#1:  What is stock market?

A stock market (also called as share market) is the aggregation of buyers and sellers, where seller can sell their shares or stock and buyer can buy it. Or in other words, we can say that it is a market place where shares of pubic listed companies are traded.

#2: What is a stock exchange?

Stock exchange is a body which act as a mediator and facilitates buying and selling of shares for execution of their respective orders. Some of the well known exchanges are BSE, NSE, NYSE, NASDAQ etc. For trading any stocks on exchange the company must first get listed on that exchange.

#3: What is a share?

Shares are the smallest unit of ownership in any enterprise that provides proportional distribution of any profit (if declared) in the form of Dividend.  The two main types of shares are common shares and preferred shares. Preferred shareholders have a bigger claim on company’s earnings and assets. Also, they get preference over common shareholders when dividends are distributed. Generally, dividend for preference shareholders is more than that for the common shareholders. Earlier, shares were issued in physical format. However, now physical paper stock certificates have been replaced with electronic recording of stock shares, just as mutual fund shares are recorded electronically.

#4: Why do companies issue shares?

Companies issue shares to meet their financial requirements for expansion of business and other purposes. By issuing the shares company gets funds from public and other financial institutions. In return of investment, shareholder gets ownership of the company in the form of share.

#5: Why do people buy shares?

People buy shares because they are looking for better returns on their investments as compared to traditional products like bank FDs, PPF etc. They believe in growth prospect of a company in which they invest.

#6: How many ways we can trade in the market?

You can trade in following ways in the market:

Intraday trading: In intraday trading, the position must be squared-off on the same day on which it’s created.

Positional Trading/Investing: In positional trading/investment, the trader/investor carry the trade overnight. He can hold the trade/investment for a couple of days or stay invested for long period.

At Capital via market pro segment we have only two product for positional trading. BTST and BTST STBT

BTST/ BTST STBT: BTST stands for Buy Today Sell Tomorrow, this means that an individual can buy a share today and sell it tomorrow when its price moves up. STBT stands for Sell Today Buy Tomorrow (STBT) individual can earn a profit by selling the share today and purchasing the same tomorrow when prices moves down. STBT is possible in future segment only.

#7: What is Volume?

Volume refers to the number of shares or contracts traded in any security in that particular period or time frame.

#8: What are dividends?

A Dividend is a pay-out to the shareholder from the profit of the company. When a company earns a profit then it will pay a proportion of that as a dividend to shareholders. Distribution of dividends will be in a various form like cash or in form of shares (if a company has a dividends reinvestment plan)

#9: Why Do Companies Pay Dividends?

A dividend is a reward given to shareholders for owning stock in the corporation. It is key to attract people to invest in their company or buy a stock.

#10: How can you get Returns from investment?

In early days of stock markets, dividends were the primary method of calculating the return value to shareholders. Price appreciation was considered more of a bonus, as people bought stocks mainly because of their sizable dividends. In more recent times, dividends have come back into vogue. For the past five years, dividend stocks have easily outpaced the price performance of non-dividend stocks.

#11: How Do I Collect Dividend?

If you buy a dividend-paying stock and meet the eligibility requirements (determined by its dividend dates), you’ll receive dividend. The dividend pay-outs are issued on a per-share basis. For example, if an investor purchases one share of stock XYZ, which pays 1 Rupee quarterly, the investor will receive 1 Rupee for each share he or she owns, four times per year.
Dividends are most commonly deposited into a shareholder’s brokerage account. However, if an investor buys shares directly from a company itself (through a direct investment plan like a DRIP, for example), then the dividends can be automatically reinvested to buy more shares. Investors may also choose to have dividend cheques mailed to them.
Here are a few suggestions:

What is your reason for investing? If you would like to receive regular income while you invest then you should invest in stocks that have a track record of regular dividend payment. If you pursue a purer value orientated strategy then dividends are not so important. However, in some cases, a lack of dividend may alert you to a value investing opportunity.

