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Knowledge Centre

minus      1. What are Equities/shares ?
AjmeraLotus       Shares, stocks or equities are basically one and the same thing. Buying a share in a company means buying a fraction of the capital of a publically listed company. When an investor buys shares of a company, he practically owns a part of the business of the company. Share prices tend to fluctuate constantly in response to the company’s performance, market scenario and economic environment. Investors buy shares in expectation of an increase in their price in the future.
minus      2. Where are Equities Traded ?
AjmeraLotus       In India, there are two primary exchanges; the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE).
minus      3. Why should I Invest in Equities ?
AjmeraLotus       Shares or equities are an extremely popular asset class for investors around the world. Equity markets have historically outperformed every other type of investment and are generally held as an attractive way of creating long term wealth by investing in shares of good companies. Share prices of a company tend to increase following the consistent revenue and profit generation and investors who had bought these shares earlier at a lower value tend to benefit as a result. In addition to this capital gain, well performing companies also tend to give dividends to the shareholders out of the profit they make.
minus      4. How to Invest In Equities?
AjmeraLotus       Investors can buy or sell shares through an agent, commonly referred to as “stock broker”. Investors can simply open an account with the broker and buy/sell shares in a publicly listed company which is listed on any of the major stock exchanges in the country. Opening an account with a broker is a straightforward process and it can be done quickly by submitting documents like ID proof, residence proof and bank details etc. Once an account is opened, an investor can transfer funds according to his convenience and start transacting in shares and other securities like commodities, equity derivatives etc.
minus      5. What is Day Trading ?
AjmeraLotus       Day Trading which is also referred to as intra-day trading involves buying and selling of stocks within the same trading day or squaring-off your trade on the same day. Stocks are purchased, not with an intention to invest, but for the purpose of earning profits by harnessing the movement of stock indices.However, intraday trading is riskier than investing in the regular stock market.
minus      6. What is the difference between Primary Markets and Secondary Markets ?
AjmeraLotus       When a company comes out with an initial public offer (IPO) it is called the primary market. The normal purpose of an IPO is to list the stock in the share market. Once the share gets listed it starts trading in the secondary market. The difference between the primary capital market and the secondary capital market is that in the primary market, investors buy securities directly from the company issuing them, while in the secondary market, investors’ trade securities already issued. In secondary market, an investor can buy shares directly from a seller and the stock exchange or broker acts as an intermediary between two parties.
minus      7. What is Fundamental and Technical Analysis?
AjmeraLotus       Fundamental analysis is about understanding the business of the company, its growth prospects, its profitability, its debt etc. Technical analysis focuses more on charts and patterns and tries to find out past patterns to apply for the future. Fundamentals are used more by investors while technicals are used more by traders.
minus      8. What are Sectors ?
AjmeraLotus       A sector is a group of securities that share similar characteristics, such as building materials, transport and engineering companies. It is an area of the economy in which businesses share the same or a related product or service. Dividing an economy into different sectors allows for more in-depth analysis of the economy as a whole.
minus      9. What Makes Stock Prices Go Up and Down ?
AjmeraLotus       If there are more sellers than buyers, stock prices will tend to fall. Conversely, when there are more buyers than sellers, stock prices tend to rise. However, there’s a compilation of factors that determine whether stock prices rise or fall. These include the media, the opinions of well-known investors, natural disasters, political and social unrest, risk, supply and demand, etc.
minus      10. What is Dividend?
AjmeraLotus       Companies distribute a small portion of a company's earnings to its shareholders. This becomes an important source of earnings for investors who stay involved in the share market for a longer period of time. However, the size of this dividend is not known to investors as it depends on company profits and is at the discretion of the company's directors. Companies can either pay fixed rate, referred to as preferred dividends, or they can pay variable dividends based on the earnings, known as common dividends.
minus      11. What is the role of a Broker in the Share Market ?
AjmeraLotus       The broker helps you execute buy and sell trades. Brokers typically help buyers find sellers and sellers find buyers. Most brokers will also advise on what stocks to buy, what stocks to sell and how to invest money in share markets for beginners. They will also assist in how to trade in stock market. For that service, the broker is paid brokerage.
minus      12. What is D-MAT Account?
AjmeraLotus       The full-form of DEMAT A/C is dematerialization account. It’s an account where your bought shares will be deposited in electronic format like how your money is kept in your savings account as electronic format after deposit. There is a term called DP(depository participant) who has a right to open up demat accounts & most of the brokers have got this DP license to open up a demat account for you.
minus      13. What are the charges applicable on Stock Trading ?
AjmeraLotus       Statutory charges like GST, stamp duty and STT are imposed by either the central or the state government. The broker does not get these payments. The broker just collects these on your behalf and deposits it with the government.
minus      14. What is SEBI ?
