Indian Finance Market
Understanding the Indian Finance
Market and its Components
Work board
Types Of Account In Indian Finance
List of all Stock Market Trading
Fees and Charges in India
Trade Charges in the Indian Financial Markets
Brokerage fees
Brokerage fees are a significant expense that can impact your investment returns. They
are essentially charges imposed by stockbrokers for executing trades on their platform.
The amount you pay in brokerage fees can differ based on factors like the asset type,
the amount of trading you do, and the brokerage plan you choose. Generally, these fees
are either a percentage of the trade's total value or a fixed amount per trade.
Securities Transaction Tax (STT)
Securities Transaction Tax (STT) is a direct tax imposed by the Indian Government. It
applies to all buying and selling transactions of financial instruments, except
commodities. The STT rate is determined as a percentage of the entire transaction
amount and it differs based on the type of trading segment. Here is a table that shows
the various STT rates.
Commodity Transaction Tax (CTT)
Applicable only to non-agricultural commodity derivatives, CTT is similar to STT but
targets a different segment of the market. For instance, the CTT rate on the sale of
commodity derivatives is 0.01% of the sale value, while commodity options attract a CTT
of 0.05% of the premium paid by the seller. Here’s a table outlining the different CTT
rates.
SEBI Turnover Fees
The Securities and Exchange Board of India (SEBI) charges a turnover fee on all buy
and sell transactions on stock exchanges. This fee is based on the total value of your
trades and is collected by the exchanges for SEBI.
For most financial securities, except debt securities, the turnover fee is 0.0001% of the
transaction value. For debt securities, the fee is lower, at 0.000025% of the transaction
value.
Stamp Duty
Stamp duty is collected by state governments on every trade executed and varies from
state to state. This duty is generally a small percentage of the transaction value:
Transaction Charges
Transaction fees are costs that stock exchanges charge to handle trades on their
platforms. These fees help cover expenses related to completing trades, clearing them,
and settling transactions. Typically, these fees are based on the value of the trades
made. Let's explore the transaction fees for buying and selling financial instruments on
the Bombay Stock Exchange (BSE) and
the National Stock Exchange (NSE).
Goods and Services Tax (GST)
GST is applicable to the sum of brokerage fees, transaction
charges, and SEBI turnover fees at a rate of 18%. This can
significantly increase the total cost of trading operations.
Capital Gains Tax
Capital gains tax is charged on the profit made from selling capital assets, such as
stocks, bonds, derivatives, and mutual funds. In India, the tax rates vary depending on
how long you've held the asset.
For equity assets, including mutual funds, if they are held for more than 12 months, the
profits are treated as Long-Term Capital Gains (LTCG) and are taxed at 10%.
Importantly, LTCG is only taxed if the gains exceed ₹1 lakh in a financial year.
If these assets are held for less than 12 months, then the profits are considered
Short-Term Capital Gains (STCG) and are taxed at a rate of 15%.
Miscellaneous Charges
Other charges can include Demat account maintenance fees, electronic
transfer fees, and charges for various services like call & trade, physical
statements, etc. For example, Angel One charges ₹20 + GST per executed
order for their call and trade service.
Equity Charges
Currency Derivative Charges
Commodity Derivative Charges
Brokerage charges in Lemonn
Other charges in Lemonn
Client onboarding process
Eligibility criteria and Document required
Anyone can open a Demat
account with Lemonn if they meet
the basic criteria mentioned…
The Option Chain
Options trade on the open market just as stocks do, however
there are additional data points displayed that are specific to
options – this is depicted on the option chain. An option chain is
utilized by investors to view the pricing and activity of all of the
listed options for the selected underlying.
How is the option chain organized?
Calls and Puts – Options chains are normally broken down into
two sections, calls and puts. Calls are displayed on the left and
puts on the right. Purchasers of call contracts own the right to buy
and sellers of call contracts have the obligation to sell. Purchasers
of put contracts own the right to sell and sellers of put contracts
have the obligation to buy.
Strike Price – The strike price is typically displayed in the center
column of the option chain. This is the price at which the put or
call can be exercised.
Expiration Date – The option chain is by default sorted by
expiration date with the options expiring first at the top. The
expiration date will determine how long the contract is in
existence. This is sometimes depicted as days to expiration
(DTE).
Color Coding – Options that are highlighted ‘green' are
in-the-money and options that are highlighted ‘red' are
out-of-the-money. (Calls are in-the-money when the strike
price is below the market price of the underlying. Puts are
in-the-money when the strike price is above the market price
of the underlying). The color coding is used to easily see what
is in, out, or near the money
What do all the quote details mean?
Last – The last price represents the last price at which the option
was traded. This could be an opening or a closing transaction. It is
important to note that the last time an option was traded could be
within seconds, minutes, days, weeks, or even months and may
not be an accurate depiction of the current value of the option.
The last price in conjunction with the bid and ask is used to quote
the value of the option.
Bid – The bid represents the best available price that the option
can be sold for.
Change – The change displays the difference of the last price and
previous day's close.
Ask – The ask represents the best available price that the option
can be purchased for.
Volume – Volume represents the amount of transactions that
have occurred on the current trading day. This figure will
update intra-day and is used in conjunction with open interest
to determine if the options contract is considered liquid. (Most
options do not trade through the extended hours therefore,
previous day information may be displayed prior to the market
opening) Any option transaction regardless if it is opening or
closing will be reflected in the volume.
Open Interest – Open interest shows the amount of contracts in
existence for the option. This figure is only updated once a day
and will differ from volume. At the end of the trading day all
contracts that were closed are subtracted from open interest and
all contracts that were open are added to open interest.
