Transactions in STOCK MARKET

We buy Vegetables in the nearby shops in person, for our home. Now in some big cities by just making a phone call we can get the available vegetables in our home itself.

Likewise, previously to buy / sell a stock we ought to go directly to the stock Exchange. Later on by making a phone call, to our Share broker, we can buy / sell the desired stock and quantity. Now-a-days after the arrival of ( Internet ) Broadband anyone is able to buy / sell stocks in his own residence or even through mobile phones, etc.

After the arrival of Computers, since the share transactions are completely computerized, while purchasing a stock

# Name of the Purchaser
# No:of stocks purchased
# Buying price
# Buying time

all details are recorded and available. So that any intelligent adept can’t commit a crime. Even a person from a remote village can buy / sell stocks within a minute with the help of Computers.

THE SECONDARY MARKETS :-
There are 22 Stock Exchanges in India. The others are Bangalore and Bhuvaneswar Largely regional exchanges. Also 25 Commodity Exchanges are present in India. Due to the Arrival of Computers in Stock Market, the great disadvantage which occurred is, Regional stock Exchanges slowly fainted. The names of various regional Stock Exchanges in India are:-

REGIONAL STOCK EXCHANGES OF INDIA :
The list maintained by the Securities and Exchange Board of India (SEBI) is not current as of 2010.

AHMEDABAD
Name of Stock Exchange: The Stock Exchange, Ahmedabad
Address Kamdhenu Complex, Opp. Sahajanand College, Panjarapole, Ambawadi,
AHMEDABAD-380001.
Phone: (+91-079) 6449460, 6446733, 6441842, 6443058
Fax. (+91-079) 6442222
Tel. (+91-079) 6443131, 6447171
Fax. (+91-079) 6449966 / 448822

BANGALORE
Name of Stock Exchange: Bangalore Stock Exchange Ltd.,
Address "Stock Exchange Towers",
No. 51, Ist Cross, J. C. Road,
BANGALORE : 560 027
Tel. (+91-0281) 2995229, 2995234, 2995235
Fax. (+91-0281) 2995242 / 2277160
Tel. (+91-0281) 3311456

BARODA
Name of Stock Exchange: Vadodara Stock Exchange Ltd.,
Address Fortune Towers, Dalal Street, Sayajigunj,
BARODA 390 005.
Tel. (+91-0265) 340378
Fax. (+91-0265) 331452
E-mail vse@lwbdq.lwbbs.net
Tel. (+91-0265) 361433

BHUBANESWAR
Name of Stock Exchange: Bhubaneswar S. E. Assoc. Ltd.
Address: Falcon House, A- 22 Jharpara, Cuttack Road,
BHUBANESWAR 751 006.
Tel. (+91-0674) 582340, 582341, 582140
Fax (+91-0674) 582283

CALCUTTA
Name of Stock Exchange: Calcutta Stock Exchange Assoc. Ltd.,
Address: 7 Lyons Range,
CALCUTTA 700 001.
Tel. (+91-33) 220 6136, 3741, 1489, 1488, 6987
Fax. (+91-33) 2202514
Te.. (+91-33) 2206136

MADRAS
Name of Stock Exchange: Madras Stock Exchange Ltd.,
Address 11 Second Line Beach, Post Box No. 183,
MADRAS 600 001.
Tel. (+91-44) 510845, 512237
Fax. (+91-044) 5244897
Tel. (+91-44) 5221070

COCHIN
Name of Stock Exchange: Cochin Stock Exchange Ltd.,
Address: Post Box No. 3529, Veekshanam Road,
Ernakulam,
COCHIN 682 035.
Tel. (+91-0484) 369020, 367728
Fax. (+91-0484) 364864, 370471
Tel. (+91-0484) 364578, 367728

COIMBATORE
Name of Stock Exchange: Coimbatore Stock Exchange
Address "CSX Towers", 683-686 Trichy Road,
Singanallur,
COIMBATORE 641 005.
Tel. (+91-0422) 315100,315102
Fax. (+91-0422) 314937
Tel. (+91-0422) 572714

GAUHATI
Name of Stock Exchange: Gauhati Stock Exchange Ltd.,
Address: Saraf Buildings Annexe, A. T. Road,
GAUHATI 781 001(ASSAM).
Tel. (+91-0361) 533667, 533670, 72, 73
Fax. (+91-0361) 543272

HYDERABAD
Name of Stock Exchange: Hyderabad Stock Exchange Ltd.,
Address: 3-6-275 Himayatnagar,
HYDERABAD 500 029.
Tel. (+91-040) 597709, 10, 12
Fax. (+91-040) 240804
Tel. (+91-040) 4618251

INDORE
Name of Stock Exchange: Madhya Pradesh Stock Exc Ltd.,
Address: Rajani Bhawan, 3rd Floor, M. G. Road,
Opp. High Court,
INDORE 452 002.
Tel. (+91-0731) 432841-46
Fax. (+91-0731) 432849
Tel. (+91-0731) 432844

JAIPUR
Name of Stock Exchange: Jaipur Stock Exchange Ltd.,
Address: Rajasthan Chamber Bhavan, M. I. Road,
JAIPUR 302 001.
Tel. (+91-0141) 564962, 568335, 563521, 560201
Fax. (+91-0141 ) 563517
Tel. (+91-0141) 563521, 565163

KANPUR
Name of Stock Exchange: Uttar Pradesh Exchange Assoc Ltd.,
Address: Padam Towers, 14/113 Civil Lines,
KANPUR 208 001.
Tel. (+91-0512) 293115, 293174, 293134, 293437
Fax. (+91-0512) 293175

LUDHIANA
Name of Stock Exchange: Ludhiana Stock Exchange Assoc. Ltd.,
Address: Phiroze Gandhi Market,
LUDHIANA 141 008.
Tel. (+91-0161) 39318, 39319
Fax. (+91-161) 405756
Tel. (+91-0161) 405756