AjmeraLotus       SEBI refers to Securities and Exchange Board of India. Because the bourses (stock market) have inherent risks, a market regulator is required. The SEBI is provided with this power and has the responsibility of developing as well as regulating the markets. The basic objectives include protecting investor interest, developing the share market, and regulating it’s working.
minus      15. How does Equity Market work ?
AjmeraLotus       ABC Limited is a privately owned company that is currently worth Rs10,000,000. The owners want to raise some money so that they can expand the business overseas. To do this, they sell a portion of the business by issuing stock at Rs2 per share. This means ABC becomes publically listed. You decide it looks like shrewd investment so you buy Rs10,000 worth of stock. At Rs2 per share that gives you 5000 shares, or a 0.1% stake in the company.Your investment turns out to be a good one. By the time ABC releases its first annual earnings report, its share price has risen to Rs3 and your investment has grown to a value of Rs15,000. You can now either sell your shares, or hold onto them in the hope of future profits.However, share prices can go down as well as up and if ABC plc had gone down in value you could have lost money. For that reason, it is incredibly important to research both the company you are thinking of investing in and their wider industry before you buy any shares.
minus      16. What are the risks involved in Equity Trading ?
AjmeraLotus       Since equities don’t pay a fixed interest rate, they don’t offer guaranteed income. Hence, with equities comes the risk factor. There are various risks involved in equity investment that affects your returns such as changes in economic environment namely, changes in interest rates, inflation, market risks to name a few. While investment in equities is not risk-free because of various risk factors, being regulated by Securities and Exchange Board of India (SEBI) you can be sure that there is no counterparty risk.
minus      17. How can an Investor manage risk efficiently ?
AjmeraLotus       As an age old saying goes,'not putting all eggs in one basket’, your equity portfolio should not be concentrated to one particular investment style or a particular sector. Most risks associated with investments in shares can be reduced by using the tool of diversification. To reduce the risk, diversify your portfolio pyramid and make sure that your portfolio consists of shares across various sectors and industries like automotive, engineering, financial services, information technology. Also make sure the companies are all located in different regions and that the companies you have invested in belong to large-cap, mid-cap and small-cap clan.
minus      18. How to build a Portfolio of Stocks ?
AjmeraLotus       A portfolio is a grouping of financial assets such as stocks, bonds and cash equivalents, as well as their funds counterparts, including mutual, exchange-traded and closed funds. Portfolios are mostly held directly by investors and/or managed by financial professionals. The first step towards building a portfolio is to have a clear goal. Once you have that, then it's relatively easy to build the rest of the portfolio in a way that's suitable for meeting your goals. Secondly, a focused and disciplined approach with limited number of stocks can help improve performance of the portfolio. Thirdly, diversifying your investment portfolio can help by spreading around your money to a number of stocks.A well-diversified portfolio is important because in the event that one or more sectors of the economy start to decline, it will remain strong over time and reduce the likelihood of taking a significant hit as the market fluctuates.
minus      19. What is Economic Environment?
AjmeraLotus       The economic environment refers to the state of the economy in a country or region. Economic conditions are considered to be sound or positive when an economy is expanding and are considered to be adverse or negative when an economy is contracting. Economic indicators which can be used to define the state of the economy or economic conditions are the unemployment rate, levels of current account and budget surpluses or deficits, GDP growth rates, and inflation rates. An improvement in economic conditions would lead investors to be more optimistic about the future and potentially invest more as they expect positive returns. The opposite could be true if economic conditions worsen.
minus      20. What are Company Earnings ?
AjmeraLotus       A Company’s Earnings is an official public statement of a company's profitability during a specific period, which is usually defined as a quarter (three calendar months) or a year. It is often evaluated in terms of earnings per share (EPS) - this is the most important indicator of a company's financial health. When the company has been profitable leading up to the announcement, their share price will usually increase after the information is released.
minus      21. What is PE ratio ?
AjmeraLotus       The price to earning ratio (P/E Ratio) is a valuation ratio of a company’s current share price compared to its per-share earnings. P/E is one of the most important and interesting ratios used to compare the price and value of a particular stock. Usually higher the P/E ratio, the more premium is the stock and vice versa. A high P/E ratio doesn’t necessarily mean that a stock is expensive and should be sold. It simply means that investors are willing to pay a premium to hold the stock.
minus      22. What is Dividend Yield ?
AjmeraLotus       The dividend yield is a financial ratio that measures the amount of cash dividends distributed to common shareholders relative to the market value per share. Dividend yield is the relation between a stock's annual dividend payout and its current stock price.A security's dividend yield can also be a sign of the stability of a company and often supports a firm's share price. Normally, only profitable companies pay out dividends. Therefore, investors often view companies that have paid out significant dividends for an extended period of time as "safer" investments.
minus      23. What are Derivatives ?
AjmeraLotus       A derivative is an instrument whose value is derived from the value of one or more underlying, which can be commodities, precious metals, currency, bonds, stocks, stocks indices, etc.Four most common examples of derivative instruments are Forwards, Futures, Options and Swaps. The value of a derivative is based on the expected future price movements of their underlying asset. Derivatives are often used as an instrument to hedge risk for one party of a contract, while offering the potential for high returns for the other party. Derivatives have been created to lessen fluctuations in stock, bond, commodity, and index prices; changes in foreign exchange rates; changes in interest rates etc.
