For any investor in the stock market, understanding the pre-open market session, also known as the pre-opening session, is crucial. […]
For any investor in the stock market, understanding the pre-open market session, also known as the pre-opening session, is crucial. This 15-minute window, occurring before regular trading hours (pre-market session time), offers an opportunity to gauge market sentiment and influence the opening price of stocks. Let’s understand the details regarding the pre-open market session:
What is the Pre-Open Market Session?
It is like a trailer before all the busy action starts in the stock market. The pre-opening session lasts for 15 minutes (pre-market session time). It allows investors to place orders (pre-open market session activities) before the regular trading hours start, typically at 9:00 AM and ending at 9:15 AM in India. This pre-market session facilitates two key functions:
Order Placement: Investors can express their early-morning views by placing orders at desired prices (limit orders) or at the current market price (market orders). This pre-opening session activity sets the stage for the day’s trading.
Price Discovery: Through a detailed process of matching buy and sell orders, the pre-open market session helps establish an equilibrium price for each stock based on current supply and demand. This price discovery mechanism contributes to a more informed market opening.
How Does Pre-open Session in Share Market Help Reduce Volatility?
Volatility, the ever-present companion of the stock market, can be mitigated through the pre-open market session. Here’s how:
Early Order Expression: The pre-opening session allows investors to react to overnight news or announcements by placing orders early. It stops too many orders from rushing in when the market first opens, which could reduce price swings.
Gradual Order Matching: Instead of a burst of activity at the market opening, the pre-market session facilitates a gradual matching of orders. This smoother transition helps to stabilize prices and minimize volatility.
Equilibrium Price Identification: By matching buy and sell orders, the pre-open market session assists in finding a fair opening price that reflects investor sentiment. This agreed-upon price makes it less likely to have significant price differences when the market opens.
Stock Market Timings in India: Break-Up of the Pre-Open Market Session
The 15-minute pre-market session in India is further divided into two distinct phases:
1. Order Collection Period (9:00 AM – 9:08 AM):
This pre-opening session window allows investors to place, modify, or cancel orders.
It’s a planning phase where investors strategize their daily moves.
2. Order Matching Period (9:08 AM – 9:15 AM):
In the pre-market session phase, before regular trading hours commence, the exchange processes buy and sell orders to set the initial price for each stock. This establishes a starting point for trading activity once the market officially opens.
This price discovery process sets the tone for the regular trading session. How is the stock’s opening price achieved in the pre-open market session?
The opening price of a stock in the pre-market session isn’t determined by chance. An algorithm analyzes the “order book” generated during the session. This order book contains all placed orders with their associated prices and quantities. The algorithm then calculates the price where the total quantity of buy orders matches the total quantity of sell orders. This calculated price becomes the stock’s opening price for the regular trading session.
The Bottom Line
The pre-open market session offers valuable insights and strategic advantages for investors in the Indian stock market:
It provides an early opportunity to express market views and participate in price discovery.
It contributes to a more stable market opening by reducing volatility and establishing a fair opening price.
It allows investors to consider the market sentiment during the early morning hours, assisting them in making informed decisions about their investments.
While the pre-market session is a valuable tool, it’s important to remember that it’s just one piece of the puzzle. Combining insights from the pre-market session with thorough research and analysis can empower you to make informed investment decisions.
FAQ
u003cstrongu003eWhat is the time of the pre-open session of BSE?u003c/strongu003e
In the Indian stock market, the BSE’s pre-open session takes place between 9:00 AM and 9:15 AM, allowing investors to place orders and influence the opening price of stocks before regular trading begins. Remember, this is a 15-minute window to early participate in the market.
u003cstrongu003eIs it possible to purchase shares during the pre-open session?u003c/strongu003e
Certainly, you have the option to submit orders to purchase shares during the pre-open session.u003cstrongu003e u003c/strongu003e(9:00-9:15 AM). However, the orders are matched, and trades are confirmed once the session ends. It is important to note that this session sets the opening price, but actual execution happens later.
u003cstrongu003eHow do you order in the pre-open market?u003c/strongu003e
During the pre-open market (9:00-9:15 AM), you can place limit orders at specific prices or market orders at the prevailing price. These orders are collected but only executed once the session ends. Remember, you’re setting the stage for trading, not buying immediat
Introduction The Interim Union Budget 2024-25 was announced recently. All eyes were on the income tax slabs and the applicable […]
Introduction
The Interim Union Budget 2024-25 was announced recently. All eyes were on the income tax slabs and the applicable tax rates for the forthcoming year. However, being an election year and an interim budget, the tax slabs and rates were left unchanged. Most have applauded the announcement, while some are figuring out income tax basic concepts.
Indeed, the Budget, finance, taxation, and their impact on individuals can be challenging to understand. This blog attempts to explain helpful income tax knowledge so one can understand how one’s income is taxed.
Basics of Income Tax for Beginners
Soon, a new fiscal year will start. It is also when we fill out Form 16 and file Income Tax Returns. It can be quite confusing for those filling out the forms for the first time, given the many aspects of filling it out. Here, we explain some income tax basic concepts to make tax filing easier.
Defining the ‘Previous year.’
After you fill in the personal details in your ITR, there is a field ‘Previous Year.’ It is one of the most crucial income tax basic concepts. It is the year before the year the tax is filed. Individuals file their income tax returns for a fiscal year in the following year. For example, if an individual files his tax in 2023-24, 2022-23 is the Previous Year. Simply put, it is the year before the current year when one files the returns.