MUMBAI
Name of Stock Exchange: The Stock Exchange, Mumbai
Address Phiroze Jeejeebhoy Towers, Dalal Street,
MUMBAI 400 023.
Tel. (+91-22) 2655581, 2655626, 2655860-61
Fax. (+91-22) 2658121
Tel. (+91-22) 2655665

MANGALORE
Name of Stock Exchange: Mangalore Stock Exchange Ltd.,
Address: Kodialbail, 4th floor, Ram Bhavan Complex,
MANGALORE 575 003.
Tel. (+91-0824) 441214, 440813/ 581/ 275/ 597/ 254
Fax. (+91-0824) 440736
Tel. (+91-0824) 351137, 22361

MEERUT
Name of Stock Exchange: Meerut Stock Exchange Ltd.
Address: Kingsway Building
345 Bombay Bazar
Meerut Cantonment - 250 001
India

NEW DELHI
Name of Stock Exchange: Delhi Stock Exchange Assoc. Ltd.,
Address: 3 & 4/4B,
Asaf Ali Road, Near Turkman Gate
New Delhi - 110006.
Tel. (+91-11) 3724387, 3352951
Fax. (+91-11) 3379660, 3271302
Tel. (+91-11) 6219593, 6420710

OTC EXCHANGE OF INDIA
Name of Stock Exchange: OTC Exchange of India,
Address: 92 Maker Towers 'F', Cuffe Parade,
MUMBAI 400 005.
Tel. (+91-22) 2188164-68/2188511
Fax. (+91-22) 2188012/2188503
Tel. (+91-22) 2068468

PATNA
Name of Stock Exchange: Magadh Stock Exchange Association,
Address Ashiana Plaza, 9th Floor, Budh Marg,
PATNA 800 001.
Tel. (+91-0612) 223644, 222852
Fax. (+91-0612) 220960
President -
Tel. (+91-0612) 226568, 235712
Fax. (+91-0612) 235712

PUNE
Name of Stock Exchange: Pune Stock Exchange Ltd.,
Address: PMT Commercial Building, Deccan Gymkhana,
PUNE 411 004.
Tel. 328771, 772, 782, 783, 786
Fax. 212 328773

RAJKOT
Name of Stock Exchange: Saurashtra-Kutch Stock Exchange Ltd.
Address: Popatbhai Sorathia Bhavan, Sadar Bazar
RAJKOT 380 001
Tel. (+91-0281) 474673, 474699, 474686
Clg House: 447360
Fax. (+91-0281) 443431

SIKKIM
Name of Stock Exchange: The Sikkim Stock Exchange Association Ltd .
Address:Kundeh Khang
Tibet Road
Gangtok -737101 .

COMMODITY EXCHANGES OF INDIA :
§ Multi Commodity Exchange of India Limited (MCX)
§ National Commodity & Derivatives Exchange Limited (NCDEX)
§ Indian National Multi-Commodity Exchange (NMCE)
§ Commodity Exchange Limited ICEX.

Exchange	Abbreviation	Location	Product Types
Asian Derivative Exchange	ADX	Kathmandu,Nepal	Energy, Industrial Metals, Precious Metals
Commodities & Metal Exchange Nepal Ltd.	COMEN	Nepal	Gold and Silver
National Spot Exchange Limited	[NSEL]	Mumbai, India	Spot Trading in commodities, E-Series
Nepal Derivative Exchange Limited	[NDEX]	Kathmandu,Nepal	Agricultural, Precious Metals, Base Metals, Energy
Mercantile Exchange Nepal Limited	MEX	Kathmandu,Nepal	Agricultural, Bullion, Base Metals, Energy
Nepal Spot Exchange Limited	NSE	Kathmandu,Nepal	Agricultural, Bullion
Indian Commodity Exchange Limited	ICEX	India	Energy, Precious Metals, Base Metals, Agricultural
Multi Commodity Exchange	MCX	India	Precious Metals, Metals, Energy, Agricultural Products
National Multi-Commodity Exchange of India Ltd	NMCE	India	Precious Metals, Metals, Agricultural
Bhatinda Om & Oil Exchange Ltd.	BOOE	India	Agricultural
National Commodity and Derivatives Exchange	NCDEX	India	All

All the Trading facilities are provided only through their members. Therefore memberships or seats , on the exchange are valuable assets. The majority of seats are commission broker seats, most of which are owned by large full service brokerage firms.

Regional Exchanges also sponsor trading of some firms that are traded on National Exchanges. This dual listing enables local brokerage firms to trade in shares of large firms without needing to purchase memberships on the larger exchanges like BSE and NSE. This for example, Infosys is listed on the Bangalore stock exchange apart from BSE and NSE. However, BSE and NSE are still the preferred exchanges for large Traders.

Like that in various Cities stock Exchanges were present. After the formation of “ NATIONAL STOCK EXCHANGE – NSE ” in 1994 , since Mumbai stock exchanges alone are computerized all others are having tie up with NSE. Let us look at a glance to the World Stock markets:- 

Sl.No	Name of the Exchange	Listed Companies	Grade	Market Capitalization	Status
1	Bombay stock exchange	4900	World – 1	70,46,748 Crores	OCT - 2010
2	N.S.E.	2200		68,94,911 Crores	NOV – 2010.

But before entering the stock market to buy / sell stocks, we need an account like a Bank account, called “ De-mat Account ” and “ Broking account ”. In previous years a certificate          ( Paper form ) will be given on authority to stocks purchased.

Many disadvantages were found in issuing those in paper form. Those printed in Paper must be kept safe, may be torn out, burnt in fire, destroyed in Water etc.

