2. What is share market?
Market is that place where trading (buying and selling) of the previously
issued securities are done, these transaction is generally done through the
stock exchange. Basically traders buy or sell a part of company.
3. Trading & Types of trading
The share of a company are in general be transferable from one shareholder
to another, this leads to buying and selling of shares termed as trading.
Investors usually buy and sell shares on the EXCHANGES through a stock
broker registered with the exchange.
Types of trading
1. Intraday-Same day
2. Delivery or positional-Holding basis
Ways of trading
1. Online
2. Offline
4. Major indices
What is an index?
An index is an indicator. It gives you a general idea about whether most of the
stocks have gone up or most of the stocks have gone down.
NSE Major Index- S&P CNX Nifty 50
The Nifty is an indicator of all the major companies of the NSE. If the index goes
up, it means that the prices of the stocks of most of the major companies on the
Exchange have gone up. If the index goes down, this tells you that the stock price
of most of the major stocks on the Exchange have gone down.
BSE Major Index - Sensex 30
It‟s a Value-weighted index and consists of 30 largest and most actively traded
stocks. It gives you a general idea about whether most of the stocks have gone up
or most of the stocks have gone down. The Sensex is an indicator of all the prices
of the major companies of the BSE.
7. Financial Services Axis Bank 2.63
Bank of Baroda 0.51
HDFC 6.61
HDFC Bank 7.98
ICICI Bank 5.1
IndusInd Bank 1.8
Kotak Mahindra Bank 2.98
State Bank of India 2.65
Yes Bank 1.28
Metals Coal India 1.29
Hindalco Industries 0.74
Tata Steel 0.92
Energy BPCL 1.11
GAIL (India) 0.66
NTPC 1.33
ONGC 1.71
Power Grid 1.39
Reliance Industries 5.41
Tata Power 0.44
Telecom Bharti Airtel 1.41
Idea Cellular 0.32
Bharti Infratel 0.66
Consumer Goods Asian Paints 1.44
Hindustan Unilever 1.99
Construction Larsen & Toubro 3.75
Industrial Manufacturing BHEL 0.39
Media & Entertainment Zee Entertainment 0.82
Shipping
Adani Ports and Special
Economic Zone Ltd.
0.78
8. Major World Indices:
Asian Indices:
1. Straits Times - Singapore Exchange
2. SSE Composite Index – Shanghai Stock Exchange ( CHINA)
3. Hang Seng – Hong Kong Stock Market
4. Nikkei 225- Tokyo Stock Exchange (Japan)
American Indices:
1. NASDAQ Composite Index - NASDAQ America
2. S&P 500 - Dow Jones, NYSE , NASDAQ ( America)
3. Dow Jones Industrial Average – Dow Jones ( America)
European Indices:
1. DAX 30 (Deutscher Aktien Index) - German Stock Exchange
2. BEL20 (Belgian 20 Index) - Euro Next Brussels, Belgian
3. CAC40 (Cotation Assistée en Continu) - Euro Next Paris, France
4. FTSE100 (Financial Times Stock Exchange Index) - London Stock Exchange
9. World Markets Timings
Country Local Timings Timings in Indian Standard Time(IST)
Japan 9:00 to 11:00
12:30 to 15:00
05:30 to 7:30
09:00 to 11:30
Taiwan 09:00 to 13:30 06:30 to 11:00
Singapore (SGX Nifty) 09:00 to 18:15
19:15 to 01:00
06:30 to 15:45
16:45 to 22:30
China (Shanghai) 09:30 to 11:30
13:00 to 15:00
07:00 to 09:00
10:30 to 12:30
Hong Kong 09:30 to 12:00
13:30 to 16:00
07:00 to 09:30
11:00 to 13:30
USA 09:30 to 16:00 19:00 to 01:30 (14th Mar to 7th Nov)
20:00 to 02:30 (08th Nov to 13th Mar)
European Countries 08:00 to 16:30 12:30 to 21:00 (28th Mar to 31st Oct)
13:30 to 22:00 (1st Nov to 27th Mar)
10. Exchange
These are organized market places where stocks, bonds are other equivalents
are trades between the buyers and sellers where exchange acts as counter-
party to both the participants in case of any default. The contracts are
standardized and not customized ones. For example, NYSE, NASDAQ, NSE,
Tokyo Stock Exchange, etc.
