Beginner Question

Ikonos · #1 23rd November 2008, 06:29 AM

I am new to the market in India but i have some experience with markets in US. In US markets when I buy 100 shares of a stock then i will get access to those 100 shares immediately and I can sell them immediately for a fixed commission or keep them for few years with out any additional charge and pay the commission only when you sell them again. However I feel that is not the same in India. As I understand when I buy 100 shares of a stock I can not sell them immediately with confidence that the buy and sell quantities will balance out and the broker will take care of the transfer of ownership for those shares between appropriate parties. I think if I do not receive the full delivery of those 100 shares then I will be responsible for the missing shares that I sold already. Is my understanding correct? If so why am I being penalized? Why wont I get the delivery of the 100 shares immediately? Is it because BSE/NSE are not electronic exchanges? Appreciate your clarification.

Thanks
Ik.

gsalvadi · #2 25th November 2008, 08:53 PM

Quote:

Originally Posted by Ikonos

.... keep them for few years with out any additional charge and pay the commission only when you sell them again. Ik.

In India too, you need not have to pay any charges to keep your stocks in your demat account. You would pay brokerage only when you buy or sell. The charges collected by brokers for maintaining the service is a maintenance charge, that is not to do anything with buy or sell

Quote:

Originally Posted by Ikonos

the broker will take care of the transfer of ownership for those shares between appropriate parties.
Ik.

Broker can not transfer ownership of securities, it is the responsibility of other organizations that involved in the process of "clearing and settlement", I hope. Sometimes, brokers use to do "adjustments" for their clients. That is not the official system works.

Quote:

Originally Posted by Ikonos

I think if I do not receive the full delivery of those 100 shares then I will be responsible for the missing shares that I sold already. Is my understanding correct? If so why am I being penalized? Why wont I get the delivery of the 100 shares immediately? Is it because BSE/NSE are not electronic exchanges?
Ik.

"NSE/BSE are not electronic exhanges" - I don't understand this. As they are electronic obviously. Sorry if I don't get you right. Exchanges are evidently "electronic" as they don't deal with papers. (a demat account - an account that holds "dematerialized securities", in electronic form (?))

YOu are penalized for the reason that it is your obligation to deliver what you sell. Likewise, if you don't get the shares you buy, the buyer get penalized

Hope it helps

fast_rizwaan · #3 26th November 2008, 03:36 AM

In Indian stock exchanges, they follow T+2 delivery system (trading day + 2 days, i.e., on 3rd day the buyer gets the delivery of shares). And for failure of delivery NSE/BSE has rules for settlement usually T+5 to T+7 days.

A sells B and B sells to C; if A defaults, B also get default because of A and hence get "Penalized"; but A will be penalized on B's behalf and B will be penalized on C's (the final buyer's behalf). So, C will get shares or full amount + penalty from B, which B again gets than from A.

So, you, as B will not suffer; but until The deliveries are settled, your money is gone/blocked by the broker/exchange.

vidyamanoj · #4 26th November 2008, 06:41 PM

hi everybody

i am new to trading stocks. i have opened an online account with sharekhan.
can anybody tell me whether the leverage amount can be used for delivery also rather than day trading.what i want to know is:if suppose i have rs 10000 in my demat account and i have bought stocks for say rs 12,000 thinking that i will go for intraday.but unfortunately the stock price comes down and i dont sell the stock same day itself and wait for the stock price to go up to sell(may be next day).do i have to again credit my account with rs2000/- more or will it be adjusted in leverage amount.
waiting for the kind replies.

gsalvadi · #5 26th November 2008, 09:00 PM

Quote:

Originally Posted by vidyamanoj

... i have bought stocks for say rs 12,000 thinking that i will go for intraday.

Dear friend,

You should not buy stocks thinking that it would go up

Quote:

Originally Posted by vidyamanoj

i am new to trading stocks.

It is good to learn about trading before trade. I strongly suggest you to learn.
I suggest you to check Beginners Section of this forum to getting started. There are wonderful threads you can learn from.

Perseverance is the key of success

Cheers

The Following User Says Thank You to fast_rizwaan For This Useful Post:
gsalvadi (26th November 2008)