After the arrival of Computers, as a substitute to Paper Certificates, by the Electronic methods, all were converted to Digital format (Paper-less).

TRADING ACCOUNT:- 
Any person to buy / sell stocks in stock market, a “ Broker ” is required, who is an authorized member of the Stock Market. We have to open a “Trading Account” to a “Broker” as desired by us.

Without Trading account we can’t do business with any Broker. There are Hundreds of Brokers each of them may be having branches in various towns.

For Example:- You desired to Buy / Sell stocks in stock market. An advance Cheque must be given to your Broker. Based upon the value of your Cheque, the broker finds no difficulty to buy / sell stocks within the Cheque value.

Supposing no advance payment is given ! On what basis he can purchase stocks? He may confuse or never buy stocks on your behalf.

On your request your broker can purchase the desired stocks, and quantity as mentioned by you. After purchasing he may give the (Buy order Execution ) Buying order form to you. After purchasing the stocks, the no: of stocks will be increased, and money will get reduced in your Trading Account.

While selling stocks, share document if given to your Broker, he may sell to another Broker, and collect the money. And the stock selling price will be credited in your Trading account. As needed by you, the sold amount from the Broker can be collected by means of a Cheque. After depositing in your Bank account can be encashed.

Traditionally for several years share transactions were performed in the above manner. Auction had taken place at which cost, the Broker purchased at which cost said to us, were all entirely suspicious.

Moreover, everyone felt that the Trading transactions were conducted in Dark room atmosphere, so that no investor is aware of the Truth happening Inside.

DE-MAT ACCOUNT:- ( De- Materialized account )
In the above situation Transparent Auction method was Introduced. Previously within the stock exchange auction conducted only in the presence of several stock brokers, was modified, and then with the help of Computer ventilation’s due to the Technological Development, made visible to everyone.

The Auction Bids offered by investors were visible in “ ON LINE ”. Brokers were able to open branches throughout the country and in various cities. Auction and Bargaining were conducted in front of the Computer Screen.

In olden method, the stocks bought / sold will be known to the Brokers within the Auction Hall. But in Computerized Transaction, Auction and Bargaining visible to everyone, none is necessary to show their Identity.

While purchasing stocks as an authority of stocks purchased a copy of “ Share Certificate” will be given. Those were also be recorded like name of the purchaser, no: of stocks in the Company Registrar’s documents.

Since all the certificates were in Physical or Material form it can be visibly seen, touched, and taken in hand, watch its colour, even smell the paper, etc…

Share certificate while kept in home due to the following reasons like Lost, theft, Fire, Flood, may get damaged and possibilities are also there, to get completely Destroyed. Instead of securing in Material form an alternative method to this, would be better for all.

The solution to the above problem is De-Mat account. Material can be said as physical form whereas, De-Material can be said as immaterial form. No Shape, can’t be seen, can’t be touched etc. Only we can realize and feel its presence.

Like the money kept safely in Banks, Shares in De-Mat form are maintained safely by Organizations called ( Depository Participants ) D.P’s. Like the money saved in Bank account, the stocks are saved in De-Mat form by the D.P’s. like giving Cheque’s, here Delivery Instruction slips.

While Buying Stocks :-

1. Cheque given to the Broker.
2. Money gets reduced in the Bank account, and increases in the Trading account.
3. According to our instruction buying order executed.
4. Money reduces in Trading account.
5. Stocks increases in De-Mat account.

The stock Exchange informs the Registrar and the records are renewed. Only the cheque given, and the instruction, to buy the stocks, said to the Broker are our duty. Balance all are happening automatically.

While Selling Stocks :- 
Delivery instruction Slips are given to the Broker. Name and no: of stocks are to be mentioned.

1. According to our instruction selling the stocks executed.
2. Stocks decreases in De-Mat account.

Informed to Registrar and records are renewed.
Trading account balance increases.
Broker issues Cheque.
Money gets reduced in Trading account.

ADVANTAGES OF DE-MAT :-
1. No need for delivery.
2. Delivery forms duly filled is not necessary to be checked out.
3. For name transfer share transfer stamps need not be bought.
4. Registered post may not be sent.
5. Dividend, Bonus, Rights losses are never, for the time taken for name transfer.
6. Monthly statements including stocks purchased / sold will be sent to us. ( List )
7. No need to find place to keep safe.
8. Address changes need not be informed to all the stocks purchased companies, instead the  

    De-mat account maintaining company alone be informed.
9. No need to see share certificate.
10. Regarding postal department dividend warrant cheque’s missing, receiving delayed, forget 

       depositing in bank, depositing in bank all those burdens are set free.
11. Apart from this our bank account no; can be informed them, easier to credit our dividend in    

      our bank account.

De-Mat accounts are maintained by two Organizations namely

1.National Securities Depository Limited (N.S.D.L.) and
2.Central Securities Depository Limited (C.S.D.L.).

Both the two Organizations are maintaining the India’s entire De-Mat accounts. Between the Investors and the above two Organizations there may be D.P’s. The D.P’s most probably be your Broker. For extreme safety ness Trading account, and De-Mat account can de opened from two different Brokers. But many difficulties can be found.

Opening a Broking Account:- 
While selecting the Brokerage firm, the following points, can be taken into account,

1. Broker’s experience in the Field,
2. About him or his promoters any cases filed in SEBI,
3. The experience gathered by his customers,
4. Both Online / Offline facilities are provided,
5. To give personal advice or to guide regarding share Trading, persons are available,
6. The qualities of your Relationship Manager, Etc….. are to be considered before opening an 

    account.

Brokerage Charges:-

According to the rules and regulations released by N.S.E. and B.S.E. more than 2.5% of Brokerage charges shall not be collected.