minus      24. What are Futures ?
AjmeraLotus       Futures are exchange-traded contracts to sell or buy financial instruments or physical commodities for a future delivery at an agreed price. There is an agreement to buy or sell a specified quantity of financial instrument commodity in a designated future month at a price agreed upon by the buyer and seller.The contracts have standardized specifications like market lot, expiry day, unit of price quotation, tick size and method of settlement.
minus      25. What are Options ?
AjmeraLotus       An Option is a contract that grants its owner the right, but not the obligation, to make a transaction in an underlying commodity or security at a certain price within a set time in the future. The underlying commodity or security could be anything. Equity shares are one major type of underlying asset. The right to sell a security is called a ‘Put Option’, while the right to buy is called the ‘Call Option’. Just as futures contracts minimize risks for buyers by setting a pre-determined future price for an underlying asset, options contracts do the same however, without the obligation to buy that exists in a futures contract.
minus      26. What is the tax treatment for Equity Investment and other charges that are levied ?
AjmeraLotus   Tax Treatment;-
  • Long Term Capital Gains Tax (LTCG) – The Union Budget 2018-18 proposes a Long-term capital Gains tax on sale of Equity shares / units of Equity oriented Fund if more than Rs 1 lakh at @ 10% without the benefit of indexation from i.e. from 1st April 2018.
    Short Term Capital Gains Tax (STCG) – It is payable at 15% if securities are held for less than 1 year.
AjmeraLotus   Other Charges;-
  • 1. GST- Central Goods and Services Tax (CGST) @9% and Integrated Goods and Services Tax (IGST) @9% are payable to the government for every trade executed.
  • 2. Transaction Charges - Transaction charges are levied as follows - (For NSE @ 0.00325% and for BSE@ 0.00275%)
  • 3. SEBI charges - Rs 20 per crore on total turnover.
  • 4. Stamp duty charges - Stamp duty are 0.0002% for intraday and 0.01% for delivery.
  • 5. Securities Transaction Tax – STT is levied by government on every transaction done on stock exchange (NSE or BSE). The STT is 0.1% on buy and sell for Equity delivery. 0.025% on sell for Equity intraday . 0.01% on sell side for Equity Futures and 0.1% for sell side of Equity options ( Levied on premium)
minus      1. What is a Mutual Fund ?
AjmeraLotus       A mutual fund is a professionally-managed investment scheme, usually run by an asset management company that brings together a group of people and invests their money in stocks, bonds and other securities. Mutual funds are pooled investment vehicles actively managed either by professional fund managers or passively tracked by an index or industry.
minus      2. What is Systematic Investment Plan (SIP) ?
AjmeraLotus       SIP has become a very attractive way of investing for retail investors over the years. SIP basically involves investing a fixed amount at regular intervals in mutual fund. Investors can invest small amounts of money in daily, weekly, monthly or quarterly basis instead of investing a lump sum at one go.
minus      3. What is the primary role of Mutual Funds ?
AjmeraLotus       Mutual fund is a fund of funds. A mutual fund combines the funds of individual investors and invests them in variety of financial securities like equities/debt. A mutual fund holds a variety of investments which can make it easier for investors to diversify than through ownership of individual stocks or bonds. It has emerged as a great option for investors who are willing to take risks for higher rectums and do not have required expertise or time for handling their investing activities.
minus      4. What exactly do Mutual Funds offer for Investors ?
AjmeraLotus       Mutual funds have turned out to be a very useful investment option for investors who lack the time or knowledge to make traditional and complex investment decisions on their own.
minus      5. How do Mutual Funds function ?
AjmeraLotus       A mutual fund basically collects money from investors, pools it together and invests it in various options like stocks, bonds or both. The investing decisions are taken by professionally equipped managers who understand the market well, and try to create value for the investors over a period of time.
minus      6. How can an investor participate in Mutual funds ?
AjmeraLotus       As an investor, you can buy mutual fund 'units', which basically represent your share of holdings in a particular scheme. These units can be purchased or redeemed as needed at the fund's current net asset value (NAV). These NAVs keep changing, according to the fund's holdings.
minus      7. How are the investor’s interests protected while investing in Mutual Funds ?
AjmeraLotus       All the mutual funds are registered with SEBI. They have to function within the provisions of strict regulation created to protect the interests of the investor.
minus      8. What makes Mutual funds attractive for retail investors ?
AjmeraLotus       The biggest advantage of investing through a mutual fund is that it gives small investors access to professionally-managed, diversified portfolios of equities, bonds and other securities, which would be quite difficult to create with a small amount of capital.
minus      9. What is Net Asset Value (NAV) ?
AjmeraLotus       NAV is the value of a fund's asset less the value of its liabilities per unit. In simple terms, NAV = (Value of Assets-Value of Liabilities)/number of units outstanding.
minus      10. What are Sponsors, Trustees and AMCs ?
AjmeraLotus       A mutual fund is set up in the form of a trust that has a Sponsor, Trustees, Asset Management Company (AMC). The trust is established by a sponsor(s) who is like a promoter of a company and the said Trust is registered with Securities and Exchange Board of India (SEBI) as a Mutual Fund. The Trustees of the mutual fund hold its property for the benefit of unit holders. The trustees are vested with the power of superintendence and direction over the AMC.

