# data[].attributes.headline
Averaging in Stock Market: Meaning | TradeSmart

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Averaging in Stock Market: Meaning | TradeSmart

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Averaging in the stock market is the process through which investors buy more shares of their best stocks over time. Visit now at https://tradesmartonline.in/

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शेयर बाजार में औसत क्या है | What is Averaging in the Stock Market | TradeSmart

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What is the Commodity Market? | TradeSmart

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What is the Commodity Market? | TradeSmart

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A commodity market is a market for purchasing, selling, and primary trading products. Checkout this video also visit https://tradesmartonline.in/

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कमोडिटी मार्केट क्या है? | What is Commodity Market? | TradeSmart

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How to Open a Demat Account for Minors? | TradeSmart

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How to Open a Demat Account for Minors? | TradeSmart

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The procedure of opening demat account for minor is quite easy and simple. Check out the entire video to know more also visit https://tradesmartonline.in/

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अवयस्कों के लिए डीमैट खाता कैसे खोलें? | How to Open Demat Account for Minors? | TradeSmart

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BSDA Account - Know What is Basic Service Demat Account? | TradeSmart

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BSDA Account - Know What is Basic Service Demat Account? | TradeSmart

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Basic Service Demat Account is a specific kind of Demat account that the Securities & Exchange Board of India developed. Visit now at https://tradesmartonline.in/

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बेसिक सर्विस डीमैट अकाउंट क्या है? | What is a Basic Service Demat Account? | TradeSmart

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Know How to Close Your Demat Account Online? | TradeSmart

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Know How to Close Your Demat Account Online? | TradeSmart

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Opening a Demat account is an easy online process. However, closing a Demat account is not that easy. Check out this video alnd also visit https://www.youtube.com/watch?v=fuX-IsV23ww

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डीमैट खाता कैसे बंद करें? | How to close a Demat Account? | TradeSmart

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Learn How to Select the best Demat Account | TradeSmart

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Learn How to Select the best Demat Account | TradeSmart

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Factors to be considered when Choosing the Best Demat Account in India. Checkout this video and also visit https://tradesmartonline.in/open-demat-account/

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सबसे अच्छा डीमैट खाता कैसे चुनें | How to choose the best Demat Account | TradeSmart

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How to close Trading Account? | TradeSmart

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How to close Trading Account? | TradeSmart

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There can be a Various of reasons to close a trading account, Checkout this video to know more also visit https://tradesmartonline.in/

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ट्रेडिंग अकाउंट कैसे बंद करें? | How to close a Trading Account? | TradeSmart

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How to Select Stocks for Intraday Trading in India? | TradeSmart

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How to Select Stocks for Intraday Trading in India? | TradeSmart

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How to Select Stocks for Intraday Trading in India. Check out this video to know the best stocks to select for intraday trading also visit https://tradesmartonline.in/

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इंट्राडे के लिए स्टॉक कैसे चुनें? | How to Select Stocks for Intraday? | TradeSmart

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What is an Futures & Options Ban? | TradeSmart

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What is an Futures & Options Ban? | TradeSmart

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The F&O ban is a regulatory measure intended to prevent unwarranted growth and speculative intraday trading. Visit now at https://tradesmartonline.in/futures-and-options-trading

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फ्यूचर्स एंड ऑप्शंस बैन क्या है? | What is Futures & Options Ban? | TradeSmart

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Know How to Transfer Funds into your Trading Account? | TradeSmart

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Know How to Transfer Funds into your Trading Account? | TradeSmart

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If you have opened your trading account online, this is the simplest method to transfer funds into it. Visit now to know more at https://tradesmartonline.in/

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अपने ट्रेडिंग अकाउंट में फंड कैसे ट्रांसफर करें? | How to Transfer Funds into your Trading Account?

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What Is a Crypto Wallet - Meaning, Importance | TradeSmart

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What Is a Crypto Wallet - Meaning, Importance | TradeSmart

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Understanding the meaning of crypto wallets and know how they work in buying and selling digital assets. Know more about Crypto wallet at TradeShaala by TradeSmartr

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What Is a Crypto Wallet - Meaning, Importance & Types at TradeShaala by TradeSmartq

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Guide to History of Blockchain - Origin & Invention | TradeSmart

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Guide to History of Blockchain - Origin & Invention | TradeSmart

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Blockchain is a computer ledger that keeps track of transactions in time. Learn about the purpose and inventor of blockchains at TradeShaala by TradeSmart.

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A Brief History of Blockchain - Origin & Invention at TradeShaala by TradeSmart

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Know about types of cryptocurrency at TradeShaala by TradeSmart

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Know about types of cryptocurrency at TradeShaala by TradeSmart

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Cryptocurrency is a virtual or digital currency. Know about different types of cryptocurrencies in the market with TradeShaala by TradeSmart.

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Expense ratio: Everything you need to know at TradeShaala by TradeSmart

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Expense ratio: Everything you need to know at TradeShaala by TradeSmart

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The expense ratio is the charge a fund house levies on the gross returns. Learn more about expense ratios at TradeShaala by TradeSmart.

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Learn What is Expense Ratio (ER) & its Interpretation with TradeShaala at TradeSmart

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What is Fund Manger & its responsibilities at TradeShaala by TradeSmart

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What is Fund Manger & its responsibilities at TradeShaala by TradeSmart

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A fund manager is responsible for implementing a fund's investment strategy and managing its trading activities. Know more about Fund Manager at TradeSmart

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Learn & Understand What is Fund Manger & its responsibilities at TradeShaala by TradeSmart

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Know the types of Mutual Funds with TradeShaala at TradeSmart

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Know the types of Mutual Funds with TradeShaala at TradeSmart

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earn the types of mutual funds and know how it protects from multiple risks. Visit now to know more about the types of mutual funds at TradeSmart

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Types of Mutual Funds - Learn the types of mutual funds and how it protects from multiple risks with TradeShaala at TradeSmart. Learn Now!

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What is Mutual Funds - Know How Mutual Funds Work | TradeSmart

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What is Mutual Funds - Know How Mutual Funds Work | TradeSmart

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A mutual fund is a pool of money managed by a professional Fund Manager. Learn all about mutual funds at TradeShaala by TradeSmart

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What is Mutual Fund - Learn Mutual Fund Types, Advantages with TradeShaala by TradeSmart

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Ratio Analysis - Learn about ratios & benefits | TradeSmart

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Ratio Analysis - Learn about ratios & benefits | TradeSmart

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Ratio analysis evaluates a company's prospective financial stability by assessing its effectiveness, profitability, and financial risks. Know more at TradeSmart

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Ratio Analysis (Part-1) - Learn about Classification of ratios & benefits with Tradeshaala by TradeSmart

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Cash Flow Statement - Uses of cash flow statement | TradeSmart

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Cash Flow Statement - Uses of cash flow statement | TradeSmart

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Cash flow statement shows how much money is coming into and going out of businesses. Know more about Cash flow statement at TradeSmart

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Cash Flow Statement - Learn the Uses of cash flow statement with Tradeshaala by TradeSmart

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How to Prepare a Balance Sheet - Know its Importance at TradeSmart

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How to Prepare a Balance Sheet - Know its Importance at TradeSmart

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A balance sheet is a financial statement that reports a company's assets, liabilities, and shareholder equity. Know the importance of a balance sheet with Tradeshaala by TradeSmart.

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A Guide To Profit and Loss Accounts at Tradeshaala by TradeSmart

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A Guide To Profit and Loss Accounts at Tradeshaala by TradeSmart

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The profit and Loss account throws light on the company's operational performance over a year. Know everything about profit & loss accounts with Tradeshaala by TradeSmart.

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Profit and Loss (P&L) Account - Know everything about P&L account at Tradeshaala by TradeSmart

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Annual Report - Importance of the company's annual report | TradeSmart

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Annual Report - Importance of the company's annual report | TradeSmart

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Annual reports show the financial performance of the company. Understand the importance of Annual Report at TradeSmart

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Annual Report - Know the Importance of company’s annual report with Tradeshaala by TradeSmart

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Annual reports show the financial performance of the company. Understand the Annual report Contents & learn the Importance of the annual report at TradeShaala by TradeSmart.

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Introduction to Fundamental Analysis - Study financial analysis | TradeSmart

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Introduction to Fundamental Analysis - Study financial analysis | TradeSmart

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Fundamental analysis is an approach used for long term investment. Understand about Fundamental Analysis & how it helps an investor at TradeSmart

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Introduction to Fundamental Analysis - Learn about Financial analysis at TradeShaala by TradeSmart

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Know The Secret to Wealth Creation - TradeShaala by TradeSmart

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Know The Secret to Wealth Creation - TradeShaala by TradeSmart

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Secrets of Wealth Creation is making your money work harder and faster. Know more about Secret to Wealth Creation at TradeShaala by TradeSmart

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What is Ipo? Definition & Meaning of IPO - TradeShaala by TradeSmart

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What is Ipo? Definition & Meaning of IPO - TradeShaala by TradeSmart

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An initial public offering (IPO) is the first time a company issues shares to the public. Know more about IPO at TradeShaala by TradeSmart

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What Are Market & Business Cycles - TradeShaala by TradeSmart

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What Are Market & Business Cycles - TradeShaala by TradeSmart

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What Are Market and Business Cycles - Tradeshaala by TradeSmart

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Indices - Know How to invest in Indices with Tradeshaala by TradeSmart

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Indices - Know How to invest in Indices with Tradeshaala by TradeSmart

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Market Stakeholders - Know about market stakeholders at Tradeshaala by TradeSmart

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What are Financial Markets - Know their Importance

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What are Financial Markets - Know their Importance

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What Are Markets: Know the Types of Markets at Tradeshaala by TradeSmart

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Know How to Calculate Share Price? | TradeSmart

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Each time a stock is sold, its buyer and seller swap money for share ownership. Know how to calculate share price at TradeShaala by TradeSmart

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Ordinarily, supply and demand drive the stock market in the same manner that they propel forward other markets. Each time a stock is sold, its buyer and seller swap money for share ownership. The new market price is the price at which the stock is bought for. As and when more stocks sell, their selling prices become the newest market prices.
The Influence Demand and Supply Has on Share Prices
The greater the demand there is for a stock, the more intensity with which its price rises. Similarly, in the event that the demand for a stock is lacklustre at best and it continues to dip, so too, does its price.

Now, the quantity of a stock also drives its price. Should a stock be limited in its quantity, its price is likely to rise upward whereas if there are ample amounts of a stock available, its price is likely to move downwards.

This means that while, theoretically speaking, a stock's initial public offering or IPO is offered at a price that equals the value of its future dividend payments, its price still fluctuates keeping in mind supply and demand.

Understanding Factors That Affect Share Prices Directly

In addition to demand and supply, the following factors directly impact share prices.

The earnings and profitability of a company via their production and sale of goods and services.

The behavioural factors of investors and traders operating the market can cause stock prices to move.

In the event that supply and demand are equal, stability prevails within a company's share prices and they experience only a minor increase or decrease in their prices. In the event that the supply or demand suddenly outweighs the other, an abrupt price change can be expected. In instances of a company issues new shares in the market to be purchased by the public, the quantity offered is ordinarily limited. In the event that tons of investors seek to get their hands on these shares and the supply remains limited, the share prices will rise.

In case a company chooses to buy back its shares from the market, it reduces the number of shares that circulate within the market. With the reduced supply now available, the prices of the company's shares can rise.

Understanding Factors That Affect Share Prices Indirectly

Listed below are some of the factors that indirectly influence the prices of company stocks.

Company Share Price and Company Value

While the law of supply and demand is fairly straightforward to understand, understanding demand in real time can be tricky. Investors' feelings towards a company's worth are showcased in the price movement of a stock. However, how do investors decide what a company is worth? One area they definitely do take into account is said company's current earnings i.e., the extent to which and how much profit it accrues. Yet most investors do tend to look beyond these numbers as well. This means that the price of a stock isn't exclusively reflective of its company's prevailing value. It also indicates the company's prospects and the growth the investors believe - or rather, expect - it to achieve in the future.

Predicting a Company's Share Price

Quantitative techniques and formulas are utilised in order to predict what a company's share prices will amount to. These models are called dividend discount models (or DDMs) and are created keeping in mind the idea that a stock's current price is equivalent to the sum total of each of its dividend payments made in the future when discounted back to their current value. By discerning a company's share by its anticipated future dividends in their totality, dividend discount models actively employ the time value of money (or TVM) theory.

The Gordon Growth Model

While there exist plenty of dividend discount models, some are more popular than others. The Gordon Growth Model, for instance, is popular owing to its inherent straightforwardness. Myron Gordon, an American economist is credited with developing this model in the 1960s.

The present value of stock is equal to dividend per share divided by the discount rate from which the growth rate has been subtracted.

The equation that the Gordon Growth Model employs is represented as follows.

P = current stock price

g = constant growth rate in perpetuity anticipated for the dividends of the stock

r = constant cost of equity capital for said company (this is also referred to as the rate of return)

D 1 = value of the following year's dividends

Using an Example to Understand Share Price Valuation

Let us assume that company ABC's stock is trading at INR 100 per share. Now, this company requires a 5 % rate of return (r) as its minimum and presently pays INR 2 dividend per share (D 1 ). This figure is expected to rise by 3 per cent on an annual basis (g).

The intrinsic value (p) of the stock can therefore be calculated as follows.

INR 2 / (0.05 - 0.03) = INR 100

As per the Gordon Growth Model, since these shares prices' match their intrinsic value, they are correctly valued and appropriately price. If, however, they were being traded at a price of INR 150 per share, they would be overvalued by 50 per cent. Similarly, if they were being traded at a price of INR 80 per share, they would be undervalued by INR 20. If this undervalued price prevailed, it would create a buying opportunity for value investors that actively seek out stocks that are operating below their intrinsic value as it gives them a chance to score a profit in the future.

The Gordon Growth model considers a stock's current value in the same way it would treat perpetuity, which here means a constant stream of the same cash flows for an unending period of time. However, in real life companies do not and are not able to maintain the same rate of growth each year and their stock dividends aren't necessarily going to increase at a constant rate.

Further, while a stock price is conceptually decided keeping in mind its anticipated future dividends, it is important to understand that several companies do not distribute dividends.
Conclusion
Those seeking to make profits from the stock market often look out for shares whose market prices fall below their intrinsic value. Investors who purchase these shares frequently are called value investors and they aim to hold onto these shares for a significant period of time or until the market price equals if not exceeds their intrinsic value such that they can generate returns on their investments. Methods used by value investors to discern which stocks operate below their intrinsic value include the following.

Price to earnings (or P/E) ratio

Price to book (P/B) ratio

Debt to equity (D/E) ratio

Free Cash Flow

Price/ earnings to growth (or PEG) ratio

Frequently Asked Questions

The greater the demand there is for a stock, the more intensity with which its price rises. Similarly, in the event that the demand for a stock is lacklustre at best and it continues to dip, so too, does its price. Now, the quantity of a stock also drives its price. Should a stock be limited in its quantity, its price is likely to rise upward whereas if there are ample amounts of a stock available, its price is likely to move downwards.

The following factors impact a share's price in addition to supply and demand.

The earnings and profitability of a company via their production and sale of goods and services.

The behavioural factors of investors and traders operating the market can cause stock prices to move.

In the event that supply and demand are equal, stability prevails within a company's share prices and they experience only a minor increase or decrease in their prices. In the event that the supply or demand suddenly outweighs the other, an abrupt price change can be expected.

In instances of a company issues new shares in the market to be purchased by the public, the quantity offered is ordinarily limited. In the event that tons of investors seek to get their hands on these shares and the supply remains limited, the share prices will rise.

In case a company chooses to buy back its shares from the market, it reduces the number of shares that circulate within the market. With the reduced supply now available, the prices of the company's shares can rise.

The equation that the Gordon Growth Model employs is represented as follows.

P = current stock price

g = constant growth rate in perpetuity anticipated for the dividends of the stock

r = constant cost of equity capital for said company (this is also referred to as the rate of return)

D 1 = value of the following year's dividends
The following 3 factors indirectly influence a share's price.
Changes made to economic policies

Global fluctuations

Myron Gordon, an American economist is credited with developing this model in the 1960s.

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Share Price Calculation - Learn How Share Price Is Calculated | TradeSmart

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Ordinarily, supply and demand drive the stock market in the same manner that they propel forward other markets. Each time a stock is sold, its buyer and seller swap money for share ownership. The new market price is the price at which the stock is bought for.

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What is a Settlement Period? Complete Guide | TradeSmart

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What is a Settlement Period? Complete Guide | TradeSmart

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The time taken between the date of trade & the date of transfer of cash & securities is known as the settlement period. Know more at TradeSmart

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In stock market parlance settlement means completion of a transaction where-in the buyer gets delivery to the shares bought and the seller receives the payment for the same. The time taken to do this is the settlement period. The settlement period is the time gap between the date of trade and the date of settlement. It is a two-way process of transfer of funds and securities on the settlement date. The in-between period is when the clearing of trades are done. The clearing is the process of determination of obligations before it is settled. Trading, clearing and settlement is thus an integrated process.

Clearing and settlement are an integrated process

We cannot talk about settlement in isolation. Clearing leads to settlement. Clearing and settlement involve other market participants listed below who are an integral part of the entire process of trade to transfer.

Clearing corporation-Ultimately responsible for clearing, settlement and risk management regardless of member defaults. National Securities Clearing Corporation Limited (NSCCL) is designated for this

Clearing members-responsible for clearing and settlement of deals executed by trading members

Custodians-responsible for clearing trades of institutions like mutual funds, FIIS, corporates treasury, bank treasuries etc.,

Clearing banks responsible for settlement of funds.

Depositories-There are two depositories- National Securities Depository Limited (NSDL) and Central Depository Services Limited (CDSL)

Professional clearing members-non-trading clearing members

Brief process of clearing and settlement

On the date of trade (T Day), the exchanges intimate the trades to the clearing corporation.

The clearing corporation gets the trade confirmed with the clearing members or custodians after which the clearing members obligations are arrived at. (T+1)

Since clearing is done by clearing corporations the funds and securities are transferred through the clearing bank and the depository pool account. (T+2)

Funds are made available by the clearing banks and securities by the depositories

There are 13 banks designated for this purpose. The clearing members open a clearing account in any of them. All fund settlements are done through this account

Clearing members hold a pool account with NSDL and CDSL where they receive securities for transfer on the date of settlement before they are finally transferred to the client

For example, if a clearing member is settling a Sell trade the clearing corporation transfers funds into the clearing account through a clearing bank and in case of a buy trade, the corporation transfers securities into the pool account.

Settlement types

The important settlement types as per NSE are as follows:

Trades in the settlement type N, W, D and A are settled in dematerialized mode

Trades under settlement type O are settled in physical form

Trades under settlement type Z are settled directly between the members and maybe settled either in physical or dematerialized mode.

BSE generates Delivery and Receive Orders for transactions done by the Members in A, B, and F and G group Securities after netting purchase and sale transactions in each Security whereas Delivery and Receive Orders for "T", "C" & "Z" group Securities and Securities which are traded on BSE on "trade-to-trade" basis are generated on a gross basis, i.e., without netting of purchase and sell transactions in a Security. However, the funds' obligations for the Members are netted for transactions across all groups of securities.

Rolling settlement in dematerialised form

NSE and BSE clearing follows a T+2 rolling settlement cycle

The obligations of all the trades executed on T Day (date of trade) are determined on the T+1 day (date of trade + one working day) by NSE clearing

and settlement is done on T+2 days (date of trade +2 working days)

Auction is carried on T+2 and settled on T+3 days

All exchange intimated holidays, bank holidays Saturdays and Sundays are excluded

Towards T+1 settlement

SEBI has been pushing for a T+1 settlement. The stock exchanges have declared that they shall implement the same in a phased manner starting February 25, 2022. All listed stocks will be ranked in descending order and the bottom 100 stocks will be introduced to T+1 settlement. Thereafter from March, on the last Friday of every month, the next bottom 500 stocks will be introduced. The idea of T+1 will reduce systemic risk and improve liquidity.

Frequently Asked Questions

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Settlement Period - What is a Settlement Period? Complete Guide | TradeSmart

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In stock market parlance settlement means completion of a transaction where-in the buyer gets delivery to the shares bought and the seller receives the payment for the same. The time taken to do this is the settlement period. The settlement period is the time gap between the date of trade and the date of settlement.

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Face Value of Share – Know its Meaning & Importance | TradeSmart

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Face Value of Share – Know its Meaning & Importance | TradeSmart

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Face value or par value is the exact value of shares listed in the stock market. Learn more about Face Value of share at TradeSmart

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The Indian stock market is growing at such turbo-speed that, according to a Bloomberg article, India's listed market capital is just 4% behind the UK's!

With the increasing enthusiasm of Gen-Z towards the market, India's stock market participation is projected to keep expanding in the long term. But before you venture into the fascinating stock market world, it is crucial to start with the basics. And today, we deep dive into the meaning of face value and explain how it differs from market value.

So what exactly is the face value of a share?

Investors buy shares of companies at market price, but many are unaware that each share has a designated face value. Let us look at this fundamental feature of a share.

When a company is formed, it has to issue equity shares to its promoters and register the incorporation papers with the Registrar of Companies (RoC). The face value of the shares issued to promoters is mentioned in the Memorandum of Association (MoA), Articles of Association (AoA) and other documents submitted to the RoC and other Government Authorities. Hence, the face value of a share holds pivotal significance for a corporation.

