Foreign Exchange is the trading of one currency against another. Professionals refer to this as foreign exchange, or use the acronyms Forex or FX. The financial asset constituting Forex are “currency-pairs” like Euro and US Dollar, or US Dollar and Japanese Yen, and so on.

(In the same way as Scripts constitute the Stock Market)

Investing in equity involves purchasing shares of a company listed on a stock exchange. You can acquire these shares in two ways - either through the Primary Market, i.e., when a company makes an offer to issue its equity for the first time (this is called Initial Public Offering (IPO)) or through the secondary market, i.e. via a stock exchange. When you trade in equity through a stock exchange, you have to make use of the services of a brokerage firm, which acts as your agent whenever you buy or sell.

Equity is considered a high risk-high return investment avenue. This is because there is scope for considerable appreciation or loss of the capital that you invest, depending on various factors such as the performance of the company that you have invested in, general market conditions, the state of the economy, etc. However, it forms an integral part of any well-balanced portfolio, since it is at one end of the risk-return spectrum.

Review the stocks. For example, you can get a list of the most recent Technical Events and Patterns for the stocks in your portfolio.  

Find new investment opportunities. For example, you can search for all stocks, on the BSE & NSE, that have formed a bullish/bearish pattern.   

Review the historical behaviour. For example, you can get a list of all the patterns for a specific security for the last 3 years and then use those to analyse if you should invest based on the most recent pattern. 

Set Alerts: For example, you can set an alert that will send you an email when any pattern occurs in any of the stocks you own.

Equity is a must for any well-balanced portfolio. So, irrespective of whether you are a high net worth investor or a small retail investor and irrespective of whether you have a large or timid appetite for risk, you must hold some portion of your assets in equity. This is because it is the only instrument that has the ability to truly deliver a high return, when held over a long period of time.

However, the amount of equity that you hold in your portfolio is a very subjective decision and will depend upon various factors. These include your investment objectives, time horizon and risk appetite. But as a general guideline, there’s a rule of thumb that states that to decide upon the proportion of your assets that should go into equities, reduce your age from 100 and that’s the proportion of your money which should be put in equities. The remaining can be invested in fixed income securities.

Every investor must do some homework before investing money in equities…

v      While recommendations and tips received from your broker, a friend, etc. may be the starting point of your selection, let it not be the only reason that makes you purchase a particular stock, even if these tips have come from ‘market experts’. Short list the shares that you want to buy on the basis of your investment objective, risk profile and the stock’s fundamentals.

v      If you feel that the price of a stock is high, don''t purchase it. Buy stocks that you believe still have scope for appreciation.

v      Don''t try to time your purchases. That could turn you into a speculator instead of an investor. 

v      Lastly, once you have purchased shares, if the business prospects of the company change to its detriment, get rid of the stock. Don''t hesitate to liquidate your portfolio before your target time horizon if circumstances lead you to believe that it’s necessary.

There are various factors that determine the value of a stock. Understanding these will help you to pay a price that reflects the true value of a stock.

Demand and Supply: In the short term, the basic economic theory of demand and supply determines a stock’s worth. So, when the demand for a stock exceeds its supply (that is, there are more buyers than sellers), its price tends to rise. And, when supply overtakes demand (that is, sellers exceed buyers), the stock loses value. However, these are short-term market trends, which tend to get evened out over a period of time. In the medium to long-term, a stock is driven by the company’s fundamental strength i.e. business potential, past performance, competence and credibility of its promoters and management, etc.

Growth potential: Investors are willing to pay a premium for stocks of companies that have the potential to increase their revenues and net profits. The greater this growth potential, the higher the premium given to the stock. If a company proves that it is capable of sustaining growth, the market will continue to give it high valuations. And, that’s likely to be the major driver for stock valuations.

Fundamentals: A company’s growth outlook is linked to its business prospects and how well its management is capitalising on the existing opportunities. The quality of a company’s management is crucial. So, pay attention to the management practices of a company and its level of corporate governance.