Comparison between major brokerage firms

ICICI Securities

HDFC Securities

UTI Securities

5 Paisa (Indian Infoline)

Indiabulls

Account Opening Charges

Rs.750

Rs.750

Rs.600

Rs.750

Rs.500

Brokerage (%)

Delivery

Intraday

Delivery

Intraday

Delivery

Intraday

Delivery

Intraday

Delivery

Intraday

0.75

0.15

0.75

0.15

.80

.15

0.251

0.071

0.5

0.10

With all taxes and other charges per 100

0.92

0.19

0.92

0.19

0.97

0.19

0.87

0.12

0.64

0.12

Transaction Charges (selling)

Rs.20 or 0.04% of transaction, whichever is more

Rs.23 or 0.04% of  transaction, whichever is more

Rs.23 or 0.04% of  transaction, whichever is more

Rs.23 or 0.04% of  transaction, whichever is more

Rs.17

Exposure on Cash

NIL

4 times

NIL

4 times

NIL

NIL

NIL

NIL

2/4 times

12 times

Exposure on Securities

NIL

NIL

NIL

NIL

75% 0f  the Market Value

Minimum Margin

-

-

Rs.10,000

Rs.2,500

NIL

Annual Maintenance Charges

Rs.350

Rs.500

Rs.250

Rs.300

NIL

Banking facility

ICICI Bank

HDFC

UTI Bank

-

All Banks

Net Banking facility

ICICI Bank

HDFC

UTI Bank

-

HDFC/ICICI/ Citibank

Charting

NA

NA

NA

Thru software2

Thru Software

Historical Data

NA

NA

NA

NA

Available for the last 4-5 yrs & linked to the s/w

Intra day cut off time

3 pm

3 pm

3 pm

3 pm

3:10 pm

Relationship Manager

N.A.

N.A.

NA

NA

Assigned to every client

* 1. The brokerage will be charged on the condition of Monthly fixed fee of Rs.800/- or Yearly Rs.8, 000/-. And whatever trading you did the brokerage will get deducted from this amount with the mentioned rate. I.e. you are require to trade approx volume of Rs.14, 00,000 per month to get the benefit of this already paid amount. * 2. Only intraday 

Who can open the De-mat Account ?
1. Indian Citizens (Including minor )
2. Companies
3. Partnership Organizations
4. Trusties.
5. Hindu Joint Families (H.U.F)
6. Anglo Indians
7. Non resident Indians (N.R.I) and
8. Foreign Institutional Investors (FII’s)

Documents needed for Opening De-mat Account :-

1) Application form ( signed with more than 50 signatures )
2) Passport size photos + Nominee photo
3) PAN Card Xerox
4) Address proof
5) Bank Account ( with 3 or 6 months statement )
6) De-mat account charges ( A/C payee Cheque or cash )

The Items traded in Stock market :-

1) Shares or Stocks
2) Government / Private Debt Instruments.
3) Mutual Fund Schemes.
4) E.T.F’s ( Gold , Silver )
5) Futures & Options
6) Currency

TRADING PATTERN OF THE INDIAN STOCK MARKET 
Indian Stock Exchanges allow trading of securities of only those public limited companies that are listed on the Exchange(s). They are broadly divided into two categories, namely,

Specified Securities ( Forward List) and  
Non-Specified Securities (Cash List).

Equity shares of dividend paying, growth-oriented companies with a paid-up capital of at least Rs.50 million and a market capitalization of at least Rs.100 million and having more than 20,000 shareholders are, normally, put in the specified group and the balance in non-specified group.  

Types of Transactions 
The flowchart below describes the types of transactions that can be carried out on the Indian stock exchanges:

They are :
(a) Spot delivery transactions                                                                                        

 " For delivery and payment within the time or on the date stipulated when entering into the contract which shall not be more than 14 days following the date of the contract " : and 

(b) Forward transactions 

 " Delivery and payment can be extended by further period of 14 days each so that the overall period does not exceed 90 days from the date of the contract". 

The latter is permitted only in the case of specified shares. The brokers who carry over the out standings pay carry over charges (can tango or backwardation) which are usually determined by the rates of interest prevailing. 

A member broker in an Indian stock exchange can act as an agent, buy and sell securities for his clients on a commission basis and also can act as a trader or dealer as a principal, buy and sell securities on his own account and risk, in contrast with the practice prevailing on New York and London Stock Exchanges, where a member can act as a jobber or a broker only. 

The nature of trading on Indian Stock Exchanges are that of age old conventional style of face-to-face trading with bids and offers being made by open outcry. However, there is a great amount of effort to modernize the Indian stock exchanges in the very recent times. 

Indian stock exchange allows a member broker to perform following activities: 

1. Act as an Agent, 
2. Buy and sell securities for his clients and charge commission for the same, 
3. Act as a trader or dealer as a principal, 
4. Buy and sell securities on his own account and risk. 

Over The Counter Exchange of India (OTCEI) 
Traditionally, trading in Stock Exchanges in India followed a conventional style where people used to gather at the Exchange and bids and offers were made by open outcry.

The age-old traditional trading mechanism prevailed in the Indian stock markets gave way to many functional inefficiencies, such as, absence of liquidity, lack of transparency, unduly long settlement periods and binami transactions, which adversely affected the investors to a great extent. 

In order to overcome these inefficiencies, and to provide improved services to investors, the country's first ringless, scripless, electronic stock exchange - OTCEI - was created in 1992 by country's premier financial institutions – 

Unit Trust of India, Industrial Credit and Investment Corporation of India, Industrial Development Bank of India, SBI Capital Markets, Industrial Finance Corporation of India, General Insurance Corporation and its subsidiaries and Can Bank Financial Services. 

