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Trading in Indian stock market for daily profit
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Mastering the art of trading in Indian stock market
Indian has about 22 stock exchanges operating n full strength. However, most of the trading transactions are carried out through NSE or BSE. The Bombay Stock Exchange established 1857 leads the race with more than 4700 companies listed in its registry. The National Stock Exchange established 1992 has about 1200 companies registered which make it a strong contender although it has hardly been a decade since its inception. Of all the stocks registered in these stock exchanges only one half is seen to be actively traded in the market floor. The top performing companies are called the blue-chip companies which have vast operations scaling enormous resources and geographical locations.
Any individual who is interested in stock trading in Indian stock market will have to open three types of accounts: i) Trading account, ii) Demat account, iii) a normal bank account. A trading account is used for buying and selling orders for stocks. A demat is account is an electronic account into which shares are accounted for in dematerialized form. A bank account is used to pay for stock acquisitions and receiving proceeds of dividends and interest incomes. Any individual with basic personal identification document can open a bank account and link demat and trading accounts to them. Ideally these are simple procedures that any individual with basic literacy can carry out without any external help.
The best way to open a demat and trading account will be to approach a registered stock broker along with necessary KYC documents like voter id card, license, etc. In addition to KYC norms the PAN number and a copy of the PAN card will also be required from the investor to ensure that all transactions are subject to taxation without fail. Usually stock brokers handle both the trading account and demat account of the investors since it will be easy for them to make prompt transfer of shares when the prices are ripe. The best way to Stock brokers also offer extended services in the form of Depository Participant (DP) who act as intermediaries between investors and traders.
Trading in Indian stock market requires careful judgment of various factors that can have an impact on your net earnings. There are quite a lot of charges that stock brokers and bankers charge from investors for lending their services. Most banks charge account maintenance charges for demat and trading account although they are provided over the internet. It is better to review these charges collected by various banks and have a cost benefit analysis since exorbitant charges can cause leakage to your revenue from stock trading. Brokers also charge what is known as brokerage charges for intraday transactions which will usually fall in the range of 0.02% to 0.03% of the net cost of the transaction. Further there will be separate charges for futures and options trading which will range from Rs. 25 to Rs. 100 in the case of futures and 0.02% t 0.05% in case of options.
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