Assessment Year
Along with the ‘Previous Year,’ there is also the ‘Assessment Year, ’which is crucial from the perspective of basic income tax knowledge. The assessment year is the year right after the present financial year. The assessment year also starts from 1 April to 31 March.
Both the Previous and the Assessment years can be explained with an example.
Period: April 1, 2023 – March 31, 2024.
Financial year – 2023-24
Assessment year – 2024-25
Understanding your Salary
In income tax basic concepts, the income tax rate applies to one’s income depending on one’s income slab or category. This information about the income is available in the individual’s salary slip.
The salary slip, also known as the pay slip, which your HR department maintains, gives the break-up of the salary structure in a given month. The salary slip contains information about the basic salary, house rent allowance (HRA), conveyance allowance, and medical allowance.
As fundamental income tax basics, the employers also mention the applicable deductions such as professional tax, Employee Provident Fund (EPF), and Tax Deducted at Source (TDS).
Income On Which You Pay Tax
There is so much to income taxation, and every aspect of it is crucial to income tax basic concepts. Generally, most individuals are either salaried, businesspersons or self-employed. While this is their core income, they could also get income from other sources. In this case, your total income is your income as a salaried individual/self-employed or a businessman.
Sources of Income
To understand the income tax basic concepts, we must also know the different sources of income. The following are the income heads from which an individual can earn and are taxed.
Business Income: These are the profits from owning and operating a business, including self-employment earnings, partnerships, and sole proprietorships.
Rental Income: This is the income from a house or a building that could be self-owned/ self-occupied or rented.
Income from Capital Gains: This is the income one makes from selling capital goods or investments. Even if an individual makes a loss, they will still be taxed.
Income from Other Sources: This is the income from other sources not included above, such as interest on savings bank accounts, fixed deposits, family pensions, or gifts.
Deductions
As a part of income tax basic concepts, deductions are claims individuals make to reduce their taxable income. It is a tax benefit that helps them save tax. Individuals with additional income from various investments and other expenses can claim tax deductions to lower their taxable income.
Deductions Under Section 80C
One of the most significant and helpful income tax basic concepts is the deduction under Section 80C. This section of the Income Tax Act 1961 allows deductions for investments in specified instruments such as Public Provident Fund (PPF), National Savings Certificate (NSC), Equity Linked Savings Scheme (ELSS), life insurance premiums, tuition fees for children, home loan EMIs, Post Office Time Deposits, etc., up to a maximum limit of Rs. 1.5 lakh per financial year.
Standard Deduction
Another significant concept in income tax basic concepts is standard deduction. A standard deduction is another claim by salaried individuals and pensioners, irrespective of any investment or spending by taxpayers. As per the new FY 2023-24 tax regime, salaried individuals can get a standard deduction of Rs. 50,000. The same standard deduction applies to pensioners, while family pensioners qualify for a standard deduction of Rs.15,000.
TDS or Tax Deducted at Source
A deduction is one of the most crucial income tax basic concepts. It is Tax Deducted at Source or TDS. TDS is the tax deducted by the person making the payment. The amount of tax deducted is as per the rules prescribed by the Income-Tax department. An employer will assess your income and deduct the applicable amount if your income exceeds the Rs. 2,50,000 threshold. Also, your fixed deposit will attract a TDS on the interest income. The TDS is generally 10% and can be 20% if the PAN card number is not mentioned.
Calculating Tax Payable
Income tax basic concepts also include the income tax payable. It is the amount of tax one has to pay in a year. An individual’s final tax payable is determined by the taxable income and the rates that apply to it. From this tax payable, one deducts the TDS to arrive at the final tax payable.
Illustration on Salary TDS
Using some of the income tax basic concepts and deductions discussed, we take an example to understand the basic income tax formula.
Anuja’s gross salary – Rs.13,00,000.
Tax-exempted HRA – Rs. 1,00,000
Tax-exempted LTA – Rs. 1,00,000
Standard Deduction – Rs. 50,000
80C deduction declared by an employee – Rs. 1,50,000
80D deduction declared by an employee – Rs. 50,000
Net Salary = 13,00,000 – 1,00,000 – 1,00,000 – 50,000.
Net Salary = Rs. 10,50,000.
Then,
Net Taxable Salary = Net salary – 80C deduction – 80D deduction
Net Taxable Salary = 10,50,000 – 1,50,000 – 50,000
Net Taxable Salary = Rs. 8,50,000
Tax Payable
Up to Rs. 5,00,000: 5% of Rs. 2,50,000 = Rs. 12,500
Rs. 5,00,000 to Rs. 8,50,000 = 20% of Rs. 3,50,000
= 70,000
Tax Payable = Rs. 12,500 + Rs. 70,000
= Rs. 82,500
Applicable TDS rate = Tax Payable / Gross Income *100
= 82,500 / 13,00,000 *100
= 6.35%
Hence, your employer will deduct 6.35% of your taxable income per the basic income tax formula.
Documents Required to File Income Tax Returns
When an individual is filing his income tax returns, he has to submit some documents. Knowing this is a part of the income tax basic concepts. These documents depend on the salary status of the citizen filing the ITR. However, the following documents are needed by the type of occupation status of the taxpayer.
Salaried Individual – The finance department provides a salaried individual with the 16A/16B form. The 26 AS reflects the TDS deducted during the year. The employee submits the rent receipt (for HRA), payslips, and other investments made under Sections 80C, 80E, 80D, and 80G should be provided.
