Knowledge Zone : NIFTY

NIFTY

 

What is Nifty and how trading is done?

1. Nifty (S&P CNX Nifty) is the Index of Indian share market on NSE (National Stock exchange) like Sensex on BSE (Bombay Stock Exchange)
2. Trading is done on Nifty contract which is also called as Nifty future derivative.Nifty derivative movement is based on Nifty index.In stock market language it is called as “underlying of Nifty future contract is S&P CNX NIFTY Index.”
3. Nifty Lot Size - Nifty derivative consist of a lot of 25* quantities of Nifty (as on date). So if you want to buy Nifty contract then you have to buy at least one lot.The trading in Nifty contract is done in lots.
4. Nifty Expiry - The Nifty derivative expires last Thursday of every month. In India we have three month future derivatives for trading.For example - In the month of October, we have October, November and December month series of Nifty derivative for trading. Current month derivative will have more liquidity (more volumes) as compared to other two months derivatives. A new contract is introduced on the trading day following the expiry of the current month contract. If the last Thursday is a holiday then contracts expire on the previous trading day.

Advantages of trading in Nifty

1. Trader get margin to trade on Nifty. For example - Nifty derivative consist of 25* quantity of Nifty index so the cost of one lot will become Rs 2,10,000 [25 qty of Nifty multiple by the closing price of Nifty index, which is 8400 current closing price]. Please note - You need to have 15% amount of the entire cost to trade in Nifty future contract. Approximately it comes to Rs 31,500. b) Small traders can even buy Mini lot of Nifty contract.
2. You can do day trading (Intraday trading) as well as carry forward (hold your nifty positions) till the expiry period of your contract (minimum one month expiry and maximum three month expiry)
3. You can trade both sides of the Nifty means if you feel market is going up then you can buy Nifty contract and if you feel market is going to fall then you can short sell Nifty and later buy it to cover up your positions.
4. Very Low brokerage rates. Low brokerage rates increases your profit percentage. We are offering 0.01% for buying and 0.01% for selling. If you are interested to open the Demat account with us then please Contact us.
5. High liquidity - Very high volumes are traded in Nifty future contract which will make the trader to square off at any time and at any price. ie.Based on your trading position your account will get adjusted on daily basis as per the closing price of Nifty derivative contract. Thats called MTM basis.
   For Example - If you buy one lot of Nifty at 8400 and Nifty closes at 8450 then Rs 50 as profit (total profit will become 25*qty x Rs 50 = Rs 1250) will get credited in your account. On the other hand if Nifty went down Rs 50 then Rs 1250 will be debited from your account.
   If you do not have balance in your trading account then very next day your position will be squared off by your broker. Some brokers provides some extra days to transfer money in your trading account.
6. If you buy and sell on a same day then the profit and loss will be adjusted in your trading account accordingly.
7. Trader has to square off the positions before or on expiry. If you does not square off then the contract expires on the expiry date and the money gets adjusted in your account.
8. You can buy and sell Nifty derivative contract in your trading account/terminal. Separate account is not required.

Risk Involved in Nifty trading

        Trading in Nifty future is a risky, heavy loss can occur. Basically trading involves big risk either you trade in Nifty future or in any other future contract or in stocks. Trading requires lot of experience and market knowledge. Investing and trading are two different factors in share market. Investing is not as risky as trading.

  *Lot Size or Quantity keep changes from time to time, as per SEBI & exchanges rules.

Click here to know about "Trading Account"

Click here to know about "Demat Account"

Click here to know about "Beginners Guide for share trading"

Click here to Learn "Chart Types"

Click here to Learn "What is Chart ?"

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Knowledge Zone : Financial Markets Classification

FINANCIAL MARKETS CLASSIFICATION

In India Financial Market can be classified as

       1) Money Market                                                  2) Capital Market

Besides the above it is again classified as primary markets and secondary markets

           Money market deals with instruments having a period of maturity of one year or less like treasury bills, bills of exchange etc. Capital market deals with all instruments having a period of maturity of above one year like corporate debentures, government bonds, equity and preference shares etc.