An Asset Management Company (AMC) approved by SEBI manages the fund by making investments in various types of securities.
minus      11. What is NFO ?
AjmeraLotus       A new fund offer (NFO) is the first time subscription offer for a new scheme launched by the asset management companies (AMCs).
minus      12. What are Open-ended Funds ?
AjmeraLotus       Open ended funds buy and sell units on a continuous basis and allow investors to enter and exit as per their convenience.
minus      13. What are Close-ended funds ?
AjmeraLotus       Close-ended funds have a fixed maturity. Investors can buy units of a close-ended scheme from the fund only during its NFO. The fund makes arrangements for the units to be traded post-NFO in a stock exchange. This is done through a listing of the scheme in a stock exchange.
minus      14. What are Interval funds ?
AjmeraLotus       These funds combine features of both open-ended and close-ended schemes. They are largely close-ended, but become open-ended at pre-specified intervals
minus      15. What is Return grade ?
AjmeraLotus       Return grade is the rating given to a fund based on its particular attributes. A return grade is defined as a quality rating of the stock or the bond based on the returns it offers to the investor and is used for the risk-return profile assessment.
minus      16. What is Asset Under Management (AUM) ?
AjmeraLotus       AUM is the relative size of mutual fund companies that is assessed by their assets under management (AUM). When a scheme is first launched, assets under management would be the amount mobilized from investors. If the scheme has a positive profitability metric, its AUM goes up; a negative profitability metric will pull it down.
minus      17.What is diversification and how does it help investors ?
AjmeraLotus       Units of a Mutual Fund scheme give investors exposure to a range of securities held in the investment portfolio of the scheme. Thus, even a small investment in a mutual fund scheme can give investors a diversified investment portfolio.
minus      1. What is Commodity Market ?
AjmeraLotus       Commodity market is a marketplace for facilitating trading in different commodities. Market can be a derivative or spot market. In the derivatives market, different financial instruments like futures and options are specifically traded based on the commodities. On the other hand, in spot market commodities are sold and brought for the immediate delivery. Such financial instruments like ‘futures’ are often traded in the online commodity exchanges.
minus      2. What are Commodity Futures ?
AjmeraLotus       Commodity Futures are the contracts for selling or buying particular quantity of the specific commodity at the future date. It is quite similar to the Stock futures and Index futures but underlying occurs to be the commodities in place of indices and Stocks.
minus      3. How does Futures Trading work ?
AjmeraLotus       Future trading is known as trading of the future contract. The future contract purchaser possesses the right to buy commodity of similar quality, quantity in particular time period from seller of the contract.
minus      4. What are the advantages of Online Commodity Trading ?
AjmeraLotus       Fair Price Discovery and Transparency: Trading in the commodity futures is often considered as transparent and through the large-scale participation; fair price discovery process is confirmed as well. Also large participation illustrates expectations and the views of the wider section of people who are concerned with the commodity.