Capital Gains – When filing ITR for capital gains, the individual must provide an ELSS statement, a mutual fund statement, proof of sale and purchase of securities/bonds, purchase/sale price of property, registration details of any residential property sold, and a capital gains statement showing stock trading and the sales of securities.
House Property – PAN card, co-owner details, property address, and home loan interest certificate.
Other Sources include interest from savings accounts, fixed deposits (FD), family pensions, or gifts.
Income Tax Slabs
In India, the income tax individuals have to pay is organized in slabs or categories in which their income falls. It is an essential part of income tax basic concepts. Every such slab has a tax rate assigned to it. Generally, the tax slabs begin from the 0 tax liability slab to the highest tax liability. It means that while some portion of income is tax-free, the remaining is taxable. Also, as the individual’s income increases, the tax rates increase.
In the recent interim Union Budget 2024-25, the tax slabs and the rates were left unchanged. The total Union Budget to be held later may change the tax slabs and the rates. Presently, two tax regimes are applicable as follows:
(Old Regime) Income Tax Slabs: FY 2023 / AY (2024-25)
Citizens less than 60 years of age
Resident Senior Citizens (60-80 years of age)
Resident Super Senior Citizens (80 years and above)
Up to Rs. 2,50,000 lakh
NIL
NIL
NIL
Rs. 2,50,000 lakh to Rs. 3,00,000 lakh
5%
NIL
NIL
Rs. 3,00,001 to Rs. 5,00,000
5%
5%
NIL
Rs. 5,00,001 lakh to Rs. 10,00,000 lakh
20%
20%
20%
Above Rs. 10,00,000 lakh
30%
30%
30%
(New Regime) Income Tax Slabs
Up to Rs. 3,00,000
Nil
Rs. 3,00,001 to Rs. 6,00,000
5%
Rs. 6,00,001 lakh to Rs. 9,00,000 lakh
10%
Rs.9,00,001 to Rs. 12,00,000
15%
Rs. 12,00,001 to Rs. 15,00,000
20%
Above Rs. 15,00,000
30%
Source: Finance Bill, Interim Union Budget, 2024-25.
Income Tax Returns
The income tax basic concepts also include, Income Tax Returns (ITR). ITR is a form from the Income-Tax department with seven such forms available. They are ITR-1, ITR-2, ITR-3, ITR-4, ITR-5, ITR-6 and ITR-7. Which form applies to you depends on the sources of income, the income earned, and whether the taxpayer is an individual, a Hindu Undivided Family, or a company.
Conclusion
As a responsible citizen, knowing income tax basics is very important. Here, we familiarised ourselves with some of the frequently used income tax basic concepts and some concepts that also give tax relief.
Together, the income tax basic concepts are of great help in understanding taxation.
FAQ
What is the basic concept of income tax?
The income tax basic concepts start with an individual/non-individual mandated to pay income tax earned on income as per the applicable laws of I-T.
How do you calculate income tax?
Income tax is calculated by deducting the exemptions from your gross income to arrive at the taxable income. The standard deduction is subtracted, and the net tax payable is derived. On this, the income tax is charged as per the applicable rate.
Who pays income tax?
As per the Income-Tax Act 1961, the income tax basic concepts require every person to pay income tax. Section 2(3) defines a person as a natural and an artificial person/entity.
The Indian Ethanol Stocks Industry: A Synopsis In June 2022, India reached a significant milestone by achieving an average blending […]
The Indian Ethanol Stocks Industry: A Synopsis
In June 2022, India reached a significant milestone by achieving an average blending rate of 10% ethanol in petrol. The government has fast-tracked efforts to reach a 20% average blending rate by 2025.
This initiative, known as the Ethanol Blended with Petrol (EBP) program, has spurred massive ethanol production in the country, benefiting the companies involved. As of 2023, India’s ethanol production capacity stood at approximately 1,380 crore liters, with 875 crore liters from molasses and 505 crore liters from grains.
To meet the 20% blending target by 2025, India must ramp up production capacity to over 1,700 crore liters. Sugar mills have benefitted significantly from selling ethanol to oil marketing companies for blending, generating over Rs 94,000 crores in the last decade and adding to the bottom line.
With supportive government policies and rising demand for ethanol, sugar mills are expected to reap substantial financial gains in the foreseeable future.
Some Ethanol Stocks in India
EID Parry (India) Limited
Shree Renuka Sugars Limited
Balrampur Chini Mills Limited
Triveni Engineering and Industries Limited
Bajaj Hindusthan Sugar Limited
Top Listed Ethanol Stocks List in India: An Overview
EID Parry (India) Limited
EID Parry is a leading sugar manufacturer based in Chennai and part of Murugappa Group. Founded in 1788, the company has six sugar manufacturing plants and one distillery across South India. The company produced 647.28 liters of ethanol in FY23 and 638 liters in H1FY24.
Market Cap
CMP (as of 4th Feb 2024)
All-time High Level
PE Ratio
5 yr CAGR Return
ROCE (FY23)
₹ 11,390 crore
₹641.60
₹670
11.5
27%
8%
Return Period: 4th Feb 2019 to 4th Feb 2024 (screener. in)
In FY23, the company’s total income was reported at ₹35,283.02 crores, up by about 50% from ₹23,743,78 crores in FY22. The consolidated EBITDA during FY23 was ₹3,194.72 crores. While profit after tax in FY23 was ₹1,827.74 crores, compared to ₹1,573.70 crores in FY22.