A company’s ability to pay a dividend depends on its ability to continue making profit. But because the future is unknown, check the dividend payment history of a company going back as far as records go. If you can’t be bothered with that, check at least 10 years’ worth of dividend payment history.

Dividends can only be paid when a company is in good financial shape and management is willing to pay a dividend. Use screeners to check whether a company pays dividend whilst taking account of the health of their finances.

#12: What do you understand by Security Market? What are the different types of security market?

Security market is where securities are issued and traded. It is the market for different types of securities namely: Debt, Equity and Derivatives.

Debt market is divided into three parts:
• Government securities market
• Money market
• Corporate Debt market

Equity market is divided into two parts:
• Primary market
• Secondary market

Derivatives market is also divided into two parts:
• Options market
• Futures market

#13: What are the advantages of Derivatives?

• For investors in cash market to hedge their positions
• Enhance price discovery process
• Increases volume of transactions
• Lower transaction costs
• Increased liquidity for investors and growth of fund flow from savings
• Leads to faster execution of trades and arbitrage and hedge against risk

#14: What is Beta of an asset?

Beta is a way of measuring systematic risk of any asset. It shows how price of a security responds to changes in its respective index price. Beta is a way of measuring systematic risk of any asset. It shows how price of a security responds to changes in its respective index price. It indicates the extent of movement or price of a stock with respect to the movement of index in market. Assets that are riskier than average will have Beta greater than 1 and assets that are safer than average will have Beta lower than 1. Risk-free assets will have a Beta value of 0.

#15: What do you understand by Stock market indices? Name the major stock market indices?

A Stock market index is a measure of relative value of group of stock or a numerical representation of the value of group of stock. Stock market indices are used to measure the general movement of stock market. Indices are the plural form of index.

The major indices in India:
• BSE Sensex - it reflects movements of 30 sensitive shares from specified and non-specified groups
• NIFTY - it reflects movements of 50 sensitive shares from specified and non-specified groups

#16: What is the difference between Bombay Stock Exchange and National Stock Exchange?

Bombay Stock Exchange (BSE Sensex) was started in 1986 whereas National Stock Exchange (NSE Nifty) started in 1995. The base year for Sensex is 1978-79 and base value is 100 whereas the base year for nifty is 1994 and base value is 1000.
• BSE consists of 30 scrips whereas NSE consists of 50 scrips
• BSE is screen based trading whereas NSE is national, computerized exchange
• BSE has adopted both quote driven system and order driven system whereas NSE has opted for an order driven system

#17: What are different types of Equity Markets?

Equity market consists of primary market and secondary market.

• Primary Market – It is also called new issues market as securities are issued to public for the very first time. In this market, new issues are made in following four ways:
o Public issue
o Rights issue
o Private placements
o Preferential allotment
• Secondary Market – All the issued securities are traded in the secondary market. Stock exchanges are an important part of capital market.

#18:What do you understand by Money Market? Give an example

Money market is the market where short-term instruments of credit with a maturity period of less than one year are traded. Such instruments are known as near money. The borrowers of money market are traders, government, speculators etc. Lenders in this market are commercial banks, central bank, financial institutions and insurance companies etc.

#19: On what basis fixed income securities should be selected?

Following factors should be considered in selecting fixed income securities:
• Yield to maturity,
• Risk of defaulting,
• Tax shield and
• Liquidity

#20: What are the important macroeconomic indicators that influence stock market?

Following are the macroeconomic indicators that influence stock market:
• GDP Growth Rate
• Monsoon and its impact on agriculture
• Trends in public investment and savings
• Monetary and fiscal policy
• Economic and political stability
• Inflation (both wholesale and retail)
• Infrastructural facilities and arrangements

#21: What is efficient market hypothesis?

A market that is efficient in processing all available information and in which current prices of any stock fully reflects all the available information. In other words, in an efficient market, the prices of securities at any time will consists of all information available at that time.

