Share market has given an average annual return of about 18 percent in the last 10 years.
The Indian share market has given an average annual return of about 18 percent in the last 10 years. This is higher than returns earned on traditional avenues like FDs, corporate and government bonds, commercial papers, etc. Going forward, the corporate sector is expected to perform even better on the back of rapid urbanization and increase in per capita income of the population, indicating a stronger growth. As a result, the stock market may be the best investment bet for long term wealth creation.

National Stock Exchange (NSE) and Bombay Stock Exchange (BSE)
The two major stock exchanges—National Stock Exchange (NSE) and Bombay Stock Exchange (BSE)—are open from Monday to Friday from 9.15 am to 3.30 pm Indian Standard Time. Investors can place orders for equity trading/buying by opening an account with a broking house, and opt for the online trading facility for convenience. The Indian equity market follows the settlement cycle of T+2, indicating that the transaction will be settled two working days after it is made.

Limit

Limit order allows you to set buy/sell limits on a contract or an order. This effectively means that you can buy or sell a particular stock if it reaches the desired level. This strategy helps in maximizing profits and minimizing risks, even when you are not tracking your holdings during the market hours.

Market

This option allows you to trade by placing orders during market hours. You can hence buy/sell at the best obtainable price in the market at the time of execution.

Stop Loss

An order placed with a broker to sell a security when it reaches a certain price. A stop-loss order is designed to limit an investor’s loss on a position in a security. A stop-loss order takes the emotion out of trading decisions and can be especially handy when one is on vacation or cannot watch his/her position. However, execution is not guaranteed, particularly in situations where trading in the stock is halted or gaps down (or up) in price. Also known as a “stop order” or “stop-market order.”

Through Wealth Discovery, you can now trade in Index and Stock futures on the National Stock Exchange (NSE). Futures trading allows you to enter into a contract (having a maximum period of 3 months), and take buy/sell positions in Index or Stocks.

Trading in futures is not as complex as it sounds. If, during the contract period, the price moves in your favour (i.e. rises in case you have a buy position or falls in case you have a sell position), you make a healthy profit, and vice versa. Today, only a few stocks that meet the liquidity and volume criteria are qualified for futures trading.

The process of futures trading has become simpler with two smart tools offered by Wealth Discovery—‘Calculate Index’ and ‘Know your Margin’—that helps in calculating your margin requirements and also the Index and Stock price movements.

An option is a contract between two parties (the seller and the buyer) that gives the buyer the right to buy or sell shares at a specific price, on or before a particular date. There is no obligation on the buyer to complete the transaction if the price is not favorable to him. For this, the buyer has to pay to the seller some money called premium.

To carry out a transaction (buy/sell) position on Index/Stock options, one has to pay certain percentage of the order value as margin. There are two types of options: Call and Put. The former allows the trader to buy the underlying asset at a certain price, while the latter allows him to sell it at a certain price.

Bullish options strategies are employed when the options trader expects the underlying stock price to move upwards. It is necessary to assess how high the stock price can go and the time frame in which the rally will occur in order to select the optimum trading strategy. The most bullish of options trading strategies is the simple call buying strategy used by most novice options traders.

The bull call spread and the bull put spread are common examples of moderately bullish strategies. Mildly bullish trading strategies are options strategies that make money as long as the underlying stock price does not go down by the option's expiration date. Writing out-of-the-money covered calls is a good example of such a strategy.

Bearish options strategies are employed when the options trader expects the underlying stock price to move downwards. It is necessary to assess how low the stock price can go and the time frame in which the decline will happen in order to select the optimum trading strategy.
The most bearish of options trading strategies is the simple put buying strategy utilized by most novice options traders.
The bear call spread and the bear put spread are common examples of moderately bearish strategies. Mildly bearish trading strategies are options strategies that make money as long as the underlying stock price does not go up by the options expiration date. In general, bearish strategies yield less profit with less risk of loss.

Neutral strategies in options trading are employed when the options trader does not know whether the underlying stock price will rise or fall. Also known as non-directional strategies, they are so named because the potential to profit does not depend on whether the underlying stock price will go upwards. Rather, the correct neutral strategy to employ depends on the expected volatility of the underlying stock price.