Buy low and sell high is the ultimate guide to successful stock investing. It is also the reverse of what many investors do, although they don’t intend to. They tend to buy high and sell low because they use price, and in particular, the price movement, as their only signal to buy or sell.

Investors are tempted to buy stocks that have shot up and are basking in the media spotlight just to get a part of the action. They jump at a stock that is already trading at a premium… that’s how they buy high. Ironically, if a stock has had a good run up it may be time to sell, not buy (sell high).

On the flip side, when a stock price is falling, most investors may want to sell in a panic, although the company has not lost any intrinsic value and still remains a sound investment…that’s how they sell low. In fact, when a stock’s price has fallen, it’s a great time to buy (buy low), if your research on the company suggests that it is a good long term buy.

Experienced traders can make money jumping in and out of a stock that’s caught the public’s attention, but it’s not a game for the inexperienced and it can definitely not be called ‘investing’, in the true sense of the word. There are risks involved and tax consequences that apply to such trading, along with other issues, which means that most investors should leave this tricky activity to short-term traders.

There are various risks that companies are exposed to and when you invest in equity, your returns are affected by these risks. These are business risks (i.e. the risks associated with the prosperity of a business and the demand for its products), financial risks (the skill with which a company’s finances are managed to ensure that it has an optimum level of debt, equity, reserves, etc.), industry risk (changes in technology, regulations, fashions, etc., affect the performance of an industry), management risks (the level of corporate governance, management skills and vision), political, economic and exchange rate risks (these factors affect a company but are outside its control). There are other risks, such as market risks (the risk that the market will collapse, or that you have invested at the peak), which determine your returns on your equity investment.

Before you start investing in equity, you need to open the following accounts:

          - A broking account with a stock broker

          - A demat account with a depository participant

          - A bank account for cash payments and receipts (you can use one of your existing bank accounts for this purpose)

You then need to decide whether you want to invest by making purchases/taking delivery of shares or by undertaking margin trading (in this case you pay only a portion of the cost for purchases and your broker funds the balance and you don’t take delivery of the shares. You simply book your profit or loss).

Investing in equity involves incurring the following costs 

• Brokerage charges

You will have to pay a nominal one-time account opening fee and brokerage charges for every purchase and sale transaction undertaken. Presently, brokerage charges range between 0.25 per cent and 0.85 per cent.

• Demat charges

These are charges levied for maintaining your demat account. These charges include periodical charges for maintenance of the account, transaction charges (for each debit and credit of shares for sales and purchases respectively) and other incidental charges.

• Payment of Securities Transaction Tax (STT)

Investing in equity involves paying of Securities Transaction Tax (STT) while buying as well as selling shares. Presently, STT rates are:

• Payment of Service Tax (ST) and Education Cess (EC)

The dividends that you receive on shares are not taxable in your hands. You are, however, required to pay short term capital gains tax on any short-term capital gains that you make from transacting in shares. These are gains that arise from selling equity shares that have been purchased and sold within a period of less than 1 year. The rate of tax payable on such gains is 11.22 per cent (10 per cent tax + 2 per cent education cess + 10 per cent surcharge, if applicable). There is no tax on long-term capital gains.

Further, while transacting, you are required to pay Service Tax at the rate of 12.24 per cent on the brokerage charges that you pay. In addition, you have to pay Securities Transaction Tax (STT) on certain types of sale and purchase transactions of shares. The STT rate for delivery-based transactions is 0.125 per cent of the transaction value for both buyers and sellers. For non-delivery based transactions, STT of 0.025 per cent of the transaction value is payable.

If you have grievances against a listed company/ intermediary registered with SEBI, you should first approach the concerned company/ intermediary against whom you have a grievance. Then, if you are not satisfied with their response you can approach SEBI, who is the regulatory authority for such entities. SEBI takes up grievances related to issue and transfer of securities, non-payment of dividend, etc. with listed companies. In addition, this market regulator also takes up grievances against various intermediaries that are registered with it. Visit http://www.sebi.gov.in/ for more information.