#22:What are the main phases of Portfolio management?

Management of various financial assets for any individual or corporate is called portfolio management. Following seven phases are there in portfolio management:
• Specification of Investment Objectives and Constraints
• Choice of Asset Mix
• Formulation of Portfolio Strategy
• Selection of Securities
• Portfolio Execution
• Portfolio Revision
• Portfolio Evaluation

#23: What are the types of Risks?

Generally, there are two types of risk: Systematic risk and Unsystematic risk

Systematic risks are uncontrollable risk. It creates impact on the overall market and not just a stock or industry. Below mentioned are the major types of systematic risks:
• Market risk
• Purchasing power risk
• Interest rate risk
Unsystematic risks are controllable risk. It creates impact on a organization or sector. Below mentioned are the major types of unsystematic risks:
• Business risk
• Financial risk
• Liquidity risk
• Default risk

#24:What are the rights and obligations of buyer and seller for the Call and Put options?

Rights and Obligations of the Buyer for Call Option:
• Pays premium
• Right to exercise and buy the shares but not obligation
• Limited losses, unlimited gain
• Profits from rising prices
Rights and Obligations of the Seller for Call Option:
• Receives premium
• Profits from falling prices or remaining neutral
• Obligation to sell shares if exercised by buyer
• Unlimited losses, limited gain
Rights and Obligations of the Buyer for Put Option:
• Pays premium
• Right to exercise and sell shares but not obligation
• Limited losses, unlimited gain
• Profits from falling prices
Rights and Obligations of the seller for Put Option:
• Receives premium
• Obligation to buy shares if exercised by seller
• Profits from rising price or remaining neutral
• Unlimited losses, limited gain

#25: Mention what are levels of traders?

Generally, there are 3 levels of traders depending upon their experience in the market:
• Beginner
• Experienced
• Proficient

#26: Explain what do you mean by private equity transactions?

When private equity firms make investments in target companies, it is referred as private equity transaction or placement. A target company is an enterprise that has potential to out-perform in short period of time.

#27: Explain what are two types of orders issuers may issue in equity trading?

The two basic issues in equity trading are:
• Buy Orders
• Sell Orders

#28: Explain what is equity fund?

Equity fund is a mutual fund that invests principally in stocks. Equity funds are also known as stock funds and it allows the investors to take the exposure of equity through a basket of stocks or index fund.

#29: Explain what is weighted average rating factor?

Weighted Average Rating Factor (WARF) is a technique used by credit rating agencies to calculate, analyse and communicate the overall risk of a portfolio. By using the WARF, rating agencies assign a single rating to a portfolio after calculation.

#30: Explain what is call option?

A call option gives right to the holder but not an obligation to purchase the share at a specified price and at a specified date in future.

#31: When purchasing a stock what charges are payable?

The charges that are payable while purchasing a stock are
• Cost of the stock
• Brokerage
• Transaction Charges
• Stamp duty
• SEBI Charges

#32: What are certain measures that you should undertake to be ready for equity trading?

• It is important to spend time in researching and learning about trading, even when a broker is handling your trading account. It requires   knowledge, discipline and time.
• Ready to lose money is to take risk. If you are not ready for taking risks, then equity trading is not suitable for you
• Always trade with Stop Loss (SL)
• If you are running into heavy losses or the market is not performing as expected than cut losses and stop for the day
• Don’t be foolish to turn profits into losses, consider selling some of your stocks to a level & adopt the trailing stop loss strategy to reduce your   losses.

#33: Explain what is Option trading?

Options trading is a contract between the seller and buyer to buy or sell one or more lot of underlying assets at a fixed price on or before the date of expiry of the contract. The contract provides buyer the right, but not the obligation, to buy (in case of call options) or sell (in case of put options) in future. Buyer will have to pay premium to avail the privilege in options contracts.

#34: Explain how options are different than equities?