Money Market
          Money market deals in short-term debt, and channel the savings into short-term productive investments like working capital, call money, treasury bills etc.
          In India, money market is classified into the organized segment and unorganized segment. The organized segment is characterized by fairly rigid and complex rules and is dominated by commercial banks and major financial institutions like UTI. This segment is subjected to tight control by the Reserve Bank of India. Unorganized segment is characterized by informal procedures; flexible terms and attractive rates of interest both depositors and borrowers. The unorganized sector is dominated by money lenders.
         The Discount and Finance House of India (DFHI) is a finance house established as a company under the Companies Act, 1956. It is providing liquidity to money market instruments by creating a secondary market and offering buying / selling quotes for various instruments. RBI actually operates in the money market through the DFHI
         The position of money market in the Indian system has become important with recent liberalization of monetary policies, such as deregulation of lending rates, permitting mutual funds and banks subsidiaries to enter into money market operations. Money market ensures efficient functioning of the financial system and provides greater flexibility in operations

Capital Market
        Capital market is the market for financial assets having a period of maturity of more than one year or of an indefinite period. Thus, capital market provides long-term resources needed by medium and large scale industries.
        The Indian capital market which had been lying dormant in the seventies up to mid eighties has witnessed an unprecedented boom and undergone sea change with a number of financial services and banking companies, merchant bankers, more stock exchanges, ventures capital funds, private sector mutual funds, foreign institutional investors, over-the-counter exchange, national stock exchange, credit rating services, custodial services, portfolio management services, non-resident investment, new regulations etc. emerging on the Indian capital scene.
         Before repeal of Capital Issues Control Act 1947, the entire working of the new issue market in India was governed by the Controller of Capital issues Control Act, 1947. The timing of the new issues by private sector companies, the composition of securities to be issued, interest (dividend) rates which can be offered on debentures and preference shares, the premium to be charged on securities were all subject to the regulation of the CCI.
        The repeal of Capital Issues Control Act, 1947 and the establishment of Securities Exchange board of India (SEBI) has been a milestone in the history of capital market in India. There is complete metamorphosis of the market system, policies and regulation with the birth of SEBI like allowing companies to fix the price of instruments, making guidelines for various issues involved in primary market and framing guidelines for various intermediaries of both primary and secondary market. The role of SEBI has changed from controlling to regulatory with investor protection as the primary motive.

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Knowledge Zone : Trading Account

Knowledge Zone

Trading Account - Definition

Trading account is the account where you can buy or sell securities and derivatives products. In simple term, if you want to buy or sell a listed company shares (stocks) than you need to hold an Trading account.
You can holds your cash in your trading account so you can buy securities (shares) or trade in derivatives products with that cash.
These days trading accounts are three way accounts ( Bank-Trading-Demat) it means that your trading account is linked with your bank account and also with you demat account, so that the transaction remains smooth. Trading accounts are managed by brokers who having licenses from SEBI & exchanges to run there broking business.

Trading Account - Explained

      a) Though trading accounts are traditionally thought to hold only stocks, now a trading account can hold cash, securities and other types of derivatives and funds investments also.

      b) Investors can use a number of trading brokerage accounts. There is no limitation of opening of trading account on one individual name. Trading accounts are managed by brokers who having licenses from SEBI & exchanges to run there broking activity.

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India is GROWING

India is GROWING

MUST WATCH -  School kid shocked RBI Governor 

Courtesy : YouTube

 

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Knowledge Zone : Types Of Investments

Financial Instruments

Equities

Equities (in simple words or in day to day language we call it stocks of company) are a type of security that represents the ownership in a company, it means if you are holding some equities of any company than you are the part owner of that particular company.
Equities are traded (bought and sold) in stock markets. Alternatively, they can be purchased via the Initial Public Offering (IPO) route also, i.e. directly from the company.
Investing in equities is a good long-term investment option as the returns on equities over a long time horizon are generally higher than most other investment avenues off-course that company performances must be well for best returns in log term. However, along with the possibility of greater returns comes with greater risk.

Mutual funds

Mutual Fund is a fund based on particular theme and managed by professional fund mangers, there are many mutual fund themes are there available in markets for example :  Tax Saver or ELSS, Dividend or growth, Mid-cap or Large-cap and even Small-cap funds, blue chip, pharma, diversified, PSU and many such themes mutual funds are available for investors to invest in. A mutual fund allows a group of people to pool their money together so that a professional fund manager can manage that fund. This investments is popular because of its cost, risk-diversification, professional management & strict regulations. Investor can invest as little as Rs.1,000 in a mutual fund of his / her choice.Investor also have the option to try Systematic Investment Planing route popularly known as "SIP"  to invest in Mutual funds. Investors must check the fund's past track records and returns before investing in there chosen fund.