The Tradable Forex Rates are quoted by the Market Maker. The Market Maker, in-turn, gets these rates from the Banks they have tied up with.

Bid/Ask Spread is the difference between the Bid Rate and the Ask or Offer Rate.

Spread is determined by the breadth and depth of the market for the concerned currency-pair as well as on the currency-pair’s volatility.

Forex is Foreign Exchange

Resident Indian
PAN
Associated Bank savings Account / Reliance Mutual Fund (Liquid Scheme) & Reliance trading Account
Demat a/c is not mandatory for trading purposes
   • Mandatory for delivery based positions
   • Commodity demat a/c is separate from equity demat a/c
Sales Tax no. is not mandatory for trading
   • Mandatory for delivery based positions

The following commodities are actively traded in these two Exchanges:-

MCX
   • Bullion: Gold and Silver
   • Metals: Aluminum, Copper, Zinc etc.
   • Oil and Oil Seed: Refined Soy Oil, Soy Bean etc.
   • Energy: Brent crude oil, Crude oil, etc
   • Other commodities: Urad, Chana, Wheat, Guar Seed, Sugar, Potato etc.
NCDEX
   • Bullion: Gold and Silver
   • Metals: Aluminum, Copper, Nickel, Sponge iron and Zinc.
   • Oil and Oil Seed: Castor oil, Crude Palm oil, Soy Oil, Soy Bean etc.
   • Energy: Brent crude oil, and Furnace oil.
   • Agro Commodities: Cotton, Chana, Masur, Tur, Urad, Basmati rice, Wheat, Maize, Cashew Kernel, Guar seed, Sugar, Rubber, etc.

For newly listed commodities please visit home page of exchange websites www.mcxindia.com and www.ncdex.com

Both the commodity exchanges have done exceedingly well over the years, in terms of risk management, volumes or launching new & better commodity products.
Before choosing an exchange you need to check the following:
• The commodity you wish to trade is listed on that exchange
• Check the contract specifications of that commodity to ensure it suits you best
• There is enough liquidity i.e. price difference between the best buyer (bid) and best seller (offer) should be minimal in the given commodity (i.e daily volumes are high & you will be able to liquidate your position at will)
• Commodity price should be in sync with the physical market prices or its respective benchmark prices
• The exchange that matches the above mentioned characteristics can be your choice.

The term "Derivative" indicates that it has no independent value, i.e. its value is entirely "derived" from the value of the underlying asset. The underlying asset can be securities, commodities, bullion, currency, livestock or anything else. In other words, Derivative means a forward, future, option or any other hybrid contract of pre determined fixed duration, linked for the purpose of contract fulfillment to the value of a specified real or financial asset or to an index of securities.

With Securities Laws (Second Amendment) Act,1999, Derivatives has been included in the definition of Securities. The term Derivative has been defined in Securities Contracts (Regulations) Act, as:-

Derivative includes -

• a security derived from a debt instrument, share, loan, whether secured or unsecured, risk instrument or contract for differences or any other form of security; 
• a contract which derives its value from the prices, or index of prices, of underlying securities;
  

Futures Contract means a legally binding agreement to buy or sell the underlying security on a future date. Future contracts are the organized/standardized contracts in terms of quantity, quality (in case of commodities), delivery time and place for settlement on any date in future. The contract expires on a pre-specified date which is called the expiry date of the contract. On expiry, futures can be settled by delivery of the underlying asset or cash. Cash settlement enables the settlement of obligations arising out of the future/option contract in cash.

Options Contract is a type of Derivatives Contract which gives the buyer/holder of the contract the right (but not the obligation) to buy/sell the underlying asset at a predetermined price within or at end of a specified period. The buyer / holder of the option purchases the right from the seller/writer for a consideration which is called the premium. The seller/writer of an option is obligated to settle the option as per the terms of the contract when the buyer/holder exercises his right. The underlying asset could include securities, an index of prices of securities etc.

