Prajna Capital - An Investment Guide

In the last decade or so, the stock market has moved towards paperless trading. For investors, who used to burdened with reams of stock certificates, a demat account has become a necessity. Not having a depository or demat account has now become the biggest entry barrier to investing in equities. It is no wonder that more and more entities (commodities futures and spot market) are moving to the dematerialised form of trading. A demat or 'dematerialised' account holds shares in electronic form, thus saving you the bother of holding shares in paper form. DEPOSITORY FUNCTIONS A depository is similar to a bank. It holds shares, which belong to investors, in electronic form. The investor has to open an account with the depository, through a Depository Participant ( DP ). The DP is an intermediary between the depository and the investor. In India, there are two depositories, viz., National Securities Depository and Central Depository Services. A number of banks (HDFC Bank, ICICI Bank...

Primary and Secondary Markets, How to do trading ? Buy and Sell.Primary and Secondary Markets Shares which are bought in IPO are called primary market shares. Once IPO is over and shares are listed in stock exchange and if you buy them, they are called secondary market shares. Opening a Demat Account : A person should open a demat account ( dematerialised account) with any of the brokers available so that trading can be started. ICICI direct, Reliance Money, Share khan, India Bulls, Geojit, 5 Paisa, HDFC securities are few of the brokers available with whom you can do online trading. Pan Card is must for opening demat account. You should also have address proof and Id proof so that the demat account can be opened. It takes upto 15 days to open a new online trading account. Your broker will create an online account for trading, demat account for your shares, bank account for your cash transactions. ICICI direct offers 3 in one account but brokerage is bit high. Reliance Money has flat ...

Where can an investor get a form for applying/ bidding for the shares? The form for applying/bidding of shares is available with all syndicate members, collection centers, the brokers to the issue and the bankers to the issue. These are also available with your friendly neighborhood news paper vendors and sub brokers. How are offer documents prepared? The offer documents such as prospectus etc. are prepared by an independent entity know as Merchant Banker, which is registered with regulatory authority SEBI. They are required to carry out due diligence while preparing an offer document. The draft offer document submitted to SEBI is put on website for public comments. Is it compulsory for an investor to have a Demat Account? All the public issues of size in excess of Rs.10 crore, are to made compulsorily in the demat more. Thus, if an investor chooses to apply for an issue that is being made in a compulsory demat mode, he has to have a demat account and has the responsibility to put the...

An ETF is like an index fund in terms of its portfolio. The basket of stocks is in the same proportion as the pre-decided index. The initial participants give the fund the basket of stocks and in turn take units of the fund in exchange. These units are then traded on the stock exchange through stock brokers. So investors who wish to take up units of an ETF require a demat account. The price of an ETF fluctuates with the fluctuation in the underlying index throughout the trading day. The NAV is usually a fraction of the value of the index, like one-tenth or one-hundredth. But the value at which it is traded is a function of its demand and supply. So ETF units can trade at premium or at discount. The benefit of an ETF to an AMC is more or less the same as it would be in case of any other mutual fund. But since it tracks an index, it doesn’t require active management of the underlying portfolio.