Similarly, when a company goes public, i.e., makes a fresh issue of securities in the public market, it has to determine its shares' face value. This face value is mentioned in the documents submitted to authorities at Initial Public Offering. Therefore, the issuing company's responsibility is to keep the SEBI, Stock Exchanges, Clearing Houses, and the public informed of its shares' par value.

About share/ bond certificate and some noteworthy takeaways

When a company goes public, it issues securities or bonds with a particular value. In the earlier decades, physical share and bond certificates were issued to the security holders. These physical certificates mentioned the face value for the holders' reference. The mandatory requirement of physical certificate issuance is done away with, and the transfer happens through brokers' online sites or apps.

Face value helps determine the accounting value of the shares and bonds issued, which is mentioned in the company's financial statements - particularly the balance sheet.

For your detailed understanding, here are some crucial points to keep in mind:

The issuing company determines the face value of its shares.

The face value of stocks and bonds is duly noted in the company's balance sheet.

A Share's face value is the initial cost of the share and duly assigned to it.

What is the essence of the face value of a share?

For an investor, it is crucial to be aware of the face value of the asset that they are purchasing. This knowledge comes in handy when stock splits happen due to corporate actions. So if a company decides to split its share with a face value of Rs. 10 into ten shares of the face value of Re. 1 each, the investor would notice a tenfold jump in the quantity of the inventory held. But that does not equate to a ten times monetary benefit as the market value of the share also gets aligned with the new face value.

Another point to note is that when a company declares dividends, it is based on the financial value of the share, irrespective of its market value.

Face value knowledge helps in understanding the following -

1. The market value of a share is correlated to its face value.

2. Company issues dividends for its shares based on their face value.

3. In the case of bonds, face value is the basis for calculating interest rates.

The fundamental difference between face value and market value

Market value is the rate at which the company's shares are exchanged between the buyer and seller - determined by market conditions. Market value is not the same as the book value.

To understand the fundamental difference between the face value and market value of a share, let us look at the table below -

Price
The face value price remains constant until changed explicitly by the company itself.

The market value price keeps changing as per market conditions.

Determined by
The issuing company fixes face value at its discretion.

The market dynamics determine market value. It constantly changes as the trading on exchanges continues.

Calculation
The total number of shares issued by the company multiplied by its face value determines its share capital.

A company's market capitalisation is calculated by multiplying the stock's current market value with the number of outstanding shares.

Can the face value of shares be modified?

Once determined by the issuing company, the face value of a share mostly remains the same. In specific cases, the company may decide to change the face value. Such decisions need various compliance actions on the company's behalf. The company would need to pass a shareholder's resolution and alter the Capital Clause of the Memorandum of Association. Also, various submissions are to be made with the Registrar of Companies and Stock Exchanges.

Generally, face value changes when the company splits stocks. In such cases, the face value of the share is reduced as per the company's directives. In some instances, the face value is also increased by the company.

Frequently Asked Questions

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Face Value of Share - Meaning & Importance of Face Value in Share Market | TradeSmart

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The Indian stock market is growing at such turbo-speed that, according to a Bloomberg article, India's listed market capital is just 4% behind the UK's! With the increasing enthusiasm of Gen-Z towards the market, India's stock market participation is projected to keep expanding in the long term.

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Primary Market: Meaning, Types, & Stock Market Impact | TradeSmart

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Primary Market: Meaning, Types, & Stock Market Impact | TradeSmart

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Primary Market is the market for the sale of newly issued or IPO securities. Visit now to know more about Primary Market at TradeSmart

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Primary Market: Meaning, Types, and its effect on stock market | TradeSmart

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Primary Market is the market for the sale of newly issued or IPO securities. Read this blog to check the types of primary markets with its properties at TradeSmart.

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What is Face Value in IPO? – A Detailed Study | TradeSmart

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What is Face Value in IPO? – A Detailed Study | TradeSmart

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The face value of an IPO is the price at which a business raises capital from the market. Visit now to know more about the cutoff price in the IPO at TradeSmart

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In order for a business to grow, capital is needed. There are two ways in which money can be raised-equity or debt. Equity is the capital that the entrepreneur or the promoter or group of promoters bring in a proprietary partnership or a private limited company. Debt is the component that lenders loan to the business, which is to be repaid over a fixed tenure.

When a private limited company intends to raise more capital through the primary market, it has to go through the IPO route or the Initial Public Offering route. Here, the company seeks funds through a process where the general public can invest in the company.

By investing in the company, the public is essentially becoming a partner in it. In order to seek such partners, a company has offered a price at which it is willing to take them. This offer price at the time of an IPO has two components-Face Value and premium.

In order to understand these terms, let's first dive deep into understanding the IPO process.

What is the IPO process?

IPO is the process through which a private limited company raises money from retail individuals and institutions and gets listed on the bourses.

The company, in this case, known as the issuer, approaches a merchant banker to help raise funds.

The merchant banker handholds the company through the process of raising funds by meeting all the requirements set down by the market regulator, the Securities Exchange Board of India (SEBI), and the stock exchanges.

It is the merchant banker, who through their experience and market study, informs the issuer on the pricing that the company can charge. Looking at the mood of the market, the company's fundamentals and the relative valuation of its peers, the merchant banker suggests the issue price.

Face Value of an IPO

The price at which a company raises money from the market has two components-face value and a premium.

It is the premium at which the company should price its issue is what the merchant banker advises the company.

The face value is normally fixed by the company.

A Face Value is the par value or the nominal value of one share.

A company can have a face value of as low as Re 1 and any number above that. Most companies in India have a face value between Re 1 and Rs 100. The most common numbers apart from these two are Rs 2, Rs 5, and Rs 10.

Face value is also the minimum price at which a company can raise money. If a company having a face value of Rs 10 decides to raise funds at the face value or at Rs 10, it is said that the company is raising money at par.

Most companies have raised money at a face value of Rs 10 and a premium above it. If the share price of the company increases in higher four digits or five digits, it is observed that the trading volume in the company reduces in the secondary market. In order to attract more investors to the company and have a wider investor base, face value is reduced.

A change in face value impacts the earning per share (EPS) of the company, which in turn impacts the price to earnings or PE ratio, one that is among the most important valuation ratio monitored.

The dividend announced by the company is also based on the face value. If a company has a face value of Rs 10 and announces a dividend of 30 percent, it means that the dividend payout will be Rs 10 * 30% = Rs 3 per share.
Conclusion
Understanding of face value is very important both at the time of IPO when the company is raising funds and also at the time when it is being actively traded in the secondary market. A number of corporate actions like dividends, rights, and splits of shares are announced on the basis of face value. Important ratios and valuation parameters use face value as an important component.

Frequently Asked Questions

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What is Face Value in IPO? - A Detailed Guide | TradeSmart

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In order for a business to grow, capital is needed. There are two ways in which money can be raised-equity or debt. Equity is the capital that the entrepreneur or the promoter or group of promoters bring in a proprietary partnership or a private limited company.

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What does cutoff price mean in an IPO | TradeSmart

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What does cutoff price mean in an IPO | TradeSmart

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The cut-off price in IPO is referred to the price at which a company issues its shares to investors. Visit now to know more about Cut off Prices in IPO at TradeSmart.

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The process of a company going public is very complex as there are multiple stakeholders involved. While the steps of going public are well defined, the time taken for such a process varies and may take months or even years. But once the IPO is set to be open for the public, there are two ways the company can approach this to set a price for its shares.

Fixed price - This as the name suggests, is when the company sets a fixed price to the shares to be sold. In this case the demand for the IPO is known only after the closure of the issue.

Book building price - In this case, the company does not set a fixed price for the shares offered to the public. Unlike the fixed price method, the price is not announced in advance. Instead the company gives a range for the investors to bid and then the final price is decided once the issue closes. In this case, we deal with two more concepts known as cut-off price and floor price. What is the cut-off price? Let's understand in more detail.

What is the cut-off price?

The offer price for an initial public offering which is set by a company in collaboration with the merchants or managers for the IPO, which could be any amount within the price bracket is known as the cut-off price for IPO stock. This, however, should not be confused with the floor price, which is the lowest rate at which bids can be placed.

The issuer must disclose a price range or a floor price within a book-building offer. The actual discovered issue price could be either above the floor price or anywhere within the pricing spectrum. The issue price is thus referred to as the "cut-off price."

After assessing the book and investors' demand for the stock, the issuer and lead managers make that call. When applying for the issue, prospective investors must select the cut-off option, which shows their willingness to subscribe to shares at any price discovered within the trading range throughout the book-building phase.

At the cut-off price, authorized personnel participating in the employee reservation portion and retail individual investors are allowed to bid. Investors who are not QIBs (the qualified institutional buyers which include anchor investors) or non-institutional investors are not allowed to bid at the cut-off price.

Cut-off bids are always legitimate for allotment considerations as opposed to price bids. The price bids imply that a specified price can become invalid if the applicant's price is lower than that which has been disclosed.

Making bids at the "cut-off price" means that the retail investor receives an allocation along with the quantity of allotment which is based on demand at varying prices.

Put Things in Perspective

A cut-off price is, therefore, a price at which shares are issued to investors, to make things simpler for a layman in the field of the stock market investment. An IPO book-building issue begins with a cost range, which includes both a minimum and a maximum limit. An investor can bid for the appropriate amount for any number of stocks at a rate that is within acceptable price limits.

The two forms of IPO pricing

When it comes to IPO pricing in India, there are two methodologies. The first one is the Fixed Price Method and the other is Book Building Method. Let's look into the details of these two.

While in a fixed-price method, the price is determined early on by the company. It opens up the initial public offering to the general masses. On the date of the issue, the firm hands out the complete information of different investors. There is no way to predict demand for shares before the issue date using this methodology.

However, the price is not predetermined at the commencement of an IPO in the book-building method. Instead, the company declares a price range at the time of the launch. The Investors then start the bidding using this very price range. At this point, it's crucial to maintain maximum transparency; the company, therefore, publishes investor data on a daily basis.

After evaluating the book and investors' desire for the stock, the issuer and lead merchant or manager make this decision. Only retail individual investors are allowed to apply at this price, as per the SEBI guidelines.

Comprehending the Concept

Let's suppose that the price bracket of an IPO is determined to be between Rs.100 to Rs.110. You apply for ten shares for Rs.105 each. As you were prepared to subscribe to the initial public offering at approximately Rs.105, you will be allocated shares at the price of Rs.104, if the determined price of issue is Rs.104.

Conversely, if the calculated price of issue is Rs.106, you will not receive an allotment of stock. But if you go for the cut-off, you will be allotted shares at the price of issue.

I nvestment bankers proceed to work on the price determination towards the final stage of the IPO. But, when no fixed price has been calculated, there is a range of bids that occur at distinct values. The actual price is determined by the merchant bankers by calculating the average of all the bids submitted in total and this is known as the actual cut-off. It is typically the legal price that helps establish the bids for a set of stock.

Once the IPO has reached completion, shareholders who bid below the cut-off will have their money reimbursed because they are not eligible for share allotment. Those who bid higher than the cut-off earn the difference in addition to the stock allotment. Customers who desire to buy an IPO must pick the option to buy at cut-off while completing the registration process. This means that irrespective of the cut-off price, the individual is still entitled to the allotment.

Frequently Asked Questions

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Cut-Off Price - What is a cut-off price in an IPO?| TradeSmart

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The process of a company going public is very complex as there are multiple stakeholders involved. While the steps of going public are well defined, the time taken for such a process varies and may take months or even years.

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What is IPO & How to Invest in IPO in India | TradeSmart

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What is IPO & How to Invest in IPO in India | TradeSmart

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IPO means Initial Public Offering. It is a process by which a privately held company becomes a publicly-traded company by offering its shares to the public. Visit now at TradeSmart

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After a private limited company is unable to grow further with its own capital or borrowed money it decides to go to public to raise funds. Going through this route of raising money for the first time is called Initial Public Offering.

What is IPO? IPO Investment Explained

Defining an IPO

An initial public offering, which is often referred to by its acronym IPO, is the process by which a private corporation begins to offer shares to the public via a new stock issuance. With an IPO, it is possible for a company to generate capital via public investors. During this transitional period wherein, a private company becomes public, private investors stand to fully realise gains from their investments as IPOs ordinarily include a share premium for current private investors. During this time public investors also have the opportunity to participate and can stand to potentially profit from the company's growth in the future.

To be eligible for being listed in the National Stock Exchange (NSE) or Bombay Stock Exchange (BSE), the company has to have a minimum paid-up capital of at least Rs.10cr and post issue, the market capitalization should not be below Rs. 25cr.

Criteria for filing an IPO

Any private company can go public if they like, provided they meet the following criteria

The company's operating profit should be a minimum of Rs. 15cr for at least three years in the preceding five years.

The company should possess net tangible assets which are nothing but physical assets plus monetary assets of at least Rs. 3cr in each of the last three years. Virtual assets which are fluctuating in nature like shares don't count.

The size of the IPO cannot exceed the company's worth more than five times.

But the above criteria are not compulsory to fulfil. If the company still wishes to go for an IPO then it has to get approval from the Securities and Exchange Board of India (SEBI), but can only opt for the book-building IPO issue. In a book-building IPO, 75% of the stock has to be sold to Qualified Institutional Investors (QII) if not the IPO will be cancelled and all the capital raised has to be returned.

The IPO process in India

How an IPO is filed from the company's point of view involves a lot of processes and can be summarized in the point below.

The company approaches an underwriter, which is normally an investment bank to do the due diligence and background checks and gives a nod if the company can go ahead for applying for the IPO.

The company must then submit the necessary documents to the Securities and Exchange Board of India (SEBI) for examination

One of the important documents that it needs to prepare is the Draft Red Herring Prospectus and send it across to SEBI for approval.

Ince approved, the company and the underwriters then decide the date for the IPO and the price of the shares and the number of shares to be issued to the public. In this case, there are two types of IPO filings it can follow

Fixed price IPO where the price of the shares are fixed and decided in advance

Book-Building IPO where there is a range of prices and the bidding is done within that price range.

Once that is decided, then the bidding process is open to the public. The interested investors then submit their applications.

After the bidding process is over, the company then sits and allots the shares based on the number of subscribers it has received. There are two instances that can happen here

When the number of subscribers is less than the number of shares available then all of them will receive the desired number of shares.

When the number of subscribers is more than the number of shares available then in this case the SEBI rules will apply where the company will try and accommodate as many investors as they can. If the number is still very big then the process of allotment takes place via lucky draw.

Once the shares are allotted then the company is officially registered as a public company and the shares are available to be traded in the stock market.

What you should know when investing in an IPO

Once you have been allotted shares of an IPO of the company, you are exposed to the fortunes of the company. Meaning the success and failure of the company has a direct impact on your earnings.

There is a risk in the investment, in the sense that there is potential for the company to give huge returns, yet it can also lead to drowning your investment. Stocks are subjected to changes in demand and supply.

The amount once invested, the company is not indebted to pay the capital to the investors. The situation will only arise when the company dissolves.

Only invest once you've done your due diligence. If you're new then it is better to take the help of an expert to guide you to make better decisions.

Terminology to remember with IPO

When applying for an IPO, you will surely come across a lot of terms used often and we will cover the most frequently used ones below

Issuer - the company or the firm that gives out shares to the public in exchange for money to grow its operations.

Underwriter - These are institutions like banks, financial institutions, brokers or merchant brokers who assist in determining the price of the stock to be sold. They also play a role in subscribing to the balance shares if the IPO is not fully subscribed.

Draft Red Herring Prospectus - It is the document that makes all the information about the company available to the public as approved by SEBI. It contains the following information.

Purpose of raising funds

Balance sheets

Promoters expenses

Net proceeds of the company

Earning statements in the last three years

Commission and discounts of the underwriter

Details of the underwriters, officers, directors who possess 10% or more than the outstanding stock

Under subscription and oversubscription - under subscription is when the number of shares subscribed for is lower than the number of shares available. Similarly, oversubscription is when the number of shares subscribed for is more than the number of shares available for subscription.

Green Shoe Option - This is a situation where there is an overallotment. It is an underwriting agreement that permits the underwriter to sell more shares than what was initially planned by the company.

The final word
IPO's in general are a good sign as it signals that the company wants to expand its business and has a good future planned out. That leads to providing investors with handsome returns. But keep in mind that not all IPOs successful and one must be cautious before deciding to make an investment in one

Frequently Asked Questions

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What is IPO? - Know Meaning & IPO Process in Detail | TradeSmart

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After a private limited company is unable to grow further with its own capital or borrowed money it decides to go to public to raise funds. Going through this route of raising money for the first time is called Initial Public Offering.

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What is Commodity Market in India? | TradeSmart

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What is Commodity Market in India? | TradeSmart

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A commodity market is where tradable goods are bought and sold. A commodity could be any raw material or primary agricultural product. Visit now at TradeSmart.

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What Is Commodity Market & Commodity Trading | TradeSmart

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What Is Commodity Market– It is a market where various commodities and their derivatives products are transacted in. To also know about commodity trading, visit TradeSmart.

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What is Difference Between Futures & Options | TradeSmart

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What is Difference Between Futures & Options | TradeSmart

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Futures and options are tools investors use when trading in the stock market. Visit now to know more about the Future and options at TradeSmart

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Futures vs Options – Know 4 Difference Between Futures and Options | TradeSmart

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Difference Between Options and Futures – Read about futures and options and find out the four major difference between them here at TradeSmart. Keep reading.

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What is F&O Ban – Know the Meaning of F&O Ban | TradeSmart

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What is F&O Ban – Know the Meaning of F&O Ban | TradeSmart

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The F&O ban is a regulatory measure to prevent excessive speculation. This stock exchange is to prevent excessive speculation of stocks. Visit now to learn more at TradeSmart

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What is F&O Ban – Know What Does F&O Ban Means | TradeSmart

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What is F&O Ban – This is a list issued by the stock exchanges to prevent excessive speculation of stocks. Visit TradeSmart and know more about F&O ban.

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Intraday Margin – Meaning & Advantages of Intraday Margin | TradeSmart

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Intraday Margin – Meaning & Advantages of Intraday Margin | TradeSmart

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A form of investment known as day trading, sometimes intraday trading, involves buying and selling shares on the same day. Visit now at TradeSmart

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Intraday Margin – Meaning, Advantages & Effects of Margin | TradeSmart

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Wondering about how much margin is available for intraday trading? This blog will guide you through everything you need to know about intraday trading margins. Read on at TradeSmart.

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What is Pledging of Shares & How Does it Work?

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What is Pledging of Shares & How Does it Work?

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Pledging of shares is a contract that allows a company's promoters to use its shares as collateral to meet their financial obligations. Visit now at TradeSmart.

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Pledging of Shares – What is Pledging of Shares? | TradeSmart

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Pledging of Shares - Shares can be pledged for any purpose including requirement of working capital, new ventures, to trade in the equity market, futures and options, or even personal financial requirements. To know more in detail about what is Pledging of Shares, visit TradeSmart.

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What Is a Contract Note? Know How to Read It? | TradeSmart

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What Is a Contract Note? Know How to Read It? | TradeSmart

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A contract note is a legal document that presents the summary of all the trades executed during the trading day. Know more about Contract notes at TradeSmart

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Since the onset of the pandemic, the number of retail investors has seen a huge rise. Thus possibilities of conflicts are also increasing day by day. The Securities Exchange Board of India (SEBI) has taken a lot of measures to safeguard the interests of retail investors. One of these is done by issuing contract notes, showing the price, brokerage, GST, and securities transaction tax (STT) in the prescribed format.

Contract notes are easily one of the most relevant legal documents available to investors and traders in the stock market. It shows in detail all transactions which took place in a day in one place, along with profit and loss information. It is a legal record of any of the trades made by a trader on a stock exchange. It records and confirms the trades taken place on a particular day, performed on a stock exchange (BSE or NSE). This document is sent to the trader by the broker, listing out the details of the shares bought and sold through them. This document is generally available in an electronic form.

Contents

A contract note gives traders and investors a basic description of the trades they have taken, along with the date, period, lot size, or quantity traded. It also gives the trader a reference number with which they can cross-reference their transactions with the stock exchange.

Contract Notes usually consist of the following:

Order Time: the precise time at which an investors Order was placed on the Exchange is highlighted here.

Trade Time: The time at which an investor's trade was successfully executed on the Exchange comes under this column.

Buy/Sell: basically refers to the sort of order placed by the trader or investor.

Exchange: This column lets you know on which exchange your trades took place. That is NSE or BSE.

Quantity: This accounts for the quantity of stock an investor trades in. Positive numbers apply to buy orders while negative (-) numbers apply to Sell Orders.

Gross Rate per Unit: This rate highlights the price at which an investor's order got executed on the Exchange.

Net Rate per Unit: As brokerage charges are mentioned separately, net rate per value adds up to the same value as gross rate per unit.

Net Total before Levies: This refers to the whole amount before any of the other charges can be added. A positive (+) amount denotes that an amount is owed to you. Whereas a negative (-) amount denotes an amount you owe.

While the first table provides you with comprehensive details, the following table gives you a breakup of the summary of the charges.

Pay In/Pay out Obligation: This is the summation of the amounts owed to you (positive), or the amounts you owe (negative), before the deduction of levies and taxes.