Shree Renuka Sugars Limited
Shree Renuka is India’s largest agribusiness and bio-energy corporation. It is one of the first companies to harness the potential of sugar as a source of green energy in India. The company operates eight sugar mills with a cumulative refining capacity of 1.7 MTPA and three distilleries with an ethanol production capacity of 1,250 KLPD.
Market Cap
CMP (as of 4th Feb 2024)
All-time High Level
PE Ratio
5 yr CAGR Return
ROCE (FY23)
₹10,579 crore
₹49.7
₹123.50
–
38%
–
Return Period: 4th Feb 2019 to 4th Feb 2024 (screener.in)
In FY23, the company’s total income was reported at ₹9,106.5 crores, up by about 40% from ₹6,501.6 crores in FY22. EBITDA during FY23 was ₹719.7 crores. The company reported a loss of ₹196.66 crores in FY23, which increased from ₹136.7 crores in FY22.
Balrampur Chini Mills Limited
Founded in 1975, Balrampur Chini Mills is one of India’s largest sugar manufacturing companies, with a distillery capacity of 1,050 KLPD.
Market Cap
CMP (as of 4th Feb2024)
All-time High Level
PE Ratio
5 yr CAGR Return
ROCE (FY23)
₹7,931 crore
₹393.10
₹525.90
14.7
29%
Return Period: 4th Feb 2019 to 4th Feb 2024 (screener.in)
In FY23, the company’s total income was reported at ₹4,728.65 crores, down by about 4% from ₹4,893.94 crores in FY22. EBITDA in FY23 was ₹512.32 crores. And, in FY23, profit for the year was ₹275.53 crores, down from ₹514.66 crores in FY22.
Triveni Engineering and Industries Limited
Founded in 1932, Triveni Engineers is one of India’s largest integrated sugar manufacturers and producers of fuel and alcohol-grade ethanol. The company has a cumulative ethanol production capacity of 660 KLPD.
Market Cap
CMP (as of 4th Feb 2024)
All-time High Level
PE Ratio
5 yr CAGR Return
ROCE (FY23)
₹7,397 crore
₹338
₹417
17.4
49%
55%
Return Period: 4th Feb 2019 to 4th Feb 2024 (screener.in)
In FY23, revenue from operations was at ₹6,310.1 crores, up 25.6% from ₹4,694 crores in FY22. EBITDA in FY23 was ₹696.3 crores. And, net profit during FY23 was reported at ₹1,791.8 crores, up from ₹424.1 crores.
Bannari Amman Sugars Limited
Bannari Amman Sugars Limited is a Tamil Nadu-based industrial conglomerate involved in the manufacturing and trading sugars, alcohol, liquor, granite, etc.
Market Cap
CMP (as of 4th Feb 2024)
All-time High Level
PE Ratio
5 yr CAGR Return
ROCE (FY23)
₹3,020 crore
₹2,408.40
₹2,975
19.7
10%
12.38%
Return Period: 4th Feb 2019 to 4th Feb 2024 (screener. in)
In FY23, the company’s total income was reported at ₹2,565 crores, up by about 26% from ₹2,004 crores in FY22. Profit for the period in FY23 was ₹143.4 crores, up from ₹80 crores in FY22.
Factors to Consider Before Investing in Top Ethanol Stocks in India
Investing in ethanol stocks in India is not without risks. There are several factors to consider before investing in top ethanol stocks in India.
Dependency on the Sugar Industry
Ethanol production is closely tied to sugar production in India, which relies heavily on water availability due to the water-intensive nature of sugarcane cultivation. Therefore, any rainfall deficit year can severely impact the sugarcane production in the country, indirectly impacting ethanol production. This adds to volatility and uncertainty in the performance of ethanol stocks.
Government Policies
Government policies play a crucial role in the ethanol industry as they set the blending targets and procurement prices by oil marketing companies and provide financial incentives for ethanol producers. For example, advancing the 20% blending target to 2025 from the previously slated 2030 has boosted the demand and profitability aspect for ethanol producers. Similarly, any policy shift can significantly impact the performance of ethanol stocks.
Rising Demand
Ethanol is an important industrial chemical and solvent used as a blending fuel for automotive fuel. It is also the primary ingredient in many alcoholic beverages. Therefore, before investing in ethanol stocks, you should assess the company’s product portfolio and the different segments of the market they cater to. You should also evaluate the demand and supply scenario for ethanol in India and globally.
Protection from Inflation
Ethanol is derived from sugarcane and food grains, commodities that often see their prices rise alongside inflation. With the government regularly adjusting procurement prices in line with production costs, investing in ethanol stocks can offer a hedge against inflation for investors.
Financial Health of Companies
Ethanol production is a capital-intensive business that requires setting up distilleries and an effective supply chain to ensure adequate sugarcane supply and working capital. Therefore, before investing in ethanol stocks, you should look for indicators like revenue growth, profitability margins, cash flow, debt-to-equity ratio, debtor payable days, return on equity, and return on capital employed. You should also compare the financial results with different ethanol companies.
*Disclaimer Note: The securities quoted, if any, are for illustration only and are not recommendatory. This article is for education purposes only and shall not be considered as recommendation or investment advice by Research & Ranking. We will not be liable for any losses that may occur. Investment in securities market are subject to market risks. Read all the related documents carefully before investing. Registration granted by SEBI, membership of BASL, and certification from NISM in no way guarantee the performance of the intermediary or provide any assurance of returns to investors.
