Rupee denominated account meant for NRIs which allows repatriation of funds. This means that the funds can be freely sent to any other country. NRE account can contain funds remitted from abroad, or obtained from another NRE / FCNR account maintained in India. The interest earned on deposits in an NRE account is exempt from tax in the hands of the NRI.
Non Resident Ordinary (NRO) account is a Rupee denominated account which allows repatriation of upto 1 million USD. NRIs can repatriate up to USD 1 million, for bonafide purposes, per financial year from balances in NRO Accounts subject to payment of applicable taxes. The limit of USD 1 million per year includes sale proceeds of immovable properties held by NRIs/PIO (Person of Indian Origin) for a period of 10 years. In case a property is sold after being held for less than 10 years, remittance can be made if the sale proceeds have been held by the NRI/PIO for the balance period in eligible investments. The interest earned on deposits in an NRO account is taxable in the hands of the NRI as per the applicable income tax slab rates.
|People who can open this account?||NRIs||Any person residing outside India|
|Joint account permitted of 2 or more NRIs?||Yes||Yes|
|Joint account permitted with another person residing in India?||No||Yes|
|Joint account permitted with another person residing in India?||No||Yes|
|Currency in which the account is denominated||INR||INR|
|Is the principal repatriable?||Freely||Partly|
|Is the interest repatriable?||Freely||Freely|
|Risk- Foreign currency?||Account holder is exposed the fluctuations in the value of INR||Account holder is exposed the fluctuations in the value of INR to the extent of interest amount|
Yes, money can be freely transferred from NRE account to NRO account.
No, money cannot be transferred from NRO to NRE account. Even if erroneously, money is transferred from NRE to NRO, it cannot be transferred back to NRE.
No permission is required from RBI to open a demat account. However, credits and debits from demat account may require general or specific permissions as the case may be, from designated banks.
For long term investment, i.e., shares that are held for more than 1 year from the date of purchase, there is no capital gain tax applicable if it’s sold after 1 year. However, if shares are sold within 1 year from the date of purchase, then the gains would be taxed.
Securities Lending and Borrowing (SLB) is a scheme that has been launched to enable settlement of securities sold short. SLB enables lending of idle securities by the investors through the clearing corporation/clearing house of stock exchanges to earn a return through the same. For securities lending and borrowing system, clearing corporations/clearing house of the stock exchange would be the nodal agency and would be registered as the “Approved Intermediaries” (AIs) under the Securities Lending Scheme, 1997.
Securities in the F&O segment are eligible for SLB.
Under SLB, securities can be borrowed for a tenure of up to 12 months. The fixed settlement dates are the first Thursday of the respective month and the date is displayed on the SLB trading screen at the time of order entry.
The rate of interest for SLB is dependent on the stock’s value on that day and is generally calculated on a per month basis.
Shares are borrowed by traders for the purpose of short selling it in the market. When an investor has a negative view on the stock, he/she borrows it through SLBM and sells it and later buys them back when price falls.
Long term investors who own a large number of shares and are not planning to sell them in the near future lend their shares through SLB Scheme. This gives long-term investors an opportunity to earn additional income.
Features of Securities lending and borrowing scheme are as follows:
SEBI permits all categories of investors i.e. retail and institutional to participate in SLBM.
NSCCL acts as a central counterparty in the SLB Scheme providing financial settlement guarantee.
The settlement cycle for SLB transactions shall be on T+1 basis. The settlement of lending and borrowing transactions shall be independent of normal market settlement. The settlement of the lending and borrowing transactions shall be done on a gross basis at the level of the clients i.e. no netting of transactions at any level will be permitted.
Asp.Net with C#, Angular JS, WEB API 2.0, MVC5, BOOTSTRAP, HTML, CSS, JAVA SCRIPT, SQL Server
Sales of Mutual Fund Products, FD and Insurance Products.
A Commerce graduate from St Xavier’s College, Kolkata, with a capital market exposure of 40 years, Ramesh Kumar Somani commands great respect for his administrative skills and leadership capabilities. He has been instrumental in transcending and transforming the group into a well-diversified financial services company.
Responsible for the day-to-day operations in relation to risk management, surveillance, and internal control, Rajesh Kumar Somani is actively involved in broadening the Branch and Sub Broker network. Helping clients to sail smoothly through the market volatility is his forte and he assumes a vital role in building and developing strong customer relationships.
A Commerce graduate from St Xavier’s College, Kolkata, Chartered Accountant, Cost Accountant and DBF (ICFAI) with over 24 years of experience, Rakesh Somani provides dynamism and professionalism to the whole group. He was the President of Associations of National Exchanges Members of India (ANMI), Chairman of Asian Forum for Investor Education (AFIE), and member of the Trading Advisory Committee of Bombay Stock Exchange (BSE). He spearheads the DP vertical of the Company and is responsible for Regulatory Compliances and Controlling Finance. He oversees Institutional Business and is responsible for the development and growth of Institutional Clients.
He is a Rank Holder Company Secretary, Chartered Accountant, and commerce graduate from St. Xaviers College, Kolkata. He is the Executive Director of Eureka Stock & Share Broking Services Ltd, with over 12 years of experience in Capital Markets, Bond Markets, and Distribution of various financial products such as Mutual Funds, NPS, Bonds, PMS, Insurance, etc.
He started his career as a Tax Consultant in KPMG, Hyderabad, and thereafter joined Eureka as a Business Analyst. Now he is spearheading Eureka group’s efforts to expand its operations in the Financial Products domain.