What is a Share or Stock?

What is a Share
A very simple question for those who are already into shares. But,
for those who are new to Shares, the following text will help you to
understand.

Difference between Share and Stock

The term of share and stock means the same thing, of this stock is a common usage in America for shares. In India we term this as
shares.
What is a Share Certificate
Share is the proof of ownership in a company. The physical proof of this ownership is a record called a share certificate. Today,
shares are kept in electronic format or it is also termed as dematerialized format. You can still hold a share in a paper format, if you
want.
This document is a proof of your share in the company. Your ownership in the company is in proportion to the number of shares you
hold. In short, you are buying a partial ownership of the company.
A Simple Example :
Suppose a  company issues 100 shares
Out of 100 issued shares, you are buying 10 shares of the company
Now you own 10 percentage of the company.

What is a Face value of a Share?

Face Value (par Value) of Share

All companies issue shares with a fixed denomination called the face value (or
par value) of the share. This face value be indicated on the share certificate.
Generally Indian shares has a face value of Rs. 10/-

Difference between Face Value and Market value

A face value has no relation with the market value of the share. Market value of the share will always change depending upon the
market conditions.  But the face value is a fixed value of the share as per the books of the company.
Split the face value of the share
A Face value or par value of the company share always remains the same, irrespective of the market price of that share.
Companies have to right to split the face value of the share to Rs. 5, 2 or 1 to bring more volatility to the share.

Risk of Investment in Shares

Make money with Share Trading

As everyone know, every money making avenues has its own risks  involved like in investments. The
knack of investing is by knowing which risks are worth taking, and which should be avoided.

Understanding and analyzing

Understanding and analyzing the risks to take is the soul of good investing and the becomes your basis
of getting good returns from your investments. This cannot be done without thorough research and
analysis.
Share Trading is not Gambling
Take the right decision by yourself. Do not let other factors bother you from your investment policies.
Investing without adequate research is like gambling. By gambling on your investments you are not
protecting your investments and may incur heavy losses.
How to become a Successful Investor?

How to become a Successful Investor?

Look for company financial data

Before investing in company shares on the stock
market, you should be aware that all publicly traded
companies must provide access to investors with
company financial data. The data is generally available
from the company so if you are considering buying
shares from a company, then get access to this
financial information and make happy yourself that the
company is in a good financial state before owning the
shares of the company with your money.
Key aspects to Look in a Company’s Financial
information
While researching the details of a company, then take
a look at its financial position of atleast two to three
years into the past. There is no need to go back further
than this but if you go back less, there may be
significant trends in the finances that you will fail to
spot. Take exceptional note of the quarterly statements
and the revenue and earnings per share of the
company. 
Figures tell the Story of a Company
Try to identify trends in the figures. While there is no
guarantee of what might happen In the future of the
figures, it is unquestionable that an upward trend in
revenue and profits will be a positive sign to look out
for. In simple words, a company having steady growth
for past 2 to 3 years should have a positive growth in
the future, until or unless some major changes occur.
After you are satisfied with the financials of the
company and that the projection of making good profits
into the future are favourable you will be in a situation
to consider putting money into the share.
What Kind of Shares will give more returns?
(Growth or Dividend)
It is an continuing debate over whether it's preferable to
buy shares that will grow in value, or shares that pay
good dividends. The answer to this question should
always lie with the individual investor. It is always
suggested to avoid chasing dividends. We refer to the
practice of certain investors of buying a share just
before a dividend is expected to be announced. Please
note that the price of the share will already have taken
the dividend into account so you will be paying for it in
any case.
Guide for Stock Trading in India NSE & BSE (NIFTY & SENSEX
Trading Guidance)

Manage your Emotions

Trading in Stock markets involves huge risk. Remember that it can even wash out your capital. Never try to take the risk which you
are not comfortable with. As a stock trader, emotion is always your enemy. Emotions can drive your thinking and it may deviate from
wise decisions. Variable emotions during trading is one of the prime reason for most traders to fail in stock trading. In order to be a
successful trader, you have to control your emotions. For this, it is always best to reduce the risking money and limit it to your
comfortable levels. If you are getting sleepless nights for losing Rs.1000  on a trade, then it is advisable not to take the risk of more
than Rs.1000. If a loss of upto Rs.500 is bearable to you, then risk up to Rs.500 only. In this way emotions will not drive your
thinking and wise decisions can be taken to have profitable trades everyday.

