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  1. Asked: In:

    What is an AMO Order?

    Srinivas Garimella Professional

    After market order, AMO is placed-in to do trading after market hours i.e., after 3:30 PM. It is usually done post-market hours of the trading day. The placement of an order should be between post-market hours of the current day and the next trading day. The purpose of the AMO order is to improviseRead more

    After market order, AMO is placed-in to do trading after market hours i.e., after 3:30 PM. It is usually done post-market hours of the trading day. The placement of an order should be between post-market hours of the current day and the next trading day.

    The purpose of the AMO order is to improvise the order performance. The AMO orders are opened on the next day in the stock exchange at 09:00 am. The time period between 9:00 am to 9:07 am is called pre-market hours, where all the AMO orders are executed.

    Trader can place an AMO at any time between 03:45 PM and 08:57 AM (National Stock Exchange), and for BSE it can be anytime between 03:45 PM and 08:59 AM. However, the best time for the AMO to be placed in the stock exchange is between 05:00 PM and 08:50 AM at NSE. It is a time ideal for NFO and Currency segments.

    Place an AMO:

    An investor before buying a stock must fix the buying price. In such a case first thing, one should keep into account is the closing price of the day. The investor can either quote five percent more or less than the price at the end of the trading day. The investor can choose the range of the preferred share. Say, the closing share price is INR 100 then it can be quoted for INR 95.00 or INR 105.00

    AMO: Rejection

    There are two instances in which AMO gets rejected and that means the client/investor is not allowed to trade on the stock exchange. It does happen if the client account is in Dormant Status. A Demat account/trading account gets into dormant status if the investor doesn’t transact at the stock exchange past six months.

    Cancellation of AMO:

    The investor can cancel before the trading session of the next day begins. When the following day’s session begins an investor may not find sufficient margin in the margin calculation process usually dealt at the beginning of the day. In such circumstances, the investor must check the ‘order status’ that is found in the order report during market hours. An investor can cancel such aftermarket orders before it gets registered at the exchange.

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  2. Asked: In:

    Can I Buy/Sell Shares Without a Demat Account?

    Srinivas Garimella Professional

    SEBI Rules Govern Demat Account: An individual investor cannot buy or sell shares without a Demat account. In the earlier days, the shares were issued in the paper form and that process is no longer in existence. In 1996, the Securities and Exchange Board of India, SEBI made it mandatory for all invRead more

    SEBI Rules Govern Demat Account:

    An individual investor cannot buy or sell shares without a Demat account. In the earlier days, the shares were issued in the paper form and that process is no longer in existence. In 1996, the Securities and Exchange Board of India, SEBI made it mandatory for all investors to open Demat accounts. The entire transactions of selling and buying on the demat account and the financial transactions are credited or debited accordingly.

    Significance of Demat Account:

    A Demat account is similar to a bank account. In bank account it deals with the account holders finances. In demat account it takes account of shares, bonds, and securities. Hence, individuals will require to hold a demat account. Individuals will need to maintain demat and trading account to trade (buy/sell) in the stock market. What is trading account? It is an account that enables individuals to buy and sell shares in stock market.

    Exception: Trading without Demat A/C

    Now the question is can anybody do trading without a demat account. It is made possible for traders who intend to do trading in the futures, options, and currency derivatives. In all the mentioned trading the share market conducts and transactions are complete using cash settlements.

    To trade other forms of services such as equities, intraday trading, it is mandatory for the investor to adhere to the regulations laid by the securities and exchange board of India (SEBI) and hence demat account is compulsory.

    Features of Demat Account:

    1. Demat account ensures safety and security of investor’ shares.
    2. Demat account holds financial instruments like equity shares, government securities, and exchange traded funds in an electronic form.
    3. It provides a unique number that identifies the individual account.

    Condition to Open A Demat Account:

    1. The individuals who plan to establish their trading in share market will have to open demat and trading account.
    2. Individuals of any age group can enter to operate demat account. They will have to submit Pan card, identity card proof, KYC documents. For beginners, Kotak Securities is the best as it provides the best advises. One must bear in mind that the investor must get full time support.
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  3. Asked: In:

    What is Stock Split in Stock Market?

    Srinivas Garimella Professional

    Stock Split in simple terms is the increase in number of the company shares and decrease in price per share. The company in such circumstances maintains the same market capital as it is before split. Here are some of the reasons as why Corporates go for Stock Split. Reason: Create a liquidity in theRead more

    Stock Split in simple terms is the increase in number of the company shares and decrease in price per share. The company in such circumstances maintains the same market capital as it is before split. Here are some of the reasons as why Corporates go for Stock Split.

    Reason:

    1. Create a liquidity in the share market.
    2. Enhance the purchasing capacity of the investor.
    3. Fall in the share price does attract investors to purchase the shares of corporates which were expensive otherwise.
    4. Important Note:
      1. When bonus shares are issued by companies it changes the value of the share capital only. If a stock is slip in a prescribed ratio, then the authorized share capital remains unaltered.
    5. Caution:
      1. The shareholders must be cautious when there is a stock split as the value of share decreases. They should wait for ideal time and sellout as and when the stocks increase in value.