Adjusted Options – Sometimes an option will be displayed
on the chain with an “A”. This is calling out that an adjusted
option exists within the options series. You may notice an
adjusted option has different volume and quotes displayed.
20 Mandatory SEBI Rules for
Relationship Managers
1. Know Your Client (KYC): Ensure client KYC is complete and verified before
offering services.
2. Risk Profiling: Understand and document the client's risk appetite and goals
before suggesting
products.
3. Suitability Rule: Recommend investments based on the client's financial status
and risk profile.
4. No Assured Returns Promise: Never promise guaranteed returns on
market-linked products.
5. No Unauthorized Trading: Execute trades only with client consent; discretionary
trading is illegal.
6. Proper Client Segregation: Maintain separate accounts for clients and personal
transactions.
7. Disclosure of Charges: Clearly disclose brokerage, taxes, and other applicable fees.
8. Conflict of Interest: Disclose any conflict of interest that might affect client advice.
9. No Misuse of Client Information: Maintain strict confidentiality of client data and
documents.
10. No Cross-Selling Without Consent: Seek explicit consent before selling additional
financial
products.
11. Avoid Churning of Portfolio: Avoid excessive trading aimed at increasing brokerage
revenue.
12. Client Grievance Redressal: Help resolve complaints promptly and inform clients about
SEBI SCORES.
13. Timely Contract Notes & Statements: Ensure clients receive trade confirmations and
account statements.
14. Proper Documentation: Maintain records of all client communications and investment
instructions.
15. SEBI Registration Awareness: Inform clients of your firm's SEBI registration and
regulatory status.
16. No Insider Trading or Rumors: Avoid acting on or spreading unpublished price-sensitive
information
17. Education and Awareness: Promote informed investing and avoid high-pressure sales
tactics.
18. Follow Code of Conduct: Uphold SEBI's ethical standards for brokers and
sub-brokers.
19. Periodic Compliance Training: Stay updated through compliance training and
NISM certifications.
20. Follow AML Guidelines: Report suspicious transactions as per PMLA
regulations.
TYPES OF ORDERS IN INDIAN
STOCK MARKET
Market Order
A Market order is an order to buy or sell a security at the prevailing
market price. This type of order is executed on the basis of the
next available best price.
Limit Order
In a Limit order, you set the price at which you want to buy or
sell a security- known as limit price.
In case of Limit order:
– The order gets executed only at the limit price or a lower
price for Buy Limit orders
– The order gets executed only at the limit price or a higher
price for Sell Limit orders.
Stop-loss Order
A Stop-loss order helps you limit your losses by exiting a trade, if a
specified trigger price(the specific price at which your buy/sell
order becomes active for execution) is reached
Stop-loss Market order Stop-loss Limit order
In this case, once the trigger In this case, once the
price is reached, the Stop trigger price is reached,
loss order gets converted the Stop loss order gets
into a Market order converted into a Limit
order
Delivery (Also known as Cash & Carry or CNC)
Delivery orders refer to when you buy, take delivery of the
securities and hold them in your account. After delivery, you can
hold the securities for as long as you want, and choose to sell
them whenever you want.
Margin
With Margin, you can use leverage to place your trade and buy
stocks by paying just a fraction of the total trade value.
Margin Product allows you to place your order with a minimum
required margin and the rest will be funded by Angel One, similar
to a short term loan facility
With Margin order, securities can be purchased in delivery only.
Angel One allows you to increase your Buying Power by 4x limit
So if your Ledger Balance is ₹ 25,000, you can invest in securities
up to ₹ 1,25,000 using Margin order with ₹ 1,00,000 funding from
Angel One
Intraday
Intraday orders refer to buying and selling of securities on the same day before the
market closes.
In case you do not close an intraday open position, they are automatically squared off
before the close of the market as per the schedule below:
Immediate or Cancel (IOC) order
An Immediate-Or-Cancel (IOC) order gets executed immediately.
You can place a buy or sell IOC order. However, any portion of the
order that cannot be fulfilled immediately gets canceled.
Eg: You place an IOC order to purchase 100 shares of the
Company XYZ. Since its an IOC order:
– The order gets placed immediately
– However, if there is a matching order only for 10 shares and
those 10 shares are purchased, the order for the remaining 90
shares gets canceled
Day order
A Day order can get executed anytime within the market hours of
the same day once there is a matching order.
Eg: You place a Day order to purchase 100 shares of Company
XYZ at ₹ 10 per share. Since it’s a Day order, the order can get
filled anytime during the market hours of the same trading day
once it finds a matching order.
Good Till Triggered (GTT) order
GTT order stands for Good Till Trigger order. GTT order allows you to buy or sell orders
at a predetermined limit price. These orders are executed if the market price of the stock
reaches your specified price also known as Trigger Price before the GTT order expires.
A GTT order is a limit order where the product type can be delivery or margin. You
cannot place GTT orders in the intraday product type. You can also place GTT orders in
the derivatives segment. In this case the GTT order will be executed as a carry forward
type order and order expiry will be as per contract expiry date.
If your busy schedule doesn’t allow you to place a trade during market hours, Angel One
provides you a special order type called After Market Order (AMO).
After Market Order (AMO)
As the name suggests, AMO allows you to place an order during
non-market hours i.e, either before or after the market hours. This
order will be triggered in the next trading session. AMO orders are
helpful to place an order at a certain price before the start of
market hours.
Now that you know about the various kinds of orders and product
types Angel One offers, we hope you will be able to identify which
order suits your investment needs and benefits you the most.
