Any query/confusion? Visit this thread and get answers

[jitendra6328]

i do not have any demat account. i want to have one and invest some of my savings in shares. what 2 do? which bank i should prefer. i have account with ING Vyasa, hdfc, idbi

[Saand-Bhaaloo]

Gaurav and Jitendra, welcome on board
As both the queries are demanding some experienced trader advice we will wait for a couple of days else I'll suggest whatsever little I know on the issue.
Once again a request to all the great traders to take some 10 mins a day out and see practice mentoring at one point, anyways I am kinda determined to make this one a memorable thread for years

Regards,
SB

[logmein]

Originally Posted by gaurav_ahuja

Hi...I am new to the stock market and have a pretty basic question.
What is the use of delivery instruction?? I mean why do we need to take delivery of the shares we buy??
Is it necessary??
And what in case an investor doesnt take the delivery of his shares??
Any prompt reply wud b greatly appreciated.....

Hi

I will answer it the best way I can. Correct me seniors if I go wayward or miss the point altogether

Earlier shares were traded in physical form; in papers. You had to buy shares by physically moving yourself to the exchange and making the payment before being handed over the share "delivery".

Nowadays, everything has been "dematerialised" or is in "demat" form. This means that shares can be traded (Sold/ bought) without any paperwork. These shares are in "soft" copy form and held by the NSDL (National Stock Depositry Ltd) or the CDSL (Central Depository for Securities Limited) which is a Government undertaking.

So when you buy shares nowadays, through your "Demat" account, you still are buying them from the NSDL/ CDSL; only that your broker does the co-ordination on your behalf. So, you still have to take delivery of the shares like you used to before. Very importantly, it also denotes that the set of shares are something you own and have taken "delivery" of; hence the same cannot be "re"-sold off to anyone else.

I hope this clarifies the "delivery" aspect.

Now, assume a scenario wherein you want to buy a share/ scrip in the morning (on its low) and sel it off (on its day high) in the afternoon. This is intra-day trading and you will not take "delivery" of shares since you are going to sell it off and "void"/ return the delivery in any case, in the afternoon. So this is a common situation wherein you will not assume "delivery".

Also, technically speaking, the shares that you buy are simply a request for buying. The same is passed on from your broker to the exchange which then routes it to its repository/ NSDL/ CDSL. These units then check for the company's availability of shares/ other parameters before transferring the shares to your Demat account and confirming delivery with your broker who then in turn informs you of the same. So if NSDL determines that the shares cannot be issued/ alloted for some reason, it will hold back/ decline delivery of the bought shares. This is one situation wherein the exchange/ NSDL/ CDSL does not issue delivery. Just thought I would explain this as well; contrast it with the case above where the user does not take delivery.

Do let us know if there is something pertaining which you have not understood yet. Am by now means an experienced pro, but yes its as much a learning experience for me answering questions as it is fo asking new ones

Keep it flowing guys!!!

[logmein]

Originally Posted by jitendra6328

i do not have any demat account. i want to have one and invest some of my savings in shares. what 2 do? which bank i should prefer. i have account with ING Vyasa, hdfc, idbi

Hi Jitendra

You will have to have a Demat/ Trading account to be able to trade in equities/ shares. It is a mandatory requirement from SEBI. SEBI is the government undertaking/ unit that takes care of regulating / policing the shares market.

You are best recommended to take a Demat/ Trading account with the bank which houses your Savings account. Else, a minimum balance amount of about 5,000/- will have to be maintained on that account all along. Having a Demat service with the same banker gives you a Zero-balance account in most cases.

I strongly recommend HDFC Securities for their clean practices, but then again, its your final call.

[reji]

Dear Saand,

I also have a basic query. It seems that somtimes a few secuirity comes in ban period under FNO segmanet. Why is it so? What would be the impact on the price of these shares (in cash market)during the ban period? How long it itake to come out from the ban? Who lift the ban and undrer what circumstances?

My other queries are as follows

What is BC start date and and BC end date?

ND start date and ND end date

VaR

Bhav copy

Kindly respond back when you gets time.

Thanks in advance,

Regards

Reji

[Saand-Bhaaloo]

Originally Posted by logmein

Hi

I will answer it the best way I can. Correct me seniors if I go wayward or miss the point altogether
......................
So when you buy shares nowadays, through your "Demat" account, you still are buying them from the NSDL/ CDSL; .................
I hope this clarifies the "delivery" aspect.

..........................

Welcome logmein, infact we are more than happy to log you in !
Ok so as promised I'll coordinate these discussions will also do the clerical job of minuting points of these discussions
So for here what I have understood is like this:-

1. In Dmat environment shares are all in electronic form, and like earlier still are held in Govt owned repositories
2. So when a company say PQR limited launches an IPO with 100 shares there is nothing physical issued but after allotment depository maintains the name of owners such that total is always hundred.
3. In future transactions whenever depository receives matching instructions of trade i.e. net amount of sold equaling net amount purchased it make the changes in the ownership such that total is again 100.
4. Ideally all this happens end of the day so within day there's no name changes or hence delivery
5. When the name change is done in depository it is also intimated to the holder and this is what we mean by receiving a delivery or ownership.
6. But the catch is that we individuals never held accounts directly in depositories but with providers called depository participants (DP) or DMat service providers.
7. Now few questions, as this all if correct appears pretty robust and with advancement of technology quite manageable also, but then to we hear that delivery fails also, what are or can be the most common reasons of such failures?
8. Secondly, what are the reasons of few stocks having delay in delivery i.e. usual delivery being 3 days than other stocks, or is this just my misconception?