Taxable Value of Supply: This tells you the total of brokerage that is chargeable as per your brokerage plan, plus the Exchange Transaction Charges, which is a fee by exchanges like NSE, BSE, MCX, and NCDEX, in order to enable the trader to trade.

Securities Transaction Tax (STT): This is the direct tax chargeable on each trade taken on the exchange,, which gets collected by the broker and paid to the respective exchange. STT is levied on every trade taken be it buying or selling and on equity delivery, and on selling on intraday and F&O.

SEBI Turnover Fees: The Securities and Exchange Board of India (SEBI) charges a fee on securities transactions made by traders in order to regulate the market.

Stamp Duty: this is a Government levy applicable on transfer of securities like shares, debentures, futures and options, currency, commodities, and various other capital assets.

Net Amount Receivable by Client / (Payable by Client): This column denotes the total amount to be paid or received by the client after all levies and charges. A positive (+) amount denotes that an amount is owed to you, while a negative (-) amount denotes an amount you owe.

 Sample of a contract note issued by TradeSmart

Importance of Contract Notes

As there has recently been a huge increase in the number of participants in the stock market, the odds of disputes are also rising at a similarly increasing rate as days go by. SEBI has taken a few steps to shield the retail investors. One of the first actual steps on this course is the digital contract note in the prescribed format showing Price, Brokerage, GST, STT etc. By perusing this report thoroughly, an investor can be confident that the order he has placed with his broker has been executed correctly. This report is a prerequisite for submitting a grievance against your broker, you must always insist on regular delivery of contract notes from your broker.

Just by glancing at this report , an investor can be assured that the order he executed through his brokerage was carried out efficiently. Contract Notes can act as a ready reference in case of doubt with reference to any transactions as you can guarantee the genuineness of the same on the BSE/NSE website. The most common use of a contract note is:

In summation, contract notes offer investors a summary of their trades taken on a specific day. Additionally to those trades, they're given an overview of their profits or losses. Contract notes are provided in an electronic format with a digital signature of the authorized signatory of the brokerage firm.

Frequently Asked Questions

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Contract Note - What is a Contract Note & How to read it | TradeSmart

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Since the onset of the pandemic, the number of retail investors has seen a huge rise. Thus possibilities of conflicts are also increasing day by day. The Securities Exchange Board of India (SEBI) has taken a lot of measures to safeguard the interests of retail investors.

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Benefits of Online Trading in India | TradeSmart

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Benefits of Online Trading in India | TradeSmart

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Online Trading is trading your stock directly from a website or an app. Visit now at TradeSmart to know the top benefits of Online Trading

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Back in the day when trading had just started in India, the stocks used to be traded in a fashion known as the "Open Outcry system". This was a system that took place on the trading floor where the person would shout or use hand signals to indicate price changes or buying and selling of shares during market hours. The person interested would approach these people and strike a deal and would take down notes on a slip or form and then after the session they would go back and register all the trades made for the day. The process was cumbersome and exhausting and only those who had access to the building where it happened could benefit from this. However, this has become an outdated process and with the advent of technology, everything has become online. No more shouting or screaming and fighting for getting shares on the market floor.

In the present, online trading has made it easy for the common man to trade stocks with minimal interference from the broker. From websites to mobile apps, trading has become convenient for all with just a few clicks. And this has seen a huge number of participation from all age groups from across the country. So what are the benefits of trading online? I'm sure you can name many yourself but we'll cover some here as well just in case you may have missed out a point. So let's go!

What is Online Trading?

Online Trading is the process of trading your stock directly from a website or an app instead of calling the broker or other traditional methods. These platforms are provided by internet based brokers like TradeSmart. It's very easy to access these platforms as all you need is a good computer system or mobile phone that has an internet connection and you start trading. Basically, you can easily buy and sell stocks from your home or workplace.

The process of online trading

When you place an order online to buy or sell stocks, the process gets executed within seconds. But at the same time, there is a lot happening behind the scenes which help execute these trades in seconds. The process involves.

You place and order and it gets registered

The order then gets placed in a database

It then waits for a seller or buyer depending on the order placed to match its order and when found, a confirmation message is sent to both parties.

The order and price is reported to the regulatory bodies

The records of the transactions are then stored by the regulatory bodies incase they want to study your past transactions

A contract is sent to your broker who sold the shares and to the one who bought them

Then the broker has a maximum of 3 days to settle where they exchange the cash and shares

The money then gets debited and the shares are officially in your account.

What are the advantages of online Trading?

With technology incorporated in trading, this has brought several benefits. The benefits of Online Trading are as follows:

More independence from stockbrokers
Prior to the online trading era, stock traders would contact their stockbrokers on the phone. While calls were recorded, the chances of human error were huge. While trading something as critical as leveraged stocks, especially over Intraday trading, a single error could cause massive losses.
In the case of Intraday trading, all you need is that the internet connection should be stable. Rest, everything is on a screen in front of you. Omitting the trader and phone call significantly reduces the time taken and chances of human error.

Also, when the market is volatile, the dealers of stockbrokers remain busy. That is not the case with online trading. Everything can be managed by the trader instantly at the click of a button.

Online Trading is quicker
Earlier, to trade stocks, you would have to call the stockbroker's dealers. Then at times, your call would be placed in a queue. After connecting to the broker, you would read the exact details of the stock and sale. With online trading, all this happens at the click of a button. In the case of Intraday trading of even minutes matter for volatile stocks. Thus, online trading is quicker.

More exposure to stocks and finances
In the case of online trading, all stocks and finances are visible on the webpage. You make independent decisions and eventually are exposed to detailed statistics of stocks.

Location flexibility
As of present, most of the reputed trading platforms have apps for phones. This means you can manage your stocks from literally anywhere. All you need is an internet connection. While dealing through an app on your phone, you can trade on the go.

Trader gets alerts
While dealing with stocks by phone, you have to constantly ask the broker for clarifications. In the case of online banking, you can change the settings to get email and SMS alerts. This can help you keep a track of your stock transactions from time to time.

Conclusion

Online Trading is no doubt a way better option than trading on the phone. It saves your time, reduces risk, is more convenient, and saves your money. There is no question on whether one should shift to Online Trading, but one needs to decide which broker to work with. With this technology, opening a demat account also has become faster, simpler and can be done at the comfort of your home.

Frequently Asked Questions

Online trading is more about making the life of both the trader and broker easier and more convenient. It gives a sense of control while executing trades. It definitely is cheaper so the chances of you making a higher profit is better.

With the advanced technology available, it takes less than 24 hours to open a demat and trading account to begin your trading journey online. You have to visit the website or download the app and submit the required documents and then get the approval from the DP which will then give you a unique demat number through which you can make trades online.

While online trading has its pros, there are instances where certain individuals have abused the facility for personal gains with fraudulent activities. While there are regular checks of safety by the brokers and SEBI, there are some points you can also follow to ensure safety in your trading activities.

Use anti-virus softwares

Research about the online trade provider

Verify the privacy policy of the company

Check for the encryption of the company

Choose a broker like TradeSmart that is reputable in high standards of safety

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Benefits of Online Trading - Top Advantages of Online Trading | TradeSmart

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Back in the day when trading had just started in India, the stocks used to be traded in a fashion known as the "Open Outcry system". This was a system that took place on the trading floor where the person would shout or use hand signals to indicate price changes or buying and selling of shares during market hours.

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List of Documents Required for Opening Trading Account | TradeSmart

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List of Documents Required for Opening Trading Account | TradeSmart

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Read and find out how the trading account differs from a demat account. Also, check the list of Documents required for opening a trading account at TradeSmart.

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Possessing a demat account is a mandatory prerequisite for investing in the share market. However, it may not always be enough. If you're planning on trading in the stock market through the stock exchanges, then you'll also need another account - a trading account. Wondering what this trading account is and what documents you would need to open one? This article will cover the answers to both of them. Let's begin with what a trading account is.

What is a trading account?

A trading account is an electronic account that essentially gives you access to the stock exchanges. With this account, you can browse through the entire gamut of securities that are listed on the stock exchanges for trading. This includes shares, bonds, mutual fund units, and Exchange Traded Funds (ETFs), among others. That's not all. In addition to being able to browse through them, you can also place buy orders and sell orders for your favourite securities through the trading account.

How is it different from a demat account?

There are a whole host of differences between a trading account and demat account. Fundamentally, they're completely different with purposes that are in stark contrast to each other.

A trading account merely enables you to buy and sell shares and other securities on the stock exchanges. A demat account, on the other hand, allows you to store the shares and other securities that are bought by you through the trading account. Now, that's why your demat account is almost always linked to a trading account. Finding it hard to understand? Here's an example that can help give some clarity.

Let's say that you're interested in a stock - Tata Consultancy Services Limited (TCS). And you wish to buy 100 shares of this stock. You've also opened a trading and demat account with a stock broker like TradeSmart Online. Now, to purchase 100 shares of TCS, you will have to log into your trading account, search for the stock of TCS and place a buy order for 100 shares. And once the buy order that you placed gets executed, the shares that you bought will automatically be transferred (credited) to your demat account that's linked to your trading account.

And similarly, when you wish to sell the 100 shares of TCS, you will have to again log into your trading account and place a sell order for those 100 shares. Once the sell order is also executed, the shares that were in your demat account would automatically be transferred (debited) out of your account.

So, as you can see from the process above, the trading account and the demat account do two different things, yet their functions are carried out in a synchronised manner.

Why do you need both trading and demat accounts?

To understand the importance of a trading account, let's assume that you don't have a trading account and that you only possess a demat account. Now, you will not be able to purchase any shares or other securities trading in the stock exchanges without a trading account.

However, with just your demat account, you can apply for and invest in Initial Public Offerings (IPOs) of companies. Let's now assume that you've applied for an IPO and have managed to buy 100 shares of the company, which is now in your demat account.

Without a trading account, how will you sell these shares that are currently stored in your demat account? This is precisely why a trading account is as important as a demat account. Without it, there's very little use for a demat account.

What are the documents that are required to open a trading account?

Now that you've understood what a trading account is and its importance, let's now move on to the documents that you would have to submit to open one.

TradeSmart allows you to open both a demat and a trading account in just a single and hassle-free process. Here's the list of documents that you would have to provide to open a trading account with TradeSmart. All of the below mentioned documents must be self-attested with your signature.

1. A duly filled and signed trading account opening form

2. A copy of your PAN card as proof of identity

3. For proof of address, any one of the following documents

A copy of your driving licence

A copy of your ration card

A copy of your passport

A copy of your latest telephone bill

A copy of your latest electricity bill

A copy of your latest bank statement (shouldn't be older than 3 months)

A copy of your Aadhaar card

A copy of the sale agreement of your residence or a registered lease document

4. A passport size photograph of yourself

5. If the trading account is for the following segments - Equity/F&O/Currency - A cheque leaf favouring 'VNS Finance and Capital Services Ltd.' for an amount of Rs. 400 for printed online forms and Rs. 500 in the case of offline forms.

6. If the trading account is for the commodity segment - A cheque leaf favouring 'VNS Commodities Private Ltd.' for an amount of Rs. 200 for printed online forms and Rs. 300 in the case of offline forms.

7. A cancelled cheque leaf with your name mentioned and signature affixed. The cheque leaf should contain the MICR and IFSC of your bank branch.

8. A copy of your bank statement (for the last 6 months). This is applicable if the trading account is for the following segments - F&O, Currency, and Commodity.

Conclusion

Here's something that you should know. The list of documents that are displayed above are applicable for TradeSmart trading accounts only. Although other stock brokers may also require a very similar set of documents for trading account opening, the list of documents required may be slightly different as well. So, that's something that you should account for when trying to open a trading account from a different stock broker.

Now that you know what you need to do to open a trading account, what are you waiting for? Visit TradeSmart Online right away and initiate the demat and trading account opening process now! Follow this link to quickly get started.

Frequently Asked Questions

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Check Documents Required for Opening Trading Account | TradeSmart

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Possessing a demat account is a mandatory prerequisite for investing in the share market. However, it may not always be enough. If you're planning on trading in the stock market through the stock exchanges, then you'll also need another account - a trading account.

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Open Trading Account Online | TradeSmart

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Open Trading Account Online | TradeSmart

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Open a trading account online with TradeSmart, explore the best brokerage plan, and enjoy hassle-free trading. Visit now to learn more about Trading Accounts.

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Financial markets have undergone a transformation since the start of the century. Open outcry form of trading gave way to electronic trading that paved an era of transparency. With improving transparency, institutions, both foreign and domestic, started their operations in India. This resulted in new investors coming to the market.

Presently, online trading has become a rage among the young with most brokers offering an online method of opening trading accounts.

Why Do You Need a Trading Account?

A trading account is necessary for every trader to take part in the stock market activities to buy and sell shares, securities, commodities, and any financial underlying asset. Without having a trading account, neither you nor the broker on your behalf can facilitate the trade.

List Of Documents Required to Open a Trading Account

Before you dive into opening a trading account, there are certain documents that you should have with you. Although the process of opening a trading account is almost the same with every DP/depository participant, submitting these documents is mandatory for all the traders.

Income Proof

Income Tax Return or ITR copy

Net worth copy or annual statement of accounts copy attested by a CA

Form 16 or current month's salary slip

Last 6 months bank statement

Identity Proof

PAN card followed by a proper photo

Aadhaar card, Voter ID card, Driving license, and Passport (Present any one of these)

ID cards with one valid photo issued by the Central/State government

You are allowed to present ID cards provided by professional regulatory bodies like ICAI, ICWAI, or ICSI Credit/ Debit cards, banks, PSUs, commercial banks, statutory bodies, etc.

Address Proof

Ration card, Voter ID, Passport, Insurance document, House maintenance bill, and Telephone bill (Submit any one of these copies as address proof)

Electricity bill or Gas bill not older than 3 months

Bank passbook copy not older than 3 months

New house or flat address signed and attested by High court or Supreme court

Address proof furnished by any of the statutory bodies, namely, Scheduled Commercial Banks, Scheduled Co-Operative Bank, Multinational Foreign Banks, Gazette Officer, Notary public, Member of Legislative Assembly, and Member of Parliament.

ID cards furnished by universities/colleges, professional bodies like ICAI, ICWAI, ICSI, Bar Council.

How To Open a Trading Account?

To incorporate your trading knowledge, you have to go live first. For that, you have to open a trading and demat account online or offline by visiting or associating with a depository participant cum stockbroking firm. TradeSmart Online, a leading discount brokerage firm, offers both trading and demat account services. You can go paperless by opening your online trading account with TradeSmart.

Step 1: Find an Appropriate Stockbroker

The first and foremost thing you have to do is find a proper stockbroker that fits all your trading needs. Check with the broker whether they offer all the necessary trading services demanded by you. Always keep in mind that time is money in the trading business. So, make sure the broker's trading platform can be easily accessible both via website and app if they have one.

Step 2: Check The Differences

Once you find the right stockbroker, check out the brokerage rates they are offering and compare them with other firms. Each stockbroking company has brokerage rates and processing charges. So, before deciding to open a trading account with any stockbroking company/firm, ask all the necessary information related to the trading account opening charges, followed by other fees details, if any.

Step 3: Fill All The Details

After finalizing the stockbroker, fill the forms of trading account, demat account, and KYC. If you are opening a trading account online, here's the procedure to fill the form.

Go to the application page

Enter your name, PAN details, contact number, email ID, house address, bank account details, etc.

Upload all the necessary documents like income proof, address proof, bank copy, canceled cheque, ID proof, and photographs.

Record a small video of yourself and upload the same for self-identity verification

In the end, e-sign the document and finish filling the form

Upon finishing the form filing, your data will be crosschecked by the stockbroker. As and when the details and the documents are verified, you'll receive your trading and demat account login credentials. Now, you are ready to start trading. However, before you plan to buy any share in the market, deploy some amount from the bank account to the trading account. You can glance at the live market, make a watchlist, purchase shares of the top companies, and a lot more.

Step 5: Power of Attorney

It's like a personal bank account, where the customer gives the banker the limited power to change as per their instructions. POA or Power of Attorney is just the same. Here, the stockbroker is given limited authority over the trader's account. Prior to that, you have to fill the POA given by the stockbroker to give basic access to your trading account. By doing so, the stockbroker transfers the shares to and from your trading account after every sale and purchase made. In simple words, POA allows stockbrokers to debit or credit the shares from your trading account whenever the trade transaction is made.

Key Takeaway

Every person who wants to trade in the stock market should open a trading account. Before leaping into finalizing the account opening decision, you have to find and choose the right stockbroking firm. They should be able to offer all sorts of trading services inquired by the trader.

Besides, you should also check and compare the brokerage rates and other fees of one stockbroking firm with another. If you feel gratified about the services, you can come to a conclusion as to whether to open a trading and demat account with that firm or not. TraderSmart Online is one of the leading stockbroking firms that provide trading and demat account services at the best rates. You are just a tap away to create a trading account with them and enjoy the unceasing services.

Frequently Asked Questions

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How To Open A Trading Account? - A Complete Guide | TradeSmart

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Financial markets have undergone a transformation since the start of the century. Open outcry form of trading gave way to electronic trading that paved an era of transparency. With improving transparency, institutions, both foreign and domestic, started their operations in India. This resulted in new investors coming to the market.

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How to Check Demat Account Status? A Complete Guide | TradeSmart

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How to Check Demat Account Status? A Complete Guide | TradeSmart

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A Demat account needs to be regularly checked to ensure that the trades are going smoothly. Know more about Demat account Status at TradeSmart

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Checking on our wealth is a human tendency. It gives us a sense of security, gives us an idea of where we stand financially, and also gives us the comfort that our nest is intact. It is easy to check and take stock of our physical and tangible assets, though it may be time consuming. However, it is far easier to check in the electronic format.

Take bank accounts, for example, a few taps on the mobile and we can get our bank balance. Similarly, the value of our position with the broker is possible by logging into your account. A summary of all cash and derivative position with a mark-to-market profit and loss account will be visible.

But what about shares that are stored in a Demat account and not linked to your trading account. How does one get access to that? To answer that let's first understand Demat and how shares are stored.

How are shares stored?

Since the turn of the century, share transactions in India have largely been in electronic form. The days of physical shares are behind us as share trading moved from an open outcry system to computers, and with it shares certificates gave way to an electronic mode of storage.

This process of converting physical shares to electronic form is called dematerialization of shares.

Now, if an investor buys shares, they get stored in what is known as a Demat account. Just like a bank account where money is stored, a Demat account stores financial assets like shares. Each investor has his personalized Demat account.

All shares purchased are credited to a Demat account which maintains records of all transactions in and out of the account.

These Demat accounts can be opened with a broker, bank, or any Depository Participant. A Depository Participant is registered with one or both the Depositories - National Securities Depository Ltd (NSDL) and Central Securities Depository Ltd (CDSL).

What is the need to check your Demat account?

A Demat account needs to be regularly checked by both a trader as well as an investor to ensure that the trades are going smoothly. If shares are not credited after purchasing them in the market, he or she can take up the matter with the broker. More importantly, in case the account holder wants to sell a share, he needs to ensure that they are available in his Demat account else, he may have to pay for the auction charges that an exchange charges if shares sold are not delivered.

Few scams reported recently around shares from Demat accounts, especially dormant ones, going missing also requires one to regularly check their Demat accounts.

The Demat account needs to be specially checked around the time when corporate actions are announced, like dividends or bonuses. If the shares are not in the Demat account of the client, he may not be able to avail of the benefit of these actions.

How do you check a Demat account?

Normally, the Depository participant where the Demat account is opened sends regular statements either in the mail or through an SMS. These statements have the detail of present holding in the account. But these accounts are periodic and are not sent on a daily basis.

For someone who wants to check their Demat account, the investor will need to log in on the site of the Depository Participant with his unique ID and password. In case, the details are misplaced, the Depository Participant needs to be contacted to resolve the matter.

One can also check the Depository directly for their Demat details. NSDL has a service called IDeAS which stands for 'internet-based Demat account statement'. The site has a lag of 30 minutes but offers all details like the account statement and transaction details. One needs to register on IDeAS and provide details of their Demat account before accessing the details.

The advantage of viewing in IDeAS is that you can get a consolidated statement of all your Demat accounts. CDSL offers a similar facility where one can view the consolidated statement.

Conclusion

A trader or an investor's job is not just researching for stock ideas or looking for trade setups, they also need to keep a track of their belonging. Checking your Demat account for all your purchases and sales is a healthy habit that keeps you updated on your holding and helps keep track of corporate action related transactions like dividends being deposited in your bank account or bonus shares being credited.

Frequently Asked Questions

Before exchanges move to electronic transactions, a buyer of shares would get share certificates which were filed and saved in safe boxes in the house. However, post automation share trading moved from an open outcry system to computers, and with it, shares certificates gave way to an electronic mode of storage. This process of converting physical shares to electronic form is called dematerialization of shares.

The electronic shares are stored in what is known as a Demat account. Just like a bank account where money is stored, a Demat account stores financial assets like shares. Each investor has his personalized Demat account.

The Demat accounts can be opened with a broker, bank, or any Depository Participant. A Depository Participant is registered with one or both the Depositories - National Securities Depository Ltd (NSDL) and Central Securities Depository Ltd (CDSL).

A depository is an organization, bank, or institution that holds securities and assists in the trading of securities. In India, there are two Depositories - National Securities Depository Ltd (NSDL) and Central Securities Depository Ltd (CDSL). NSDL is associated with NSE, while CDSL is with BSE. However, shares bought in one exchange can be stored in the Depository promoted by the other.