Trading at OTCEI is done over the centres spread across the country. Securities traded on the OTCEI are classified into: 
Listed Securities -  
The shares and debentures of the companies listed on the OTC can be bought or sold at any OTC counter all over the country and they should not be listed anywhere else 
Permitted Securities -  
Certain shares and debentures listed on other exchanges and units of mutual funds are allowed to be traded 
Initiated debentures -  
Any equity holding at least one lakh debentures of a particular scrip can offer them for trading on the OTC. 

OTC has a unique feature of trading compared to other traditional exchanges. That is, certificates of listed securities and initiated debentures are not traded at OTC. The original certificate will be safely with the custodian. But, a counter receipt is generated out at the counter which substitutes the share certificate and is used for all transactions.

In the case of permitted securities, the system is similar to a traditional stock exchange. The difference is that the delivery and payment procedure will be completed within 14 days.

Compared to the traditional Exchanges, OTC Exchange network has the following advantages:
OTCEI has widely dispersed trading mechanism across the country which provides greater liquidity and lesser risk of intermediary charges.
Greater transparency and accuracy of prices is obtained due to the screen-based scrip less trading.
Since the exact price of the transaction is shown on the computer screen, the investor gets to know the exact price at which s/he is trading.
Faster settlement and transfer process compared to other exchanges.
In the case of an OTC issue (new issue), the allotment procedure is completed in a month and trading commences after a month of the issue closure, whereas it takes a longer period for the same with respect to other exchanges.

Thus, with the superior trading mechanism coupled with information transparency investors are gradually becoming aware of the manifold advantages of the OTCEI.

Advantages of OTCEI :-
1. Greater liquidity and lesser risk of intermediary charges due to widely spread trading 
    mechanism across India,
2. The screen based scrip less trading ensures transparency and accuracy of prices,
3. faster settlement and transfer process as compared to other exchanges,
4. Shorter Allotment procedure ( in case of a new issue ) than other exchanges.

SECTORS OF THE STOCK MARKET

Before entering the Stock Market let us know the various sectors connected with the Stock Market. 

Apart from the below listed some new sectors are also possible, is to be taken into account.

#           Agriculture

#           Adhesives

#           Aeronautics ( Airlines )            

#           Agro Chemicals

#           Air cooled Heat sharers, Feed Condensers

#           Air Transport Service

#           Air, Rotary, Centrifugal Compressor

#           Alcoholic Beverages

#           Alloys

#           Aluminum Foils

#           Auto Ancillaries

#           Automobile

#           Automobiles & Spares

#           B.P.O. services

#           Banking

#           Banks

#           Barrels & Drums

#           Batteries ( All Purpose )

#           Bearing Housings

#           Belt Tensioners

#           Bulldozers

#           Bus Driving Simulators

#           C.F.L Lamps, Circuit Breakers, etc.

#           Cables

#           Cam Followers

#           Capital Goods

#           Capital Goods - Electrical Equipment

#           Capital Goods-Non Electrical Equipment

#           Carbon Block

#           Castings, Forgings & Fasteners

#           Cement

#           Cement - Products

#           Ceramic Products

#           Ceramics

#           Chemicals

#           Cigarettes

#           Clothing

#           Coal

#           Communications

#           Computer Education

#           Computer Hardware

#           Conductors

#           Conglomerates

#           Construction

#           Consumer Durables

#           Consumer Electrical goods

#           Consumer Goods

#           Consumer Non-Durables

#           Cooking & Industrial Salt

#           Cosmetics

#           Cranes

#           Crude Oil & Natural Gas

#           Diamond, Gems and Jewellery

#           Diesel Engines & Generators

#           Diversified

#           Drugs

#           Dry cells

#           Edible Oil

#           Electric Rope Shovels

#           Electrical Cables & Wires

#           Electrical Motors

#           Electricity Power Generation and Distribution

#           Electronics

#           Energy

#           Engineering

#           Engineering Plastic

#           Entertainment

#           ETF

#           Export Items

#           Fast moving Consumer Goods (FMCG)

#           Fertilizers

#           Finance

#           Fire Engines

#           Fire Protection

#           FMCG

#           Food and Beverage

#           Food Products

#           Footwear’s

#           Fuel Pumps

#           Gas Distribution

#           Gear Shifters

#           Glass & Glass Products

#           Graphic Series Boards

#           Hardware

#           Healthcare

#           High Tensile Fasteners ( Bolts & Nuts )

#           Hospitals

#           Hotels & Resorts

#           Hotels & Restaurants

#           Housing Finance

#           Hubs & Shafts

#           Hydraulic Escalators

#           Hydro Electric Power stations

#           Hydrogen Peroxide

#           Industrial Electrical goods

#           Industrial Gears

#           Information Technology (IT)

#           Infrastructure

#           Infrastructure Developers & Operators

#           Insecticides & Pesticides

#           Insurance

#           Inverters

#           Investing

#           Iron & Steel

#           IT - Hardware

#           IT - Software

#           IT Services

#           Lead, Silver & Zinc

#           Leather

#           Lignite

#           Linear Alkali Benzene

#           Logistics

#           Machine Tools

#           Manufacturing

#           Material Handling Equipments

#           Media

#           Media - Print/Television/Radio

#           Media Works

#           Medical Facilities

#           Metal Containers

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TYPES OF SHARES ( or ) STOCKS

TYPES OF SHARES :-
The capital of a company can be divided into different units with definite value called shares. Holders of these shares are called shareholders or members of the company. The Indian Companies Act prescribes that a public Ltd company can issue only 2 classes of shares :-

(a) Equity or Common shares or stocks
(b) Preference shares or stocks

(A) COMMON SHARES AS OWNERSHIP SHARES :-
Common stocks also known as Equity securities or Equities, represent ownership shares in a corporation. Each share of common stock entitles its owner to one vote on any matters of corporate governance that are put to a vote at the corporations Annual meeting and to a share in the financial benefits of ownership. ( A corporation sometimes issue two classes of common stock, one bearing the right to vote, the other not. Because of its restricted rights, the non-voting stock might sell for a lower price )

Holders of common stock exercise control by electing a board of directors and voting on corporate policy. Common stockholders are on the bottom of the priority ladder for ownership structure.

