Introduction to Share Market:

The National Stock Exchange of India is a stock Exchange that is located in Mumbai, Maharashtra. The National Stock Exchange basically function in three market sections, that is, (CM) the Capital Market Section); F&Q (The Future and Options Market Sections) and WDM (Wholesale Debt Market Segment). It is important place where the trading of shares, debt etc takes place.

It was in year 1992 that the National stock Exchange was for the first time incorporated in India. It was not regarded as a stock exchange at once. Rather, the national Stock exchange was incorporated as a tax paying company and had got the recognition of a stock exchange only in year 1993 the recognition was given under the provisions of the Securities Contracts (Regulation) Act, 1956.

The National Stock exchange is highly active in the field of market capitalization and thus aiming it the ninth largest stock exchange in the said field. Similarly, the trading of the stock exchange in equities and derivatives is so high that it has resulted in high turnovers and thus making it the largest stock exchange in India.

It is the stock exchange wherein there is the facility of electronic exchange offering investors. This facility is available in almost types of equitable transactions such as equities, debentures, etc. it is also the largest stock exchange if calculated in the terms of traded values.

Equity:

Intraday Trading

Intraday Trading, also known as Day Trading, is the system where you take a position on a stock and release that position before the end of that day's trading session. Thereby making a profit for yourself in that buy-sell or sell-buy exercise all in one day. You are not concerned about whether the market is going down or up. You are not concerned with market sentiments. You are not concerned with the fundamental strengths (or the lack of it) of any company. All you need to predict is that the stock price will either rise or fall very sharply in the course of the day.

When you take up day trading, the rules that may have helped you pick good stocks or find great money makers over the years, trading 'normally', will no longer apply. This is a different game with different rules. All of the methods that are used to identify stocks that are appropriate for normal delivery-based trading are dependent on technical analysis, fundamentals or insider information. Technical analysis with charts is a way of using historical price/volume patterns to predict future behavior. Fundamentals deal with the market strength of a company, involving detailed study of balance sheets, branding, positioning, etc.

None of these, on its own, hold good for day trading. The day trader's choice of scrips and positions has to work out in a day. There's no waiting until tomorrow to see how the charts play out before committing capital. If the day trader sees an opportunity, he has to go for it now or it's gone. Things can change drastically in minutes. When it's time to buy or sell, it's time to buy or sell, and that's all there is to it. Day trading can be a great way to make money all on your own. It's also a great way to lose a ton of money, all on your own.

 

Calculation of Brokerage for Intraday

Example:

• Company: ITC • Principle: Rs.1,00,000 • Share price: Rs. 200 • Brokerage Intraday: 0.05%

If we invest Rs. 1,00,000 in ITC ltd. @ Price 200 at 9.30 and we sell this share in a same day before 3.30 pm then the brokerage will be:

• Buy @ Rs.200 • Quantity 500 Units

Amount: Rs. 200 X 500 Units = Rs. 1,00,000

Brokerage: Rs. 100,000 X 0.05% = Rs.50

• Sell @ Rs. 210 • Quantity 500 Units

Amount: Rs. 210 X 500 units = Rs. 1,05,000

Brokerage: Rs.1,05,000 X 0.05% = Rs. 52.5

Thus the total Brokerage Charged to You will be Rs 50 on Buying + Rs. 52.50 on selling = Rs. 102.50 for intraday trading.

Delivery/ Holding of Stock:

Delivery based trading is the most common form share trading done by most of the stock market investors throughout the world. In this type of trading the investors have to pay the full price of the stock and the stocks are deposited in their demat account. There is no predefined time limit in case of the delivery based trading for selling the stocks.

The biggest advantage of delivery based trading is that you are not bound with time for selling the stock. You can hold the stocks for as long as you want. So, you can always hold a stock until you are getting a significant profit from the investment. Therefore, with delivery based trading you can always take your time to take a decision and reduce the risk of losses.

When you are making a long term investment with delivery based trading, you can also benefit from other things like dividends, split of stocks, bonus shares and so on. These are benefits that the companies offer to their share holders from time to time and you can make significant profit from these offers if you are holding the stocks for long periods.

 

Calculation of Brokerage on Delivery:

Example:

• Company: ITC ltd. • Principle: Rs. 1,20,000 • Share price: Rs. 150 • Brokerage on Holding: 0.5%

If we invest Rs.1,20,000 to purchase the share of ITC ltd @ Rs. 150 today but for the purpose of holding the share then the brokerage will be calculated as:

• Buy @ Rs. 150 • Quantity 800 Units

Amount: Rs.150 X 800 Units = Rs. 1,20,000

Brokerage: Rs. 1,20,000 X 0.5% = Rs. 600

If you want to sell the Share of ITC ltd. after a period of 1 year at a price of Rs. 210 then the calculation will be:

• Sell @ Rs. 210 • Quantity 800 Units

Amount: Rs. 210 X 800 Units = 1,68,000

Brokerage: Rs. 1,68,000 X 0.5% = Rs. 840

Brokerage will be calculated on the Buying and selling of shares and not on the holding period thus the brokerage paid on this trading will be Rs. 600 on Buying + Rs. 840 on Selling = Rs. 1,440 on Delivery/ holding of stock.