Under Securities Contracts (Regulations) Act,1956 options on securities has been defined as "option in securities" means a contract for the purchase or sale of a right to buy or sell, or a right to buy and sell, securities in future, and includes a teji, a mandi, a teji mandi, a galli, a put, a call or a put and call in securities;

An Option to buy is called Call option and option to sell is called Put option. Further, if an option that is exercisable on or before the expiry date is called American option and one that is exercisable only on expiry date, is called European option. The price at which the option is to be exercised is called Strike price or Exercise price.

Therefore, in the case of American options the buyer has the right to exercise the option at anytime on or before the expiry date. This request for exercise is submitted to the Exchange, which randomly assigns the exercise request to the sellers of the options, who are obligated to settle the terms of the contract within a specified time frame.

As in the case of futures contracts, option contracts can be also be settled by delivery of the underlying asset or cash. However, unlike futures cash settlement in option contract entails paying/receiving the difference between the strike price/exercise price and the price of the underlying asset either at the time of expiry of the contract or at the time of exercise / assignment of the option contract.

Futures contract based on an index i.e. the underlying asset is the index, are known as Index Futures Contracts. For example, futures contract on NIFTY Index and BSE-30 Index. These contracts derive their value from the value of the underlying index.

Similarly, the options contracts, which are based on some index, are known as Index options contract. However, unlike Index Futures, the buyer of Index Option Contracts has only the right but not the obligation to buy / sell the underlying index on expiry. Index Option Contracts are generally European Style options i.e. they can be exercised / assigned only on the expiry date.

An index, in turn derives its value from the prices of securities that constitute the index and is created to represent the sentiments of the market as a whole or of a particular sector of the economy. Indices that represent the whole market are broad based indices and those that represent a particular sector are sectoral indices.
In the beginning futures and options were permitted only on S&P Nifty and BSE Sensex. Subsequently, sectoral indices were also permitted for derivatives trading subject to fulfilling the eligibility criteria. Derivative contracts may be permitted on an index if 80% of the index constituents are individually eligible for derivatives trading. However, no single ineligible stock in the index shall have a weightage of more than 5% in the index. The index is required to fulfill the eligibility criteria even after derivatives trading on the index has begun. If the index does not fulfill the criteria for 3 consecutive months, then derivative contracts on such index would be discontinued.

By its very nature, index cannot be delivered on maturity of the Index futures or Index option contracts therefore, these contracts are essentially cash settled on Expiry.

Derivative trading in India takes can place either on a separate and independent Derivative Exchange or on a separate segment of an existing Stock Exchange. Derivative Exchange/Segment function as a Self-Regulatory Organisation (SRO) and SEBI acts as the oversight regulator. The clearing & settlement of all trades on the Derivative Exchange/Segment would have to be through a Clearing Corporation/House, which is independent in governance and membership from the Derivative Exchange/Segment

With the amendment in the definition of ''securities'' under SC(R)A (to include derivative contracts in the definition of securities), derivatives trading takes place under the provisions of the Securities Contracts (Regulation) Act, 1956 and the Securities and Exchange Board of India Act, 1992.

Dr. L.C Gupta Committee constituted by SEBI had laid down the regulatory framework for derivative trading in India. SEBI has also framed suggestive bye-law for Derivative Exchanges/Segments and their Clearing Corporation/House which lay''s down the provisions for trading and settlement of derivative contracts. The Rules, Bye-laws & Regulations of the Derivative Segment of the Exchanges and their Clearing Corporation/House have to be framed in line with the suggestive Bye-laws. SEBI has also laid the eligibility conditions for Derivative Exchange/Segment and its Clearing Corporation/House. The eligibility conditions have been framed to ensure that Derivative Exchange/Segment & Clearing Corporation/House provide a transparent trading environment, safety & integrity and provide facilities for redressal of investor grievances. Some of the important eligibility conditions are-

