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Friday, 26 October 2012

Costs Involved in In stock market investments


Costs Involved in In stock market: As per Oct,2012



My first shocking Experience,
It was my first day in MBA IIIrd  Semester , the faculty  polished our Brain By saying to achieve something. I still remember that class when My SAPM Proff Atin Garg asked “what do you want to become” I just replied Portfolio manager and I don’t know much about that and then he said, do some thing extra in life …. Gain practical knowledge,“Kal subah Janta puchegi,Maa Baap Puchenge, dost puchengy” kya bhai Placement huui yani? What will you say?. On that day I decided to open a real account so that I can become temporary Portfolio manager.

I went to kotak Securities and asked to open a account and then he asked
1) PAN(Permanent Account Number)
2)Savings Bank Account With Cheque Book
3)Adress Proof

It was Aug 18 when I received My trading Account KIT,then I started  to Trade with 5,000 Rs At that time I was just Knowing the Commision of 0.25% over total turnover for Delivery and 0.025% Intraday.

By the blessings of God,The Economic Reforms Part II was releasd, KFA rose from 8 rs per share to 17 rs within 16 days and SAIL,GVKPIL,GMR,SUZLON,BHARTIARTL,RENUKA almost every SCRIP was Up and I made more than  20% return over 5000 in just 45 days…

And then came October, on that day I really realized my real profit by deducting the hidden charges

1)STT(Security Transaction Tax) mandatory_ 0.1% for Buying and 0.1% for selling(it changed to 0.001% in FY13-14 BUDGET)
2)Brokerage:0.25% on Buying and 0.25% on selling(depends on Broker)
3)Service tax on brokerage 12.36% for buying and  12.36 % on selling
4)Stamp Duty : According to scrip but ‘ll be in Rupees only(very less)
5)Depository charges:There is no charge if any scrip is credited in your DEMAT account but they will charge 30Rs + 0.1% total value of  debiting Scrips
6)Annual Maintenance Charges(AMC):600 Rs per Annum.
7)Short term Capital Gain Tax if sold with profit with in 365 days 15% of total Profit...
8)No Long Term Capital Gain Tax if you hold more than 365 days.



In India There are Two depositories NSDL(NAtinal Securities Depository Ltd) and (CDSL) Central Depository Of secutities Ltd…… NSDL is for NSE and CDSL is for BSE Trades…. The charges are subject to Kotak brokerage and NSE,CDSL…it will differ if you trade from others  



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i.e if you bought a share of 80rs then you have to sell it above 81 rs then only you will get profit...you may gain 10% on you share from buying ..but when the real profit comes to your account you 'll be shocked to see These deductions.


What is Margin?
Margin is the liquidity which your broker will provide.
Case:1

Suppose You thought ITC share Price will Rise by 10 rs to 310 rs tomorrow.and you have 3000 rs in your trading Account.but you have balance to buy 10 shares only.Then what you do is Utilize the Margin Provided by your broker.(Margin utilization for Every stock is different if it is good stock then you may utilse 80% levarage .if it is volatile and Bad stock then you will get 0% levarage to buy that share) ITC is a good and less volatile share so you will get 80% leverage to buy this stock.So finally you can buy 50 shares(50*300=15000).This is because you have balance of 3000 rs which is 20% of 15,000 rs.But you have obligation to Pay that 80% margin with in 2 days..else intrest will be charged.Suppose the ITC gone down by 10% then you will get a margin calll to clear the balance else they will sell the shares and reedem the amount.

Conclusion:
If you are learner, start trading with not less than or more than Rs 5000/- and when you gain knowledge trade with a minimum of 50,000
2) Utilize the margin Given by your trader in Intraday transactions....why i am saying Intraday becz The brokerage 
'll be 90 times less and there will be no DP(Depository Charges) because there is no delivery.....

I am poor at english so if any gramatic error or spelling mistake found Please let me know by commenting on this blog

if you don't feel comfort please mail your comment here:( thecfo@in.com;zelani.ceo@gmail.com)

For National and International Financial Market Updates in Basic layman language Like A Failed Investor Facebook Page


Syed Abdul Zelani,

MBA 2nd year,

Lovely Professional University.

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