Indian stock market
BSE(Bombay stock exchange)
NSE(National stock exchange)
11. Timing of exchange
Working Hours of NSE:
Session Timing
Pre-open Trading Session 09:00 - 09:15
Trading Session 09:15 - 15:30
Closing Session 15:40 – 16:00
13. Equity market
Cash is a segment where direct buying and selling of shares is done. Client
directly purchase share or sell share in exchange with the help of broker.
Future is a segment where bunch of shares or lot are already predefined
and trading is done according to lot. The contract expires on a per-
specified date or on an expiry date and on expiry, futures can be settled by
delivery of the underlying asset or cash.
Options are other types of derivatives (other than futures) which
resembles both cash and futures when it comes to the characteristics of
the segment and the way they are traded in the markets. They expire with
futures and are traded in lots (future segment trade) but a trader has to
pay full amount, margin trading is not allowed.
14.
15. Short selling
The sale of a security that is not owned by the seller, or that the seller has
borrowed. Short selling is motivated by the belief that a security's price will
decline, enabling it to be bought back at a lower price to make a profit. Short
selling may be prompted by speculation, or by the desire to hedge the
downside risk of a long position in the same security or a related one. Since
the risk of loss on a short sale is theoretically infinite, short experienced
traders who are familiar with its risks should only use selling. Let us
understand through an example of company SBIN.
Now suppose, SBIN is priced at Rs 250/-. You know it‟s going to fall that day
because of some reason. But you don‟t have any shares with you of SBIN. But
still you can sell the shares; this is called as short selling.
16. Future segment & terminology
1. Spot Price: The price at which an asset trades in the spot/cash market.
2. Futures Price: The price at which the futures contract trades in the future market.
3. Contract Cycle: The period over which a contract trades. The index future contracts on the
NSE have one months, two months and three months expiry cycle that expires on the last
Thursday of the month. Thus the contact which is to expire in January month will expire on last
Thursday of January.
4. Expiry Date: It is the date specified in the future contract. This is the last date at which the
contracts are trades, at the end of which it will cease to exist.
5. Contact/Lot Size: It is the quantity of asset that has to be delivered under one contract, for
instance the contract size on NSE‟s Futures is 75 Nifty.
6. Initial Margin: The amount that must be deposited in trading account at the
time when a future contract is first entered into is known as margin.
7. Mark to Market: In the future market, at the end of each trading session, the margin
amount is adjusts to reflect the investors gain or loss depending upon the futures closing price;
this is called the Marking-to-market.
17. Future Margin & Calculation
1. A margin payment is required (which will be blocked by your broker) as long as the futures trade is live
2. The margin blocked by the broker at the time of initiating the futures trade is called the initial margin
3. Both the buyer and the seller of the futures agreement will have to deposit the initial margin amount.
4. The margin amount collected acts as a leverage, as it allows you to deposit a small amount of money and
take exposure to a large value transaction
5. M2M is a simple accounting adjustment, the process involves crediting or debiting the daily obligation
money in your trading account based on how the futures price behaves
6. The previous day closing price figure is taken to calculate the current day’s M2M
7. SPAN(Standard Portfolio Analysis of Risk) Margin is the margin collected as per the exchanges instruction and the
Exposure Margin is collected as per the broker’s requirement
8. The SPAN and Exposure Margin is determined as per the norms of the exchange
9. The SPAN Margin is popularly referred to as the Maintenance Margin
10. If the margin account goes below the SPAN, the investor must deposit more cash into his account if he
aspires to carry forward the future position
11. The Margin Call is when the broker requests the trader to infuse the required margin money when the
cash balance goes below the required level
18. Future Margin
Particular Details
Symbol HDFC Bank Limited
Trade Type Long
Buy Date 10th Dec 2014
Buy Price Rs.938.7/- per share
Sell Date 19th Dec
Sell Price Rs.955/- per share
Lot Size 250
Contract Value 250*938.7 = Rs.234,675/-
SPAN Margin 7.5% of CV = Rs.17,600/-
Exp Margin 5.0% of CV = Rs.11,733/-
IM (SPAN + Exposure) 17600 + 11733 = Rs.29,334/-
P&L per share Profit of Rs.16.3/- per share (955 – 938.7)
Net Profit 250 * 16.3 = Rs.4,075/-
19. Options & Terminology
Options are of two types: Call Option and Put Option. The buyer of the “Call
Option” has to pay premium multiplied by the lot-size, and will generate
profit if the prices of the underlying asset moves up. The premium of the “Call
Option” moves up with the asset price, just like in Future segment. In the case
of “Put Option”, the buyer of the Put Option will generate profit only if the
prices move downwards. Yes, the premium of the “Put option” increases when
the price of the underlying asset goes down. Here in Options we can also
short (sell) as explained below but we do not generate calls on selling side.