A Demat account needs to be regularly checked to ensure that the trades are going smoothly. If shares are not credited after purchasing them in the market, the trader can take up the matter with the broker. More importantly, in case the account holder wants to sell a share, he needs to ensure that they are available in his Demat account, else he may have to pay for the auction charges that an exchange charges if shares sold are not delivered.

Checking your Demat account for all your purchases and sales is a healthy habit that keeps you updated on your holding and helps keep track of corporate action related transactions like dividends being deposited in your bank account or bonus shares being credited.

In most cases, the Depository participant sends regular statements either in the mail or through an SMS.

If someone wants to check their Demat account, the investor will need to log in on the site of the Depository Participant with his unique ID and password.

One can also check the Depository directly for their Demat details. NSDL has a service called IDeAS which stands for 'internet-based Demat account statement'. One needs to register on IDeAS and provide details of their Demat account before accessing the details.

The advantage of viewing in IDeAS is that you can get a consolidated statement of all your Demat accounts.

CDSL offers a similar facility where one can view the consolidated statement.

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How to Check Demat Account Status? - Complete Guide | TradeSmart

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Demat Account Status - Checking on our wealth is a human tendency. It gives us a sense of security and gives us an idea of where we stand financially. Find out how to check demat account status here at TradeSmart.Demat Account Status - Checking on our wealth is a human tendency.

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How Do I Add a Nominee to my Demat Account? | TradeSmart

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How Do I Add a Nominee to my Demat Account? | TradeSmart

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Adding a nominee to your demat account is an easy and hassle-free process. Visit now to know more about adding a Nominee to the demat account at TradeSmart

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A demat account shares a lot of similarities with a bank account. For one, both of them are electronic accounts. And secondly, they're used to safely and securely store assets electronically - money in the case of a bank account and securities, like shares and bonds, in the case of a demat account.

Considering the fact that you use your demat account to store your investments, the concept of assigning a nominee to your account also applies here, just like how you would do to a bank account.

But how do you assign a nominee to your demat account and why should you do it? The answers to these questions are outlined in the sections that follow. Continue reading to find out all about assigning a nominee to your demat account. But before we get to the answers, let's first discuss the fundamental concept of what the term 'nominee' means.

What is a nominee?

In simple terms, a nominee is an individual who is assigned by the owner of an account. This assigned individual will receive any and all benefits arising from the account, including any balances remaining with the account, in the event of the demise of the account owner.

Since all of the benefits and balances of an account would go to the nominee upon the account owner's demise, individuals generally choose to assign their own family members such as spouse, children, or parents as a nominee to their account.

Why should you add a nominee to your demat account?

Assigning a nominee is one of the most important tasks that you should do as a demat account holder. One of the main reasons for this has to do with the fact that having a nominee makes it extremely easy for the demat account holder's family and beneficiaries to withdraw the shares held in the account.

Without a nominee assigned to a demat account, the bereaved family will be forced to meet several cumbersome legal requirements like obtaining a succession certificate. Only then can they actually go ahead and claim ownership of the securities in the account. This can unnecessarily cause delays and hassles to the family, since the process of obtaining a succession certificate can be both expensive and time-consuming.

However, with a nominee assigned to a demat account, all of these hassles can be eliminated. And to claim ownership of the securities in the deceased individual's demat account, the nominee only has to submit a transmission form that has been duly filled, along with a certified copy of the demat account holder's death certificate. The entire process of transferring the assets can then be completed within just a few days instead of taking several months.

When can you add a nominee to your demat account?

Now that you know how important it is to add a nominee to your demat account, let's take a look at when you can add one.

How can you add a nominee to your demat account?

Adding a nominee to your demat account is an extremely easy and hassle-free process. Here's a quick look at the two different ways through which you can add a nominee.

Things to note when adding a nominee to your demat account

Now, there are quite a few things that you should consider when adding a nominee to your demat account. Let's take a quick look at a few of these important considerations.

The nominee has to be an individual and not a non-individual entity like HUF, body corporate, partnership firm, trust, or society.

Non-individual entities holding a demat account cannot assign a nominee. Only individual demat account holders can.

You can assign a minor as a nominee. However, you would have to give details of the minor's guardian as well.

If your demat account is held jointly, the nomination form that you submit must be signed by all of the account holders.

You can assign more than one nominee. In fact, you can assign up to three nominees. Also, you can specify the percentage of shares or securities that you wish to be transferred to each of the nominees upon the account holder's demise.

Just like how nominees can be added at any point in time, they can also be modified and removed whenever you wish by submitting a duly filled form to your stock broker or Depository Participant.

Conclusion

As you can see, assigning a nominee is extremely important since it can drastically reduce the complications in the transmission of shares and securities in the event of the demat account holder's demise. If you already have a demat account and haven't assigned a nominee yet, it is advisable to initiate the process forthwith without any further delay.

On the other hand, if you don't already have a demat and trading account, all that you would need to do is visit TradeSmart Online. You can open demat account in an easy and paperless process within just a few minutes.

Frequently Asked Questions

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How to Add Nominee in Demat Account | TradeSmart

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A demat account shares a lot of similarities with a bank account. For one, both of them are electronic accounts. And secondly, they're used to safely and securely store assets electronically - money in the case of a bank account and securities, like shares and bonds, in the case of a demat account.

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How to Open a DEMAT Account Online? A Complete Guide | TradeSmart

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How to Open a DEMAT Account Online? A Complete Guide | TradeSmart

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A Demat account holds and keeps stocks and shares in electronic or digital format. Visit now to know the steps of opening a demat account at TradeSmart

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The sooner you start investing, the more benefit of compounding you enjoy! As more and more people are learning about the power of compounding and investing, the number of DEMAT accounts is on the rise. Young India is moving from conventional savings assets like Fixed Deposits to investing in growth assets like Mutual Funds, ETFs, SIPs, etc. If you are on the lookout for starting your investing journey as well, you need to first get a DEMAT account. The shares that you purchase needs a safe house to stay and DEMAT accounts provide that shelter to your investments.

So in this blog, we will first get into knowing the DEMAT accounts and then learn the simple procedure you need to follow to open your DEMAT account. So let's get started!

What is a Demat Account?

A Demat Account is a facility used for storing and trading securities. It facilitates easy and quick trade by allowing users to buy and sell shares.

It is a place where an individual can store and manage their various investments.

Was that confusing? Let us make it very simple. You can compare a Demat account with a locker in your house where you safely store all your valuables. Except, in the case of the Demat account, the valuables are investments assets like shares in electronic form.

Note: It is important to note that a Demat account is different from a trading account. A trading account only facilitates buying and selling of shares whereas Demat account stores those shares. Typically, the Demat account and trading account are offered as a two-in-one product by the brokerage firms in India.

Procedure to Open a Demat Account

Did you know that since 1996, daily 4340 Demat accounts have been opened with NSDL alone? This has demanded the account opening process become very simple and hassle-free. Here's a step-by-step guide that will help you get started with opening a Demat account.

Step 1: Online Application

You can log on to the website of TradeSmart or download the app and make an online application for opening a Demat account. All the brokers provide online account opening facilities. For the offline process, you can visit their registered office and begin the process by filling out a physical application form. You can also opt for E-KYC in which along with the Aadhar Number, you only need to provide supporting documents for address and identity proof, PAN Card, cancelled cheque and 6-months bank statement. For EKYC, it's very important that your email id and the mobile number are linked with Aadhar.

For offline processes to open a demat account, you can either download the account opening form from the TradeSmart website or if that doesn't happen then you can request the company to courier the documents to your address with some nominal charge.

Step 2: Upload the Documents

All the necessary documents are mandatorily required to be submitted to initiate the process of opening a Demat account. With this, the Know-Your-Customer (KYC) norms are fulfilled. This process can be done by uploading an e-copy of documents on the TradeSmart website or mobile app. The list of documents required

Self attested copy of your pan card

Self attested copy of address proof - driving license, ration card, aadhar card, electricity bill are some of the documents

One passport size photograph

One cancelled cheque

In-person verification - it requires a live photo of you so stock broking companies take a pic using laptop webcam or mobile phone front camera feature.

Step 3: Verification

After the successful submission of documents, the verification process begins. The authenticity of all the documents is ensured before giving a go-ahead with the Demat account finalization.

Step 4: Confirmation of DEMAT Account Once the verification of documents is finished, you will receive a 16-digit unique identification code of your Demat account. With this, the process of opening a Demat account successfully ends.

List of Necessary Documents

The following is the list of documents required to open a Demat account.

Proof of Your Identity Any document that possesses your name and photograph suffices as identity proof. You can submit a document such as a PAN card, aadhaar card, election card, driving license, or any government-provided ID card.

Proof of Residential Address
As proof of the address, you can submit any document that possesses the detailed postal address of your residence along with the city code. You can submit a copy of either aadhaar card, election card, passport, ration card, telephone or electricity bill held in your name, etc.

Bank Details To complete the process of opening a Demat account, you need to link your bank account with it. For this, you have to submit bank account details such as account number, passbook, or the recent statement of your bank account.

Proof of your Income
To provide proof of your income, you can submit the salary slips received from your employer or the acknowledgment of IT return of the most recent assessment year submitted with the Income Tax Department.

What are the Charges to Open a DEMAT Account?

Every depository participant can have a different set of charges for opening a Demat account. But a general trend noticed in India is that most of the brokers offer a free Demat account opening facility whereas some charge a minor fee. Apart from that, the first-year annual maintenance charges are mostly waived off by the brokers. Technically, an investor has to pay AMC only from the second year onwards.

The following are general charges involved in opening a Demat account in India.

Account Opening Charges As per the recent trend, account opening charges are either nil or a very nominal amount is charged for the same. Most of the brokerage firms provide Demat, as well as trading accounts, and charges for such inclusive accounts might vary.

Custodian Fees
Custodian fees is a fee paid by brokers to the depositories. This is either paid as a one-time charge or every month. The brokers that pay custodian fees to depositories every month pass on this charge to investors. It might range between 50 paise to Re. 1 per security.

Annual Maintenance Charges (AMC)
As we discussed, most brokerage firms waive off the first-year annual maintenance charges. From the second year onwards, an AMC is levied for maintaining your Demat account. This fee varies from broker to broker but typically it ranges between Rs. 300 to Rs. 1000. It is divided into four equal installments and is charged every quarter.

The charges TradeSmart offers are very competitive so that anyone can open a demat account and begin trading. The details of the charges are given below.The charges TradeSmart offers are very competitive so that anyone can open a demat account and begin trading. The details of the charges are given below.

Key Points to Focus on while Opening a DEMAT Account

At the time of opening your Demat account, you must ensure the following points.

Demat account is linked with the trading account to facilitate smooth buying and selling of shares.

All the details provided are correct and the nomination (if selected) is correctly mentioned along with the relation.

All the upfront and hidden charges are communicated with the broker in advance.

The Power of Attorney (PoA) is correctly signed and submitted for allowing the broker to debit shares from your Demat account at the time of selling.

Correct communication details are provided since all the necessary updates are shared on your mobile number and Email ID.

The advantage of opening a demat account with TradeSmart

Below are some of the many reasons why a newbie trader or any trader should open a demat account with TradeSmart.

Simple And Minimalistic Interface. Easy to understand for new users/beginners.

Instant Fund Transfer through Netbanking and UPI

Cover, Bracket and After Market hours orders (Advanced order types)

80+ Indicators and Trade From Charts

Day And Night Themes

Easy IPO subscription

Easy and Simple to place and monitor orders, holdings, positions, etc.

Single Sign in (No separate login to Back office and access to profile details)

Biometric login process so nobody else can get access without your presence.

Frequently Asked Questions

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How to Open a DEMAT Account? The Complete Guide | TradeSmart

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The sooner you start investing, the more benefit of compounding you enjoy! As more and more people are learning about the power of compounding and investing, the number of DEMAT accounts is on the rise. Young India is moving from conventional savings assets like Fixed Deposits to investing in growth assets like Mutual Funds, ETFs, SIPs, etc.

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What is Demat Account? All You Need to Know | TradeSmart

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What is Demat Account? All You Need to Know | TradeSmart

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A Demat account is used by an investor to hold shares and securities in an electronic form. Visit now at TradeSmart

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Ever since the initial public offers (IPOs) started raining and the stock markets began the journey of their biggest rally, DEMAT Accounts have been the stock of the town. In the fiscal year ended March 31, 2018, Indian investors opened a record number of Demat accounts, largely due to the global pandemic and the disruptions caused by the business disruptions. The numbers talk for themselves, don't they? It is not late if you are new to investing.

In this blog, we will enlighten you with all the details regarding DEMAT Account so when you go out to the next social meetup and this topic comes up, it should feel like a familiar subject.

DEMAT Account - What does it mean?

First things first. The term DEMAT is a shorter version of dematerialized shares. After dematerialization, the shares were converted into an electronic form from the physical form, and the Demat account became the safe house for such electronic shares.

A Demat Account is similar to a bank account that enables investors to hold their shares and other securities in electronic format. It eliminates the need for maintaining paper documents for these types of investments.

What is Dematerialization?

Converting physical securities to electronic form is known as dematerialization. This process helps minimize the cost and complexity of doing business. Earlier, the shares of the companies were held in physical form such as pieces of paper. A company used to issue a share certificate in the name of the shareholder mentioning the number of shares held by them.

Many issues such as physical damage, loss, theft, forgery, etc. used to take place and it was a tedious process to transfer those physical shares. Dematerialization is nothing but the conversion of those physical shares into electronic form. Today, we do not have physical shares in the market. As per the SEBI Guidelines, all the physical shares have been mandatorily converted into dematerialized form.

Dematerialized shares allow easy transfer and all the problems related to theft, forgery, etc, have been taken care of with this change.

Depositories and Depository Participants

A depository is an organization that stores financial assets electronically which aids traders in buying, selling or holding these assets. In India, we deal with two depositories that are maintaining all demat accounts in the country. These are

National Securities Depository Limited (NSDL)

Central Depository Securities Limited (CDSL)

But you cannot deal with the depositories directly and are required to go through a depository participant like TradeSmart. They act as an intermediary between you and the depository.

How does Demat account work?

While buying and selling of stocks happens through a trading account, the demat account is used to hold the shares bought through the trading account. That's why it's important to link your demat account with your trading account though today, both the trading and demat account are opened together. The following points tell us how the demat account works.

After placing a buy order on your trading platform, a buy request is forwarded by your depository participant to the stock broker.

The stock exchange then matches your buy request with a similar sell request and then sends an order to the clearing house.

Once found, the clearing house then debits the specific number of shares from the seller's account and credits it to your account at the close of the share market.

Types of DEMAT Account

There are three kinds of DEMAT Account available in India. Let us discuss them below.

You can open a regular Demat account with any of the participating banks or financial institutions in India. This type of account does not provide any additional facilities, say, international transfer of funds for instance.

If a non-resident Indian carries out some business activity in India, then they have to open a special non-resident rupee account (SNNR). It is a current account. An investor who has an SNNR Account can open a repatriable Demat account that allows them to transfer funds internationally.

Like SNNR Account is a current account, a non-resident Indian can open a non-resident ordinary account (NRO) which is a savings or fixed deposit account. Investors with NRO accounts can open non-repatriable Demat accounts. This account does not facilitate the international transfer of funds.

Components of DEMAT Account

A DEMAT account has the following main components.

Depositories are the parties that hold the shares in the dematerialized form electronically. In India, there are two depositories - National Securities Depository Ltd. (NSDL) and Central Depository Service (India) Ltd. (CDSL).

Depository Participants, commonly known as DPs, are the agents of depository that facilitate buying and selling of shares electronically by providing a trading platform to their clients.

The individuals like you and me who hold the DEMAT Account and invest in shares and other investments assets.

This is a 16-digit exclusive identity number assigned to each investor (client of the depository participant). With the help of this unique identification number, it becomes easier and safer to transfer the shares from one account to another.

Features of DEMAT Account

Features of a DEMAT Account vary from broker to broker. Some brokers also offer various plans with different features to their clients. TradeSmart offers some of the best and most competitive features in the industry. Some of them are included below.

A trading terminal or platform that is easy to understand for beginners

Market depth with bid and offer prices and the total number of buying and selling orders

Customizable watch-list with multiple rows

A full-features technical chart with multiple indicators

A mobile application to support quick actions on the go

Basic fundamental analysis of the companies

Portfolio analysis with details such as overall position, day's position, percentage change, the total return on investment, etc.

Secure, biometric login process

Cover, bracket and after market orders feature on the app.

Benefits of DEMAT Account

Following are some of the benefits of the DEMAT Account.

With DEMAT, traders can make transactions without having to enter their details in a paper trail. It's also convenient and time-saving.

No risk of theft or forgery since these securities are stored electronically.

You can now manage all of your debt and equity instruments in one platform. It includes an automated credit facility that can be used for various purposes, such as bonuses, splits, and mergers.

Electronic alerts are sent to every stakeholder of the transaction, allowing them to easily and quickly contact the company, investor, or any other stakeholder in case of any discrepancy.

The account holder can transfer their entire or a portion of their portfolio to another person. All that is required is filling a Delivery Instruction Slip.

The securities in a Demat account are linked to the company. In this case, if there is a split in the company's equity or bonus is declared, the investor is notified and the transaction is automatically given effect immediately.

Demat account charges

While opening a demat account is not very hard and takes hardly any time, there are certain charges levied by the DP to maintain the demat account and ensure that smooth transactions take place whenever you trade. There are various charges like account opening fees, annual maintenance charges (AMC), custodian fees that a trader needs to incur. The details and definitions of each are given here. The charges TradeSmart provides can be summarised in the table below.

So as you can see, the charges levied for the demat account by TradeSmart are extremely competitive in the market and the advantage is that it is free for the first year and nominal charges are billed from the second year onwards. So you can open a demat account for free and begin your trading journey.

Demat account and Trading account - Are they the same?

It is important to know that when you open a new demat account, it may seem like you're opening only one account, but in reality there are two accounts that are interlinked , that is, the trading account and demat account. In today's time, when you open an account with any of the depository participants like TradeSmart, you open both a demat account and trading account at the same time. They are opened together because in order to conduct smooth and hassle free trading, both are dependent on each other. A demat account is used to store your securities that you purchase and a trading account is used for buying and selling of these securities. When someone speaks of or uses the word demat account in a statement, it is understood that it means both trading and demat account. Although it is possible to open both accounts separately, doing so only makes your job tedious and unnecessarily time consuming.

Conclusion

While the above information contains a lot of benefits for having a demat account, there are even more that can be discovered only when you open one. In fact, one more feature is that you can temporarily freeze your demat account as well. The benefit is that whatever shares are stored in that cannot be touched by the broker or cannot be sold in cases where there is fraudulent activity going around. This gives an extra layer of protection for your securities and can only be reactivated by the account holder after submitting his details. So the possibilities are endless, all you have to do is open one and see for yourself.

Frequently Asked Questions

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What is Demat Account? Everything You Need to Know | TradeSmart

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Ever since the initial public offers (IPOs) started raining and the stock markets began the journey of their biggest rally, DEMAT Accounts have been the stock of the town. In the fiscal year ended March 31, 2018, Indian investors opened a record number of Demat accounts, largely due to the global pandemic and the disruptions caused by the business disruptions.

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Know the Top 5 Performing Equity Midcap Funds | TradeSmart

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Know the Top 5 Performing Equity Midcap Funds | TradeSmart

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Check out these Top Mid Cap Funds, then make wise investments for your future. Read Now to know more about these Top 5 Mid Cap Equity Funds at TradeSmart.

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The Indian equity market has been on a roller coaster ride since the beginning of this year. The market, which was still recovering from the COVID blues, has been again hit by the global geopolitical crisis, high inflation, tightening monetary policy and relentless selling by foreign portfolio investors.

The benchmark Nifty50 has fallen over 8% this year so far, but it has risen more than 34% in the last 3 years. However, domestic retail investment has sustained positive momentum in the market.

The equity mutual funds witnessed a net inflow of Rs 15,890 crore in April 2022, The mutual fund industry's total net assets under management (AUM) as of April 30, 2022, grew 17% on a year-on-year basis to Rs 38.03 lakh crore, as per data from the Association of Mutual Funds in India (AMFI).

It seems return prospect have managed to restore investor confidence in a high risky asset class such as equities given the huge retail investor fund inflow. The leading mutual fund scheme, especially a systematic investment plan or SIP has been the torchbearer of sorts in this highly volatile market. The segment witnessed a humongous increase in new customer addition and fund inflow hitting record levels in the past.

Inflows through SIPs in the mutual fund industry crossed Rs 1.24 lakh crore in FY22, rising over 30% from Rs 96,080 crore in the previous fiscal.

Let us take a look at top-performing equity midcap mutual fund schemes
Source: AMFI Considered Date: May 25, 2022
Quant Mid Cap Fund has been the top performer in the last five years, generating returns of 18.21%. The primary investment objective of the scheme is to seek to generate capital appreciation and provide long-term growth opportunities by investing in a portfolio of midcap companies.

The total AUM of the fund is around Rs 460 crore with 99.8% holding in equity. The scheme has 32 stocks in its portfolio including Indian Hotels Company, Ruchi Soya Industries, Tata Communications and Oracle Financial Services as its top holdings. The benchmark index for the fund is Nifty Mid Cap 150 Index and the fund's NAV is Rs 114.41 as of May 25.