• Options are derivatives which means their values are derived from the value of an underlying investment
• Trading in options take place in lots
• Option trade is defined by 2 instruments Call and Put
• Option trading can limit an investor’s risk; it offers a known risk to buyers as any option buyer cannot lose money which is more than the price   of the option
• Regular equities can be held for indefinite time while options have expiry date
• Like regular equities, option does not have physical certificates
• Owning an option does not mean right to ownership of any share or dividends of a company unless the option is exercised

#35: Explain what is the role of equity analyst?

Equity analysts perform research and analyse financial data & trends for a company. Equity analyst writes reports on company finances and assign them financial ratings. Apart from this they also help companies to overcome financial crisis by giving them plan to get out of debt.

#36: Explain what is cash equity trading?

Cash equity is the total amount of cash or net worth of all the cash which could be gained from the investments and securities mentioned in the portfolio. To know whether your current mix of investment is working, cash equity monitoring is a better way to know this and it also helps to determine what to hold and what to sell.

#37: Explain what is short sell in equity trading?

Short selling is a process of selling a security that is not owned by the seller, or that the seller has borrowed to generate the profit from falling stock price. In this technique, trader sell them at the market price, and then purchases them at the lower price to return them to the original lender and thus generates the profit from the market.

#38: Explain the term double bottom?

Double bottom is a reversal pattern used in reference to technical analysis. As per the pattern formation, stock or commodity hits a support level twice in down trend and after that its trend reverses to up-trend.

#39: What is MF or Minimum Fill Order?

Minimum Fill is a pre-condition attached to an order. Any order which is a Minimum Fill Order will be executed only if the minimum amount is available, otherwise the order will be in pending state. For example, A buyer puts an order for 5000 shares with minimum request of 2000 shares. This order will get triggered ONLY if a minimum of 2000 shares are available for purchase.

#40: Explain what is Debt to Equity ratio?

Debt to Equity Ratio is used to measure a company's financial leverage. It is calculated by dividing a company's total liabilities by its stockholder's equity. The Debt to Equity ratio indicates how much debt a company is using to finance its assets relative to the amount of value represented in shareholder's equity.

#41: Explain what is bridge equity?

It is a short-term financing technique which enables potential buyer of companies or assets to complete the deal before longer-term financing is secured.

#42: What is debenture?

Debenture is a medium to long-term debt instrument used by large companies to borrow money and it is given on the basis of general credit worthiness and reputation of the issuer.

#43: What are derivatives?

Derivatives are a specialized contract for buying or selling the underlying assets of a particular period of time in the future at a pre-defined price.

#44: Explain the difference between convertible and non-convertible debentures?

Non-convertible Debentures: They carry higher interest rate, and they are not convertible into the equity shares.
Convertible Debentures: Convertible debentures can be converted into equity shares of the company after a predetermined period of time. They have lower interest rates.

#45: Explain what is ROE?

ROE stands for Return on Equity; it is a measure of profitability. It calculates how much profit a company generates with the money that shareholders have invested.

ROE = Net Income/ Shareholder Equity

#46: Explain the difference between equity financing and debt financing?

Issuing additional share of common stock to an investor is referred as Equity Financing, while debt financing is borrowing money while not giving up ownership.

#47: Explain what is Net Asset Value (NAV)?

The value of one unit of a fund is referred as NAV or Net Asset Value. It is calculated by adding the current market values of all securities held by the fund, adding in cash and accumulated income and then subtracting liabilities, expenses and dividing the result by the number of units outstanding.

#48: What is equity share?

Equity share represents the net-asset value backing up each share of the company’s stock. An equity share, commonly referred to as ordinary share also represents the form of fractional or part ownership in which a shareholder, as a fractional owner, undertakes the maximum entrepreneurial risk associated with a business venture.

#49: How much can I trade initially?

You can trade up to 5 times the amount of cash deposit and/or marginable securities.