Examples of neutral strategies are:

• Guts - sell ITM (in the money) put and call
• Butterfly - buy ITM (in the money) and OTM (out of the money) call, sell two at the money calls, or vice versa
• Straddle - holding a position in both a call and put with the same strike price and expiration. If the options have been bought, the holder has a long straddle. If the options were sold, the holder has a short straddle. The long straddle is profitable if the underlying stock changes value in a significant way, either higher or lower. The short straddle is profitable when there is no such significant move.
• Strangle - the simultaneous buying or selling of out-of-the-money put and an out-of-the-money call, with the same expiration. Similar to the straddle, but with different strike prices.
• Risk reversal - simulates the motion of an underlying so sometimes these are referred as synthetic long or synthetic short positions depending on which position you are shorting.
• Collar - buy the underlying and then simultaneous buying of a put option below current price (floor) and selling a call option above the current price (cap).
• Fence - buy the underlying then simultaneous buying of options either side of the price to limit the range of possible returns.
• Iron butterfly - sell two overlapping credit vertical spreads but one of the verticals is on the call side and one is on the put side.
• Iron condor - the simultaneous buying of a put spread and a call spread with the same expiration and four different strikes. An iron condor can be thought of as selling a strangle instead of buying and also limiting your risk on both the call side and put side by building a bull put vertical spread and a bear call vertical spread.
• Jade Lizard - a bull vertical spread created using call options, with the addition of a put option sold at a strike price lower than the strike prices of the call spread in the same expiration cycle.

Neutral trading strategies that are bullish on volatility profit when the underlying stock price experiences big moves upwards or downwards. They include the long straddle, long strangle, short condor and short butterfly.

Neutral trading strategies that are bearish on volatility profit when the underlying stock price experiences little or no movement. Such strategies include the short straddle, short strangle, ratio spreads, long condor and long butterfly.

The currency market is the largest and most liquid financial market In this market, one country’s currency is exchanged for that of another at a fixed price.
With the advancement in technology and increased globalization, it is now possible for individuals, corporate entities, governments and almost anyone to take part in online currency trading. It offers two advantages to the traders: an opportunity to benefit from currency value fluctuations, and a chance to minimize loss from currency value fluctuations due to various factors. Currencies are traded in derivatives, specifically in futures and options. Here’s more about these methods.

Futures

Through Wealth Discovery, you can trade in currency futures on the National Stock Exchange (NSE). Futures trading allows you to enter into a contract (having a maximum period of 3 months), and take buy/sell positions in a currency of any country.
Trading in futures is not as complex as it sounds. If, during the contract period, the price moves as you had anticipated, you make a healthy profit, and vice versa.

Options

An option is a contract between two parties (the seller and the buyer) that gives the buyer the right to buy or sell shares at a specific price, on or before a particular date. There is no obligation on the buyer to complete the transaction if the price is not favorable to him. For this, the buyer has to pay to the seller some money called premium.

To carry out a transaction (buy/sell) position on Index/Stock options, one has to pay certain percentage of the order value as margin. There are two types of options: Call and Put. The former allows the trader to buy the underlying asset at a certain price, while the latter allows him to sell it at a certain price.

Key participants in the currency markets are

• Corporate/small and medium enterprises (SMEs)
• Authorized dealers/banks
• Central bank – The Reserve Bank of India
• Individual retail traders
• Money Changers

Key reasons for currency movement

• Trade and capital flows
• Imports by oil marketing companies
• Remittance by NRIs
• Investment by offshore institutions in India
• Indian offshore investments
• Foreign Direct Investment (FDIs) and Foreign Institutional Investment (FII) flows

One of the major advantages of future trading is that you can earn money without actually physically storing commodities. On the exchange, commodities are traded as future contracts. One of the major advantages of future trading is that you can earn money without actually physically storing (or buying and selling) commodities. Besides, the trading cost too is substantially low. Traders participate in commodities trading mainly because:

• They do not need to pay the entire transaction amount for trading; only the margin amount is required
• They can earn from short selling

Some of the other benefits of trading in commodities are

• The commodities listed on this market mainly include metals, energy and agricultural products. This diversity provides opportunities for investors, hedgers, traders, manufacturers, arbitragers, importers and exporters to earn money.
• The prices of commodities changes purely on demand and supply. This makes it really easy to understand the movements and exploit opportunities.
• Commodities are traded all over the world. Putting your money in this kind of investment helps you diversify your portfolio.
• Unlike the Indian stock market, the Indian commodity market is open for 14 hours a day, covering timings of major commodity exchanges around the globe and giving you ample time to trade.

The fluctuation in the prices of commodities is caused by

• Demand and supply
• Currency movements
• Crop sowing aspects
• Economic forces
• Weather
• Crop arrival factors

Agricultural Commodities

Plantation Products - Rubber

Spices - Pepper, Red Chilli, Jeera, Turmeric, Cardamom, Coriander

Pulses - Kapas, Cotton

Cereals - Wheat, Barley, Maize

Oil and Oil Seeds - Castor Seeds, Cotton Seed Oilcake, Soy Seeds, Mustard Seeds, Soya Been, Crude Palm Oil, Kapasia Khalli, Refined Soya Oil

Others - Guar Seed, Gur, Sugar, Sugar M, Guargum, Mentha Oil, Gur, Patato (Agra), Potato (Tarkeshwar), Almond etc.