With an AUM of Rs 17,678.92 crore, Axis Midcap Fund has been a consistent performer in the last 5 years as it has shown returns of over 16%. Rs 1 lakh invested in this fund 5 years back would have grown to Rs 2.29 lakh today.

The fund holds 15.72% of its net assets in financial services, 12.47% in information technology, 9.64% in Consumer Services, 9.53% in Capital Goods and 7.88% in Consumer Durables.

Cholamandalam Investment and Finance Company, ICICI Bank, Trent, Bajaj Finance and Coforge are the top equity holdings of this fund. It has a total of 65 stocks in its portfolio. The NAV is Rs 59.81 and the fund is benchmarked to S&P BSE 150 MidCap Total Return Index.

PGIM India Midcap Opportunities Fund

PGIM India Midcap Opportunities Fund predominantly invests in midcap stocks in accordance with the investment objective and asset allocation. The fund has given a return of more than 15.5% in the last 5 years and has NAV of Rs 38.06.

The open-ended scheme has an AUM of Rs 5,012 crore and holds 51 stocks in its portfolio with Persistent Systems, HDFC Bank, TVS Motor Company, The Federal Bank and Dalmia Bharat being the top 5 holdings.

Edelweiss Mid Cap Fund is an open-ended equity scheme predominantly investing in mid-cap stocks. The fund was launched in December 2007 and Rs 1,00,000 invested since inception has grown to Rs 4,50,477 at 10.97% CAGR.

The fund has a NAV of Rs 44.8410 and a total AUM of Rs 1,959 crore. With 59 stocks in its portfolio, the scheme's majority of investment includes in financial services, basic materials, consumer cyclicals and industrials sector. Persistent Systems, Cummins India, Bharat Forge, Dixon Technologies (India) and Ashok Leyland are the top holdings.

Nippon India Growth Fund

Nippon India Growth Fund has shown over 13% returns in the last five years and Rs 1 lakh investment five years back would have grown to Rs 1.93 lakh today.

The fund has 83 stocks in its portfolio with Varun Beverages, Cholamandalam Financial Holdings, AU Small Finance Bank, Max Financial Services and Aditya Birla Fashion and Retail as its top holdings. The scheme has an AUM of Rs 12,178 crore.
Disclaimer: This article is for information purposes only and should not be considered as stock recommendation or advice to buy or sell shares of any company. Investing in the stock market can be risky. It is therefore advisable to research well or consult an investment advisor before investing in shares, derivatives or any other such financial instruments traded on the exchanges.

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The Indian equity market has been on a roller coaster ride since the beginning of this year. The market, which was still recovering from the COVID blues, has been again hit by the global geopolitical crisis, high inflation, tightening monetary policy and relentless selling by foreign portfolio investors.

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Hotel & Travel Stocks Fly High in 2022 increase to 84% YTD

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Hotel & Travel Stocks Fly High in 2022 increase to 84% YTD

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Hotel stocks have so far outperformed the benchmark indices in the year 2022. Visit now and Get the List of Top Hotel & Travel Stocks in India to rise in 2022 at TradeSmart.

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The COVID-19 pandemic created havoc across sectors of the economy. The Indian hospitality industry was one of the most hit sectors due to the lockdowns and travel bans in 2020. Consequently, the shares of hotel, travel and tourism companies crashed around 40%-50% during the first couple of months of the lockdown.

However, with the ease in lockdown protocols, the hotel industry witnessed increased bookings driven by pent-up demand and more hotel stays in 2022. The industry occupancy that fell below 50% in January 2022 because of the impact of the Omicron variant, recovered to pre-COVID levels of around 65% in April 2022, as per reports.

Moreover, the industry RevPAR, or revenue per available room, in May 2022 improved and was 10% higher than the pre-COVID levels of May 2019. A rise in leisure travel, an increase in revenge travel and the beginning of MICE activities (meetings, incentives, conferences and exhibitions) have been the key drivers behind the industry growth.

The year 2022 has so far seen a sharp surge in enquiries in the long-haul and short-haul international destinations along with many domestic leisure destinations due to pent-up demand after a two-year hiatus. However, with soaring international airfares amid rising inflation and longer waiting times for travel approvals, Indians are likely to continue preferring domestic travel. Additionally, inbound travel to India may also rise on the back of pent-up demand and a weak currency in the coming days.

The growth prospects of the hospitality industry seem high with the hotel market expected to grow at an annual rate of 21% to $125 billion by 2027.

Hotel stocks have so far outperformed the benchmark indices in the year 2022. While the benchmark Nifty50 index has dropped over 7% YTD, hotel stocks have surged up to 84% YTD.

Here's a list of top hotel & travel stocks with positive returns:

Tata Group's The Indian Hotels Co. Ltd is the largest hospitality company in India by market capitalisation. The company's brands include popular hotels like the iconic TAJ and Vivanta. It has a portfolio of hotels, resorts, palaces, jungle safaris, spas and in-flight catering services.

The company's stock has given more than 35% returns YTD. In one year period, the stock of Indian Hotels Company has surged over 70%.

The company added 1,156 rooms in FY22, taking the total to 20,581 rooms as on March 31, 2022. Under the AHVAAN 2025 strategy introduced by the company, it expects to reach a portfolio of 300 hotels. It comprises Taj (100), Vivanta and SeleQtions (75), and Ginger (125).

EIH Ltd, the flagship company of Oberoi Group, is the second-largest luxury hotel chain in India. The company operates hotels under three renowned names of Oberoi, Trident and Maidens. EIH has a portfolio of 33 hotels and resorts with 4,935 rooms spanning across 15+ locations covering 7 countries.

The company has a strong balance sheet with a low debt-to-equity ratio of 0.11. the stock price of EIH Ltd has risen over 8% YTD, while it commands a market capitalisation of more than Rs 8,400 crore. The company's prospects look good in the long-term driven by its strategic property locations and India's tourism growth story.

The shares of Chalet Hotels have seen a robust growth of over 50% YTD and more than 72% in one year period. The stock price hit a 52-week high of Rs 345 apiece on July 05, 2022. It commands a market capitalisation of over Rs 6,600 crore.

Part of the K Raheja Corp Group, Chalet Hotels is the operator of the high-end JW Marriot Group and the Westin chain of hotels in India. The company's portfolio comprises seven fully operational hotels representing 2,554 keys, across mainstream and luxury segments, and four commercial spaces, representing around 0.9 mn sq. ft. in close proximity to the hospitality assets.

Lemon Tree Hotels is one of the largest mid-priced hotel chains and operates 87 hotels in 54 destinations with ~8,500 rooms and over 8,000 employees. The company's brand portfolio includes Aurika Hotels & Resorts, Red Fox, Keys Prima, among others.

The stock price has jumped over 40% YTD. The company's debt-to-equity ratio stands at 0.52, while its P/B ratio is at 5.28. The company has a strong presence in the mid-priced hotel segment and markets with high ARR (Average Room Rate).

Mahindra Holidays & Resorts

Mahindra Holidays & Resorts, a part of the Mahindra Group, operates more than 100 resorts, hotels, vacation facilities, leisure activities and related ancillary activities across India and abroad.

The company's total revenue in the quarter ended March 2022 was Rs 542.58 crore. Its consolidated net profit during the quarter was Rs 16.25 crore. The stock price has rallied over 22% YTD. It hit a 52-week high of Rs 274.95 on April 19, 2022, and a 52-week low of Rs 185.55 on January 04, 2022.

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Hotel and travel stocks fly high in 2022; rise up to 84% YTD

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The COVID-19 pandemic created havoc across sectors of the economy. The Indian hospitality industry was one of the most hit sectors due to the lockdowns and travel bans in 2020. Consequently, the shares of hotel, travel and tourism companies crashed around 40%-50% during the first couple of months of the lockdown.

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How to Apply for an IPO - All You Need to Know | TradeSmart

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How to Apply for an IPO - All You Need to Know | TradeSmart

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Learn how to buy IPO online in India by following the simple steps below if you want to apply for an IPO in India. Read now to know more about at TradeSmart

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So, if you are wondering "how to apply for IPO in India " or "How to apply for IPO online", TradeSmart is the answer!

Follow these steps and learn how to buy IPO online

1) You would first need to sign up with TradeSmart. Once you have your credentials, log in to our BOX app.

2) In BOX, look for the hamburger icon on the left.

3) Click it.

4) Select Portfolio, the first button.

5) Click on the IPO button.

6) You can now see the list of active, recent, upcoming IPOs.

7) For active IPOs, click on the bid option to start.

8) The first thing it asks you to do is enter your UPI id.

9) Now, fill in your bid details. Make sure the number of shares is a multiple of the lot size. The price can be in the range of what has been shown in the IPO window if it's a book building IPO. However, for fixed IPOs, you can just put what's given to you.

10) At the end, check your details and submit.

11) Your UPI would receive a mandate. Once you accept the mandate, the amount corresponding to your bid will be blocked or frozen in your account. Please keep in mind this amount will not be deducted or debited to the fund manager until you get your IPO shares allotted.

That's it! You have just made your IPO application.

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How to Apply for IPO - Learn How to Buy IPO in India | TradeSmart

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So, if you are wondering "how to apply for IPO in India " or "How to apply for IPO online", TradeSmart is the answer! 1) You would first need to sign up with TradeSmart. Once you have your credentials, log in to our BOX app.

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Know the Difference Between Bull Market & Bear Market | TradeSmart

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Know the Difference Between Bull Market & Bear Market | TradeSmart

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The bulls hit equity with their horns and send it flying right up in demand, whereas a bear claws the equity down and flops. Read not to know more about the Bull vs Bear Market

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If you dwell in the stock market long enough, rumour has it you would come across patches of highs and lows. Now, you may be lucky and be able to completely dodge the lows, though no investor has ever been that lucky; but, without fail, you would surely hear of the bulls. And of the bears too!

The share market can be largely divided into two groups: the bulls and the bears. While there are rabbits and turtles and frogs and hawks too in the share market, investors, for the sake of simplicity, can be divided into two groups majorly, which largely encompass all the other categories. Their dominance also decides the market's grace.

The bulls hit equity with their horns and send it flying right up in terms of prices, demand, buying volumes, etc. Bull investors are largely associated with optimism, zeal, confidence, and risk-taking.

On the other hand, a bear claws the equity down and it flops in terms of prices, but the selling volumes increase. Bear investors largely find themselves being analytical, patient, and in it for the long haul.

This is to define a bull market and a bear market.

However, there has to be more to it!

Usually, a bull run can last for several months or even several years, wherein the prices of equities grow beyond expectations and continue to soar. However, this concept applies to commodities, bonds, etc. as well. When there has been a consistent increase for a period of more than six months to be safe, it can be called a bull zone! However, the significant rise which counts as an "increase" here is 20% in the market's cumulative.

Currently, we are in the middle of a bull jaunt.

Key indicators of a bull market

To understand how to spot a bull market, we must first guess what causes the bull market.

Prices of equities grow in a strong economy, with favorable policies.

This means a stable and smooth economic setup, low unemployment, and overall development leads to growth in stocks.

These three are also the strongest indicators of the bulls' reign.

The bears are known to hibernate and sleep over the share market. Dreaded and despised, the bears of the market claw equities down. This leads to short-selling and losses. Their go can last for years too. When there has been a consistent drop in the market's value amounting to or more than 20%, it's the bear zone!

Key indicators of a bear market

A bear market is indicated by rising unemployment, inflation, and instability. All these factors also contribute to slower development, a weaker economy, and lower GDP. The GDP is high during the bull run but low during the bears' reign.

The GDP of the nation is thus a significant indicator of the market.

Bull market vs bear market

Both have their utilities. While a bear market is nervously viewed, it has its own advantages. Ask Warren Buffet! He is known to be particularly fond of the bear. When the market slumps and the good shares flop, that's when he picks them up. This method is also called the 'value investing' method.

It is when you pick these stocks at their lowest you make the gains at their highest.

While the bull market is always favored considering the wealth induction that it shows, the benefits are only for those who invested in the lows, not for the new joiners.

So, this isn't a tug of war but a synergy. The Yin and Yang. The bulls and the bears.

Differences between bull market and bear market

We have prepared the following table to help you understand the basic difference between the bull market and the bear market.

Increases in hopes of gains

Decreases, since a bear stint can go on for years and the buying price may come down sooner.

Although this is an ideal time to buy

Decreases in hopes of getting a better price

Increases, since investors panic and get anxious that equities may depreciate.

Although this is not the time to abandon your equities

Do keep in mind that the share market isn't all mathematics and logic! It is largely sentiments. In the bear market, sentiments go south and even good companies with strong numbers and less debt can take a hit. The longer this negative psychology persists, the longer your window of making a purchase.

The same goes for bull markets too. Shares of even shallow brands with no claim to leading the game can also soar high. Thus, be careful when you are investing in a bull market. The zeal of bulls can keep toggling share prices high for a year or so, but eventually, the market does have a day of judgement when all the empty vessels get knocked hard on the ground.

Thus, it is advised to pick stocks for the bull season as well as the bear season. It has been found that FMCG stocks perform better during the bear season. Why? Because rising inflation means the most common items will be the first ones to get expensive. Similar trends can be observed in electronics, healthcare, power, to name a few. During the bull market, you would find the IT, Infra, and similar developing industries rising being the major employers and GDP contributors, it is naturally assumed that economic appreciation would not be possible without them.

We hope this article has helped you understand the bull market vs bear market. While no market is to be preferred over the other, we do recommend you not panic during a crash. This is the time to oil your gears and drive right in. Remember, patience is a virtue when dealing in the stock market.

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Bull vs Bear - Know Difference Between Bull Market & Bear Market | TradeSmart

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If you dwell in the stock market long enough, rumour has it you would come across patches of highs and lows. Now, you may be lucky and be able to completely dodge the lows, though no investor has ever been that lucky; but, without fail, you would surely hear of the bulls.

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Know the Difference Between SIP & Mutual Fund | TradeSmart

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Know the Difference Between SIP & Mutual Fund | TradeSmart

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SIP is a mutual fund investment tool, whereas mutual fund is a type of investment product. Refer to this article to know more about SIP Vs Mutual Fund

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Even before we get into this topic, let us tell you this outright: Sip VS Mutual Fund cannot happen! It simply cannot. While sip vs lump sum mutual fund does happen, SIP vs Mutual Fund does not! Why do we say that?

Let us explain.

A mutual fund is an investment tool that allows you to put your money into equities, bonds, government bills, and more via just one particular scheme. Depending on your scheme, the allocation would vary. However, mutual funds are a nice way to diversify sums as little as INR 500 in various financial instruments. Moreover, mutual funds pool in money from different investors and then invests in these assets collectively.

Now, there are two ways of investing in a mutual fund. One, by making a single purchase, it's a one-time thing, and then, you withdraw from your scheme upon maturity. Another way is to be more regular and break your premium into smaller, uniformly divided brackets or SIPs.

Short-form for Systematic Investment Plans, these tools invest in mutual funds. Now, you see why we said there cannot be an SIP VS Mutual Funds in the beginning. An SIP is a way to invest in a mutual fund, so while there can be an SIP vs lump sum mutual fund, there can't be an SIP Vs Mutual fund.

SIPs are made into mutual funds!

The investor follows an automated disciplined device of investment, which allows them to invest small amounts periodically.

SIPs allow you to invest in mutual funds with as little as INR 500, as mentioned earlier.

All you have to do is fix a schedule with your broker, who'll automatically deduct the SIP amount from your bank and you will be granted units of the mutual fund for that amount.

Now, bear in mind that each month, you would get varied numbers of units. Why so? Your paid amount will be used to buy the units, which sell at their Net Asset Value (NAV). This net asset value keeps fluctuating based on the market's highs and lows.

While we have said that SIPs and mutual funds are not different, we need you to know that not all mutual funds are SIPs. There can be such a thing as a difference between SIP and mutual funds.

The difference between an SIP and a mutual fund is that of a lump sum mutual fund.

What is a lump sum mutual fund?

As the name suggests, mutual funds can also be purchased in volume by making a single buying decision. However, unlike SIPs, collective purchases do not get you the benefit of a varied NAV. When the net asset value for a share drops in a month, you can always purchase it cheaper. Moreover, investing regularly earns you compounded interest. Plus, it has been found that SIPs are far more convenient and recalled than lump-sum payments, which often get buried in oblivion.

Difference between SIP and mutual funds

Rupee average costing: When you invest using SIPs, you get the benefit of a bearish market. A bearish market is when the prices of equities are low, meaning your mutual fund scheme too can get you more units than it got you in the last month for the same payment! Thus, investing regularly can help you lower your average buying price.

Benefit of compounding: When you invest using SIPs, you get the benefit of the power of compounding. For each SIP, there is a compound interest involved, which goes out the drain if we have made a single investment. Thus, lump-sum payments derive low returns.

Flexibility: It may not be possible to make lump sum payments less than at least INR 5,000, but SIPs begin with INR 500 and can always be topped up or triggered. Keep in mind there is a Flexi SIP too, which allows you to waiver the premium on every payment.

Convenience: SIPs are automatic once on the roll. Every time you make a lump sum payment, you have to get bank transfers done and brokering agents too.

Stoppage: While you cannot withdraw from lump-sum investments before maturity, you can stop your SIP anytime. Withdrawing early in either instance would incur a penalty or exit load.

Top-performing mutual funds with SIP in India

Mutual funds in India have multiple categories, like multi-caps, tax savings, large-caps, small-caps, mid-caps, etc. We have prepared a list of some of the best mutual funds in each category with an option for SIPs.

These recommendations and not endorsements. Depending upon your financial goals and the span you can get your money locked in for, you should choose your mutual funds. Also, look into the past returns and NAV of similar shares in your category.

For instance, if you have chosen a retirement saving mutual fund, compare it with others that claim to be great for retirement savings. With mutual funds specially designed for tax-saving purposes, you should compare how the real savings count. Investors must practice vigilance before investing their hard-earned money in any mutual fund.

With no confusion on the fact that SIPs and mutual funds are not parallel concepts but rather coinciding, investors are suggested to consider SIPs over lump sum investments, especially when it comes to mutual funds that keep fluctuating with the course of the share market.

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SIP vs Mutual Fund - Difference Between SIP and Mutual Fund | TradeSmart

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Even before we get into this topic, let us tell you this outright: Sip VS Mutual Fund cannot happen! It simply cannot. While sip vs lump sum mutual fund does happen, SIP vs Mutual Fund does not! Why do we say that? Let us explain.

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What Is Sip - How Does Systematic Investment Plan Work | TradeSmart

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What Is Sip - How Does Systematic Investment Plan Work | TradeSmart

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SIPs are investment tools that are associated with mutual funds. Refer to this article to know how SIP work at TradeSmart

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Systematic Investment Plans or SIPs are investment tools that are usually associated with mutual funds. In an SIP, the investor makes periodic and regular purchases of that mutual fund's unit rather than making a one-time payment or purchase. Many investors vouch for SIPs and how they are better than making lump sum investments.

Let us try and understand how SIP works with examples.

Say you have INR 20,000 in your savings account, not reaping you any benefits. Now, you have decided to invest that amount in mutual funds.

You can make a one-time lump sum payment of INR 20,000 in a mutual fund scheme and get the required number of units for that amount.

However, when you make a single purchase, you do not have the advantage of compounding. We'll discuss it in detail in a bit. You also do not get the liquidity that emergencies might require. Do keep in mind that most equity mutual funds have a lock-in period of 3-5 years.

Instead, you can divide your amount into small brackets of INR 5,000 or INR 2,000. You can invest this amount every month into the same scheme.

Let us see what the benefits of doing so are.

Makes you a disciplined investor: This is where most people struggle: regularity! When you can't see immediate returns your investment can get weak in terms of involvement. You may even withdraw entirely. However, with an SIP in place, you become a regular investor, and you do so conveniently.

Ease: You don't have to move a muscle to continue your mutual fund investments once you have signed up for a systematic investment plan. Based on the NAV at the time of your SIP every month, you will be allotted units. Plus, the amount will be paid from your account automatically. No more hands-on work!

Start as low as INR 500: Various mutual fund/asset management houses in India offer products with an SIP option with a minimal investment of INR 500.

Benefit from the power of compounding: When you make regular investments, you also get compound interest.

Rupee-cost averaging: How SIP investment works is that it makes you invest regularly and while you are at it, you are buying units for a mutual fund at different prices. Just by being regular, you rope in units cheaper when the stock market falls. This way, eventually, your investment premium is much lower.

Now that we have understood how an SIP works with examples, let us look into the different kinds of SIPs to choose from.

Different kinds of SIPs

Flexible SIP: Also known as Flexi SIPs or Flex SIP, these use a pre-derived formula that lets you change the amount you have to pay every month based on the market conditions.

Perpetual SIP: These SIPs do not have an end date, and unless you have filled an end date in your SIP, it will be considered perpetual and would go on until 2099, although you can always pause and stop an SIP by filling a form.

Step-Up SIP: This SIP helps you increase your pre-running SIPs. If you have more surplus available in the future and would like to top up your existing premium, this facility would help you.

Trigger SIP: This one becomes active when the market price of your fund reaches a certain point you can fix and then, your SIP gets debited.

Using SIPs to invest in mutual funds is cheaper, smarter, and easier. Begin today with TradeSmart, an all-in-one solution for all your trading and investing needs.