Online platform: Processors, traders and producers along with importers or exporters for the purpose of managing price risk widely use the online platforms offered by NCDEX/MCX.

Hedging: It gives form to the producers in order to hedge positions based on their exposure within the physical commodity.

Simple Economics: The mechanism of commodity trading is depended on the simple economics that is, supply and demand. The price of the commodity is quite higher if its demand is higher and vice versa.

Low margins: Future traders of the commodity are needed to deposit quite low margins; roughly it is 5% to 10% of the contract’s total value, which is much lower in comparison to other classes of asset.

No counter party risk: Commodity Futures possesses Clearing Houses, just like exchanges within equity market that confirm the fact that contract terms totally fulfils and thus is responsible for eliminating the risk associated with the counter party.

Wide participation: The emergence of online trading enabled a wide expansion within the commodity market over the years.

Evolved pricing: The development in the participation could minimize risks of the cartelization, confirming the holistic perspective towards the commodity. Thus, pricing can be more or less irrational and more practical resulting in the Discovery Mechanism of fair price.

minus      5. Who regulates the Commodity Market in India ?
AjmeraLotus       The SEBI oversees and regulates the Indian commodity market.
minus      6. Who invests in Commodities ?
AjmeraLotus       a. Farmers/Investors b. Investors c. Exporters/Importers. Agencies providing agricultural credit. Commodity financers f. Large scale consumers like jewelers, refiners, textile mills g. Arbitrageurs, Speculators, Hedgers h. Corporate possessing risk exposure in the commodities
minus      7. What is a Commodity Exchange ?
AjmeraLotus       Commodity Exchange is the market place where the commodity trading is taken place. Currently, there are three exchanges of national-level within the country where commodity trade can take place like National Commodity and Derivative Exchange (NCDEX), Multi Commodity Exchange of India LTD (MCX) and National Multi Commodity Exchange of India Ltd (NMCE). There are 21 smaller exchanges as well offering the commodity trading at regional level.
minus      8. What types of Commodities are available on Exchanges ?
AjmeraLotus       Investors have lot of choices when participating in commodity market. There are different types of metals like Gold, Silver, Copper, etc. Energy counters like Crude oil and Natural Gas are also traded. A number of agriculture commodities like Chana, Soybeans, Turmeric, Wheat etc are also available for trading.
minus      9. What is Margin ?
AjmeraLotus       In the market of derivatives, an individual only pays very small portion for the actual trade value. In this case, it is not required to pay for the whole sum upfront like the purchasing of stocks or the spot market. This is known as the Margin. More simply, the Margin is understood as the amount an individual is needed to deposit with the broker earlier to performing any kind of commodities trade on any type of exchange.
minus      10. What is Mark to Market (MTM) ?
AjmeraLotus       Each value of trades and contracts are often adjusted for reflecting the current price of market. This is known as Mark to Market (MTM). Also, the very day when an individual enters into the futures contract, MTM or Mark to Marketing is considered as the very difference between closing price of the day and the entry value. In the context of carried forward position or stature, it is considered as the difference between the market price of day and closing price of the earlier day
minus      11. What is Hedging ?
AjmeraLotus       A hedge is considered as the investment mitigating the very risk of adverse movements of price of any asset. Commodity prices often keep on fluctuating. In order to hedge against such price risks, players are required to sell or buy positions in the futures markets of commodity. It is primarily the sellers/producers of the commodities for e.g., farmers’ producing wheat and the bulk buyers/consumers of the commodities (like the manufacturers of bread who utilize the wheat as raw material) that are undertaking hedging in various commodities.
minus      12. What are Warehouse Receipts ?
AjmeraLotus       Warehouse receipts are known as titled documents that are issued by the warehouses to the depositors against much deposited commodities. Through delivery and endorsements such documents are transferred. Such commodities can be claimed only by the receipt holders from warehouses.
minus      13. What are Lot Sizes and Delivery Quantities ?
AjmeraLotus When in Commodity Futures Market, an individual trades, that person possesses standardized contract. This means, every trade possesses certain common characteristics.

Such common quality is prescribed by Lot Size. The individual is thus responsible for trading in the multiples of such quantity or the lot.

However, delivery quantity can differ from the size of minimum lot. This is known as Delivery size.