Non-Agricultural Commodities

Metals - Aluminum, Aluminum Mini, Copper, Copper Mini, Iron Ore, Lead, Lead Mini, Mild Steel Ingot, Billets, Nickel, Tin, Zinc and Zinc Mini

Precious Metals (Bullions) - Gold, Gold Guinea , Gold M, Gold Petal, Gold Petal (New Delhi), Platinum, Silver, Silver M and Silver Micro

Energy - Crude Oil, Natural Gas, Thermal Coal, Gasoline, Heating Oil, Brent Crude Oil, Electricity Monthly and Weekly and ATF

Weather - Carbon (CER) and Carbon (CFI)

Others - Polyvinyl Chloride

ETF's are essentially the same as Mutual Funds but they trade like individual stocks.
The price of a mutual fund scheme is determined by its Net Asset Value (NAV) at the end of a trading day. The price of an ETF fluctuates throughout the trading day as they are traded during the trading hours on a stock exchange.

Benefits of Investing in an ETF

Flexibility to trade: ETFs can be traded throughout the day on the stock exchange like individual stocks and hence provide liquidity to the customers.

Lower Costs: ETFs are listed on the stock exchange and generally have a less expense ratio than most mutual funds

Simple structure: ETFs are simple in structure and easy to understand.

Tax Efficiency: ETFs generally generate relatively low capital gains, because they typically have low turnover of their portfolio securities.

Diversification: Investments in ETFs are widely diversified as indices are construed to represent performance of the stock market as a whole.

There are several criteria that one should look at while choosing the right ETF for their portfolio. Some of them are:

Cost: Expense ratios can vary greatly even among ETFs tracking the same market. Everything else being equal, choose the ETF with the lower expense ratio, because costs directly affect your returns.

Benchmark: When choosing an ETF, first decide on the market, market segment, or industry sector you wish to track, and then decide on the appropriate index for that market. Each index provider has its own construction methodology, resulting in wide variations in turnover and other portfolio characteristics. Benchmarks tracking the same market segment can deliver very different results.

Management team: Index funds are not created equal. Effective, efficient portfolio management skills can make a difference, often offsetting marginal differences in costs between two indexed products. Review the experience and track record of the fund managers. Through Wealth Discovery’s platform, you can buy/sell any of the 100+ available mutual fund schemes from more than 5 mutual fund houses.

Lump sum Purchase

If you have decided which ETF is right for you, you can choose to buy them just like you would buy an individual stock.

To obtain the list of ETF's please click here
Because ETFs trade like stocks, you will be charged a commission for each trade

ETF SIP

ETF - SIP is first-of-its-kind comprehensive facility that provides an opportunity to invest systematically and in a disciplined manner in specified ETFs (Exchange Traded Funds)

ETF - SIP averages the cost of purchase and help accumulate wealth over a long period of time

The issuing company in discussion with the lead merchant banker (the institutions upon which rests the entire responsibility of managing the issue) decides the price. There is no set price formula prescribed by SEBI. However the company and the lead banker are required to give full explanation of the key assumptions taken into consideration while deciding the issue price.

In practice, there are two types of issues, one where the company and Lead Merchant Banker fix a price (called fixed price) and other, where there is a price band and rest is left to market forces to determine the final price.

Book Building is basically a process used in IPOs for price discovery of an offer. It is a method where, during the period for which the issue is open, different categories of investors apply at various prices based on their judgment, within the price band. The cut off is determined after the bid is closed to public.

In a Book building issue, the company that wishes to tap stock market for fresh funds is required to indicate the price band. The actual discovered issue price can be any price in the price band. This issue price is called ‘Cut-Off Price’

The issuer and lead manager, which is managing the issue, decides the cut off price after considering the issue size and the investors’ desire for the stocks.

• Equity shares falling in the list of securities declared as "BSE-100" or "CNX-100".
• Equity shares of public sector enterprises which are categorised as Maharatna, Navratna or Miniratna by the Central Government
• Units of Exchange Traded Funds (ETFs) or Mutual Fund (MF) schemes which have securities eligible under Rajiv Gandhi Equity Savings Scheme (RGESS) as underlying, provided they are listed and traded on a stock exchange and settled through a depository mechanism.
• Follow on Public Offer of eligible securities.
• New Fund Offers (NFOs) of eligible ETF's and mutual funds.
• Initial Public Offer of a public sector undertaking wherein the government shareholding is at least fifty-one per cent. which is scheduled for getting listed in the relevant previous year and whose annual turnover is not less than four thousand crore rupees during each of the preceding three years;
  • BSE 100 Index Scrips
  • PSU Maharatnas
  • PSU Navratnas
  • PSU Miniratnas