#50: Why convertible securities are more attractive to investors?

Convertible Securities pay regular interest and may get converted into common stock (equity shares). If the stock appreciates, the convertible securities may participate in the good fortune of the company.

#51: What leads assets to turn into a private equity?

Following reasons leads to turn assets to private equity:
• Raising Capital
• Increasing Regulation of Public Markets
• Effect of Public Markets
• Financing the Private Equity firms

#52:Explain what are the types of derivatives?

Derivatives are classified into three types
• Future or forward contract
• Options and
• Swaps

#53: What are the characteristics of derivatives?

Below mentioned are major characteristics of derivatives:
• Derivatives have a maturity date or expiration date
• Standardized terms lead to low counter-party risk
• Trading in derivatives is based on margin amount
• Delivery can be taken as per the requirement

#54 Explain what are ETF’S? What is the advantage of it?

ETF’s (Exchange traded funds) are funds that track the index and trades like a common stock on the stock exchange. Following are the advantages of an ETF:
• You get the diversification of an index
• Ability to sell, short, buy on margin and purchase as little as one share
• You have to pay the same commission to your broker as you pay for regular order
• The expense ratios for most ETF’s are lower than the average mutual fund

#55: Explain what is a secondary market? What is the difference between the secondary and                  primary market?

Secondary market is where the trading of securities is done. It consists of both equities as well as debt markets. In the primary market, an investor can buy securities directly from the company through company’s IPO while in the secondary market one can buy securities from other investors willing to sell the same. Equity shares, bonds, preference shares, etc. are available in the secondary market.

#56: What are Preference Shares?

Preference shares allow an investor to own a stake at the issuing company with a condition that whenever the company decides to pay dividends, the holders of the preference shares will get a preference over holders of common shares.

#57: What is the difference between share market and commodity market?

Commodity market is also like a stock market where traders can trade in commodities. In the commodity market, traders deal with commodity materials which can be used for manufacturing of other goods. Major commodities that are traded are gold, silver, crude oil, natural gas, zinc, aluminium, copper etc.

#58: Why do we need futures markets?

The price you pay for goods and services depends on how successful businesses are in managing the risk. By using the futures market effectively, businesses can minimize their risk, which, in turn, lowers their cost of doing business. This saving is passed onto you, the consumer, in the form of lower prices for food and other commodities, or a better return on a pension or investment fund.

#59: What is a futures contract?

A futures contract is a binding, legal agreement to buy or sell a commodity. The terms of a futures contract are standardized by the type of quantity, quality, delivery time and place.

#60: What is an option on a futures contract?

An option gives the right to buy or sell a futures contract at a certain price for a limited time. Only the seller of the option is obligated to perform. There are two types of options: calls and puts.

#61: What are calls and puts?

A "call" is an option that gives the option buyer the right (without obligation) to purchase a futures contract at a certain price on or before the expiration date for a price called the premium, determined in open outcry trading in pits on the trading floor.

A "put" is an option that gives the option buyer the right (without obligation) to sell a futures contract at a certain price on or before the expiration date of the option.

#62: What is hedging and speculating?

Hedging is a strategy for price protection or to offset a potential loss of one market by taking an equal, but opposite position in another market.

In speculation, traders trade according to their belief to earn profit and are ready to take high risk for high return. Speculators try to earn profit from the fluctuation in the market.

#63: What is the difference between a long and short position in the market?

A short position involves selling futures contracts or selling of a cash commodity without offsetting futures transaction. (A cash commodity is an actual, physical commodity someone is buying or selling, such as corn or soybeans, also referred to as actuals.) A long position involves buying futures contracts or owning the cash commodity.

#64: What is a "bull" market?

A bull market is a period of rising market prices.

#65: What is a "bear" market?

A bear market is a period of declining market prices.

#66: How much of what is traded gets delivered?