In the business news section of any daily or online news source, one element of the financial markets will always grab the headlines.
Introduction
In the business news section of any daily or online news source, one element of the financial markets will always grab the headlines. That is the stock exchange news or the stock market performance. The stock market’s performance is vital to the overall health of the financial market and, thus, the economy.
Generally, we read about the National Stock Exchange (NSE), the Bombay Stock Exchange (BSE), and the National Commodity and Derivative Exchange (NCDEX). Does it make you wonder if there are only these stock exchanges?
This article looks at the list of stock exchanges in India.
List of Stock Exchanges in India
Per the Securities and Exchange Board of India (SEBI) website, the following is a list of recognized stock exchanges in India.
1. Bombay Stock Exchange Ltd.
2. National Stock Exchange of India Ltd.
3. Calcutta Stock Exchange
4. Metropolitan Stock Exchange of India Ltd.
5. Multi Commodity Exchange of India Ltd.
6. National Commodity & Derivatives Exchange Ltd.
7. Indian Commodity Exchange Limited
While SEBI does recognize the Calcutta Stock Exchange among the list of all stock exchanges in India, trading on the exchange has ceased since November 2023. However, trading is expected to resume in March or April 2024.
The capital market regulator’s website also publishes information about the non-operational stock exchanges. A majority of these 28 stock exchanges are regional stock exchanges. The latest to be granted exit by the regulator was Magadh Stock Exchange in 2019.
List of Stock Exchanges in India: An Introduction
Bombay Stock Exchangе (BSE): The BSE Limitеd is thе oldеst stock еxchangе in India and Asia. It is one of the most critical exchanges on the list of stock exchanges in India. Establishеd in 1875, thе BSE sеrvеs as a kеy platform for trading еquitiеs, dеrivativеs and dеbt instrumеnts. It holds a significant position in thе Indian financial markеt by providing a transparеnt and еfficiеnt markеtplacе for invеstors to buy and sеll a widе rangе of sеcuritiеs. The BSE has played a crucial role in shaping the financial landscapе of this country and rеmains a cornеrstonе of India’s еconomic infrastructurе.
National Stock Exchangе (NSE): Establishеd in 1992 and recognized by SEBI in 1993, the National Stock Exchangе (NSE) is another crucial stock еxchangе in the list of stock exchanges in India. The pioneer of еlеctronic trading, NSE commenced opеrations in 1994. NSE is globally rеnownеd for its sophisticatеd platform facilitating trading in divеrsе financial instrumеnts including еquitiеs, dеrivativеs, debt sеcuritiеs, currеncy dеrivativеs, and exchange-traded-funds. The Nifty 50 is a bеnchmark indеx of the 50 major stocks, and it is at thе corе of NSE that sеrves as a baromеtеr for thе Indian stock markеt.
Recently, thе NSE bеcamе thе largеst dеrivativеs exchange by thе numbеr of contracts tradеd in 2023 for thе fifth timе in a row.
Multi Commodity Exchangе (MCX): Foundеd in 2003, thе Multi Commodity Exchangе of India Ltd (MCX) is thе country’s first listеd еxchangе among the list of stock exchanges in India. It is a lеading playеr in commodity futures trading. It introduced thе first commodity options and futurеs contracts on bullion, basе mеtals, and еnеrgy indicеs. Its flagship MCX iCOMDEX sеriеs fеaturеs rеal-timе commodity futurеs and pricе indicеs. The series includes a Compositе Indеx, sеctoral indicеs, and singlе commodity indicеs. MCX is currently implementing a consultancy project to еstablish a commodity dеrivativеs platform at Chittagong Stock Exchangе in Bangladеsh.
As of 31st Dеcеmbеr 2023, MCX had 550 rеgistеrеd mеmbеrs and 40,047 authorisеd pеrsons through its reach in 691 citiеs and towns across thе country.
National Commodity and Dеrivativеs Exchangе (NCDEX): Yet another stock exchange in the list of stock exchanges for commodities is National Commodity & Dеrivativеs Exchangе Limitеd (NCDEX). Establishеd in 2003, NCDEX stands as a pivotal force in India’s financial markеts for agriculturе and non-agricuturе commoditiеs. NCDEX has played a significant role in offering a divеrsе rangе of futurеs contracts for commoditiеs, commodity futurеs and options in goods and indеx futurеs. It is thе first domеstic еxchangе to opеratе from an Uptimе cеrtifiеd Tiеr IV data cеntеr. NCDEX launched NCDEX’s Electronic System for Tracking Grievances (NEST).
India Intеrnational Exchangе (India INX): Thе India Intеrnational Exchangе (India INX) is India’s first intеrnational stock еxchangе on the list of stock exchanges in India. It is locatеd in thе Intеrnational Financial Sеrvicеs Cеntrе (IFSC) at Gujarat Intеrnational Financе Tеc City (GIFT City). Launchеd in 2017, India INX sеrvеs as a global platform for trading, clearing, and settlement of еquitiеs/commoditiеs/bonds/energy and equity dеrivativеs. Its Global Sеcuritiеs Markеt platform is a pionееring concеpt in India that offеrs issuеrs an еfficiеnt and transparеnt mеthod to raisе capital. Its еxclusivе Grееn listing platform is a platform for global invеstors looking to invеst in India.
