Query about arbitrage?

[sampumu]

Dear Prashant,
1.It's very difficult to catch High & Low of any script,so selling at higher rate & buying at lower,i dont think it's an arbitrage,,,,,seniors pl explain?????

In my opinion,arbitrage concept is like this-- possible in derivatives,for ex- u r bullish on say nifty future,& u buy position in future,but at the same time u buy one put option & be bearish,so if u goes wrong,in buy,then u r safguarded by ur put option,as ur put price will increase,,,,, seniors pl explain,,,,, & pl clear the concept.
Thanks in advance..
Samir Pune

 

[swagat86]

Cash market arbitrage in India is difficult because here Delievry based short selling is not allowed. So u have to square off a position by EOD which at times may be loss makin. Iv tried arbitraging several times between NSE and BSE and most of the time by EOD i landed up in negetive. Yes u can always do cash and futures arbitrage.

Say Reliance futs are trading at 10 pt premium u can buy 150 RIl shares in cash market and sell 1 lot of RIL futs. this will ensure u get 10 pts for sure, because usualy the stk and futs will definitely come equal. im afraid u have to be careful about brokerage and taxes. In above case u have to pay brokerage both on cash and futures which may not or give u very low profits.


Thanks

 

[prashant909]

Dear Sampupu.....

Thanks for ur rply.....

i wud like to clear one thing.....i meant from short selling @ higher rate in one exchange n purchasing the scrip from another exchange.............

Thanks

 

[uasish]

Yes that is also arbitraging but remember you have to sq up intraday,as there are HNI arbritragers ,this situation of price differnce in 2 exchanges may not last more than few mins.
Moreover the scrips bought on 1 exchange if fails to land up in ur demat (before u issue the slip for ur short sell to the broker)then be prepared for Auction demarrages.

 

[prashant909]

Can anybody tell me step by step procedure of making profit from arbitrage in NSE and BSE??????

 

[swagat86]

Can anybody tell me step by step procedure of making profit from arbitrage in NSE and BSE??????

as iv mentioned in the thread since india delivery based short selling is not allowed its very difficult to actualy make good and stable money out of arbitrage.

Say a stk abc in NSE is trading @ 20 and in BSE @ 21. So wat u do is BUY NSE and sell BSE. once these prices come equal, say both go to Rs 25, u make a neat RS 1. How??
NSE u bot @ 20 and Sold @ 25. Net gains= Rs 5
BSE u short @ 21 and sq off @ 25. Net loss= Rs 4

Net gain= Rs 1

problesm is out of this Rs 1 u have to pay brokerage and taxes ( in two different transaction)

and u cant carry over ur short in cash market. And NSe futures is ok but in BSE futures the volumes is too low.


Thats enuff for now i think

 

[prashant909]

The last rply "30 Bse and nf" not clear...kindly xplain..

Thanks

 

[swagat86]

The last rply "30 Bse and nf" not clear...kindly xplain..

Thanks

no thays quite very difficult so iv deleted the post.

never mind

 

[knarendra]

Dear sir,
Today SBI rate In Cash market: Rs:1585/- on 1.15 PM.

future Market: Aug : Rs: 1600/-
Sep : Rs: 1614/-
Oct : Rs: 1620/-

Now How to use ARBITRAGE? pl.explain me.
Is it possible to Buy in cash market and sell in Oct.future? Is the broker immediatly settle our payment or broker settle our payment only after expiry of october future?
Which one is more profitable? sell in Aug? or sell in Oct?
Pl.explain me.

regards,
naren

 

[loosingstreak]

Yes you can buy cash and sell futures. Which month is totally up to you.

If you do not get an opportunity to reverse the trade favourably earlier than expiry ( ie if futures go at a discount to cash) keep in mind you will have to hold till expiry and then sell in cash (futures would automatically expire.)

Take into account brokerage and interest costs.