Here we buy both the options depending on the trend of the underlying asset
prices. We buy Call Option when bullish sentiments are high and we buy Put
option when bearish sentiments are high. We have to pay premium in both
the cases to our broker, upfront.
20.
21.
22.
23.
24.
25. Options terminologies
• Index options: These options have the index as the underlying asset. In India, they have a European style
settlement i.e. it could only be exercised at the expiry day. Eg. Nifty options, Mini Nifty options etc.
• Stock options: Stock options are options on individual stocks. A stock option contract gives the holder the right to
buy or sell the underlying shares at the specified price. They have an American style settlement i.e. it could be
exercised before or at the expiry date.
• Buyer of an option: The buyer of an option is the one who by paying the option premium buys the right but not
the obligation to exercise his option on the seller/writer.
• Writer / seller of an option: The writer / seller of a call/put option is the one who receives the option premium
and is thereby obliged to sell/buy the asset if the buyer exercises on him.
• Call option: A call option gives the holder the right but not the obligation to buy an asset by a certain date for a
certain price.
• Put option: A put option gives the holder the right but not the obligation to sell an asset by a certain date for a
certain price.
• Option price/premium: Option price is the price which the option buyer pays to the option seller. It is also
referred to as the option premium.
• Expiration date: The date specified in the options contract is known as the expiration date, the exercise date, the
strike date or the maturity.
• Strike price: The price specified in the options contract is known as the strike price.
26. MULTY COMMODITY EXCHANGE (MCX)
It‟s a Mumbai based exchange which has started its operations from 11th Nov, 2003.
Trading Hours: Morning 10:00 AM to Night 11:30/11:55 PM.
Name Lot (Quantity) P&L / 1 Rs. Tick size
Gold 1 Kg. 100 1 Rs./10 Gram
Silver 30 Kg. 30 1 Rs./ Kg.
Lead 5 tons/5000 Kg. 5000 5 Paise / Kg.
Zinc 5 tons/5000 Kg. 5000 5 Paise / Kg.
Aluminium 5 tons/5000 Kg. 5000 5 Paise / Kg.
Copper 1 tons / 1000 Kg. 1000 5 Paise / Kg.
Nickel 250 Kg. 250 10 Paise / Kg.
Crudeoil 100 Barrel 100 1 Rs.
NaturalGas 1250mmbtu 1250 10 Paise
27.
28.
29. National Commodity and Derivative Exchange of India (NCDEX)
It‟s an exchange which basically deals in agri. commodity. It is based in Mumbai and as started its operation from
15th December 2003. Time: 10:00 AM to 5:00 PM.
Name Lot/ Trading
unit
P&L / 1 Rs. Tick Size Delivery Centre
CHANA 10 TONS / 10000 kg 100 1 Rs. DELHI
GUARSEED 10 TONS / 10000 kg 100 1 Rs. JODHPUR
RMSEED 10 TONS / 10000 kg 100 0.05 Paise JAIPUR
SOYABEAN 10 TONS / 10000 kg 100 0.05 Paise INDORE
DHANIYA 10 TONS / 10000 kg 100 1 Rs KOTA
GUARGUM 5 TONS / 5000 KG 50 1Rs JODHPUR
TURMERIC 5 TONS / 5000 KG 50 2 Rs NIZAMABAD
JEERA 3 TONS / 3000 KG 30 1 Rs UNJHA(GUJ)
PEPPER 1 TON / 1000 KG 10 1 Rs KOCHI
REFINEDSOYAOIL 5 TONS / 5000 KG 500 0.05paise INDORE
MENTHAOIL 360 KG 360 0.10paise CHANDOUSI(U.P)
32. 100 shares 1000 price
Sl No Chargeable Item Applicable Charges Amount
1Brokerage 0.1% or Rs.20/- whichever is lower 20/-
2Security Transaction Charges 0.1% of the turnover 100/-
3Transaction Charges 0.00325% of the turnover 3.25/-
4Service Tax 12% of Brokerage + Transaction charges 2.79/-
5Education Cess 2% of service tax 0.0558/-
6Higher education Cess 1% of service tax 0.0279/-
7SEBI Charges Rs.20 per crore of transaction 0.2/
Total 126.32/-
33. KYC (know your customer)
Name
Mail-id
Address
Investment
Previous experience
KYC form forwarded by company should be filled and duly signed
Scanned copy of Pan card
Scanned copy of address proof