Equity shares will get dividend and repayment of capital after meeting the claims of preference shareholders. There will be no fixed rate of dividend to be paid to the equity shareholders and this rate may vary from year to year.

This rate of dividend is determined by directors and in case of larger profits, it may even be more than the rate attached to preference shares. Such shareholders may go without any dividend if no profit is made.

In the event of liquidation, common shareholders have rights to a company's assets only after bondholders, preferred shareholders and other debt holders have been paid in full.

If the company goes bankrupt, the common stockholders will not receive their money until the creditors and preferred shareholders have received their respective share of the leftover assets.

This makes common stock riskier than debt or preferred shares. The upside to common shares is that they usually outperform bonds and preferred shares in the long run.

Either it may be in the secondary market, ( previously functioning shares ) or a new issue such as ( IPO, FPO, ) Initial public offer, Follow on Public Offer, etc. The number of Share holders may be varying daily., for a Specified Stock. The same condition for Other Stocks Also.

The common stock of most large corporations can be bought or sold freely on one or more stock Exchanges.

CHARACTERISTICS OF COMMON STOCK :-
The two most important characteristics of common stock as an investment are its residual claim and Limited Liability features :-

1) Residual claim means that stock holder are the last in line of all these who have a claim on the Assets and income of the Corporation. In a liquidation of the firm’s assets the shareholders have a claim to what is left after all other claimants such as the Tax activities, Employees, Suppliers, Bondholders, and other creditors have been paid. For a firm not in liquidation, shareholders have claim to the part of operating income left over after interest and taxes have been paid. Management can either pay this residual as cash dividends to shareholders or re-invest it in the business to increase the value of the shares.

2 ) Limited Liability means that the most shareholders can lose in the event of failure of the corporation is their Original Investment. Unlike owners of Un- incorporated business , whose creditors can lay claim to the personal assets of the owner ( House, Car, Furniture ) corporate shareholders may at worst have worthless stock. They are not personally liable for the firm’s obligations.

(B) PREFERRED SHARES :-
Capital stock which provides a specific dividend that is paid before any dividends are paid to common stock holders, and which takes precedence over common stock in the event of a liquidation. Also unlike common stock, preference shares pay a fixed dividend that does not fluctuate, although the company does not have to pay this dividend if it lacks the financial ability to do so. The main benefit to owning preference shares are that the investor has a greater claim on the company's assets than common stockholders.

Like common stock, preference shares represent partial ownership in a company, although preferred stock shareholders do not enjoy any of the voting rights of common stockholders.

Preferred shareholders always receive their dividends first and, in the event the company goes bankrupt, preferred shareholders are paid off before common stockholders.

In general, there are four different types of preferred stock:

a) Cumulative preferred stock,
b) Non-cumulative preferred stock,
c) Participating preferred stock, and
d) Convertible preferred stock.

Preferred stock has features similar to both equity and debt. Like a bond it promises to pay its holder a fixed amount of income each year. Suppose profitable gains are obtained then a Higher rate of Dividend will be given for Equity share holders, whereas only a limited previously given dividend may be given.

In this sense preferred stock is similar to an Infinite-maturity bond that is a perpetuity. It also resembles a bond in that it does not convey voting power regarding the Management of the firm. Preferred stock is an equity investment however.

The firm retains discretion to make the dividend payments to the preferred stock holders. It has not contractual obligation to pay these dividends. Instead preferred dividends are usually cumulative. That is unpaid dividend cumulative and must be paid in full before any Dividend may be paid to holders of common stock.

In Contrast, the firm does have a contractual obligation to make the interest payments on the Debt. Failure to make these payments sets off Corporate Bankruptcy proceedings.

Preferred stock payments are treated as dividend rather than interest, they are not tax deductible expenses for the firm. This disadvantage is somewhat offset by the fact that corporations may exclude 70 % of dividends received from Domestic Corporations in the Computation of their taxable income. Preferred stocks therefore make desirable fixed income investments for some corporations.

Even though preferred stock ranks after bonds in terms of the priority of its claims to the Assets of the firm in the event of Corporate Bankruptcy, preferred stock often sells at lower yields than do Corporate Bonds.

Presumably this reflects the value of the dividend exclusion, because the higher risk of preferred would tend to result in higher yield than those offered by Bonds. Individual Investors, who cannot use the 70 % tax exclusion, generally will find preferred stock yields unattractive relative to these on other available assets.

Preferred stock is issued in variations similar to those of Corporate Bonds. It may be callable by the issuing firm, in which case it is said to be redeemable. Due to an uncertain condition if the company is under a loss, being de-listed, then first a major portion of assets belonging to the company, would be divided to the preference share holders and the debts may be cleared , later the balance amount if any may be divided for the common share holders. It also may be convertible into common stock at some specified conversion ratio. Adjustable rate preferred stock is another variation that, like Adjustable-rate bonds, ties the dividend to current market interest rates.

a) Cumulative Preference Share
If the company does no earn adequate profit in any year, dividends on preference shares may not be paid for that year. But if the preference shares are cumulative such unpaid dividends on these shares go on accumulating and become payable out of the profits of the company, in subsequent years.

Only after such arrears have been paid off, any dividend can be paid to the holder of Equity shares. Thus a cumulative preference shareholder is sure to receive dividend on his shares for all the years our of the earnings of the company.

If the dividend is not paid, it will accumulate for future payment.

b) Non-cumulative Preference Shares
The holders of non-cumulative preference shares no doubt will get a preferential right in getting a fixed dividend it is distributed to quality shareholders. The fixed dividend is to be paid only out of the divisible profits but if in a particular year there is no profit as to distribute it among the shareholders, the non-cumulative preference shareholders, will not get any dividend for that year and they cannot claim it in the next year during which period there might be profits.