Stop Loss  'MUST' in Stock Trading

Losses in Trading always start with small amounts. You can always
control the magnitude of your losses in stock trading. If you are ignorant to
put your stop losses in a trade then it can wipe out all your gains which
may be equivalent to multiple winning trades. In order to have success, do
not take big losses, always use your stop loss to control it. After you start
a trade, enter a stop loss and maintain it.
Always Remember - Its Your Money
When ever you are trading, keep in mind that its your hard earned money
that you are risking. No body wants your money to grow, its only your
interest to grow your money. Trading is a platform where you should not
depend on others ideas to make money. You have to manage and control
the trading. Decisions should be always yours  get the skills from others to
make wise & profitable decisions.
Avoid Predictions in Stock Market
The stock markets will not care about what happened in the past. If you
find information available publicly to make commercial decisions, then you
are using old information. The stock exchange market moves on what it
hopes to occur in the future, and not on what already occurred. Use what
precisely proved in the past to provide indication for that can occur in the
future, but do not make decisions on the information which is largely
known.
Always follow wise Investors
In each stock, there is a small group of investors who know more than
general public. They have an advantage, because they can better
envisage than a company will make in the future. To be successful, we
must find out of what the investors with best information do, and then we
follow the same.
Trust the Market directions
Information is eccentric - the financial sector wants you to buy stocks.
Brokings which finance the companies, the bulletins which are paid to
announce stories of company, the promoters which are paid to support
stocks, the media which sell publicity on a high market and naturally,
companies themselves get advantage when the stock prices move high.
More purchasers, the prices go higher. Do not trust anybody by making
decisions of investment, because each one can have a target. Only the
market cannot be (although it can seem pretty stupid sometimes),
therefore, always trust what the market indicates you.
Learn How Stock Market Moves
To make money in the market you have to work really hard to learn how
the market moves. You must work hard to control your emotions. You
must work hard to learn discipline. However most money in a market is
made, which it trends, where there are lots of opportunities and it seem
simple to make money. If the market does not trend, it is harder to find
opportunities.
Basics for Online Trading in India

Online Stock trading in India

In India as the usage of internet has reached almost everyone, and broadband allows data transfer at incredible speed many
Indians today are trading online in Indian Stock Markets.

Share Trading thru Internet

 With the help of better personal computers which can process large amount of data almost immediately. Indians have started to 
trade on the internet either alone or in conjunction with a broker or an investment adviser. While the broker will get a part of your
profits that you make on all trades, the adviser will give you inputs about the market for a pre-determined rate. It is always sensible
that you get some guidance at the beginning of your trading days to get the feel of it.
For trading online in BSE or NSE, there are a few things that you should be cautious about.

Time Lag in online share trading

It doesn’t matter how fast your internet connection is, and whatever software and hardware you are using there will be some time
lag between the time you click to place your order and the actual time when your order gets processed and registered. This time lag,
depending on how long it is can seriously alter your final profits or losses. Take care that the time-lag is kept to a minimum. This can
be possible if you have the best system and your broker provides its subscribers with the best service.
Get Real time Stock Quotes
While trading online, make sure that you get real time updates and stock quotes from your online broking firm. If it is delayed then
you will be placing orders for rates which are old. This will take further time to complete your order. You will finally get is something a
lot diverse from what you were expecting. So the feeds have to be live and real time stock quotes are very important for online
trading.
Broker Charges
Check if your broker firm is giving you the best rates for the stock trading you are going for. If your broker is not getting you the right
rates, then you may have to move to a different broker who will offer you better rates. In India There are many online brokerage
firms in Indiaoffering online share trading in NSE and BSE.
Other trading Charges
Apart from brokerage fees there are service fees & taxes, which you have to pay for each trade. Understand in detail about this
commission rates and transaction fees. It will have an effect on your final profits.
Share trading is not new to India; it has been going on for many years from now. Indian Share market has seen many ups and
downs.
Find an Online Trading Broker in India

What are Bonus Shares?