Bonds

Please do not confuse these "Bonds" with "James Bond 007", hahahah. Anyways lets get back to the serious topic. Bonds are fixed income instruments which are issued for the purpose of raising capital. Private entities, such as companies, financial institutions, and the central or state government and other government institutions use this instrument as a means of garnering funds. Bonds issued by the Governments to carry the lowest level of risk but could deliver fair returns.

Deposits

Investing in bank like Fixed Deposits or post-office deposits is a very common way of securing surplus funds. These instruments are at the low end of the risk-return spectrum, Post office deposits earn one of the lowest interest rates in financial markets, but it also considers one of the safest bet as per Indian government rules.

Cash equivalents

These are relatively safe and highly liquid investment options. Treasury bills and money market funds are cash equivalents.

Non-financial Instruments

Real estate

With the increasing cost of land, real estate has come up as a profitable investment proposition. But one must keeps at-least 7 to 15 years view for best returns from the real estate.

Gold

This precious yellow metal is a preferred investment option, particularly when markets are volatile and in uncertainty like war situations. India is one of the highest consumer of Gold not in terms of investments but in terms of physical purchasing of it, as India is traditionally a Gold purchaser it is in our culture, tradition and also religion. Beyond physical gold, these days a number of products which derive their value from the price of gold are available for investment on commodity and stock exchanges like gold futures and gold exchange traded fund.

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Knowledge Zone

 KNOWLEDGE ZONE

Today I am starting a new section in which I explain some important aspects of Trading, Investing, Technical Analysis, Value Investing & many more related stuff, under that heading of  "Knowledge Zone". 

I hope these knowledge sharing will definitely help Stock market community to understand many things in very simple and learning language and explanations.

These knowledge sharing blog if for all investors and traders from all around the world,no matter in which country they are from and whichever stock market exchange they trade, because the basics remains same for all kind of markets all over the world.

We will cover all type of financial markets, from Stock Market to Derivatives to Options, Mutual Funds, Commodity market, Currency, Forex, Debt, Fixed Deposit, to any kind of investments and even Real Estate and much more.

I invite readers to post there comment and queries under the relevant topics.

I also invite readers to share there knowledge, to help the investors.

Please note (Strictly but Humble request) : 
Kindly do not post any recommendations for buying or selling any type of securities in this Blog, if found anyone breaking this important rule of the blog than I will block that person / member from the blog permanently. Also take a note that do not post any advertisement or promotion of your or others website or blog for your personal benefits etc. Do not use abusive or offensive language, as this blog is for learning and knowledge sharing purpose.

I expect that everyone must obey the basic and simple rules of this Blog.

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About Us

CHARTIST

         In my terms CHARTIST means the person who reads or make charts, it means chart can be on anything from marketing charts to stock market charts or simple data charts to the very complicated multiple data charts, it can be any chart.

         But here our relevance of chart is of Stock, Commodity, Currency, Forex charts. The person who reads the chart by implementing layers of methods and strategies on charts are called Technical Analyst  (no matter the methods and strategies are of there own created or by using techniques discovered by many legends in the past).

Here on this blog / site you will find the following :

1) Technical Charts - Studies, Theory, Indicators, Methods and everything related to charts and Technical Analysis.

2) Knowledge Zone - in this section many important topics will be covered and you will get basic information on almost everything related to financial markets.

3)  Ask Me - in this section you can ask what ever queries you have, related to Stock markets, TA charts etc.

4) Besides above topics, from time to time we will try to put some light on many such issues which are directly related to each one of us in regards of financial markets many many general topics, but are very important in our life.

Please do note down that our technical chart study is only meant for study / learning & knowledge purpose only.

I do not recommend or advise to buy / sell / hold any stock / securities / derivatives etc.

Point to be noted here that our study is mainly on past dated charts so that people can understand and learn the theory and practical or technical chart reading.

I do not study on "future" dated charts (must explain here "future" means the future date & time, means which is not present, in simple words it means "future tense" )

Please do read Disclaimer before starting with this blog. If you continue reading, learning, surfing & using this blog / site and its reviews, comments etc. than we understand that you have read full disclaimer and understood it.

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