o Derivative trading to take place through an on-line screen based Trading System.
o The Derivatives Exchange/Segment shall have on-line surveillance capability to monitor positions, prices, and volumes on a real time basis so as to deter market manipulation.
o The Derivatives Exchange/ Segment should have arrangements for dissemination of information about trades, quantities and quotes on a real time basis through atleast two information vending networks, which are easily accessible to investors across the country.
o The Derivatives Exchange/Segment should have arbitration and investor grievances redressal mechanism operative from all the four areas / regions of the country.
o The Derivatives Exchange/Segment should have satisfactory system of monitoring investor complaints and preventing irregularities in trading.
o The Derivative Segment of the Exchange would have a separate Investor Protection Fund.
o The Clearing Corporation/House shall perform full novation, i.e., the Clearing Corporation/House shall interpose itself between both legs of every trade, becoming the legal counterparty to both or alternatively should provide an unconditional guarantee for settlement of all trades.
o The Clearing Corporation/House shall have the capacity to monitor the overall position of Members across both derivatives market and the underlying securities market for those Members who are participating in both.
o The level of initial margin on Index Futures Contracts shall be related to the risk of loss on the position. The concept of value-at-risk shall be used in calculating required level of initial margins. The initial margins should be large enough to cover the one-day loss that can be encountered on the position on 99% of the days.
o The Clearing Corporation/House shall establish facilities for electronic funds transfer (EFT) for swift movement of margin payments.
o In the event of a Member defaulting in meeting its liabilities, the Clearing Corporation/House shall transfer client positions and assets to another solvent Member or close-out all open positions.
o The Clearing Corporation/House should have capabilities to segregate initial margins deposited by Clearing Members for trades on their own account and on account of his client. The Clearing Corporation/House shall hold the clients’ margin money in trust for the client purposes only and should not allow its diversion for any other purpose.
o The Clearing Corporation/House shall have a separate Trade Guarantee Fund for the trades executed on Derivative Exchange / Segment.

Presently, SEBI has permitted Derivative Trading on the Derivative Segment of BSE and the F&O Segment of NSE.

The various types of membership in the derivatives market are as follows:

o Trading Member (TM) – A TM is a member of the derivatives exchange and can trade on his own behalf and on behalf of his clients.
o Clearing Member (CM) –These members are permitted to settle their own trades as well as the trades of the other non-clearing members known as Trading Members who have agreed to settle the trades through them.
o Self-clearing Member (SCM) – A SCM are those clearing members who can clear and settle their own trades only.

o Balance Sheet Networth Requirements: SEBI has prescribed a networth requirement of Rs. 3 crores for clearing members. The clearing members are required to furnish an auditor''s certificate for the networth every 6 months to the exchange. The networth requirement is Rs. 1 crore for a self-clearing member. SEBI has not specified any networth requirement for a trading member.
o Liquid Networth Requirements: Every clearing member (both clearing members and self-clearing members) has to maintain atleast Rs. 50 lakhs as Liquid Networth with the exchange / clearing corporation.
o Certification requirements: The Members are required to pass the certification programme approved by SEBI. Further, every trading member is required to appoint atleast two approved users who have passed the certification programme. Only the approved users are permitted to operate the derivatives trading terminal.

The derivatives member is required to adhere to the code of conduct specified under the SEBI Broker Sub-Broker regulations. The following conditions stipulations have been laid by SEBI on the regulation of sales practices:

o Sales Personnel: The derivatives exchange recognizes the persons recommended by the Trading Member and only such persons are authorized to act as sales personnel of the TM. These persons who represent the TM are known as Authorised Persons.
o Know-your-client: The member is required to get the Know-your-client form filled by every one of client.
o Risk disclosure document: The derivatives member must educate his client on the risks of derivatives by providing a copy of the Risk disclosure document to the client.
o Member-client agreement: The Member is also required to enter into the Member-client agreement with all his clients.