If it is not paid, it cannot be carried forward. These shares will be treated on the same footing as other preference shareholders as regards payment of capital in concerned.

Dividend for this type of preferred stock will not accumulate if it is unpaid. Very common in TRuPS and bank preferred stock, since under BIS rules, preferred stock must be non-cumulative if it is to be included in Tier 1 capital.

c) Redeemable Preference Shares

Capital raised by issuing shares, is not to be repaid to the shareholders (except buy back of shares in certain conditions) but capital raised through the issue of redeemable preference shares is to be paid back by the raised thought the issue of redeemable preference shares is to be paid back to the company to such shareholders after the expiry of a stipulated period, whether the company is wound up or not.

As per section (80) 5a, a company after the commencement of the Companies (Amendment) Act, 1988 cannot issue any preference shares which are irredeemable or redeemable after the expiry of a period of 10 years from the date of its issue. It means a company can issue redeemable preference share which are redeemable within 10 years from the date of their issue.

d) Participating or Non-participating Preference Shares
Participating Preferred Stock

These preferred issues offer the holders the opportunity to receive extra dividends if the company achieves some predetermined financial goals. The investors who purchased these stocks receive their regular dividend regardless of how well or how poorly the company performs, assuming the company does well enough to make the annual dividend payments. If the company achieves predetermined sales, earnings or profitability goals, the investors receive an additional dividend.

The preference shares which are entitled to a share in the surplus profit of the company in addition to the fixed rate of preference dividend are known as participating preference shares.

After the payment of the dividend a part of surplus is distributed as dividend among the quality shareholders at a particulate rate. The balance may be shared both by equity and participating preference shareholders at a particular rate.

Thus participating preference shareholders obtain return on their capital in two forms
a) fixed dividend
b) share in excess of profits.

Those preference shares which do not carry the right of share in excess profits are known as non-participating preference shares.

Apart from the above some other preference stocks are also present namely as,

A) CONVERTIBLE PREFERRED STOCK :
Preferred stock (preference shares) that can be converted into common stock (ordinary shares) at the option of the stockholder (shareholder) or as provided in the agreement under which it was issued, at a specified conversion rate.

Holders of this type of security have the right to convert their preferred stock into shares of common stock. This allows the investor to lock in the dividend income and potentially profit from a rise in the common stock while being protected from a fall in the same.


Convertible preferred stock that may be exchanged, at the issuer's option, into convertible bonds that have the same conversion features as the convertible preferred stock.

These are preferred issues that the holders can exchange for a predetermined number of the company's common stock. This exchange can occur at any time the investor chooses regardless of the current market price of the common stock. It is a one-way deal so one cannot convert the common stock back to preferred stock.

B) PRIOR PREFERRED STOCK
Many companies have different issues of preferred stock outstanding at the same time and one of them is usually designated to be the one with the highest priority. If the company has only enough money to meet the dividend schedule on one of the preferred issues, it makes the dividend payments on the prior preferred. Therefore, prior preferred have less credit risk than the other preferred stocks but it usually offers a lower yield than the others.

C) PREFERENCE PREFERRED STOCK
Ranked behind the company's prior preferred stock (on a seniority basis), are the company's preference preferred issues. These issues receive preference over all other classes of the company's preferred except for the prior preferred. If the company issues more than one issue of preference preferred, then the various issues are ranked by their relative seniority. One issue is designated first preference, the next senior issue is the second and so on.

D) EXCHANGEABLE PREFERRED STOCK
This type of preferred stock carries an embedded option to be exchanged for some other security upon certain conditions.

E) PERPETUAL PREFERRED STOCK
This type of preferred stock has no fixed date on which invested capital will be returned to the shareholder, although there will always be redemption privileges held by the corporation. Most preferred stock is issued without a set redemption date.

F) PUTABLE PREFERRED STOCK
These issues have a "put" privilege whereby the holder may, upon certain conditions, force the issuer to redeem shares.

G) MONTHLY INCOME PREFERRED STOCK
A combination of preferred stock and subordinated debt.

( II ) DEPOSITORY RECEIPTS
A depositary receipt is a negotiable financial instrument issued by a bank to represent a foreign company's publicly traded securities. The depositary receipt trades on a local stock exchange.

Depositary receipts make it easier to buy shares in foreign companies because the shares of the company don't have to leave the home state.

When the depositary bank is in the U.S., the instruments are known as American Depositary Receipts (ADRs). European banks issue European depositary receipts, and other banks issue global depositary receipts (GDRs).

( III ) AMERICAN DEPOSITARY RECEIPT (ADR)
American Depository Receipts, or ADR’s are negotiable security ( certificates ) that represents the underlying securities of a non-US company that are traded in U.S. financial Markets that represent ownership in shares of a Foreign Company. Individual shares of the securities of the foreign company represented by an ADR are called American depositary shares (ADSs).

Each ADR may correspond to ownership of a fraction of a foreign share, one share or several shares of the foreign corporation. ADR’s were created to make it easier for foreign firms to satisfy U.S Security registration requirements. They are the most common way for U.S investors to invest in and trade the shares of foreign corporation.

The stock of many non-US companies trades on US stock exchanges through the use of ADRs. ADRs are denominated, and pay dividends, in US dollars, and may be traded like shares of stock of US-domiciled companies.

The first ADR was introduced by J.P. Morgan in 1927 for the British retailer Selfridges. There are currently four major commercial banks that provide depositary bank services: BNY Mellon, J.P. Morgan, Citi Bank, andDeutsche Bank.

