Investment Analysis and Portfolio
Management
(IAPM)
S.No.5
(24.06.25)
Prof.P.Saravanan
Email: psn@iimtrichy.ac.in
Any doubts before proceeding?
Let us try to find answer for the following:
•How trading takes place?
•Different Types of Trade
•Different Types of orders
•Concept of Contract Note
•Sensex – Composition and Construction
•Determination of Opening Price
•Circuit Breakers
How trading takes place?
• Essentially, there are four participants in
the market.
• SEBI, Stock Exchanges, Broking Houses,
Traders and Investors
• To trade in exchanges, one need to have
demat account and trading account
• Depositary Participant (DP) Vs Broker
• Broker is the member of any stock
exchange, but a depository participant is
the member of any depository i.e. NSDL
National Securities Depository Limited or
CSDL (Central Securities Depository
Limited)
• Technically, Trading a/c is with Broker and
Demat a/c with DP; But often a broker is
a member in both i.e. stock exchanges
and depository.
• Demat is a/c is meant to hold listed and
unlisted securities electronically;
• Trading a/c is meant to buy and sell
shares and securities at recognized Stock
Exchanges
• Wanted to know more read the attached
document (Broker Vs Depository.docx)
• The stock exchanges keep record of all
the details of buyers and sellers trading
on the exchange through the brokers to
avoid any chance of default.
• The stocks are then transferred from the
Demat account of the seller to the Demat
account of the buyer electronically.
• From January 27, 2023 onwards All
settlements are done in T+0; T+1 (Rolling
settlement cycle)
• https://www.nseindia.com/market-
data/securities-available-for-trading
• The participants are involved in Rolling
settlement cycle are clearing
corporations, clearing members,
custodians, depositors, clearing banks,
and professional clearing members.
Now, let us focus on
Types of trading
Delivery based
Trading
Day Trading /
Intra-day Trading
Short or Shorting or
Short Sell:
• Sell first and buy later
generally without
holding that particular
share in hand ?
• When should you do
this?
• Generally, practiced
when the market is in
bearish trend.
Types of orders
• Market Order: Buy / sell @ prevailing / current
market price
• Limit Order: It is an order to buy or sell a
security at a specific price or better.
• Stop Loss Order: It is an order to buy or sell a
share once the price of the stock reaches the
specified price, known as the stop price.
Limit order Vs Stop Loss Order
• A limit order executes a trade at a specified
price or better.
• A stop loss order, also called a stop order,
triggers a market order to sell a stock if it
reaches a specific price to prevent losses.
• A limit order tells your broker to buy or sell an
asset at an indicated limit price or better; A
stop order initiates a market order, which tells
your broker to buy or sell at the best available
market price once the order is processed
All or None (AON)
• This type of order is
especially important
for those who buy
penny stocks.
• An all-or-none order
ensures that you get
either the entire
quantity of stock you
requested or none at
all.
After market orders (AMOs):
These are orders that are placed beyond
market hours.
The normal market hours are between
9.15 am to 3.30 pm.
But, the entire period outside market
hours cannot be used to place after
market orders.
Different brokers specify a time interval,
within which we can place the AMOs.
There are also conditions on the price of
security you can set in limit orders,
normally it is in range of 5-10% of
adjusted closing price but the exact
range varies among different brokers.
AMOs can also be set at market price
With AMO’s, all orders will be pushed at
market open and this shall also benefit
you from the initial market opening price.
Concept of Contract Note
• Sell_Contract-notes.pdf
Let us look at some investing strategies
• Always be ‘in’ the market
• Desired / Target rate of return
• Manage your portfolio well (we will discuss
about this in detail)