NSE IFSC: Thе sixth in the list of stock exchanges in India is the National Stock Exchangе Intеrnational Financial Sеrvicеs Cеntrе (NSE IFSC). It is a subsidiary of thе National Stock Exchangе and is locatеd in thе Intеrnational Financial Sеrvicеs Cеntrе (IFSC) at Gujarat Intеrnational Financе Tеc City (GIFT City). It is India’s first IFSC on the list of stock exchanges in India. Stock еxchangеs opеrating in thе GIFT IFSC, trade in a currеncy othеr than thе Indian rupее. Trading takes place in еquity sharеs of companies incorporatеd outsidе of India, in dеpository rеcеipts, dеbt sеcuritiеs, currеncy, indеx derivatives, and all catеgoriеs of еxchangе-tradеd products that arе availablе for trading in stock еxchangеs in FATF/ IOSCO complaint jurisdiction.
Indian Commodity Exchangе (ICEX): Another prominent exchange on the list of stock exchanges in India for commodities is the Indian Commodity Exchangе Limitеd (ICEX). It is a SEBI-rеgulatеd onlinе commodity dеrivativеs еxchangе hеadquartеrеd in Mumbai that commеncеd opеrations in 2017. A notablе achiеvеmеnt for ICEX is the launch of the world’s first diamond dеrivativе contracts. At prеsеnt, it offеrs futurеs contracts in diamonds. It is thе first еxchangе in India to adopt a global tеchnically-advancеd platform that еnsurеs automatic, and sеamlеss switch ovеr from its Data Cеntеr (DC) to thе Disastеr Rеcovеry (DR) sitе with zеro data loss.
Calcutta Stock Exchangе (CSE): Possibly the only recognized stock exchange in India from the east, the Calcutta Stock Exchangе (CSE) traces its origins to the 1830s but was officially formed in 1908 only. With notable milеstonеs like adopting computеrizеd trading in 1997 (C-STAR), the CSE played a vital role in India’s stockbroking history. Howеvеr, from 28 Novеmbеr 2023, trading at thе sеcond oldеst stock еxchangе on the list of stock exchanges in India has ceased entirely. It plans to resume in March or April 2024 as an independent exchange.
Mеtropolitan Stock Exchangе (MSE) of India: Thе Mumbai-basеd, Mеtropolitan Stock Exchangе of India Limitеd providеs an еlеctronic and transparеnt hi-tеch platform for trading in futurеs & options, currеncy derivatives and dеbt markеts. MSE initiatеd opеrations in thе currеncy dеrivativеs sеgmеnt in 2008 and еxpandеd with thе launch of capital markеt and futurеs & options sеgmеnts in 2013. The same year, it also launched its flagship indеx ‘SX40.’ As one of the major exchanges on the list of stock exchanges in India, it introduced dеbt markеt sеgmеnt of MSE in 2013 and livе trading in cash-settled intеrеst ratе futurеs (IRF) on GoI securities in its currency derivative segment in 2014.
The Metropolitan Stock Exchange of India will be recognized till 15 September 2024 only.
Which Stock Exchange Should Investors/Traders Transact in India?
The two points of consideration for traders/investors to transact depend on the company they are looking at and where it is listed on the list of stock exchanges in India. Generally, most stocks are listed both on the BSE and the NSE.
Traders/investors looking to transact in agri or non-agri commodities can consider MCX, NCDEX, and ICEX. The MCX is better for non-agricultural commodities, while for agri-derivative instruments, NCDEX is better even as both exchanges offer products in both categories.
Conclusion
We looked at the list of stock exchanges in India that are available with SEBI. We then looked at their brief introduction and some other exchanges that have yet to be added to the list of stock exchanges in India. Even though there are seven stock exchanges recognized by SEBI, each, in its own way, contributes to price discovery, risk management, and transparency in the trading of commodities and securities.
FAQ
How many stock exchanges in India?
As recognized by SEBI, the list of stock exchanges in the country has seven from across the country.
Which is the oldest stock exchange in India?
BSE Limited is the oldest exchange on the list of recognized stock exchanges in India. From the list of all stock exchanges in India, it was the first set up in 1875.
Why are there two stock exchanges in India?
There are more than two stock exchanges in India. The list of all stock exchanges in India includes five other exchanges that trade in different asset classes.
IPO (Initial Public Offerings) investments can evoke excitement and confusion, particularly in understanding the IPO allotment process. We will help […]
IPO (Initial Public Offerings) investments can evoke excitement and confusion, particularly in understanding the IPO allotment process. We will help you comprehend the complexities of these systems and provide clarity and insight into the IPO share allotment process. By breaking down each step, we aim to simplify procedures, enabling you to navigate the world of IPOs with confidence and well-informed decisions.
IPO Allotment Process – Know It All
Before diving into the nitty-gritty of IPO allotment process, let’s establish some key terms:
Initial Public Offering (IPO): When a company raises capital by issuing its shares to the public for the first time.
IPO Allotment: Assigning subscribed shares to investors based on specific criteria. The IPO allotment process ensures fairness and transparency in distributing shares among the investors.
Retail Investors: They are individual investors applying for shares in an IPO.
Qualified Institutional Buyer (QIB): Institutional investors like banks, mutual funds, etc., are allotted shares separately in the IPO allotment process, often due to their significant investment capacity and expertise.