Derivative products have been introduced in a phased manner starting with Index Futures Contracts in June 2000. Index Options and Stock Options were introduced in June 2001 and July 2001 followed by Stock Futures in November 2001. Sectoral indices were permitted for derivatives trading in December 2002. Interest Rate Futures on a notional bond and T-bill priced off ZCYC have been introduced in June 2003 and exchange traded interest rate futures on a notional bond priced off a basket of Government Securities were permitted for trading in January 2004.

A stock on which stock option and single stock future contracts are proposed to be introduced is required to fulfill the following broad eligibility criteria:-

o The stock shall be chosen from amongst the top 500 stock in terms of average daily market capitalisation and average daily traded value in the previous six month on a rolling basis.
o The stock’s median quarter-sigma order size over the last six months shall be not less than Rs.1 Lakh. A stock’s quarter-sigma order size is the mean order size (in value terms) required to cause a change in the stock price equal to one-quarter of a standard deviation.
o The market wide position limit in the stock shall not be less than Rs.50 crores.
A stock can be included for derivatives trading as soon as it becomes eligible. However, if the stock does not fulfill the eligibility criteria for 3 consecutive months after being admitted to derivatives trading, then derivative contracts on such a stock would be discontinued.

The Standing Committee on Finance, a Parliamentary Committee, at the time of recommending amendment to Securities Contract (Regulation) Act, 1956 had recommended that the minimum contract size of derivative contracts traded in the Indian Markets should be pegged not below Rs. 2 Lakhs. Based on this recommendation SEBI has specified that the value of a derivative contract should not be less than Rs. 2 Lakh at the time of introducing the contract in the market. In February 2004, the Exchanges were advised to re-align the contracts sizes of existing derivative contracts to Rs. 2 Lakhs. Subsequently, the Exchanges were authorized to align the contracts sizes as and when required in line with the methodology prescribed by SEBI.

Primarily, issues can be classified as a Public, Rights or preferential
issues (also known as private placements). While public and rights issues involve a detailed procedure, private placements or preferential issues are relatively simpler. The classification of issues is illustrated below:Public issues can be further classified into Initial Public offerings andfurther public offerings. In a public offering, the issuer makes an offer fornew investors to enter its shareholding family. The issuer company makes detailed disclosures as per the DIP guidelines in its offerdocument and offers it for subscription.

The significant features are illustrated below:

Issues
Public Preferential Rights
Initial Public Offering Further Public Offering
Fresh Issue Offer for sale Fresh Issue Offer for sale

Initial Public Offering (IPO) is when an unlisted company makes either a
fresh issue of securities or an offer for sale of its existing securities or
both for the first time to the public. This paves way for listing and trading
of the issuer’s securities.

A follow on public offering (FPO) is when an already listed company makes either a fresh issue of securities to the public or an offer for sale to the public, through an offer document. An offer for sale in such scenario is allowed only if it is made to satisfy listing or continuous listing obligations.

Rights Issue (RI) is when a listed company which proposes to issue fresh securities to its existing shareholders as on a record date. The rights are normally offered in a particular ratio to the number of securities held prior to the issue. This route is best suited for companies who would like to raise capital without diluting stake of its existing shareholders unless they do not intend to subscribe to their entitlements.

A preferential issue is an issue of shares or of convertible securities by listed companies to a select group of persons under Section 81 of the Companies Act, 1956 which is neither a rights issue nor a public issue. This is a faster way for a company to raise equity capital. The issuer company has to comply with the Companies Act and the requirements contained in Chapter pertaining to preferential allotment in SEBI (DIP

Yes you can view your transactions by clicking IPO Order Book link on main menu. You need to give the date range and all transactions for specified date range will be displayed.

Yes you can modify your transaction by clicking Modify Order link from main menu of IPO. Click the Modify link for desired IPO and follow the instruction.

You will receive an email from Reliance Securities for the status of your application.