Bonus Shares
Bonus shares are additional free shares issued to the shareholder by the company. Profitable
Companies in India issue Bonus Shares. These are additional shares issues given the shareholder
without any cost to existing shareholders. (Rights Issue of a share is not free)
 
What does the Ratio of Bonus Shares mean?
Bonus shares in India are issued in a definite proportion to the existing holding.  (Eg. Ratios against the number of shares holding by
the shareholder)
Example - A 2 : 1 bonus would mean that you will get two additional shares (free) for every one share you hold in the company. If
you hold 50 shares of a company, a Bonus share of 2:1 will get 100 Bonus shares FREE. So your total number of shares in that
company will be 150 instead of 50, without any additional cost (is that exciting!!)

How Bonus Shares are Issued?

Bonus shares are issued by using on the free reserves of a company.
Companies accumulate its reserves by retaining part of its profit over the
years (the part that is not paid out as dividend). Sooner these free
reserves increase. When the company issues Bonus shares, the reserves
will converts into the capital.
Finally you are also not paying for this and the company's profits are not
affected.

Does it impact Stock Price?

Bonus Shares issue adds to the total number of shares in the market. If a
company had 10 lakh shares. Now, with a bonus issue of 2:1, there will be
20 lakh shares issues. Now, there will be 30 lakh shares.
The earnings of the company will have to be divided by that new number
of shares.
Earnings Per Share (EPS) = Net Profit/ Number of Shares
As the profits remain the same and the number of shares increases, the
value of Earnings Per Share (EPS) will go down.
In fact, the stock price should also go down proportionately to the number
of new shares. But sometimes, in reality, the share prices may not go
down, which gives more advantage to the share holder.

Makes it Easy to Buy and Sell

Whenever Bonus shares are issued the stock becomes more liquid. And
this make it easier to buy and sell.

Are Bonus Shares Good or Bad for me?

A bonus issue indicates that the company is booming and it is in a
position to service its larger equity. Bonus share issue is considered as a
positive sign for the company.
Whenever a bonus issue is announced, the company also announces a
record date for the issue. Record date is the date on which the bonus
shares takes effect, and shareholders are entitled to the bonus shares on
that date.

What is Rights Issue of a Share?

What is Rights Issue of a Share?

Rights Issue
Rights issues are the shares issued by a
company only to its existing shareholders
which will be cheaper than the current
market price of that company share.
Sometimes companies come out with a
batch of new shares and may choose not go
to the public (like IPO). Company may just
approach only the existing shareholders
(those who own the shares of that
company). These shares are called a rights
issue. In other words, only the existing
shareholders have a right to buy these
shares.
Example : If the market price of the share is
Rs 200, the company may offer the rights
issue shares for Rs 180. So if you are an
existing shareholder, you get more shares at
a cheaper rate than the market.
 

Will the Share Prices Go Up?

Normally, the price will go up because investors now want to buy the shares so that they can benefit from the rights issue.

Rights Issues are not Free

These shares do not come free like bonus shares. A Bonus share is offered free of cost. They are like a gift (bonus). Rights issue
will need you to buy the shares.

How many Rights issue shares will I get?

Rights issue are always offered in proportion to your existing share holding. Company may come out with a 2 for 1 rights issue.
Means, it will give the shareholder who has 1 share, the chance to buy 2 additional shares. So, if you have 50 shares, you will get
the chance to buy 100 additional shares, at a cheaper price.

What if I don't want  Rights Issue shares?

For a bonus share issue, you are just given the shares free of cost. While in the case of a rights issue, you are given the choice to
decline, since you have to pay for it. You have the right to refuse to subscribe to these rights issue.

It Rights Issue Good for me?

Only subscribe to a rights issue only if you really trust in the company’s performance. Don't just buy it because you are getting it
cheaper that market price. Try to find out why the company is coming out with a rights issue. If the company needs this to raise
money for a sound business plan that will eventually increase the profits and share price, then it is Good.

Indian Online Stock Market Trading

How to Trade online BSE & NSE in India?

Shares (also known as stocks, equity) can be
traded in stock exchanges. India has 2 big
stock exchanges
[1] Bombay Stock Exchange (BSE)
[2] National Stock Exchange (NSE)
There are few small stock exchanges like
Cochin Stock exchange, Jaipur Stock
exchange etc. An Investor can trade
shares (stocks) in any of the stock exchange
in India.