Now, let’s explore the details regarding the process of IPO allotment:
1. Application and Bidding:
Once you’ve decided on your desired shares, you apply for your broker, indicating the quantity of shares you wish to purchase and, if applicable, your bid price. This bid price represents the maximum amount you will pay per share. The broker then processes your application along with others, considering factors like demand and bidding prices during the IPO allotment process. Alternatively, you can also bid for IPO shares online through designated platforms.
Bidding can be fixed-price or book-building, where the final price is determined based on demand and supply. In the fixed-price method, the price is set beforehand. In book-building, the price is decided based on how many investors want to buy and sell. This flexible system for the IPO allotment process sets a fair price based on market interest and reflects investor feelings and market conditions.
2. Scrutiny and Verification:
After you submit your application for an IPO, the registrar and stock exchange carefully review the information provided to ensure accuracy and eligibility. This verification process involves confirming personal information, financial data, and compliance with regulatory requirements. Once the application passes scrutiny, it moves forward in the IPO allotment process, potentially leading to the allocation of shares to the applicant.
3. Allotment Based on Category:
Retail Individual Investors (RIIs): Allotment happens through a lottery system for oversubscribed issues.
Non-Institutional Investors (NIIs): Allotment follows a proportionate basis within the subscribed quantity.
Qualified Institutional Buyers (QIBs): Allotment happens based on bids received during book building.
4. Intimation and Payment:
You receive an email or SMS notification about your IPO allotment status.
Investors must pay the due amount within the required timeframe if allotted shares.
5. Credit of Shares to Demat Account:
Following successful payment, shares are deposited into your Demat account within a few days It helps keep the IPO allotment process running smoothly, ensuring timely transactions.
Process of IPO Allotment:
Here’s a simplified summary of the IPO share allotment process:
Apply for the IPO online or through your broker.
Your application undergoes scrutiny.
Shares are allotted based on your category and subscription.
Receive allotment notification and make payment (if applicable).
The shares allocated to you are deposited into your Demat account.
How are IPO shares allotted?
The IPO allocation process can be broadly categorized into two scenarios:
Oversubscribed IPOs: A lottery system determines allotment for retail investors when demand exceeds the available shares. Non-institutional investors receive a proportionate share based on their subscriptions.
Undersubscribed IPOs: When demand falls short of offered shares, all valid applications usually receive full allotment.
Procedure for Allotment of Shares in an IPO Allotment Process:
Allocation of shares in an IPO is governed by SEBI (Securities and Exchange Board of India) guidelines and involves the following key players:
Issuer Company: The company raising capital through the IPO.
Lead Manager: The investment bank managing the IPO process.
Stock Exchange: The platform where the IPO is listed for trading.
Registrar: An independent agency handling application processing and allotment.
Reason for No Allotment of Shares in an IPO Allotment Process:
Several factors can lead to no allotment of shares in an IPO:
Oversubscribed IPO: High demand may result in no allotment, even with a valid application.
Application Rejection: Incomplete or ineligible applications get rejected.
Insufficient Funds: Failure to pay within the required timeframe leads to cancellation.
Understanding the process of IPO allotment empowers you to participate in these offerings with more clarity and confidence. The IPO allotment process involves an element of chance, especially for oversubscribed issues. However,, staying well-informed and adhering to the appropriate procedures can enhance your prospects of obtaining shares in your preferred IPO.
Following this comprehensive guide, you’ll be well-equipped to navigate the IPO allocation process and unlock exciting investment opportunities!
FAQ
How to check allotment of IPO?
For checking IPO allotment status, please visit the registrar’s website or the stock exchange where the IPO is listed. Enter your application number or PAN to access the allotment status. Details such as the number of shares and the amount will be displayed if allotted. This step ensures transparency in the IPO allotment process.
How does IPO work?
In an IPO, a company offers its shares to the public for the first time. Investors can apply for shares through brokers or online platforms. The IPO allotment process involves verifying applications and allocating shares based on demand and bidding prices. Successful applicants receive allotted shares, while unsuccessful ones receive refunds for their bids.
Where to check IPO allotment?
Visit the registrar’s website or the stock exchange where the IPO is listed. Enter your application number or PAN to access allotment status. Successful applicants can view details like the number of shares allotted, while unsuccessful ones receive refunds for their bids.
Understanding the difference between debt and equity is vital for investors in the wide world of investments. The right mix of debt and equity funds helps diversify portfolios and achieve financial goals quickly.
Understanding the difference between debt and equity is vital for investors in the wide world of investments. The right mix of debt and equity funds helps diversify portfolios and achieve financial goals quickly. While debt and equity funds offer investment opportunities, they operate on distinct principles and cater to different risk appetites. This article will explore the distinction between debt and equity funds, highlighting their characteristics and advantages. Let’s delve into the inner workings of these funds to get a clear understanding of the difference between debt and equity.
Equity vs Debt Mutual Funds
Equity and debt mutual funds represent two primary investment avenues available to investors. Each type of fund holds a unique position and comes with a different set of risks and return potential.
Understanding Equity Mutual Funds Vs. Debt Mutual Funds
The fundamental difference between debt and equity lies in the underlying assets each invests in. Equity mutual funds primarily invest in companies’ stocks, essentially buying a piece of their ownership. Debt funds, on the other hand, distinguish themselves by investing in fixed-income generating instruments like bonds and government securities. This equity vs debt distinction directly impacts their risk and return profiles.
Equity Funds
Equity funds hold the potential for higher returns due to the inherent growth potential of stocks. However, this distinction between debt and equity comes with a price: increased volatility. The value of equity funds can fluctuate significantly in the short term. These funds are suitable for investors planning to stay in the market longer.