Thus, for example, if the size of delivery was 200 gms and one lot for the commodity was 100 gms, then the individual requires for the trading at least in two lots for being eligible for the delivery
minus      14. What is Contango ?
AjmeraLotus       Contango is a situation where the futures price of a commodity is above the expected spot price. Contango refers to a situation where the future spot price is below the current price, and people are willing to pay more for a commodity at some point in the future than the actual expected price of the commodity. This may be due to people's desire to pay a premium to have the commodity in the future rather than paying the costs of storage and the carry costs of buying the commodity today.
minus      15. What is Backwardation ?
AjmeraLotus       This is considered as the very opposite of Contango. This occurs when the futures price is lower than the commodity’s spot price therefore, backwardation opines that future expiration of contracts will be traded at higher price comparing to the expiration of contract.
minus      16. What is spread in Commodities Trading ?
AjmeraLotus       This is considered as the difference between future prices of specific commodity over various tenures. For example, commodity’s future price may be Rs. 100 for the contract of 1 month and for 2 months contract Rs. 110. Such Rs 10 difference is known as Spread.
minus      17. What are the factors Impacting Commodity Prices ?
AjmeraLotus       Commodity prices normally tend to respond to the expected trends in demand and supply. For agriculture commodities, seasonal patterns, weather conditions, stock levels in major mandies and arrivals also play a critical role in daily price variations. For commodities like Gold, Silver, Copper, Crude etc, global price movement in these commodities, cues from currency markets and the general global economic conditions shape up the price behaviour.
minus      1. What are Currencies ?
AjmeraLotus       Currency or the Foreign Exchange is a generally accepted form of money, including coins and paper notes, which is issued by a Government and circulated within an economy.
minus      2. How are Currencies Quoted ?
AjmeraLotus       Unlike the other financial assets, the price of any currency is always versus another currency – for example the US Dollar versus the Euro. The two currencies in the quote are known as a pair which consists of a ‘base’ currency and a ‘counter’ currency. In a quote of USD/EUR (US Dollar to Euro) the ‘base’ currency is USD and the ‘counter’ currency is EUR.
minus      3. What is Forex Market ?
AjmeraLotus       Forex (Foreign Exchange Market) – is a gigantic financial market in the world where foreign currencies are traded by participants spread all over the globe. The market has no certain place of auction, conduction and is a package of various trading, investment and speculative operations with currencies which are carried out virtually 24 hours a day.
minus      4. Who participates in the Forex Market ?
AjmeraLotus       The global banking enterprises (central, commercial and investment) influence the current market situations the most, but recently the number of other market participants (international corporations, companies which manage assets, futures and options traders and private investors) have grown.
minus      5. What is Online Currency Trading ?
AjmeraLotus       Markets are places to trade goods. The same goes with FOREX. The Forex Goods (merchandise) are the currencies of various countries. Online Currency Trading is the act of buying and selling international currencies using the internet based platforms. Banks and financial trading institutions engage in the act of bulk currency trading. Individual investors can also engage in currency trading, attempting to benefit from variations in the exchange rate of the currencies.
minus      6. How does the Currency Market bring Buyers and Sellers together ?
AjmeraLotus       The currency or the foreign exchange market is normally based on currency trading platforms, where different major currencies of the world are traded. The foreign exchange market works as a medium to bring two parties together who wish to trade currencies at some agreeable rate. For instance, you can exchange one country’s currency for that of another simultaneously at some exchange rate. If you want to sell Indian rupee (INR) to buy the US dollar (USD), there must be someone else who wants to sell dollar for rupee at the same exchange rate. The Currency Trading (FOREX) market is the biggest and the fastest growing market in the world economy. Its daily turnover is more than 2.5 trillion dollars, which is 100 times greater than the NASDAQ daily turnover.
minus      7. Which Exchanges offer Currency Trading in India ?
AjmeraLotus       Currency trading on the national level is offered by National Stock Exchange (NSE), Bombay Stock Exchange (BSE) and Metropolitan Exchange.
minus      8. Who are the Regulators of the Market in India ?
AjmeraLotus       The exchange traded currency derivative market is regulated by SEBI through the recognized stock exchanges. The Foreign Exchange Management Act is the law, which regulates the Foreign Exchange Market .The regulatory authority for the Indian Foreign Exchange Market is the Reserve Bank of India (RBI).
minus      9. Who can trade in Currency Markets ?
AjmeraLotus       Corporates and individuals (e.g. importers and exporters), Investors, Traders, Hedgers, Speculators and Arbitrageurs can trade and benefit from currency markets.
minus      10. What are Currency Futures ?
AjmeraLotus       Currency Futures are exchange organized contracts which determine the size, delivery time and price of a commodity. Futures can easily be traded because they are standardized by an exchange.
minus      11. What are Currency Options ?
AjmeraLotus       A Currency Option is a contract that grants the buyer the right, but not the obligation, to buy or sell a specified currency at a specified exchange rate on or before a specified date. When you take an option to buy an asset it is called a ‘call’ and when you obtain the right to sell an asset it is called a ‘put’. To determine whether it is profitable to exercise an option, the current market price (spot price) and the price in the option (strike price) need to be compared.
minus      12. What are Long and Short positions ?