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How SIP Works - Know How Mutual Fund SIP Works with Example | TradeSmart

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Systematic Investment Plans or SIPs are investment tools that are usually associated with mutual funds. In an SIP, the investor makes periodic and regular purchases of that mutual fund's unit rather than making a one-time payment or purchase. Many investors vouch for SIPs and how they are better than making lump sum investments.

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What Is KYC - Everything You Need To Know | TradeSmart

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What Is KYC - Everything You Need To Know | TradeSmart

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KYC means to know your customer. It is a successful method for an institution to confirm a customer's legitimacy. Read this article to know more about KYC

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What is KYC - Know what KYC Means, Importance & Types| TradeSmart

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KYC stands for Know Your Customer. This standard abbreviation is used by many financial institutions, such as banks, post offices, etc., to ascertain the identity of their customers. If you are new to investing or have never opened a bank account, please read this article on KYC.

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Difference Between Fundamental & Technical Analysis | TradeSmart

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Difference Between Fundamental & Technical Analysis | TradeSmart

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Understanding the difference between technical & fundamental analysis will help you make wise investments in the stock market. Read Now at TradeSmart

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When it comes to investing in the share market, one can never be too careful. The Indian share market is quite sensitive and volatile, making it lucrative if you time it right! But, who has ever timed it right? No one in any corner of the world can say they figured out the stock market.

So, what can one get?

Perhaps, just a logical explanation of what could happen next. Depending upon your investment horizon, you could be hopeful that your investments work out in the long run or the short run.

When you are looking to invest in the longer run, you do fundamental analysis. However, for those who are into trading, be it intraday or within a couple of days, you are looking at more technical aspects.

Here are some definitions.

As the name suggests, when you analyze an equity fundamentally, the focus is on the brand underneath. The company whose shares you have bought needs to have sound financials, low debt, high revenue, compliance, performance, and an overall solid market presence. The idea here is to put the money on the driver and not the car.

Contrary to fundamental analysis, technical analysis doesn't bother itself with the company. It looks at the share's buying and selling volumes, prices, charts, and near-term indices to make a call. The money here is on the car because if it's a small race, the driver won't have much of a say.

In fundamental analysis, we look at the real drivers behind the share. In technical analysis, we just don't care. We keep the focus on the stock itself.

Technical Analysis Vs Fundamental Analysis

How this information also helps fundamental analysts is that we do not want to invest equity that is expensive, irrespective of the range it will be held for.

The idea in long-term investments would be to buy cheap and sell expensive. So, while they are okay with investing in an organization, they would still have to time it right. Using the SM indicator, they too can tell if they should wait or plunge in straight off.

For instance, in the case of seasonal picks, it is advised to enter before the season begins and exit before the season ends. If you were dealing with an icebox manufacturer's share, there would be no point venturing in winters for a span of two months. It would be more profitable to enter when the summer is just around the corner. This analysis was fundamental.

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When it comes to investing in the share market, one can never be too careful. The Indian share market is quite sensitive and volatile, making it lucrative if you time it right! But, who has ever timed it right? No one in any corner of the world can say they figured out the stock market.

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Call vs Put Option: Know the Difference Between Call & Put Option | TradeSmart

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Call vs Put Option: Know the Difference Between Call & Put Option | TradeSmart

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Understanding the difference between a call and a put option is essential if you deal in futures and options. Read the complete article to know in detail at TradeSmart.

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If you deal in Futures and Options, you should know about the call and put option. While trading in options, investors need to use these contracts. However, to use them, you must first learn the difference between call option and put option.

In this article, we do a call option vs put option comparison. So, let us begin with definitions of call vs put.

What is the difference between call option and put option?

While dealing in the options derivative category, the right to buy the underlying stocks at a pre-decided price within the contract's validity is the call option. The right to sell is the put option.

How do call and put options work?

In order to buy or sell in the options market, you have to either place a call option or a put option. When you purchase a call option, you have to pay an upfront premium, which is a portion of your total cost of purchase. The brokerage requires this amount to hedge against risks.

Because there is no compulsion to actually buy the stocks, this may lead to a loss for the brokerage. So, there is no compulsion to execute the buying even after you have paid the upfront amount.

However, when you purchase a put option, you are obligated to execute the trade if the call buyer has done his part. If the call buyer with whom you have made the contract has not done his part, you don't have to either.

There is an upfront payment with put options as well.

Similarities between call and put option

Time is a factor in both these options. If the contract is not consummated within its given time frame - be it the selling or the buying - the contract is not valid.

Both parties have to pay an upfront premium to participate in the options market.

The maximum loss they can both incur is the premium they have paid.

Differences between call option and put option

While call and put options perform different tasks, they both make an options' contract valid. They are both crucial for execution.

However, to understand the matters better, let us draw a comparison table of call vs put.

Understanding the difference between call option and put option with examples

Let us say Rajesh purchased a put option for selling 20 shares of a company at INR 5,000 each after two months. Mukund has entered the contract with a call option of buying the shares at the same price, volume, and time frame.

However, if the price increases to INR 7,000, Rajesh would make a loss. However, he would still have to sell the shares for much less than their market worth. This is when purchasing a call option helps. If the price of a share appreciates, your investment works.

Now, let us look at how it works if the price of the share falls to INR 4,500. Now, purchasing the share at INR 5,000 would make it a bad trade for Mukund. So, being a call buyer, he can choose to walk out. He doesn't have to buy the stocks underlying the contract. When he walks out, he is not charged a penalty, but his loss is the premium he paid.

If he chooses to buy the shares nonetheless, it's a profit for the put option buyer. He can sell the shares at a higher price and use the difference for his next investment, profits, liquidity, etc.

For your call option to be profitable, the shares you purchased the contract for have to appreciate in the given time frame, so that you can trade them in the market openly and make profits.

For your put option to have gains, the shares you have to sell must depreciate in price, so that if the buyer goes through with his trade, you have to sell the shares at higher prices than what is currently prevailing in the market. You can then use the remainder to buy the shares back for a lesser sum.

Call option and put option are both parts of the same cycle of options contracts. The person who buys the call option has to buy and the person who buys the put option has to sell the shares, respectively. The price is pre-decided and based on the market's fluctuations, the profits are made.

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Call vs Put Option - Difference Between Call and Put Option | TradeSmart

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If you deal in Futures and Options, you should know about the call and put option. While trading in options, investors need to use these contracts. However, to use them, you must first learn the difference between call option and put option. In this article, we do a call option vs put option comparison.

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Fund of Funds (FoF) - How Does a Fund of Funds Works? | TradeSmart

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Fund of Funds (FoF) - How Does a Fund of Funds Works? | TradeSmart

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A Fund of Funds is comparable to a mutual fund. This fund differs from others in that it contains investment funds rather than equities, bonds, etc. Read now at TradeSmart

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A Fund of Funds is somewhat like a mutual fund. The significant difference here is that this fund contains several investment funds, not stocks, bonds, etc. Lately, many investors are investing in Fund of Funds for diversification and reducing risk. Through an FOF, a retail investor can get deeper access to the investment market.

Let's take an FOF, namely X. It would contain several funds, which in turn would hold stocks, mutual funds, bonds, etc. Therefore, this X FOF would still invest in these instruments, albeit indirectly. Now that we have understood the "fund of funds meaning", let's delve deeper.

Broadly, there are two kinds of Fund of Funds - Fettered and Unfettered. A Fettered FOF makes investments in funds floated by the parent company. On the other hand, an Unfettered Fund of Funds can invest in instruments across the board.

The first Fund of Funds was launched in the 1970s. However, it wasn't until the 1990s that the size and numbers of Fund of Funds started increasing.

How does Fund of Funds work?

The main objective of an FOF is to diversify the portfolio while ensuring an effective allocation of the assets in various fund categories. Every fund category can be structured according to its investment objectives. Professional and Retail investors can use these fund categories to develop their portfolios.

You can participate in various Fund of Funds, such as Mutual Fund FOF, Hedge Fund, Private Equity Fund, and so on. These funds, as we have seen earlier, can be Fettered or Unfettered.

However, a Fund of Funds has a higher expense ratio than regular mutual funds. Some top Fund of Funds in India are SBI Nifty Index Fund, ICICI Prudential Nifty Index Fund, ICICI Prudential Advisor Series, Aditya Birla Sunlife Index Fund, etc.

It's easy investing in an FOF. Contact your broker, open a Demat account, and make your first deposit.

Fund of Funds advantages

There are several reasons why one should invest in a Fund of Funds.

First, these funds are managed by the best professional fund managers in the business. Managing an FOF requires a very high level of competency, and only those managers who have demonstrated excellence over a period of time are considered for this role.

Secondly, you can diversify your assets in such a fund and optimize your profits. For example, you can choose a Fund of Funds whose investment portfolio contains stocks of the companies of the best performing sectors. This way, you focus on not just one or two good stocks but hundreds of performing stocks.

Third, the cost of entering an FOF is quite low. Investors with a lower budget can also participate in various Fund of Funds. You can also avail of monthly investment schemes to participate in FOFs.

Finally, there is moderate to low risk in any Fund of Funds. Since the money is invested in different schemes and funds, the Fund of Funds is protected against volatility and fluctuations.

Fund of Funds disadvantages

The biggest thing going against an FOF is its high expense ratio. Typically, the management fees of a Fund of Funds borders on the higher side. This is because the fee includes the management fees of the various underlying funds in the basket. This drives up the expense ratio and sometimes makes an FOF look unprofitable.

The other disadvantage of an FOF is regarding asset overlapping. Since you are essentially investing in funds, you have very little knowledge of the assets being covered. Sometimes, two different funds might be investing in the banking sector. This overlapping can reduce your profits.

Now that we have fully understood "fund of funds meaning ", let's look at some real-world examples.

Real-world example of Fund of Funds

A good example of a Fund of Funds is the UTI Nifty Index Fund. There are two objectives of this fund. The first is to invest in the stocks comprising the Nifty 50 Index. The second objective is to achieve returns that are nearly equal to the Nifty Index. The fund managers try to replicate the weightage of this fund with that of the Nifty 50 Index while minimizing the performance differences between this Fund and the Index.

The UTI Nifty Index Fund was launched way back in 2000. This fund has a moderate to high risk and has delivered a CAGR of 12% since its inception. Ranked 68 th in its category, this fund's return was 15 % in 2020, 13.2% in 2019, and 4,3% in 2018.

The Net Asset Value of the UTI Nifty Index Fund was INR 115.559 as of September 14, 2021. UTI Asset Management Company Limited manages this fund.

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Fund of Funds - Understand Fund of Funds Meaning, Definition | TradeSmart

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A Fund of Funds is somewhat like a mutual fund. The significant difference here is that this fund contains several investment funds, not stocks, bonds, etc. Lately, many investors are investing in Fund of Funds for diversification and reducing risk. Through an FOF, a retail investor can get deeper access to the investment market.

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New IPO Rules Issued By SEBI; View Details Here | TradeSmart

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New IPO Rules Issued By SEBI; View Details Here | TradeSmart

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SEBI announces new IPO guidelines in response to an increase in IPO investments over the past fiscal year. Read about the UPI bid limit increase and more details at TradeSmart.

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Capital market regulator Securities & Exchange Board of India (SEBI) has issued new rules with respect to the application for Initial Public Offering (IPO). SEBI has increased the size of bids that retail investors can submit in an IPO using the Unified Payment Interface (UPI).

In a circular issued on April 5, the regulator enhanced the limit to Rs 5 lakh from the current Rs 2 lakh. The new IPO rules will come into effect on May 1, 2022. This means that an individual investor can bid up to Rs 5 lakh through UPI for IPOs that will open on or after May 1.

SEBI had permitted the use of UPI to bid for IPOs in November 2018. This came into effect on July 1, 2019.

The new rules for IPO application come nearly four months after the National Payments Corporation of India (NPCI) increased the per transaction limit in UPI to Rs 5 lakh from Rs 2 lakh for UPI-based Application Supported by Blocked Amount (ASBA) in IPOs.

NPCI has reviewed the systemic readiness required at various intermediaries to facilitate the processing of applications with increased UPI limit and confirmed that as on March 30, 2022, more than 80% of SCSBs/Sponsor Banks/UPI Apps have conducted the system changes and have complied with the NPCI provisions, SEBI said.

"Accordingly, it has been decided that all Individual Investors applying in Public Issues where the application amount is upto 5 Lakhs shall use UPI and shall also provide their UPI ID in the bid-cum-application form submitted," the SEBI circular on the new IPO rule said.

ASBA means "Applications Supported by Blocked Amount". It is an application that contains authorisation to block the share application money in the bank account for subscribing to an IPO. The method, developed by SEBI, enables blocking of funds for IPO, Rights Issue, Follow-on Public Offer (FPO) etc., applications.

When an investor applies through ASBA, his application money shall be debited from the bank account only if his/her application is selected for allotment after the basis of allotment is finalized, or the issue is withdrawn/failed.

Unified Payment Interface or UPI is a payment system that instantly transfers funds from one bank account to another bank account. Developed by the National Payments Corporation of India (NPCI), UPI facilitates inter-bank peer-to-peer and person-to-merchant transactions.

UPI powers multiple bank accounts into a single mobile application (of any participating bank), merging several banking features, seamless fund routing & merchant payments into one hood. The system allows several banks to interconnect and transfer funds under one umbrella. With the use of UPI, a person can transfer money anytime and anywhere as it works on a 24×7 basis.

This system has a highly secured encryption format. Hence, all the transactions are safe and secure. Several apps support UPI like BHIM, Google Pay, and Paytm, among others.

How to Apply For IPO Through UPI?

Step 1: Login to your online account with the broker. Select the IPO name from the current IPO list.

Step 2: Enter the lot size you want to bid for and the bid price.

Step 3: Type your UPI ID and hit the submit button.

Step 4: Approve the transaction on your UPI app.

You will receive the mandate notification in the UPI app. Accept the mandate and the application money will remain blocked until the IPO allotment date. You will receive an SMS from the exchange confirming your application.

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IPO Process Tightens -SEBI New Rule For IPO Application at TradeSmart

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Capital market regulator Securities & Exchange Board of India (SEBI) has issued new rules with respect to the application for Initial Public Offering (IPO). SEBI has increased the size of bids that retail investors can submit in an IPO using the Unified Payment Interface (UPI).

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List Of Stock Exchanges In India (2022) | TradeSmart

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List Of Stock Exchanges In India (2022) | TradeSmart

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Stock Exchanges describe the market conditions in India for stock trading. Visit now to know the List of Stock Exchanges in India at TradeSmart

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Introduction and overview

In most countries, the stock exchange has two crucial functions. It assures a ready market for securities, encouraging consumers to invest money in corporations. It transfers capital among enterprises as a pricing mechanism by calculating prices representing the genuine investment value of a company's shares.

A stock exchange is a regulated market for purchasing and selling securities like stocks and bonds. Although most bonds are traded over-the-counter (OTC), some corporate bonds can be exchanged on stock exchanges. This enables businesses to raise funds and investors to make decisions based on real-time price data. A physical venue or an electronic trading platform can be used as an exchange. Most exchanges employ electronic trading these days.

The stock market facilitates transactions between sellers of financial instruments and targeted buyers. Stock exchanges in India adhere to rules and regulations directed by the Securities and Exchange Board of India (SEBI). The authoritative body protects investors' interests and promotes stock trading in India.

Concept of a stock exchange

The stock exchange is a marketplace where buyers and sellers meet to exchange financial instruments at certain times during business hours while complying with SEBI regulations. However, only firms listed on a stock market can trade on it., e.g., the National Stock Exchange and the Bombay Stock Exchange, known as the secondary markets.

A stock exchange in India works independently, as no "market makers" or "specialists" are present. In India, stock-exchange trading is order-driven and conducted over an electronic limit order book. Orders are automatically matched with the aid of the trading computer in this setup. Its purpose is to match the market orders from investors with the most appropriate limit orders.

An order-driven market enhances transaction transparency by publicly publishing all market orders. Brokers play a crucial part in the stock-exchange market's trading structure, as all orders are placed through them. Institutional investors and retail customers can avail themselves of the benefits associated with direct market access. Investors can put orders directly into the trading system by utilizing the trading terminals offered by stock-exchange market brokers.

Benefits of listing with the Stock Exchange

Issuing firm shares on the stock exchange market for shareholders to purchase is one of the most effective ways for a company to obtain inexpensive money. It allows companies to raise more capital through share issuance due to their reputation and fundamentals from the stock exchange market, and use it to grow their company.

Listed assets are considered more reputable in the stock-exchange market. Lenders accept them as collateral and provide credit facilities against them, provided the companies have a decent financial performance.

Investors in equity markets are holding one of the most liquid assets they can encash their investments within a short time.

The quoted price also represents the real value of a particular security on a stock exchange in India. This is because the prices of listed securities are set as per the forces of demand and supply, and are disclosed publicly.

Major stock exchanges in India

The Bombay Stock Exchange (BSE)

The National Stock Exchange (NSE)

The NSE was established in 1992 in Mumbai and is accredited as the pioneer among India's electronic stock exchange markets. This stock exchange market was created to counteract the Bombay Stock Exchange's monopolistic influence on the Indian stock market.

It is the 12th largest stock exchange in the world. NIFTY 50 is the NSE's index, and investors extensively use it across the globe to gauge the accomplishment of the capital market in India. It is India's first stock exchange to provide investors with a decentralized electronic trading platform.

India International Exchange (India INX)

The Metropolitan Stock Exchange (MSE)

NSE IFSC Ltd (NSE International Exchange)

In 2016, the NSE IFSC Limited (NSE International Exchange) rose to prominence. It is a subordinate of the National stock exchange, operating from Gujarat International Finance Tec-City.

Significant functions of a stock exchange

Determining a reasonable price

Advancing industrial development

Protecting investors' interests

Reduces a company's reliance on loans

The development of stock exchanges has aided listed firms in avoiding the need for loans by allowing them to generate capital through the issuance of securities, allowing them to save a large sum in the form of interest outflow.

The Role of Stock Exchanges in India's Capital Market

Effective mobilization of savings

Promoting the establishment of the capital

The funds raised in the capital market are distributed to industries producing various goods and services that benefit society. This generates capital and promotes the growth of national assets. Savings are routed towards relevant investment opportunities.

Wider avenues of investment

Investment priorities

Stock exchanges facilitate investors' decisions on their investment priorities by providing them with a basket of securities from different industries and companies.

Stock exchanges provide an organized market for individuals and institutional investors. They regulate the trading transactions with rules and regulations to ensure investors' protection. The Indian stock exchange is a market for trading financial products, such as stocks, bonds, and commodities. It's a marketplace where traders meet to exchange financial instruments at certain times during the business day, all while complying with SEBI's strict restrictions.

Stock markets play a crucial role in the overall consolidation of a country's economy and the growth of its industrial sector. It is the capital market's most active and well-organized segment. In emerging nations like India, Stock markets play a critical role in fostering capital development by effectively mobilizing funds and assuring investor safety.

Stock markets promote investment and raise capital, which allows companies to grow their businesses, expand operations, and create jobs in the economy. The companies invest those funds back into their businesses, and investors, ideally, earn a profit from their investment in those companies.

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List of Stock Exchanges in India - Role & How does it Work | TradeSmart

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In most countries, the stock exchange has two crucial functions. It assures a ready market for securities, encouraging consumers to invest money in corporations. It transfers capital among enterprises as a pricing mechanism by calculating prices representing the genuine investment value of a company's shares.

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Top performing profitable companies In Net Profits In 2022 | TradeSmart

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Top performing profitable companies In Net Profits In 2022 | TradeSmart

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Profitability is the primary goal of a company. It not only generates profits for its stockholders but also guarantees the long-term viability of the business. Visit now at TradeSmart

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Profitability is the primary goal of a company. Not only does it provide gains for its shareholders, but also ensures that the company survives in the long run.

It is critical to measure a company's current profit, as well as future profit, to evaluate a company, whether is worthy of investment.

In the financial year ended March 2022, India Inc reported an average 50% growth in consolidated net profit and around 25% rise in revenue on a year-on-year basis.

Here is the list of the top 10 most profitable companies in India.
Source: Companies' financial results as of year ended March 31, 2022
The billionaire Mukesh Ambani-led oil-to-telecom conglomerate Reliance Industries is the top most profitable company in FY2022. The company reported a consolidated net profit of Rs 60,705 crore in FY22, registering a sharp growth of 23.5% from Rs 49,128 crore in FY21.

RIL's consolidated revenue for the year also surged 48% YoY to Rs 7,21,634 crore. The strong financial performance was led by growth across the board. RIL also became the first Indian company to cross $100 billion in revenue.

With a market capitalisation of more than Rs 16.37 lakh crore, RIL is the largest company in India. RIL stock price has risen over 13% in the last one year.

The state-owned Oil & Natural Gas Corporation Ltd (ONGC) is the second most profitable company in India after Reliance Industries. In the financial year March 2022, ONGC earned a consolidated net profit of Rs 45,522.11 crore, witnessing a sharp jump of 179% from Rs 16,304.40 in FY21. The company's consolidated revenue in FY22 surged to Rs 539,199 crore from Rs 369,796 crore, YoY.

ONGC is a state-run oil and gas exploration and production company. The company's crude oil production in FY22 stood at 19.545 million tonnes and expects it to rise to 19.88 million tonnes this year. Its gas production in 2021-22 was at 20.907 billion cubic meters, which it expects to rise to 21.097 bcm in 2022-2023.