Why we need Stock Broker?

As an Investor, he needs to have a Stock Broker to buy and sell shares in stock exchanges (like BSE or NSE etc), he cannot deal
directly with a stock exchange. A Stock Broker is a registered member of stock exchange. Stock Brokers can register to one or more
stock exchanges. Only stock brokers are allowed to buy and sell shares in a Stock Market. Investor should contact a stock broker to
trade stocks. Brokers have charges to carrying out this trading on behalf of the investor (brokerages / commission). Brokerage is
usually a certain percent of the total amount of trade and it varies from broker to broker. (List of Online Trading Brokers in India can
be found in this Link)

Some History of Stock Trading

In early days share trading was done through stock brokers, personally or calling them through telephones. Due to the number of
people trading in stock markets increased enormously in last few years, some issues like location constrains, busy phone lines, miss
communication etc. started to grow in stock broker offices. With Internet, Information Technology and computers, Stock market
software were developed to help stock brokers in solving these problems.
Trading thru Internet
Online stock market trading is an internet based stock trading facility. An investor can trade shares through a website or through a
software installed in his computer, without any manual intervention with the Stock Broker. All of the orders to Buy or Sell shares are
routed through the Stock Broker before it reaches the stock exchanges. The software program filters all of the screening like
checking for sufficient funds available in investor account or whether it is a tradable stock etc. before forwarding this order to stock
exchange. Mostly online trading in India is done for trades in NSE and BSE.
2 Types of Trading
There are two different kinds of online trading environment :
[1] Installable software on Investor computer - Acts as a Trading terminal
[2] Web based (internet based) stock trading application
Investors can trade shares or derivatives in India through online trading facility.
With the introduction of Online trading, anyone can trade shares from anywhere with an internet connection and a computer.
Market Timing of Indian Stock Markets

Learn about Market Timing

If you know the Art of Market Timing, then are the most successful trader
reaping huge profits. But the fact is that, no one can precisely predict the correct
market timing. Anyone who has experience in share trading could have told you
that the market is very dynamic.

Pulse of Stock Markets

Knowing the pulse of the market takes years of experience, but keeping a close eye on market indexs like
SENSEX or NIFTY will be helpful.
A Simple Technique
You do not need to be an expert or a highly sophisticated trader to spot the obvious signs.
When the market is reaching all-time highs, it is the best time to shed your investments
partially/fully. When the market is low, it is an opportunity to enter/buy. This is a simple technique
of market timing.
To be a successful investor, you need to be right only 65 to 85% of the time.
 
-

Online Banking & Online Investments in India

Online Banking and Investments

Now a days our banking system in India has changed a lot. There is no need to visit a bank
for many of your banking transactions in India. Computers and Internet has made cyber
banking easy and accessible to majority of us in India.

Transfer Money Online

Even you can log on to your banking website from any part of the world. Online backing has become very popular
among our young techies as well as many others. With online banking, we can now transfer money, pay our utility
bills, order for credit card or debit card and even checks. You can also modify your account information. Now a
days to apply for a bank loan, we can do it from our home computer. The online banking services provided by our
Indian banks are not always same. It varies between each banks.
Bank from Anywhere
Online banking helps us to perform the transactions from the comfort of our home or office. It saves our time of
going to bank and standing on long queues. One of the biggest benefits is paying of bills. To pay utility bill by going
to an Electricity office will eat up half of our day. Now with online banking it takes less than 2 minutes from our
computer.

DEMAT Shares : Shares in Electronic form

Benefits of Investing in Shares

Everywhere people are investing a large amount of their savings in share markets.
Do you know that there are very good reasons and huge benefits of doing like
that?
Your Investments Grow Quickly
Your invested money in shares will start growing quickly.  Over the long term your investment in the stock market can easily offer at
least double of what is possible through your bank deposits. There is also a chance to get regular income through dividends from
the company's from which you have brought the shares.