AjmeraLotus       Short Positions are taken when a trader sells currency in anticipation of a downturn in price. Making this move allows the investor to benefit from a decline. Long positions are taken when a trader buys a currency at a low price in anticipation of selling it later for more. Making these moves, allows the investor to benefit from changing market prices. Since currencies are traded in pairs, every forex position inevitably requires the investor to go short in one currency and long in the other.
minus      13. What factors affect Currency Trading ?
AjmeraLotus Various economic factors, domestic and international, affect the movement of a currency. Exchange rates are determined by factors, such as interest rates, economic confidence and current account on balance of payments, economic growth and relative inflation rates.
minus      14. What is Bid and Ask in Forex Trading ?
AjmeraLotus       “Ask” is the price at which broker/dealer is willing to sell. It is also called as an "Offer". “Bid” is the price at which broker/dealer is willing to buy.
minus      15. What is Spread ?
AjmeraLotus       The Spread is the difference between the BID and the ASK price in the market quotes.
minus      16. How to Trade Currency Futures ?
AjmeraLotus       A Currency Future, also known as FX future, is a futures contract to exchange one currency for another at a specified date in the future at a price (exchange rate) that is fixed on the purchase date. On NSE, the price of a future contract is in terms of Indian Rupee per unit of other currency, e.g. US Dollars. Currency Future contracts allow investors to hedge against foreign exchange risk. Currency Derivatives are available in four currency pairs viz. US Dollars (USD), Euro (EUR), Great Britain Pound (GBP) and Japanese Yen (JPY). On the NSE, Cross Currency Futures & Options Contracts on EUR-USD, GBP-USD and USD-JPY are also available for trading in Currency Derivatives segment.
minus      17. What is the importance of Forex Market from the business/economic perspective ?
AjmeraLotus       In a globalized world, every business is subject to the risk of unforeseeable changes in business environment. Volatility in exchange rate affects your business growth and can be significant depending upon the underlying exposure. If you are an exporter, importer or have foreign currency loans, you are directly exposed to exchange rate fluctuation.
minus      18. How to frame a Trading Strategy using Charts ?
AjmeraLotus       Making sound trading decisions and developing a sound and effective trading strategy is an important foundation of trading. Before developing a trading strategy, a trader should have a working knowledge of technical analysis as well as knowledge of some of the more popular technical studies. Charts are a very useful tool in determining the short term trends in currency values and traders can track the price movements regularly to take decisions while trading currencies
minus      19. How to use Support and Resistance Levels while Trading ?
AjmeraLotus       Determining "support" and "resistance" levels is the key for successful trading decisions. The market normally trades above its support levels and trade below its resistance levels. If a support or resistance level is broken, the market is then likely to follow through in that direction. These levels are determined by analyzing the chart and assessing where the market has encountered unbroken support or resistance in the past
minus      20. What are the Market Timings for trading Currencies in India ?
AjmeraLotus       On NSE/BSE, currency futures and options can be traded between 9:00 a.m. to 5:00 p.m. from Monday to Friday
minus      21. How to Manage Risk Effectively ?
AjmeraLotus       Traders should trade in small quantities and maintain a disciplined approach while trading in currencies. Given the volatile nature of the market and its strong linkage with other asset classes like equities, commodities and debt markets, cutting a trade at the right time is critical. Also due importance needs to be placed on keeping strict stop losses.
minus      22. What is the Daily Settlement Price for Currency Futures ?
AjmeraLotus       On the NSE/BSE, the daily settlement price for Currency Futures is calculated on the basis of the last half an hour weighted average price.
minus      23. What is the Tick Size for Currency Futures in India ?
AjmeraLotus       On the NSE/BSE, tick size or the smallest movement in currency futures is 0.25 paise or INR 0.0025.
minus      1. What is a Depository ?
AjmeraLotus       A depository is an organization where the securities of an investor are held in electronic form. A depository can be compared to a bank. Besides holding securities, a depository also provides services related to transactions in securities.
minus      2.Who is a Depository Participant (DP) ?
AjmeraLotus       As an investor, you open a securities account with a DP. DPs are attached to the depositories very much the same way as commercial banks are attached to RBI. All interactions including account opening, dematerialization, transactions, pledge etc. are done through the DP.
minus      3.How many types of Depository Participants are available ?
AjmeraLotus       National Securities Depository Ltd. (NSDL) and Central Depository Services Ltd (CDSL) are the two DPs available in India. NSDL is the first depository to have started in India, whereas CDSL followed suit. However, most of the services offered by both these depositories are similar. Today, almost all the companies listed in dematerialized form with NSDL are available with CDSL.
minus      4. Who is a Beneficiary Owner ?
AjmeraLotus       The person who holds a demat account is a beneficiary owner. In case of a joint account, the account holders will be beneficiary holders of that joint account.
minus      5. What is a DP Id ?
AjmeraLotus       A DP Id is the number of the depository participant allotted by the depository.
minus      6. How do I select a DP ?
AjmeraLotus       You can select your DP to open a demat account just like you select a bank for opening a savings account.
minus      1. What is a Demat Account ?
AjmeraLotus       A Demat account lets you keep securities in an electronic form instead of the physical form. It thus eliminates the risk of forgery, theft and manipulation of share certificates.
minus      2. What the advantages of having a Demat Account ?
AjmeraLotus       As an investor you will enjoy many benefits if you buy and sell shares in the depository mode. The following are some of the benefits you will enjoy: -

