Learn-Trade.com Blog

People love to make money from speculation and the entering the share market is a great way of investing money and reaping benefits later on. You can be a small or a big investor, but your main aim would be to buy stocks when the prices are low and sell them when they move up. Even though there are inherent risks in share trading like all other speculative markets, you need to know the basics of how to enter or start in the stock market before venturing in.

Open a Demat Account

There are two major stock exchanges in India for buying and selling shares online, the BSE and the NSE, where shares are traded and are favored by investors. They are two major stock exchanges with high volumes traded in a single day enabling investors to book profits as well as hold on to shares for some time to allow a price appreciation.

Shares are bought and sold by approved brokers who are enlisted with the major stock exchanges.

Your primary task would be to check out a bank that has a demat account facility and open an account.

You can open a savings cum demat account with a minimum deposit of Rs10, 000 and opt for either online trading with the help of the bank or enlist with a broker. Filling out the form is simple and easy and you need to provide some basic information as well as your identity proof. Instead of piled up shares on paper, your demat account will show your holdings at any given point of time.

Online facilities for share trading are offered by banks that also double up as brokers and there are a few major banks in India like ICICI, UTI, and HDFC among others that allow buying and selling shares online.

Compared to brokers, banks will charge you less in fees and commission as they would be directly dealing in the stock exchange. Private brokers will be charging their commission and you would also have to pay extras charges to the bank. You can log in and all online transactions will be carried out by the bank.

Check the sector where share prices are rallying

You need to select the type of shares you want to trade in. You can go for sector wise trading like concentrating on pharmaceutical stocks when they are rallying or auto shares when there is a boom in the sector or any other industry that is doing well.

Your primary would be to cash in on the boom in the market and make profits before the stock price reaches a high and then drops in value.

With banks as well as brokers, you would have to keep margin money on the basis of which you can trade. You could be allowed 10 or even 20 times of the margin money for day trading which is buying and selling shares on the same day. For taking delivery of the shares for sale at a later date when the price appreciates, you would have to keep sufficient balance in your savings account for the bank to debit the amount.

Your demat account will reflect your holdings regularly for you to check them anytime you want. Tax is debited by the bank on the basis of profits you make from transactions and by the end of the accounting year each March end; your bank will provide you with a statement for the deduction. While buying, look for the 52 week low price and sell when you have made a sufficient profit instead of waiting for the price to go up further as it may crash suddenly.

If you want to hear the story of Indian mutual funds, you need to brace up for some startling revelation. According to very recent estimates, the total assets managed by the mutual funds rose from $152.82 billion last August witnessing a growth of more than 8% since the previous month. After a brief lull when the stock market was facing the crisis that spilled over from the market tumbledown abroad, the surge has made many mutual fund companies launch their schemes with great gusto.

The growth in mutual fund schemes can be directly related to the surge in the stock exchange in India by nearly 62% in eight months this year. While the monthly returns were on an average 1% on all mutual funds, the mood among investors has turned positive. With lower bank deposit rates, people are again turning to mutual funds to watch their money grow steadily. According to Dhirendra Kumar, the CEO of Value Research, an asset management company, the mutual funds that led the way was again Reliance Mutual Fund, followed by HDFC mutual fund.

Want to Buy & Sell Indian Mutual Funds: www.NriInvestIndia.com

Humble beginnings with UTI – Trading in Mutual Funds begin.

The story about mutual funds in India goes back to 1963 when UTI or the Unit Trust of India was formed with the help of the Reserve Bank of India and the Indian government. As India was closed to foreign capital and investment in the stock market for long, the UTI had a solo run for nearly 25 years. It was only in 1987 when there were mutual funds by the public sector led by nationalized banks and the life insurance companies that existed. It was a much closed situation with gingerly steps taken to get this kind of transaction going.

There were no developments in the mutual funds scene after some small activity in 1987, but it was only in 1993 that great developments and changes were seen. It was the year when many private sector funds came in leading to many regulations and laws being put in place. As India opened up the economy and there was a great flurry of activity, mutual funds grew from strength to strength. Later, many international mutual funds came over to India to take part in the economic boom. As most Indians save more and spend less on retail, the mutual fund managers have never had it so good.

Growth fuelled by rural demand

Assets under Indian mutual fund management are estimated at US $150 billion. With the prospect bright, many fund managers are coming over not only from the US, but from Europe and South East Asia also. But not all of them can make it big as the market is highly concentrated and the top seven or eight asset management companies have a stake of nearly 70% of the total market. While there was a surge in the operations of private mutual fund companies in the last decade, the share of UTI dripped from a market share of 77% to just 18% from 2000 to 2008. It also showed how interest in private players has grown with the opening up of the Indian economy.

But the modest beginnings made by UTI nearly 50 years ago managed to trigger interest in mutual funds after so many years. There is a new market waiting to be tapped in the rural areas of India where purchasing power is increasing and the population is not averse to checking out alternative investment opportunities other than banks. The reality that mutual funds can provide better returns has found favor with the rural and semi urban population of India where the majority of the people live.