Factors To Keep in Mind Before Investing in Equity Mutual Funds:
Risk Appetite: Market volatility makes Equity funds inherently riskier than debt funds. Before investing in equity mutual funds, investors should evaluate their risk tolerance.
Investment Horizon: Investing in equity is more appropriate for long-term goals because of short-term market fluctuations. Investors can get rewards from the equity markets by staying invested for extended periods.
Diversification: Diversifying investments across various sectors and companies can help mitigate risk in equity funds. Investors should consider diversification strategies to reduce concentration risk.
Fund Performance: Evaluating the past performance and track record of equity funds can provide insights into the potential returns and risk-adjusted performance.
Debt Funds
Debt funds prioritize capital preservation and regular income generation. By investing in fixed-income securities, they offer lower volatility compared to equity funds. However, this distinction between debt and equity translates to lower potential returns.
Factors To Keep in Mind Before Investing in Debt Mutual Funds
Risk Profile: Debt funds carry lower risk than equity funds but are not entirely risk-free. Investors should understand the credit, interest rate, and liquidity risks associated with debt funds.
Investment Objective: Debt funds are ideal for investors seeking regular income and capital preservation. They offer stable returns over the investment horizon, making them suitable for short to medium-term financial goals.
Interest Rate: Investors should monitor interest rate movements and adjust their investment strategies accordingly. Fluctuations in interest rates can affect the performance of debt funds.
Credit Quality: Assessing the credit quality of underlying securities is essential for debt fund investors. Higher credit quality securities offer lower risk but may have relatively lower returns.
Equity Fund Vs Debt Fund: Comparative Analysis
Investors should know the difference between debt and equity funds before making investment decisions. It’s crucial to distinguish between debt and equityfunds to align investments with individual financial goals and risk tolerance levels.
Now, let’s dissect the key differences between debt and equity through a head-to-head comparison:
Feature
Equity Fund
Debt Fund
Asset Class
Stocks
Bonds, Government Securities
Risk
Higher
Lower
Returns
Potentially Higher
Lower
Volatility
Higher
Lower
Investment Horizon
Longer (5+ years)
Varies (Short-term to Long-term)
Suitability
Investors with high risk tolerance and long-term goals
Investors seeking stability, capital preservation, or regular income
Remember, the ideal choice depends on your circumstances and investment goals. Consider seeking professional financial advice to know the difference between debt and equityin the context of your unique needs.
Conclusion
Understanding the difference between debt and equity empowers you to make informed investment decisions. Whether you seek the potentially high returns of equities or the stability of debt funds, remember to distinguish between debt and equity-based financial requirements. You can confidently chart your investment course with careful consideration and a clear understanding of these critical distinctions.
*Disclaimer Note: The securities quoted, if any, are for illustration only and are not recommendatory. This article is for education purposes only and shall not be considered as recommendation or investment advice by Research & Ranking. We will not be liable for any losses that may occur. Investment in securities market are subject to market risks. Read all the related documents carefully before investing. Registration granted by SEBI, membership of BASL, and certification from NISM in no way guarantee the performance of the intermediary or provide any assurance of returns to investors.
FAQ
What is a debt fund?
A debt fund is a mutual fund type primarily investing in fixed-income securities such as government bonds, corporate bonds, and money market instruments. Debt funds differ from equity funds and focus on generating stable returns with lower risk. The key difference between debt and equity funds lies in their underlying assets and risk-return profiles, with debt funds offering more conservative investment options.
What is the equity market?
The equity market is a platform for buying and selling stocks, shares, and other equity-related securities. It represents ownership interests in companies, allowing investors to participate in their growth and profitability. Unlike the debt market, which deals with fixed-income securities, the difference between debt and equity lies in equity’s ownership component, where investors hold shares representing ownership stakes in companies, subject to market fluctuations.
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What is an Investment Advisory Firm?
An investment advisory firm is a company that helps investors make decisions about buying and selling securities (like stocks) in exchange for a fee. They can advise clients directly or provide advisory reports and other publications about specific securities, such as high growth stock recommendations. Some firms use both methods, like Research & Ranking, India’s leading stock advisory company, specializing in smart investments and long-term stocks since 2015.
Do we have SEBI registration as an Investment Advisory?
An investment advisory firm is a company that helps investors make decisions about buying and selling securities (like stocks) in exchange for a fee. They can advise clients directly or provide advisory reports and other publications about specific securities, such as high growth stock recommendations. Some firms use both methods, like Research & Ranking, India’s leading stock advisory company, specializing in smart investments and long-term stocks since 2015.
Why choose a SEBI Registered Investment Advisor?
An investment advisory firm is a company that helps investors make decisions about buying and selling securities (like stocks) in exchange for a fee. They can advise clients directly or provide advisory reports and other publications about specific securities, such as high growth stock recommendations. Some firms use both methods, like Research & Ranking, India’s leading stock advisory company, specializing in smart investments and long-term stocks since 2015.
What is the Role of an Investment/Stock Market Advisory Firm in India?
An investment advisory firm is a company that helps investors make decisions about buying and selling securities (like stocks) in exchange for a fee. They can advise clients directly or provide advisory reports and other publications about specific securities, such as high growth stock recommendations. Some firms use both methods, like Research & Ranking, India’s leading stock advisory company, specializing in smart investments and long-term stocks since 2015.
Is investment advisory the same as wealth management?