    No bad deliveries.

    No risk of loss, mutilation or theft of share certificates

    No stamp duty for transfer of shares.

    Reduced paper work.

    Fast settlement cycles.

    Low interest rates on loans granted against pledge of dematerialized securities by banks.

     Low margin on securities pledged with banks.

     Increase in liquidity of your securities because of faster transfer and registration of securities in your account.

     Instant disbursement of non-cash benefits like bonus and rights into your account.

     Regular account status updates available from MODES (Modes Optimization and Delivery Estimation System) at any point of time.

minus      1. What is Online Trading ?
AjmeraLotus       Online trading of financial securities like shares and commodities has become extremely popular over the years. Online trading in securities is facilitated through an online platform that gives investor’s access to real time quotes of shares and other financial securities traded on various exchanges. One can buy/ sell financial instruments such as equities, commodities, currencies and mutual funds with ease using the online trading platform. In common terms, online trading refers to buying and selling securities via the Internet or other electronic means like computers/mobile phones etc.
minus      2. Why Online Trading has become popular ?
AjmeraLotus       Online trading offers real-time quotes and facilitates instant trade execution without any delay. Investors have grown used to this facility following the speed and comfort it offers in comparison to calling up a broker for transacting in shares/commodities. Instant fund transfers via online payment gateways and quick access to market information, charts, news and other useful tools also make it extremely use friendly and convenient. At Ajmera, our robust support and dynamic monitoring systems make it possible to sort out any technical problems/glitches instantly without delay.
minus      3. What are the Major Advantages of Online Trading ?
AjmeraLotus       Online trading offers instant access to security prices and takes less time as compared to offline trading. A quick and easy access to trading records also makes it highly attractive. With the latest tech innovations, online trading is easily possible through applications devised for mobile phones and as such, investors can participate in trading from any place and time.
minus      4. When did Online Trading start in India ?
AjmeraLotus       The Securities & Exchange Board of India (SEBI) approved Internet Trading In January 2000. It noted that Internet trading can take place through order routing systems, which will route client orders to exchange trading systems for execution. Thus a client sitting in any part of the country would be able to trade using the Internet as a medium through brokers' Internet trading systems. BSE provides online trading system known as BOLT and NSE’s online trading system is known as NEAT (National Exchange for Automated Trading).
minus      5. How are the Funds transferred Online ?
AjmeraLotus       Funds can be easily transferred to the online account through payment gateway without any delay. Investors can also withdraw or transfer their funds to Bank Account with complete ease.
minus      6.What are safety measures an online investor must know ?
AjmeraLotus       While investing online, investors should take some safety measures like never sharing their password with anyone and changing it at periodic intervals. Investor should also ensure that sufficient funds are available in his account and regularly pay margin to the broker.
minus      7. Which financial assets could be traded by using online account ?
AjmeraLotus       An investor can trade in various financial securities like Shares, Commodities, Currencies, Mutual funds etc,
minus      8. What are different types of orders an investor needs to keep in mind while trading online ?
AjmeraLotus       With a market order, the customer instructs his or her brokerage firm to buy or sell a stock at whatever the price is when the trade is executed. With a limit order, the investor specifies the price at which he or she is willing to buy or sell. Limit orders can help protect customers from rapid price changes when markets are moving fast.
minus      9. How is the Security and Authentication maintained in online trading ?
AjmeraLotus       Every Online Account is protected with a unique User ID and 2-levels of password authentication. Investors can prevent unauthorised transactions in account by updating mobile numbers/email IDs with stock broker. This would ensure that investors receive information of all transactions directly from Exchange on your mobile/email at the end of the day.
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Attention Investors
Prevent Unauthorized Transactions in your demat account --> Update your Mobile Number with your Depository Participant. Receive alerts on your Registered Mobile for all debit and other important transactions in your demat account directly from CDSL on the same day.............issued in the interest of investors. No need to issue cheques by investors while subscribing to IPO. Just write the bank account number and sign in the application form to authorise your bank to make payment in case of allotment. No worries for refund as the money remains in investor's account                                    "KYC is one time exercise while dealing in securities markets - once KYC is done through a SEBI registered intermediary (broker, DP, Mutual Fund etc.), you need not undergo the same process again when you approach another intermediary.
Investors should be cautious of unsolicited emails and SMS advising to buy, sell or hold securities and trade only on the basis of informed decision. Investors are advised to invest after conducting appropriate analysis of respective companies and not to blindly follow unfounded rumours, tips etc. Further, you are also requested to share your knowledge or evidence of systemic wrongdoing, potential frauds or unethical behaviour through the anonymous portal facility provided on BSE & NSE website.BSE   http://www.bseindia.com/investors/tip-off-registration.aspx?expandable  NSE   https://www.nseindia.com/int_invest/dynacontent/any_portal.htm
All payments to Stock Broker shall be received from the market intermediaries/participants strictly by account payee crossed cheques / demand drafts or by way of direct credit into the bank account through electronic fund transfer, or any other mode permitted by the Reserve Bank of India. Stock Brokers shall not accept cash from their clients either directly or by way of cash deposit to the Bank Account of Stock Broker.
Group Companies Members of : BSE, NSE, MCX, MCX.SX, CDSL, NCDEX, Broking Services, Depository Services, Portfolio Management Services, Member Area IPO Distribution, Insurance Broking
BSE Clearing No.: 911 | SEBI Regn. No.: INZ000177531 (Cash/F&O) | NSE Clearing No.: 11858 | SEBI Regn. No. INZ000177531 (Cash/F&O/CDs) | MCX-SX Clearing No.: 11400 | SEBI Regn. No.: INZ000177531 (CDs) | CDSL DP ID: 30300 | SEBI Regn. No.: IN-DPCDSL-210-2003 | MCX SEBI Reg No.: INZ000032336 | MCX: 10665 | NCDEX: 00254 | NBFC RBI Regn. No.: 13.01851
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