Please correct/improve whatever is not upto the mark above and answer the associated questions

Originally Posted by logmein

Hi Jitendra

You will have to have a Demat/ Trading account to be able to trade in equities/ shares. ................

You are best recommended to take a Demat/ Trading account with the bank which houses your Savings account. Else, a minimum balance amount of about 5,000/- will have to be maintained on that account all along. Having a Demat service with the same banker gives you a Zero-balance account in most cases.

I strongly recommend HDFC Securities for their clean practices, but then again, its your final call.

Two clarifications here, the way you have typed, it looks as if we only need to have one outta two above but in my understanding we need to have following three which can all be through different service providers or one as we desire:-

1. A bank account for issuing and receiving cash instructions/cheques etc.
2. A Dmat account to hold stocks and receive deliveries.
3. And finally a online trading account to give instructions

And please also tell what you find so good about HDFC as I am just going to apply to ICICI bank based solely on the banking services experience enjoyed with them, please inform where they lack, in services, costs or both?

With Regards,
SB

[Saand-Bhaaloo]

Hmmm, welcome reji and I appreciate you have so many queries but please understand that we are not against Google and its still pretty much live and kicking So jokes apart I would request you that in case you have chapter level difficulties please do googling, find some (whatever) info and just go through it once, believe me this practice will help all of many folds and will also attract more n more experts as mostly they all want to share knowledge with us beginners but simply get bugged up with our responses in acquiring knowledge. With this please find some of the answers I know...

Originally Posted by reji

Dear Saand,

I also have a basic query. It seems that somtimes a few secuirity comes in ban period under FNO segmanet. Why is it so? What would be the impact on the price of these shares (in cash market)during the ban period? How long it itake to come out from the ban? Who lift the ban and undrer what circumstances?

Well as we know future and options are mostly speculative however much we try defining our hedging urges, thus in case regulators (read SEBI, Fin. Min., RBI) feels the current trading is way too unrealistic or can cause a great loss to existing investors they recommend banning these in FnO segment, this is more pre dominant in case of basic commodities as noticed last year in case of Tur dal etc, where speculators caused inflation many times more than what it really was.As they say in stock market money multiplies or depletes at the rate of speculations!

Originally Posted by reji

My other queries are as follows

What is BC start date and and BC end date?

ND start date and ND end date

Sorry I don't know, btw what is this BC and ND?

Originally Posted by reji

VaR

Well I guess this is one topic having maximum articles by its name, simply try searching this in wikipedia or gloriamundi. But for layman, as we don't understand standard deviations, fat tail loss, kurtosis of curve, distribution etc. in reports risk analyst often convert everything as a percentage of investment and thus tells you in simple terms Value at Risk (VaR). For more simplifications they even tell this VaR in monetary terms like in investment in stock A you hold of 1000 rupees, your one weeks VaR is Rs 75 with 95% probability. This is equivalent to saying than in 95 out of 100 times in investment of Rs 1000 in stock A will not fall by more than Rs 75, else consider yourself exceptionally lucky and add some extra alphabet to your name!!

Originally Posted by reji

Bhav copy

Well I guess at market close all the transaction details are recorded and made available with the name daily Bhav copy. This name is more because of legacy of BSE or I must be missing something here.

Originally Posted by reji

Kindly respond back when you gets time.

Done!!

With Regards,
SB
P.S. Although participation is improving on this thread but we still needs more voluntaries, questioners, coaches and in particular a KING MENTOR......Any takers?

[jitendra6328]

Hi, thanks for all the feedbacks i got regarding demat account. Is there any advantage in opening 3-in-one account in a bank at RBI location? still i could not get any answar which bank i should choose HDFC,ING VSYASA, IDBI

[Saand-Bhaaloo]

Originally Posted by jitendra6328

Hi, thanks for all the feedbacks i got regarding demat account. Is there any advantage in opening 3-in-one account in a bank at RBI location? still i could not get any answar which bank i should choose HDFC,ING VSYASA, IDBI

Don't know what can be advantage with RBI here? But RBI is not like police maintaining law and order in its local city only, so with almost all banks going for CBS don't worry about locations till your all your accounts are accessible online.
For choosing your broker depends on parameters like:-

1. Where do you already have a banking account?
2. What is your trading requirements, like intraday, mid term, long term etc.

But more or less icicidirect and HDFC are comparable because of their well managed banking networks, others I don't no.

Regards,
SB

[gaurav_ahuja]

Thank u mr. logmein for such a long explanation... I think i got it now...