Shares are easily Cashable

Investment in shares are easily cashable unlike your investment in
property. Now a days using online trading your investment in shares are
very easy to manage from your desktop computer you do not have
bothered to go to the broker on stock exchanges to sell or buy your
shares. To start investing in shares you do not need to have a huge
investment. Start investing in shares just Rs. 5000 (Indian currency).
Regular income from shares
In order to have a regular income from shares you do not have to be a
Economist, a chartered accountant for a genius of mathematics.  All you
need is just common sense and little time and effort to know the basics. 
You can learn the basics of shares through our website, which is updated
regularly with topics about shares and your money management. There
as also many other online resources, which are freely available.
Online trading
With Online trading there are many advantages than before.  An investor
or a trader can now is buy or sell shares from any part of the world.  An
online investor can buy or sell his shares through this online trading
systems and know the price instantly and execute the orders
immediately.  In India after introducing online trading the trading volume
in stocks and shares has increased in huge volumes, and this has helped
to increase the liquidity of listed stocks in India.
Trustable Trading systems
With online trading the investors and traders have got more trust in the
system, since they can watch their orders being executed for the price
they want.  This was not possible with the earlier systems through online
trading in India. The main advantage is of the transparency of
transactions done at stock exchanges.
What a dematerialisation of shares?
You might have heard of the demat account. In order to start trading in
Indian stock exchanges you need to open the demat account. 
Dematerialisation is a term used for converting physical share certificates
to a de materialised on electronic form share.  After you convert to any
electronic form share the physical form will not exist in India this
conversion is done by central securities depository Ltd and national
security is depository Ltd they also keep custody of dematerialised shares
on behalf of share holders.  The central securities depository Ltd acts as
a depository for Bombay stock exchange (BSE). The National Securities
Depository Ltd Is the Depository for NSE
-

How to Pick Profitable Stocks?

Stock selection
In Indian Stock market, a disciplined stock selection strategy is very are important for an investor to
grow his personal wealth drastically. Investors stock picking strategies depend upon some factors
which includes the performance of company, market and industry trends, and share prices.
Let us simplify for you some of the best stock picking strategies based on different investing style.

Investing for Growth

In this strategy, you need to focus on fast growing companies, which are showing major increase in revenues and profits. This kind
of investors who focus on this strategy intend on making money from the significant increase in the share prices of companies they
decide to invest.

Returns from growth stocks

The returns from growth stocks are largely higher than that of other type
of stocks. Though, the risks involved in this type of stocks are high as
compared to others. This type of investors pick young and fast-growing
companies, regardless of the expensiveness of these stocks, as the
investors bet on the future growth potential of the companies. The
fundamental idea of growth investing may differ from industry to industry
and company to company.
Investing in Value Stocks
This kind of strategy is different to growth investing mentioned above.
These investors focus on stocks, which are trading below their intrinsic
values. Value investors look into the fundamentals of the companies
cautiously and they believe that the market undervalues these stocks.
Value investing
Value stocks are comparatively cheaper to the net asset value (NAV) of
their respective companies. Value investing does not mean to pick a
cheap stock, rather investing in undervalued stocks that have good
growth potential.
GARP Investing Strategy
GARP (Growth At Reasonable Price) Investing Strategy, is a mixture of
value investing and growth investing strategies. Through GARP investing
strategy, an investor focus on stocks that are reasonably priced, at the
same time possess robust growth potential.
In other words GARP investors do not go for high growth stocks that have
high risks or cheaply priced stocks, which are in problem. So, GARP
investors avoid expensive high-growth stocks. The significant barometer
for GARP investors is PEG ratio, which is PE ratio divided by growth.
Fundamental Analysis of Stocks
Using Fundamental analysis, an investor or analyst tries to estimate the
intrinsic value of a stock based on fundamentals. Although this strategy
takes more time and effort, it is appropriate for long-term investors.
Earning trends
With fundamental analysis, an investor try to understand the earning
trends of a company and expected earnings in the future, rather than
market sentiments. Further more than earnings and revenues, investors
also focus on factors such as, ROIC (Return On Invested Capital), ROE
(Return on Equity), cash flows and P/E ratio etc. Many Indian Business
magazines are available with all of these factors for each company.
Using Technical Analysis to Pick stocks
Technical analysis ( chart analysis), is an investing strategy through which
investors weigh the future price movement of a stock through past
performance. Technical analysis mainly depends upon the demand and
supply of the particular stock and trading volumes.
Intrinsic value stock
Technical analysis is quite contrary to fundamental analysis. Technical
analysts do not bother much about the intrinsic value stock.
Regardless of the advantages and disadvantages of the above-mentioned
stock picking strategies, many investors are making millions irrespective
of the strategies they choose.
Always an investor’s choice of a particular strategy should depend upon
his/her knowledge about the market, industry trends and growth potential
of companies. Most important is investors devotion of time and risk
calculation capabilities play major role in choosing a particular stock
picking technique.
A mixture of above strategies to fine tune and pick the winning stocks
works the best in Indian Stock markets.
What is the Risk of Investing in Shares?
 