( IV ) EMPLOYEES STOCK OPTION PLAN OR SWEAT EQUITY
An Organization to provide an offer to their serving Employees, may allow for a Specified Amount lesser than the Market value, termed as Employees Stock Option Plan.

An ESOP is nothing but an option to buy the company's share at a certain price. This could either be at the market price (price of the share currently listed on the stock exchange), or at a preferential price (price lower than the current market price).

If the firm has not yet gone public (shares are not listed on any stock exchange), it could be at whatever price the management fixes it at.

WHY WOULD A COMPANY OFFER AN ESOP?
Let's first explain what owning a share entails.
When you invest in shares, you do not invest in the market. You invest in the equity shares of a company. That makes you a shareholder or part owner in the company.

Owning an equity share means owning a share in the company business. Companies offer their employees shares because it is considered that having a stake in the company would increase loyalty and motivation substantially.

WHEN ARE THEY GIVEN?
It depends on company policy and your designation. There are time limits for availing this scheme. For instance, you can acquire the shares after you complete a particular period of employment. This could be a year, even longer.

This is known as the vesting period, and generally ranges from one to five years. If you quit your job before this period is complete, the stock options lapse.

Sometimes, the ESOPs are given in a phased out fashion -- 20% in the second year, another 20% in the third year, etc.

WHEN ARE THEY TAXED? The ESOP is not taxed on acquiring the shares. You are taxed on the profit you make when you sell the shares or transfer them.

Transfer here refers to when you gift it to someone or transfer it to someone else under an irrevocable deed (they now own it, not you).

HOW ARE THEY TAXED?
When you sell any asset you own (house, land, shares, mutual fund units, gold, debentures, bonds), and you make a profit on the sale, it is known as capital gain.

The tax you pay on this profit is called the capital gains tax. Capital gains tax is computed on the difference between the sale price and the issue price (the price at which shares are offered to you).

If you sell the shares within a year of allotment (within 12 months of acquiring them), then it is a short-term capital gain. If you sell the shares after a year of allotment (after 12 months of acquiring them), then it is a long -term capital gain.

WHAT MAY HAPPEN IF THEY ARE LISTED ABROAD AND SOLD ABROAD?
This depends on whether you are a resident or non-resident Indian. If you are a non-resident, it will not be taxable, as the gains occur outside India unless the money is received in India.

If you are a resident in India, then you will be taxed on the gains.
Long-term capital gain is taxed at 20%.
Short-term capital gain is added to your overall income and taxed according to your slab rate.

WHAT MAY HAPPEN IF THEY ARE LISTED AND SOLD IN INDIA? The taxability depends on the nature of gain at the time of sale.
If you have a short-term capital gain, you have to pay tax at the rate of 10% (plus surcharge if applicable). Long-term gains are exempt from tax. 

DO I HAVE TO PAY A SECURITY TRANSACTION TAX IF SOLD IN INDIA OR ABROAD?
If you sell your shares on or after October 1, 2004, you need to pay the Securities Transaction Tax in India. Also the STT is leviable in abroad as per their rules.

CAN I AVAIL OF INDEXATION?
You use indexation when you calculate tax taking into account the inflation. This is good because it reduces the amount of capital gain and the amount you end up paying as tax.

Indexation is available only for long-term capital gains. Since the long-term capital gains on shares and options are not taxable now, it is not required.

CAN I INVEST THE PROFIT TO AVOID TAX?
Long-term capital gain on shares are exempt, so this does not arise.
There is no provision to invest the short-term capital gains to avoid tax.

( E ) DIFFERENT VALUE RIGHTS ( DVR ) STOCKS
A DVR share is like an ordinary equity share, but it provides fewer voting rights to the shareholder. So, for instance, while a normal Gujarat NRE Coke shareholder can vote as many times as the number of company shares heshe holds, someone who holds the company’s DVR shares will need to hold 100 DVR shares to cast one vote. The number of DVR shares required to be held will differ from one company to another.

Why are these issued by companies?
Companies issue DVR shares for prevention of a hostile takeover and dilution of voting rights. It also helps strategic investors who do not want control, but are looking at a reasonably big investment in a company. At times, companies issue DVR shares to fund new large projects, due to fewer voting rights, even a big issue does not trigger an open offer.

The Companies Act permits a company to issue DVR shares when, among other conditions, the company has distributable profits and has not defaulted in filing annual accounts and returns for at least three financial years. 

However, the issue of such shares cannot exceed 25 per cent of the total issued share capital. Some companies that have issued DVR shares on our bourses include Tata Motors, Pantaloons and Gujarat NRE Coke. According to reports, Tata Steel has plans to raise $1 billion through various instruments, including DVR shares.

Who should invest in DVR shares?
It offers both retail and institutional investors a variation, especially for those who may not be as particular about voting rights, but may see economic value in the form of higher discount offer that is being made and also for the incremental dividend.

Why should retail investors invest?
These are, ideally, good instruments for long-term investors, typically small investors, who seek higher dividend and are not necessarily interested in taking a voting position. Although DVR shares are listed in the same way as ordinary equity shares, these trade at a discount, as these provide fewer voting rights to the holder. Investors can also take advantage of the price differential of DVR and normal shares. 

When Tata Motors had declared its dividend in 2006, it gave the DVR holders a divided of six per cent and the ordinary shareholders one per cent. For example, the Tata Motors DVR shares were trading at Rs 689.80 on the National Stock Exchange (NSE) and the ordinary ones at Rs 1,255.75 on Wednesday.

What are the disadvantages?
DVR shares are thinly traded scrips, which means these are highly illiquid stocks. On Wednesday, a total of 2,67,000 ordinary shares of Pantaloons were traded on NSE and only 1,154 DVR ones. A total of 44,214 DVR shares of Gujarat NRE Coke were traded on Wednesday and 5,90,000 of the ordinary ones.