    Process of stock Split:

    When a company/corporate plans to execute stock split it will inform to the shareholders about the change of it on a particular date. The shareholder will get the additional shares after that specified date.

    Example of Stock Split:

    1. A stock holds a selling value at INR 180 per share and the company/corporate issues a 3:1 stock split. The shareholder will be allotted two additional shares for every one share. It means the value of each share will be INR 60.00.
    2. If a shareholder has ten shares, then total value will be INR 1800.00. (10x INR 180 = INR 1800). Now, the share holder will have 30 instead of 10 shares. And, the value per share is INR 60.00. Hence, total value of the shares will be INR 1800.00, (30 x INR 60 = INR 1800.00).

    Reverse Stock Split:  

    1. In this scenario, the company/corporate reduces the number of shares outstanding, and thereby the prices shall begin to rise.
    2. For example, in a reverse 1:2 split, the share-holder with 100 shares at INR 50.00 per share shall own 50 shares worth INR 100.00 per share.
    3. If a shareholder has twelve shares, then total value will be INR 1200.00 (12 x INR 100 = INR 1200). Now, the shareholder will have 6 instead of 12 shares. And, the value per share is INR 200.00. Hence, total value of the shares will be INR 1200.00, (06 x INR 200 = INR 1200.00).

    Reason:

    1. The companies adopt reverse split to increase the credibility and at times the company does to prevent the stocks from getting delisted. The companies prefer it when the share price is too low.

    Advantages of Stock Split:

    1. Companies create stock splits for numerous reasons. Stock splits benefits the small investors. When there is a split in the stocks there will be reduction in the value of the stock price. The reduction in the stock price increases the liquidity of the stock. The liquidity in turn enhances the affordability to trade in the stock markets. In the practical aspect, with the increase of stocks, the investors can buy the shares and sell them. There are instances wherein stock split will increase in the stock price due to the quick trading that begins with the decline in the price per share in the stock-split.
    2. The corporates issues circulars about the stock split then often it is a sign of bullish market. In the bullish markets a typical situation may prevail and it can happen in this manner. The stock valuations rise high and as a result stock may not be within the reach of a small investors. This may keep such investors away from stock diversification.

     

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  4. Asked: In:

    What is an IPO?

    Srinivas Garimella Professional
    This answer was edited.

    Initial Public Offering: IPO is known as an initial public offering, where in the companies sell shares of a company to raise the capital. The shares are sold to individuals and institutional investors. The company can raise capital to seek new equity or even expand the trading operations of the exiRead more

    Initial Public Offering: IPO is known as an initial public offering, where in the companies sell shares of a company to raise the capital.

    The shares are sold to individuals and institutional investors. The company can raise capital to seek new equity or even expand the trading operations of the existing holdings.

    Whenever an IPO is released in the open market in a colloquial sense it is known as free float. Through the process of allowing investors and retailers into the company’s fold the floating or opening to the markets the privately held companies transform to a public company.

    The shares in the IPOs are offered to three categories…

    1. Qualified institutional buyers
    2. Non-institutional investors, and
    3. Retail individual investors.
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  5. Asked: In:

    Why Most of the People Fail in Stock Market?

    Srinivas Garimella Professional
    This answer was edited.

    These are the questions usually raised by investors who are skeptical about stock investments in general. The truth is altogether different. An investor can mint money in the stock market and in fact, become a seasoned player provided certain rules of the game are followed. Before getting into the cRead more

    These are the questions usually raised by investors who are skeptical about stock investments in general.

    The truth is altogether different. An investor can mint money in the stock market and in fact, become a seasoned player provided certain rules of the game are followed.

    Before getting into the conversation, it is necessary to note that investments in share markets are long term and the investor must set a realistic goal.

    Keeping this in view, I would recommend readers bear the below-stated information and proceed to invest. Make sure that all the factors are taken into account while making an active participation in trade and you will not fail in your attempts at the stock market.

    Tips to Avoid Losses in Stock Market

    1. The process of trading involves knowledge and essential skillsets to drive in the market.
    2. Emotional control and never get carried away by moods, and personal feelings while buying and selling the stocks.
    3. Remember, it is a practical game and sometimes your interest in a particular portfolio may not suit to make good returns on investment.
    4. In making the selection of the portfolio, make sure that you choose a broader than a narrow portfolio.
    5. When the market is fluctuating make quick transfers of funds and be sure that you are doing a balanced fund allocation.
    6. Research: is a must and making the right tool application alone enables you to derive the correct financial conclusions on investments.
    7. Pick a company, read its performances, and limitations, and preferably wait for the lowest point and then buy that company’s stocks. Knowing the lowest point for any company is difficult to predict and needs lots of time and patience. It would help if you waited for it, timing in the market is very important.
    8. Adapt to change, sometimes your perceptions and interests may not yield favorable results. Hence, change your portfolio as per the market demands.
    9. Always depend on reliable sources, for instance, collect information on a company from the company’s records and not from secondary or any alternate sources. Do not take the option of the neighbor next door just you know them. Input from such people can affect the decision-making process.
    10. It sounds easy to follow as I stated above, make sure that self-control plays a prominent role in doing stock market business.

    Good Luck with your future investments…

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