What is Capital Gains Tax?

Long Term Capital Assets

Stocks can be considered as Long-term Capital assets when held for more
than 12 months by the assessee. If it is helf for 12 months or less than that,
then it will be considered as short-term assets. All short-term capital gains
are taxable like other income. It means, that they will be added together
with the income from other sources to attain a gross taxable income. In
India Long-term Capital gains tax has been removed, the short-term capital
gains is 10 percent.

Tax on Dividends
Dividend income is now completely Tax Free for the investor. This was abolished in 2003 budget.

Wealth Tax
Stocks, Bank deposits and other specific financial assets are fully exempted from Wealth Tax.

Tax on Bonus Shares & Rights Issue

The Bonus shares are not subject to Tax, when issued. Rights issue Shares and Bonus shares are taxable, if profit is made from
them (by selling these shares).

Indian Stock Market

Trading Hours
BSE Market Timing | NSE Market Timing | Market
Trading Hours | Indian Stock Market Trading Timing |
Share Market Timing

Trading on the Indian equities segment takes place on all weekdays. No trading on Saturday, Sunday and
Published Indian Stock Market Holidays declared by the Indian Stock Exchange in advance.
 
Market timings (Indian Standard Time) :
Market Opens at  : 09:15 hours
Market Closes at  : 15:30 hours
 
Pre-open trade session will be from 09:00 ~ 09:15 hours
 
Please Note: Market trading hours may change due to outage or any other reasons published by the Stock exchanges.
Visit BSE or NSE website for more details.
What is pre-Open trade session?

BSE Market Timing | NSE Market Timing |

Market Trading Hours | Indian Stock
Market Trading Timing | Share Market
Timing | Call Auction
Pre-open trade session is a 15 minute trade session from 9:00AM to 9:15AM on the 50 stocks  of NIFTY
index to reduce the volatility.
 
This was introduced on Indian stock market from 18th Oct 2010 onwards. Both NSE and BSE will have a 15 minute ‘pre-open
session call auction’ from 9:00AM to 9:15AM.
 
Only 50 stocks of the NIFTY index can be traded during this time on both NSE and BSE. Normal trading for all other stocks will start
at 9:15AM till 3:30PM.
 
-

Indian Stock Market Holidays

BSE Holidays | NSE Holidays | Market Trading Holidays | Indian Stock Market
Holidays | Holidays of Indian Share Market

Holidays in 2010
January
   1st Jan 2010 - Friday - New Year
   26 Jan 2010 - Tuesday - Republic Day

February
  12 Feb 2010 - Friday - Mahashivratri

March 
  01 Mar 2010 - Monday - Holi 
  24 Mar 2010 - Wed - Ram Navmi

April 
  02 Apr 2010 - Friday - Good Friday
  14 Apr 2010 - Wed - Ambedkar Jayanti

September
  10 Sep 2010 - Friday - Ramzan iD

November
  05 Nov 2010 - Friday - Laxmi Puja
(Muhurat trading)
  17 Nov 2010 - Wed - Badkri Id

December Holidays
  17 Dec 2010 Friday - Moharum
 

What is pre-Open trade session?

BSE Market Timing | NSE Market Timing | Market

Trading Hours | Indian Stock Market Trading Timing |
 Share Market Timing | Call Auction

Pre-open trade session is a 15 minute trade session from 9:00AM to 9:15AM on the 50 stocks  of NIFTY
index to reduce the volatility.
 
This was introduced on Indian stock market from 18th Oct 2010 onwards. Both NSE and BSE will have a 15 minute ‘pre-open
session call auction’ from 9:00AM to 9:15AM.
 
Only 50 stocks of the NIFTY index can be traded during this time on both NSE and BSE. Normal trading for all other stocks will start
at 9:15AM till 3:30PM.