ONGC has a market capitalisation of around Rs 1,58,322 crore. Its stock has gained over 5% in one year. However, ONGC stock has been under pressure recently after the government imposed special additional excise duty of Rs 23,250 per tonne on domestically produced crude oil. The move is likely to severely hurt the benefits of elevated global crude oil prices to the earnings of ONGC.

Tata Steel reported a consolidated net profit Rs 40,153 crore in FY22, becoming the most profitable company in the Tata Group. The net profit in FY22 was 436% higher than Rs 7,490.22 crore earned in FY21. The company's net sales during the year increased to Rs 2,42,326 crore from Rs 1,54,719 crore, YoY.

However, after a strong performance in FY22, Tata Steel's earnings growth may slow down during the first quarter of FY2022-2023 amid certain headwinds faced by the metal sector. Heightened fears of a recession in the US have taken a toll on global commodity prices. Moreover, the recent levy of export duty on steel by the government and higher coking coal prices may dent the earnings performance of the company going ahead.

Tata Consultancy Services (TCS), the country's largest software services exporter, posted a bottomline of Rs 38,327 crore in FY22, witnessing a growth of 18.18% over Rs 32,430 crore in the previous year.

The IT behemoth registered a topline growth of 17% at Rs 191,754 crore in FY22 as compared to Rs 1,64,177 crore in FY21.

TCS is the second-largest listed company in India with a market capitalisation of around Rs 11,84,489 crore. TCS shares have fallen over 13% YTD as against a 28% fall in the Nifty IT index during the same period amid global headwinds. The concerns over economic slowdown and impending recession in the US and Europe, the biggest markets for IT companies, are weighing on the sector.

HDFC Bank, the largest private sector lender, posted a net profit of Rs 38,052 crore in the financial year ended March 2022, registering a growth of Rs 19.54% YoY. Its total income during the year increased to Rs 167,695 crore from Rs 155,885 crore, YoY.

HDFC Bank's total deposits as on March 31, 2022, jumped 16.8% YoY to Rs 15,59,217 crore, while its total advances increased 20.8% YoY to Rs 13,68,821 crore.

HDFC Bank is the third-largest Indian company with a market capitalization of Rs 7,49,864 crore on the Indian stock exchanges. The stock price of HDFC Bank has fallen over 8% in one year.

The next 5 companies on the list include the country's largest lender State Bank of India (SBI) with an annual net profit of Rs 35,374 crore, private lender ICICI Bank with a net profit of Rs 25,110 crore, state-run Indian Oil Corporation with Rs 25,102 crore, the country's largest mortgage lender Housing Development Finance Corporation (HDFC) with Rs 22,595 crore profit and the second-largest software services exporter Infosys with an annual profit of Rs 22,110 crore in FY22.
Disclaimer: This article is for information purposes only and should not be considered as stock recommendation or advice to buy or sell shares of any company. Investing in the stock market can be risky. It is therefore advisable to research well or consult an investment advisor before investing in shares, derivatives or any other such financial instruments traded on the exchanges.

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Top 10 Companies Registered 14-400% Growth in Net Profits in 2022

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Profitability is the primary goal of a company. Not only does it provide gains for its shareholders, but also ensures that the company survives in the long run. It is critical to measure a company's current profit, as well as future profit, to evaluate a company, whether is worthy of investment.

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Tips & Tricks for Muhurat Trading this Diwali | TradeSmart

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Tips & Tricks for Muhurat Trading this Diwali | TradeSmart

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Muhurat trading is a unique period for trading for investors and traders. Read this blog to know about tips and tricks for muhurat trading during this diwali at TradeSmart.

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The term 'muhurat' itself translates to 'auspicious time'. It implies that the planets have aligned in a manner favorable for giving positive results. The tradition of muhurat trading is now followed by stock exchanges in India. The day is marked by traders placing customary trades. The Bombay Stock Exchange (BSE) has been carrying out muhurat trading for fifty years now, but the first instance of muhurat trading in India dates back to 1957.

Traditionally, brokers used to close their clients' accounts during Diwali to make the most out of the auspicious time. They would also worship their accounting books in a ceremony called the Chopda Pujan. Some traders would also sell stocks on Diwali day because they believed that money should not enter their house on the day of Diwali. On the other hand, traders in other parts of India believe in buying shares during this time.

Both the BSE and the National Stock Exchange (NSE) allow trading for a special window of time. This muhurat trading session comprises of -

Block deal session wherein two parties come together to buy/sell their security at a fixed price.

Normal market session is an hour-long session in which most of the trading takes place.

Pre-open session of about 8 minutes in which the equilibrium price is determined by the exchange.

Call auction session in which trading of illiquid securities takes place.

Closing session wherein traders place their market orders at the closing time.

Diwali Muhurat Trading Tips

Muhurat trading is a special time for trading for traders and investors. This is why they need to place well-thought-out trades. Many investors believe that trades made during muhurat trading should amount to long-term investments. But, the catch is that because muhurat trading is restricted to just one hour, they must make fast decisions. A little preparation before muhurat trading can be incredibly helpful. Here is a comprehensive list of muhurat trading tips for diwali :

Muhurat trading is an opportunity to make a fresh start for traders. By carefully analyzing several trading tips & tricks , you can breathe new life into your investment portfolio. For seasoned traders and new investors alike, this is a time of hope and making a fresh start. It is a great chance to reassess your investment and visit several new options in which to invest so that your new year is truly a prosperous one.

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The term 'muhurat' itself translates to 'auspicious time'. It implies that the planets have aligned in a manner favorable for giving positive results. The tradition of muhurat trading is now followed by stock exchanges in India. The day is marked by traders placing customary trades.

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What is Digital Gold? Know how to buy Digital Gold | TradeSmart

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What is Digital Gold? Know how to buy Digital Gold | TradeSmart

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Digital gold is a virtual way to purchase and invest in the yellow metal without needing to hold any gold in your hands. Visit now to know more about digital gold at TradeSmart

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Investing the money in buying digital gold is a more viable option than any other trade service, only because of its stable hike in prices.

The Working model of Digital Gold

Digital Gold in INR or Grams -Decide and enter an amount in INR or weight to buy digital gold. The digital gold will be priced according to the live market rate.

No-Hassle Payment Method - Make payment via credit /debit card, UPI, or net banking.

Gold is in the Vault - The digital gold is purchased!! The customer account gets instantly credited with the digital gold with 24/7 access to it.

Options to avail Digital Gold

The customer can always avail of their digital gold through these three mediums to provide its customers with a delightful experience.

Physical Gold - If the customer wishes to convert their digital gold into physical gold, they can drop the request to the respective brokerage firm, who holds the responsibility to safely deliver the gold to customers' doorstep. The customer will, however, have to pay a nominal delivery charge.

Sell at your convenience - The customers can sell their digital gold as per their convenience. The digital gold can be sold online at any point in time.

Gold for your Loved Ones - The customer can gift digital gold to their loved ones making the occasion extra special for them. Gifting gold becomes stress-free with digital gold because your applied brokerage firm handles storage and security.

With experience of over 20 years, TradeSmart is an online business venture of VNS Finance. VNS Finance has been working under the guidelines of NSE (National Stock Exchange of India) since 1994 in furnishing their customers with full-services broking.

TradeSmart was launched in 2013 with an idea to increase efficiency, eliminate errors and reduce cost-efficiently by adopting new technologies. The team has been successfully achieving its targets with its business models.

Important note: TradeSmart does not offer digital gold ETF purchases online to its customers.

Frequently Asked Questions

What is the open sale back window?

The open sale back window is the period during which a customer can request to sell their digital gold on the platform. The customers can, however, redeem their digital gold in the form of physical gold.

What is the live gold price?

Live gold price is the gold price in Indian currency (INR) which is exclusive of manufacturing, delivery, and tax charges. Live gold prices are generally in per gram.

What is the maximum period to store digital gold?

According to guidelines issued, any customer can purchase digital gold and store their digital gold for a long-term period of 5 years from the date of purchase. The customer can buy or sell their digital gold at any point in time in these five years. However, once this duration is complete, the customer will either have to sell their digital gold or convert it into physical gold. To extend the custody of their digital gold , the customer will have to pay a nominal charge.

Will any brokerage firm deliver the requested physical gold to other family members if the registered customer is unavailable?

Whichever firm you apply through, you will be requested to share the details of a designated person to whom the delivery of gold has to be made. To ensure safety and security, gold cannot be handled by any other person except the registered customer. The designated person will receive an OTP on the registered mobile number and needs to be shared with the delivery person. After verifying the OTP, gold will be delivered to the customer.

Is the customer allowed to visit and inspect their gold physically?

To ensure the safety and security of gold, the customers are not allowed to visit their vault storage to inspect their gold holdings.

Is the physical gold delivered to customers genuine and trustworthy?

The physical gold delivered to customers in the form of coins was sealed and packed under camera surveillance. In case the customer receives a tampered package, they are requested to not accept the parcel and raise a complaint.

Can minors purchase digital gold online?

Minors are not eligible for any transaction of digital gold online .

What are the factors that affect the gold rate in India?

The Indian gold rate changes because of the international gold rate, USD-INR currency fluctuation, and customs duty, among other factors.

What tax implications does the customer have for purchasing and accumulating digital gold?

Taxes are included in the invoices of the digital gold . Whenever the customer purchases or sells digital gold , taxes are being calculated accordingly.

The ownership of digital gold for less than 36 months will not be directly taxable on the customer's returns. However, if the customer plans for a long-term investment they would require to pay 20% of tax returns on their digital gold .

Can digital gold be used for collateral purposes?

Yes, digital gold can be used for collateral purposes for an instant online loan.

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What is Digital Gold? Learn how to buy Digital Gold

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2021 is all about buying digital gold online from a trusted platform. But How to find the best platform to buy digital gold? Here is a quick little guide and answers to all your questions regarding digital gold online purchases.

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Muhurat Trading: Everything You Should Know | TradeSmart

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Muhurat Trading: Everything You Should Know | TradeSmart

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Muhurat trading takes place on Diwali as it is considered an auspicious occasion to buy stocks and make investments. Visit now to know more about Muhurat Trading

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The festive period in India starts with Navratri, builds with Dussehra, and then peaks with Diwali. The underlying theme of these festivities is light, prosperity, joy, and celebration. One traditional way of achieving prosperity is by appeasing Goddess Lakshmi, who is renowned as the provider of wealth and good fortune.

The Diwali muhurat trading session is aimed as a way to incorporate this tradition and for the benefit of investors, traders, and business firms alike to participate in the austerity of the occasion.

What is Muhurat Trading?

As the name suggests, Muhurat trading is a short, momentary trading window open on the auspicious occasion of Diwali. Although the market and exchanges have a holiday on Diwali, a special window is opened up and usually lasts about 1 hour in the evening of Diwali. The stock market muhurat trading time is announced well in advance so that investors and traders are ready and geared up to make the most of this opportunity to partake in this custom which is unique to the Indian stock market.

History of Muhurat Trading

Diwali is known as a 'shubh muhurat' (auspicious moment) for several Indian customs and traditions. Many communities consider it as the beginning of the Hindu accounting new year, which is why it is common to see professionals worship their accounting books and tools as a way of inviting good trade all year long. Lakshmi Pooja and Chopda Pooja are two of the most common rituals carried out during this time by several brokerage firms and trading communities.

Muhurat Trading has become an annual tradition which started in 1957 at the Bombay Stock Exchange (BSE) and has carried on ever since. The National Stock Exchange of India incorporated this tradition in 1992. While largely a symbolic gesture and part of religious customs, Diwali muhurat trading and muhurat trades are also tangibly beneficial, especially for new investors who wish to enter and gain exposure to the equity market.

What happens in Muhurat Trading?

The Diwali muhurat trading session is a short window opened up as a special allowance for people to conduct muhurat trade . This window can be further broken down as follows:

The Block Deal Session involves 2 parties mutually agreeing upon the purchase or sale of a security with a fixed and predetermined price. This agreement is then notified to the respective stock exchange.

Usually, 8 minutes before the muhurat trade window opens, the stock exchanges establish the equilibrium price. This is known as a Pre-Open Session.

The 1-hour share market muhurat trading time is also referred to as the normal market period.

If any security meets the respective exchange's criteria requirements then it is termed as illiquid. These illiquid securities are exchanged during the call auction session.

Closing session is when traders and investors can place a market order at the previous day's closing price.

The muhurat trading hours are based on the Hindu Panchang (traditional calendar) which defines the auspicious moments for carrying out different customs and rituals, including muhurat trading . Each year there is a different muhurat trading time based on the lunar and planetary alignments. In 2021, the Diwali muhurat trading session will be as follows:

Diwali muhurat trading hours for both the BSE and NSE remain the same.

Who Can Benefit from Muhurat Trading?

Muhurat Trading offers many benefits to investors. The festive spirit is in the air all across which usually relates to a bullish market driven by the excitement of the occasion and optimism for the future. This, in turn, leads to high trading volume making it a good time to indulge in buying and selling of securities. Especially for newer investors, this is the right time to make a symbolic gesture and also get exposure to the stock market and get your beak wet. Since the window is open for a very short duration, it can be considered a good practice ground for new investors to understand the market workings, and the way trades are conducted. Using this sample, they can develop their trading style and investment strategy for future investments.

A note of advice for new investors is to make token purchases, which means smaller quantities, of large-cap companies which are well established, stable and reliable. One of the well-known ways of doing well in the stock market is to plan for long-term investments. The longer horizon is an effective way of offsetting the short-term pitfalls.

Experienced traders too stand to gain, as there is a large volume of muhurat day trade carried out, sometimes mainly as a gesture of custom. Those with sufficient knowledge and experience stand to make good gains by taking carefully considered positions and hedging their risks sensibly.

Things to keep in Mind Before Indulging in Muhurat Trading

The muhurat trading time is short and considered an auspicious gesture, but it is important to keep some things in mind to enjoy this activity without incurring losses which are bound to play spoilsport on this joyous occasion.

An auspicious occasion is no guarantee of assured returns. After all, the market performance is not dependent on a 1-hr window. Hence muhurat trades should be carried with equal amounts of research and analysis as on any other given day.

Do not let the rush and excitement of the occasion carry you away. Stay clear of rumors, tips, and speculations. Believe in veritable information from authorized sources.

Since the muhurat trading time is only for one hour, buying equities with high trading volumes may make more sense and can possibly lead to a profit from the volatility.

Many experts suggest buying blue-chip stocks with a long-term investment horizon. Experienced investors may carry out muhurat trades based on their own trading styles but newbies will benefit from following this advice.

Experts also suggest refraining from carrying out intraday muhurat trading . This is largely due to the liquidity constraints and a very short window requiring extra attention and alertness. Again, experienced traders may still go ahead with intraday trading based on their level of comfort and knowledge.

All open positions at the end of the muhurat trading session will result in settlement obligations and the window will operate as per the timetable provided in the earlier section.

Armed with this knowledge, you can participate in the excitement of muhurat trading and take the first step towards a prosperous time ahead. Get a #SmartAarambh with TradeSmart and begin your trading journey with us.

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The festive period in India starts with Navratri, builds with Dussehra, and then peaks with Diwali. The underlying theme of these festivities is light, prosperity, joy, and celebration. One traditional way of achieving prosperity is by appeasing Goddess Lakshmi, who is renowned as the provider of wealth and good fortune.

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Trading Ideas 2022: Check the unique trading strategies | TradeSmart

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Trading Ideas 2022: Check the unique trading strategies | TradeSmart

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Trading Ideas are screens designed to give daily ideas based on technical & fundamental analysis. Refer to this article to learn more about the best trading ideas at TradeSmart

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Trading Ideas 2022: Check the unique trading strategies for the next year

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Read on to find out about short-term trading ideas for the horizon of the next 3-4 months to 11 months.

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Types of Commodity Market: View the list of traded commodities in India | TradeSmart

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Types of Commodity Market: View the list of traded commodities in India | TradeSmart

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Spot markets and derivatives are the two different kinds of commodities markets in India. Refer this article to know the types of Commodity Market at TradeSmart

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Types of Commodity Market – Check the List of Commodities Traded in India | TradeSmart

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Types of Commodity Market - Commodities are classified into two types- Hard & Soft. Both types of commodities are traded in India. Check the list of commodities traded in India at TradeSmart

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HDFC Bank merger: What it means for the companies clients & shareholders | TradeSmart

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HDFC Bank merger: What it means for the companies clients & shareholders | TradeSmart

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A merger is an agreement between two existing companies to unite into a new single unit. Refer this blog at TradeSmart to know more about HDFC Bank merger

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HDFC Ltd., India's largest housing finance company, on April 4 announced a 'transformational' merger with HDFC Bank, the country's largest private sector lender. The move is intended to create a financial services behemoth, with enormous synergies, cross-sell opportunities and long-term value for all stakeholders.

"This is a merger of equals," said HDFC Bank Chairman Deepak Parekh announcing the contours of the deal. The veteran banker summed it up by saying, "After 45 years in housing finance and after providing 9 million homes to Indians, we have to find a home for ourselves. And we have found a home in our own family company, HDFC Bank."

A merger is an agreement between two existing companies to unite into a new single unit. It is a voluntary fusion of two companies into one new legal entity on equal terms. Mergers mostly involve stock-for-stock deals rather than cash buyouts.

The advantages of merger are they help companies expand their reach, gain market share, reduce competitive risks, diversify products and increase profitability.

The benefits of a merger for investors can be immense, if implemented well. The biggest advantages of a merger are the economies of scale and scope. Mergers of companies in a similar sector with identical internal policies and matching culture can improve efficiency, deal with competition and protect industry from closing. Mergers create value for shareholders and investors by entering new markets or gaining greater share.

Specifics of the HDFC - HDFC Bank scheme of merger:

> The shareholders of HDFC Ltd. will get 42 shares of HDFC Bank for every 25 shares of HDFC Ltd. held by them, as on record date

> The current shareholding of HDFC Ltd. in HDFC Bank of around 21% will be fully extinguished

> After the completion of the deal, all subsidiaries of HDFC Ltd. will be held by the bank

> HDFC Ltd. shareholders will hold a 41% stake in the combined entity after the merger

Banking behemoth in the making

HDFC Ltd. had total assets of Rs 6,23,420.03 crore, turnover of Rs 35,681.74 crore and net worth of Rs 1,15,400.48 crore as on December 31, 2021. HDFC Bank had total assets of Rs 19,38,285.95 crore, turnover of Rs 1, 16,177.23 crore and net worth of Rs 2,23,394.00 crore as on December 31, 2021.

The subsidiaries of HDFC Ltd., HDFC Investments Ltd. and HDFC Holdings had total assets worth Rs 341.37 crore and Rs 244.43 crore, as on December 31, 2021.

The advantage of merger is that a combined balance sheet of Rs 17.87 lakh crore and Rs 3.3 lakh crore net worth would enable larger underwriting at scale.

HDFC Bank said the CEO of the bank Sashidhar Jagdishan will continue to be the CEO of the combined entity. The current HDFC Ltd. senior management will occupy senior positions within the combined entity.

The transaction is expected to be completed by the third or fourth quarter of FY24 and it is subject to shareholders, creditors and regulatory approvals, including from central Reserve Bank of India (RBI), Insurance Regulatory and Development Authority of India (IRDAI), Securities and Exchange Board of India (SEBI), Competition Commission of India (CCI) and stock exchanges.

Over the last few years, various regulations for banks and non-banking financial companies (NBFCs) have been harmonised, thereby enabling the potential merger, Parekh said.

Recent changes in the regulatory environment for NBFCs imply that the deal makes more sense. In 2020, RBI mandated large NBFCs with an asset base of more than Rs 50,000 crore must convert into commercial banks. Additionally, RBI's recognition norms for non-performing assets (NPAs) are almost the same for banks and NBFCs.

RBI guidelines mandate banks to maintain 4% of their net demand and time liabilities as Cash Reserve Ratio (CRR) and invest 18% of these liabilities into government bonds under Statutory Liquidity Ratio (SLR). Additionally, banks and NBFCs are also required to maintain high-quality liquid assets under Liquidity Coverage Ratio norms. The banks are also required to lend 40% of their adjusted net bank credit to agriculture and allied activities, small businesses, and affordable housing, among others covered under the priority sector.

The reduction in SLR rates, deepening of the affordable housing bond market and creation and deepening of the Priority Sector Lending (PSL) Certificates market, have created a conducive environment for the amalgamation of the two entities.

The merged entity's share of priority sector loans is expected to come down and HDFC Bank would need to meet the norms after the merger. However, Jagdishan said the bank would resort to buying priority sector lending certificates (PSLC) initially to meet the norms.

HDFC Bank has requested the RBI to allow it to adopt a phased approach in meeting key regulatory requirements after the merger. It has also requested the regulator time to allow it to "grandfather" certain assets and liabilities of HDFC.

What the merger means for customers of both companies

The combined entity is expected to bring together the complementary strengths of the two organisations. It would have significant cross-selling opportunities as about 70% of HDFC Ltd. customers do not bank with HDFC Bank, while around 80% of HDFC Bank customers do not have mortgages.