It is estimated that typically four percent or less is actually delivered. A contract may be bought and sold many times before the delivery date as businesses attempt to manage their risk. The basic purpose of a futures contract is to provide price-change protection; this is what accounts for the large volume traded, though relatively little is delivered.

#67: Why are the trading areas called "pits"?

Pit is a raised platform with descending steps on the inside that permit buyers and sellers to see each other. It also allows a customer's orders to move into the "pit" quickly.

#68: How is the customer's investment protected?

Protecting the interests of all participants in the futures market is the responsibility of all exchanges and industry members, as well as regulators. Working in concert, they work to maintain an honest, open trading environment for all market participants.

#69: What is stock cash capital?

A method of buying or selling securities by providing the capital needed to fund the transaction without relying on the use of margin. Cash trading is achieved by using a cash account, which is a type of brokerage account that requires the investor to pay for securities within two days from when the purchase is made.

#70: What is BTST Cash?

BTST stands for Buy Today Sell Tomorrow (BTST). It is a facility that allows you to sell shares even one day after the buy order date, without you having to wait for the receipt of shares into your demat account.

#71: What is Index Futures?

Index Futures are future contracts created by keeping Index as an underlying asset. For example, Nifty futures is created by keeping Nifty as an underlying asset.

#72: What is Index Options?

An index option is a financial derivative that gives the holder the right (without obligation) to buy or sell the value of an underlying index, such as the Standard and Poor's (S&P) 500, at the stated exercise price on or before the expiration date of the option.

#73: What are Stock Options?

A stock option is a financial instrument which provides the right (without obligation) to buyer of stock to buy at an agreed-upon price within a certain period of time.

#74: What is HNI Research Services?

This is an exclusive product designed for High Net-worth individual traders wherein they would be allotted a dedicated and experienced Technical Research Analyst for guiding & providing them personalized services.

#75: What is Market Neuron?

Market Neuron is a theme based investment strategy which revolves around a certain event/idea that you believe will materialize in the future. Market Neuron captures the effects of the theme on financial markets. Our analysts follow a top-down approach to select the right stocks & weights that reflect the theme.

#76: What is GST? How does it work?

GST (Goods and Services Tax) is a single tax on the supply of goods and services, right from the manufacturer to the consumer. Credits of input taxes paid at each stage will be available in the subsequent stage of value addition, which makes GST essentially a tax only on value addition at each stage. The final consumer will thus bear only the GST charged by the last dealer in the supply chain, with set-off benefits at all the previous.

#77: What is commodities transaction tax?

Commodities Transaction Tax (CTT) is levied on the transactions done through recognized derivative exchange in India. It’s similar to Securities Transaction Tax (STT) and imposed on selling side only, however agricultural commodities are exempted from CTT.

#78: What is commodity future trading?

Commodity future trading covers the buying and selling in large range of primary economic sector rather than manufactured products like oil & gas, metals such as gold, silver & copper and soft commodities like cocoa, coffee, wheat and sugar. Commodity future contracts are the oldest way to hedge the commodity prices.

#79: What is Sensex? How is it calculated?

The SENSEX (or SENSitve indEX) was introduced by Bombay Stock Exchange on January 1, 1986. It is one of the prominent stock market indices in India. The Sensex is designed to reflect overall market sentiments. It comprises of 30 stocks. These are large, well-established and financially sound companies from main sectors.
Sensex is calculated by using the Free-float Market Capitalization method. In this method, the index reflects free-float market value of the 30 constituent stocks relative to a base period.

Complaint Board
As On 29th February, 2020
Beginning of month Received during the month Resolved during the month Pending at the end of the month Reason for pendency
212 1 6 4 Closed by us, Filed ATR, SCORES approval awaited

Total clients served so far Total complaints received so far % complaint on customer base
70,000+ Customers 213 0.30%

Data is updated on 7th per month. It gets verified every quarter by independent auditor.

Data presented here is taken from company's inception

Importance given to satisfactory resolution as per prescribed TAT

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