HDFC Bank has a presence in more than 3,000 cities through its 6,342 branches. It has a large customer base of 6.8 crore and a well-diversified low-cost funding base. The benefit of merger for customers is that proposed transaction would broaden the combined entity's home loan offering. The merged entity is expected to benefit from HDFC's sizable home loan portfolio and access to HDFC Bank's low-cost funding and huge customer base.

What the merger means for investors

As of March 31, 2022, HDFC Bank has 8.43% and HDFC has 5.66% weight in the Nifty50 Index. This, when combined, would be 14.09%.

The merger could likely lead many mutual fund managers to revisit their portfolios. As per the norms, diversified mutual fund schemes cannot invest more than 10% in individual stocks. The asset managers, at present, can hold both the stocks, but after the merger, they will have to hold only one stock within the regulatory limits. This is likely to reduce the ability of the fund managers to take exposure in the combined entity.

The shareholding of HDFC Ltd. is regarded as foreign institutional investment or FII investment. According to media reports, FII shareholding in HDFC post-merger will be around 66% while the FII cap is at 74%. Therefore, the extinguishing of shareholding will open-up around 7-8% headroom for fresh FII investors into HDFC Bank.

The market expects benefits of the merger for investors who gave a thumbs up to the deal, as reflected in the buying interest seen in the shares on Monday along with the trading volumes. Shares of HDFC Ltd. ended 9.30% higher at Rs 2,678.90 apiece and HDFC Bank closed 9.97% higher at Rs 1,656.45 apiece on the BSE Monday

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HDFC Merger Explained - What is Merger & its Impact on Investors - TradeSmart

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HDFC Ltd., India's largest housing finance company, on April 4 announced a 'transformational' merger with HDFC Bank, the country's largest private sector lender. The move is intended to create a financial services behemoth, with enormous synergies, cross-sell opportunities and long-term value for all stakeholders.

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What Exactly Is Stagflation? The main issue affecting markets | TradeSmart

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What Exactly Is Stagflation? The main issue affecting markets | TradeSmart

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Find out What stagflation is and how it affects the economy. Understand the causes of stagflation and what the government says to prevent it. Read now at TradeSmart.

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What is Stagflation & Causes Of Stagflation in the Economy - TradeSmart

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Stepping into 2022, the global economy seemed to be recovering from the shock of the COVID-19 pandemic, and the businesses were coming 'back to normal' as described by market veterans and economists. However, the global economy suffered another blow in late February, this time in the form of Russia's invasion of Ukraine.

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Invest in Mutual Fund Online in India | TradeSmart

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Invest in Mutual Fund Online in India | TradeSmart

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A mutual fund is an investment scheme that pools money from many investors, which a professional fund manager further invests. Visit now to invest in Mutual funds at TradeSmart

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It is known that equity and debt market are inversely related, i.e. when equity market falls, debt market yields better returns and vice-versa, and investments in Mutual Funds are no exception.

If losing capital invested is the yardstick of 'risk', then asset classes like equity is definitely the riskiest given the volatility in the market. Contrarily, money saved in bank accounts and sovereign bonds are the safest. Thus w.r.to mutual funds, risk is highest in equity funds and lowest in liquid funds.

However, the only reason why people invest in equity is for higher returns compared to debt/money market instruments in a regulated environment. Higher returns are seen by patient investors who take educated decision, diversify their portfolios and give time to their investments and remain invested for long term horizon rather than timing the market and gambling with hard earned money.

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It is known that equity and debt market are inversely related, i.e. when equity market falls, debt market yields better returns and vice-versa, and investments in Mutual Funds are no exception. If losing capital invested is the yardstick of 'risk', then asset classes like equity is definitely the riskiest given the volatility in the market.

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Commodity Trading - Trade with Commodities at TradeSmart

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Commodity Trading - Trade with Commodities at TradeSmart

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Commodity trading is the purchasing or selling of goods like raw materials or basic products. Visit now to know more about Commodity Trading at TradeSmart

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Commodity Trading in India can be grouped into five major categories-

Precious metals / bullion - Gold, silver

Metals - Copper, brass, aluminum etc

Energy - Natural gas, Crude oil, etc.

Agriculture and allied activities - Grains, oil, spices, pulses and livestock

Services - Mining service, oil services, etc.

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Commodity Trading in India can be grouped into five major categories- Precious metals / bullion - Gold, silver Metals - Copper, brass, aluminum etc Energy - Natural gas, Crude oil, etc. Agriculture and allied activities - Grains, oil, spices, pulses and livestock Services - Mining service, oil services, etc.

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Currency Derivatives: Understand Currency Derivatives Trading | TradeSmart

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Currency Derivatives: Understand Currency Derivatives Trading | TradeSmart

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Currency derivatives are agreements between buyers & sellers regarding exchanging two different currencies. Visit now to learn more about Currency Derivatives at TradeSmart.

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Currency prices are determined by a host of economic as well as political factors like interest rates, inflation, international trade, political stability, etc. Central bank's intervention (by injecting more currency or buying out) can also influence the currency movement.

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Currency Derivatives - Know Currency Derivatives Trading in India | TradeSmart

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Currency prices are determined by a host of economic as well as political factors like interest rates, inflation, international trade, political stability, etc. Central bank's intervention (by injecting more currency or buying out) can also influence the currency movement.

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Futures & Options Trading - Trade in Futures & Options with TradeSmart

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Futures & Options Trading - Trade in Futures & Options with TradeSmart

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Futures & options are the major types of stock derivatives trading in a share market. TradeSmart offers a one-stop solution for your trading needs in Futures & Options. Visit now

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Here are some futures and option trading tips which will make your trading experience smoother and more fruitful-

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Futures and Options Trading - Trade in Futures & Options with TradeSmart

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Here are some futures and option trading tips which will make your trading experience smoother and more fruitful- Understand the basics of futures and options trading Understand the risks involved. Choose a dependable and well-established broking partner. Start with well-known and robust stocks or indexes as they have higher volumes.

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Equity Trading: Invest in the Equity Market | TradeSmart

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Equity Trading: Invest in the Equity Market | TradeSmart

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Equity trading or stock trading is the buying & selling of equities in the market through your registered trading account. Visit now to learn more about Equity Trading at TradeSmart.

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Keep these points in mind while making your equity trading strategy :

Make trend your friend
Try to stick to the market sentiment and trends, especially when you are just starting off. Going the opposite way (also known as contrarian bets) spikes up the risk quotient significantly.

Intrinsic or real valuation
In the equities world, it is important to understand the true or intrinsic value of stocks.Everything that shines, may not be gold.

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If you wish to optimize your trading results, it is important to understand how intraday trading works. <

Think from a long-term perspective
Equity markets are known to be volatile, especially in the short run. Hence, it is better to have a long-run view for your trades

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Keep these points in mind while making your equity trading strategy : Make trend your friend Try to stick to the market sentiment and trends, especially when you are just starting off. Going the opposite way (also known as contrarian bets) spikes up the risk quotient significantly.

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IPO - Check the Latest IPO List, Issue Price, Bid Date | TradeSmart

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IPO - Check the Latest IPO List, Issue Price, Bid Date | TradeSmart

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IPO - Check the list of IPO, Price Range, Bid Price, Issue Size, and upcoming & closed IPO details. Visit now to learn more about IPO Investment at TradeSmart

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About IPO

IPO or Initial Public Offering is a process by which a private company becomes public. A company becomes 'public' when it starts selling its shares in the market for the first time. Selling shares is like selling a portion of its stake to the investors for the company. There are two types of market.

IPOs are launched in the primary market.

Why does a company launch an IPO?

Companies use the IPO route to generate fresh equity capital for the company to further its business.

Who can invest in IPO?

Investors are divided into three main categories:
1. Qualified institutional buyers (QIB)
QIB portion which comprises

Mutual funds

Domestic Financial Institutions: Banks, Financial Institutions and Insurance Companies

Foreign Institutional Investors

Others

2. Non-Institutional Investors
NIIs comprise

Corporates

Individuals other than retail investors

Others

3. Retail Individual Investors
What Happens after the IPO period?

Once the IPO subscription period is over, the shares are listed on the exchanges after a couple of days. After the listing, the shares are traded freely in the market during market hours.

What is the Process of Investing in an IPO Online?
1. Choose the IPO That you Want to Invest in
We generally know the latest IPO calendar of a particular year beforehand. Investing in an IPO requires research as we may not have a lot of historical data on the performance, management and other crucial fundamental factors. This is when we compare that company to a listed company. Hence, determining the IPO that you want to invest in is an essential first step. Every company that launches an IPO, shares a prospectus with the public offering details about the company's business and future plans. Go through this prospectus thoroughly and research the company before making a decision.
2. Open the Required Accounts
You need the following three accounts to invest in a new IPO and trade them in the secondary market eventually:

Demat Account: This is where you store your shares in an electronic form.

Bank Account: A bank account is required to fund your share market transactions. However, a bank account can come in handy to apply for an IPO as well. Almost all net-banking platforms have the facility to apply for IPOs through the Application Supported by Blocked Amount (ASBA) facility.

Trading Account: Trading account is used to buy and sell shares. You can open a trading account with Tradesmartw.

3: What happens after you apply for an IPO?
The process is a little different. When you apply for a company's IPO, regardless of any method of application, the aggregate amount gets blocked from your bank account. It will show up in your balance but will not be available for use. Once the allotment is finalised, if you have received the shares the amount will get debited from your account. If you have not received any shares in the IPO, the amount will be unblocked and will be available for use.

How to apply for IPO on TradeSmart?

Once you have done the preliminary process of registering on the Tradesmartw app, opening a demat-cum-trading account and KYC verification, applying for IPO is an easy process

Open your Tradesmartw App, scroll down on the stocks tab and click on the IPO section.

The next page will show a list of live IPOs, upcoming IPOs and IPOs that are already closed by now

Pick the live IPO you want to invest in

In the next page, mention the number of lots you want to apply for

Here you will be asked for your UPI ID. After you complete the process on the UPI app, the money will get blocked from your account

The status of your IPO application will show up next to your application number in the same section

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IPO - Check Latest IPO List, Issue Price, Bid Date | TradeSmart

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IPO or Initial Public Offering is a process by which a private company becomes public. A company becomes 'public' when it starts selling its shares in the market for the first time. Selling shares is like selling a portion of its stake to the investors for the company.

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Brokerage Saving Calculator - TradeSmart

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Brokerage Saving Calculator - TradeSmart

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TradeSmart provides the lowest brokerage fee with stock trading value plan charges of 0.007% & power plan charges of 15rs per order. Visit now to know more about Brokerage Saving Calculator

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TradeSmart offers the lowest brokerage charge with stock trading value plan charges 0.007% & power plan 15 INR per order. Calculate your Brokerage Savings Now!

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Margin Calculator: Instantly calculate the Span & Exposure Margins online | TradeSmart

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Margin Calculator: Instantly calculate the Span & Exposure Margins online | TradeSmart

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A margin calculator is used to determine stocks' margins before trading. Visit now to learn more about Margin Calculator at TradeSmart

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What is a margin calculator?

You are required to deposit margin money with your broker when you trade in the derivatives market. This money protects the broker from any possible loss if you are unable to carry out trade due to adverse market movements. So, if you want to take positions in the Futures and Options market, you need to deposit an initial margin in your trading account before you can trade. The margin depends on the index, the type of derivative you want to trade in, and the market risks.

Primarily, there are two types of margins that, together, constitute the initial margin - SPAN and exposure margin. Besides these two types of margins, there are other parameters that you should assess when trading in the derivatives segment. Calculation of these margins and figures can be complex and cumbersome. This is where a margin calculator comes into play.

A margin calculator is an online tool that helps you calculate the different margin requirements for the position you want to take in the derivatives market. TradeSmart offers an online margin calculator that calculates the margin, instantly and accurately.

Here's what TradeSmart's margin calculator offers:

SPAN margin calculator

Standardised Portfolio Analysis of Risk (SPAN) margin is assessed based on the maximum loss you might suffer under different market scenarios. During a trading day, the Nifty SPAN margin, as well as other margins, are reviewed six times. The SPAN margin calculator would give you different values depending on the time of day that you use the calculator.

Exposure margin calculator

The exposure margin provides an additional safety net to brokers over and above the SPAN margin. It is usually fixed and calculated as 3 per cent of the contract value. The SPAN margin and the exposure margin add up to give the initial margin.

VaR margin calculator

Short for Value at Risk, the VaR margin factors in the probability of loss in the asset's value calculated using the statistical analysis of the asset's historical price movements and volatility.

ELM calculator

The Extreme Loss Margin (ELM) is calculated every month by using the rolling data of the previous six months. It is calculated as the highest of 5 per cent or 1.5X the standard deviation of the asset's daily logarithmic returns over the past six months.

Net premium calculator

TradeSmart's margin calculator also calculates the net premium margin in the case of options contracts. This margin is calculated by multiplying the options premium with the quantity purchased.

So, you can use the margin calculator to calculate all the required margins easily so that you can trade in the derivatives segment without any hassles.

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Margin Calculator - Calculate Span & Exposure Margins Online Instantly | TradeSmart

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You are required to deposit margin money with your broker when you trade in the derivatives market. This money protects the broker from any possible loss if you are unable to carry out trade due to adverse market movements.

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Brokerage Calculator - Online Brokerage Charge Calculator | TradeSmart

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Brokerage Calculator - Online Brokerage Charge Calculator | TradeSmart

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TradeSmart's Brokerage Calculator enables the comparison & calculation of brokerage fees for stocks, commodities, intraday trading, & more. Calculate your brokerage charges Now

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This stock brokerage calculator shows the brokerage and other associated costs for intraday equity trading, delivery equity trading and F&O trading. The intraday brokerage calculator can be used for NSE and BSE trading. The F&O and share brokerage calculators also show the break-even point i.e. price point at which the net gains or losses (after taking into account brokerage and other costs) are equivalent to zero.
2. Commodity Brokerage Calculator
This brokerage calculator shows the brokerage and other associated costs involved with MCX commodity trading. It also shows the points to break-even.
3. Currency Brokerage Calculator
This brokerage calculator shows the brokerage and other associated costs involved in currency trading at NSE. You need to select the pricing plan (value or power plan) and specify the buy price, sell price, quantity (no. of lots and lot size for option brokerage calculator) to get all the relevant details including point required to break-even.

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This stock brokerage calculator shows the brokerage and other associated costs for intraday equity trading, delivery equity trading and F&O trading. The intraday brokerage calculator can be used for NSE and BSE trading. The F&O and share brokerage calculators also show the break-even point i.e.

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Nest Trader - Desktop Nest Trading Software | TradeSmart

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Nest Trader - Desktop Nest Trading Software | TradeSmart

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NEST trader is a trading software where orders are placed for buying/selling listed shares on the exchange. Visit now to learn more about Nest Trader at TradeSmart.

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SINE

SINE, the online trading app (available on web and mobile)helps you trade in Cash, Futures and Options, Currency Derivatives and Commodities on NSE, BSE, MCX. This high-tech, intuitive and user friendly trading platform is embedded with a wide range of useful trading features -real-time dashboard, superior technical analysis, scanners, strategies, advanced trading tools, etc.

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SINE, the online trading app (available on web and mobile)helps you trade in Cash, Futures and Options, Currency Derivatives and Commodities on NSE, BSE, MCX. This high-tech, intuitive and user friendly trading platform is embedded with a wide range of useful trading features -real-time dashboard, superior technical analysis, scanners, strategies, advanced trading tools, etc.

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FoxTrader - Trading Platform for Desktop | TradeSmart

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FoxTrader - Trading Platform for Desktop | TradeSmart

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Fox Trader is a cutting-edge Windows-based trading programme with various striking features that every trader desires. It facilitates the process. Visit now at TradeSmart to know more

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TradeSmart in association with Reliable Software brings to you a next-gen application, FoxTrader. FoxTrader is equipped with all the features you would expect from a modern trading platform like Chart Analysis, Technical indicators, Live Tick Screening, Algorithm designing, Executing semi- automated orders, Generating trade signals etc. You don't need to worry about separate data-feeds or third party terminal plug-in, all the connectivity comes built in on the FoxTrader. As a part of our association, our clients can avail this futuristic app on a FREE 7 days trial basis.

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TradeSmart in association with Reliable Software brings to you a next-gen application, FoxTrader. FoxTrader is equipped with all the features you would expect from a modern trading platform like Chart Analysis, Technical indicators, Live Tick Screening, Algorithm designing, Executing semi- automated orders, Generating trade signals etc.

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Dartstock: Platform for perfect market information & analysis | TradeSmart

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Dartstock: Platform for perfect market information & analysis | TradeSmart

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Dartstock is considered as the smartest platform for the traders that fulfil all the needs of the trader. Visit now at TradeSmart to know more about Dartstock

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Dartstock is a Perfect Market Information and Analysis platform designed for Active traders, Dealers, Franchisees, Portfolio Managers, Research analysts and Fund Managers to make informed trading decisions.

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Dartstock is a Perfect Market Information and Analysis platform designed for Active traders, Dealers, Franchisees, Portfolio Managers, Research analysts and Fund Managers to make informed trading decisions. It combines live data with advanced tools & functions and intuitive user interface to deliver unparalleled Market experience.

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Trade Smart Mf: Investment Platform for Online Mutual Funds

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Trade Smart Mf: Investment Platform for Online Mutual Funds

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TradeSmart MF is a mobile-based online mutual fund investment platform; you can purchase and redeem mutual funds using this app. Visit now to know more

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Sign Up

Please note that by submitting the above mentioned details, you are authorizing TradeSmart to call and email you and also to send promotional communication even though the contact number may be registered under DND.

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Trade Smart Mf - Online Mutual Fund Investment Platform

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Please note that by submitting the above mentioned details, you are authorizing TradeSmart to call and email you and also to send promotional communication even though the contact number may be registered under DND.

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Box - TradeSmart's extremely effective client back office | TradeSmart

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Box - TradeSmart's extremely effective client back office | TradeSmart

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The box is TradeSmart's incredibly effective client back-office, providing customers with a hassle-free, wonderful trading experience. Visit now to know more

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BOX is TradeSmart's super-efficient client back-office. The core objective of BOX is to offer clients a delightful experience and make accounting and logging of trading activities simple and hassle-free.

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Box - Super-efficient Client back-office by TradeSmart

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BOX is TradeSmart's super-efficient client back-office. The core objective of BOX is to offer clients a delightful experience and make accounting and logging of trading activities simple and hassle-free. BOX knows everything about your trades and can extract the minutest of details that you may need.

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Swing API - Trade Share API | TradeSmart

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Swing API - Trade Share API | TradeSmart

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Swing APIs by TradeSmart is a collection of essential HTTP APIs that gives you the information you need to create your unique trading application. Visit now

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An API (Application Programming Interface) is a program which enables one software application to speak to or interact with another. For example, a flight booking aggregator site or a hotel reservation portal.

Trading APIs allows traders to interact with a third-party trading platform. They help the traders to connect their trading application to the algorithmic execution platform located at the broking partner's end, which in effect will connect with the exchange. Trading APIs are specifically beneficial for traders who wish to run algorithmic models on their own trading systems and be able to perform trades.

Swing APIs is a set of simple HTTP APIs (also known as Rest APIs). It provides complete data required to build your own customized trading application aligned to your individual trading needs. You can execute orders in real time, manage user portfolio and much more, with Swing API.

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Swing API - Share Trading API | TradeSmart

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An API (Application Programming Interface) is a program which enables one software application to speak to or interact with another. For example, a flight booking aggregator site or a hotel reservation portal. Trading APIs allows traders to interact with a third-party trading platform.

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TradeSmart is a mobile share trading programme that satisfies all your trading requirements in a straightforward, fashionable, and data-efficient way. Visit now

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TradeSmart is a mobile-based share trading app that meets all your trading needs in a simple, sleek and data-efficient manner. You can trade seamlessly, even when you are on the go. Trading is easy and quick with TradeSmart, one of the best trading apps in the country.

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TradeSmart: Share Trading App in India | TradeSmart

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TradeSmart is a mobile-based share trading app that meets all your trading needs in a simple, sleek and data-efficient manner. You can trade seamlessly, even when you are on the go. Trading is easy and quick with TradeSmart, one of the best trading apps in the country.

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SINE - Mobile Stock Trading App | TradeSmart

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SINE - Mobile Stock Trading App | TradeSmart

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SINE App is one of India's top smartphone applications for online stock trading. Visit now to know more about the Sine app at TradeSmart.

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SINE - Mobile App for Stock Trading | TradeSmart

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SINE App is the best online stock trading mobile applications in India. Secure online trading into NSE or BSE & get real-time stock market analysis. Download SINE App now!

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Get the Lowest Brokerage Trading Plans in India for Online Trading | TradeSmart

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Get the Lowest Brokerage Trading Plans in India for Online Trading | TradeSmart

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TradeSmart offers lowest monthly brokerage fees, such as Rs. 15 for each executed transaction, irrespective of the size of the deal. Visit now to know more about Brokerage Plans

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Lowest Brokerage Plans for Online Trading in India

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TradeSmart offers lowest monthly brokerage charges such as Rs. 15 per executed order, regardless of the size of the trade. Open Demat & Trading Account Now!

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Online Trading - India's Lowest Brokerage for Trading in Stocks | TradeSmart

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Online Trading - India's Lowest Brokerage for Trading in Stocks | TradeSmart

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TradeSmart is India's best online trading platform for stocks, IPOs, and mutual funds. Open your trading account and start investing. Visit now to know more about Online Trading

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