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Invest in Equity & Financial Derivatives
Equity Investment have an edge over simply saving money in your bank account. Investing in equity & financial derivatives markets helps to beat the inflationary pressure by delivering a higher rate of return and increasing the value of principal amount invested. Capital Gains and periodic dividend income is the revenue source from equity investments.
- Create wealth over time
- Protects against inflation
- Any time liquidity
- Trade across exchanges
- Dividends and capital appreciation
- Track equity investments in real-time
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Equity Trading & Derivatives FAQs
The equity market is essentially a place where equity shares of companies are bought and sold. It is for this reason that the equity market is also referred to as the share market or the stock market. When it comes to equity trading, there are two types of equity shares that are generally bought and sold in the Indian stock markets – regular equity shares and equity shares with differential voting rights (DVRs).
The benefits that you get to enjoy by investing in the equity market in India are aplenty. Here’s a quick look at a few of them.
- You get the chance to enjoy high returns on your equity investment
- You get the chance to earn passive income by way of dividends
- The investments in equity are highly liquid
- The process of investing in shares is highly transparent
- By investing in stocks, you get an ownership stake
- Investing in the equity market is highly flexible
To start trading in the equity market, you first need to open a trading and demat account with a stock broker cum depository participant. Once you’ve opened the accounts, log into the trading portal of your stock broker using the user credentials given to you.
Then, select the stock that you wish to invest in and place a buy order to purchase the number of shares that you desire. That said, before trading, ensure that you do adequate equity research. This way, you can make sure that you make informed decisions.
Derivative trading is basically the process of buying and selling of derivative products. Derivatives are primarily used to speculate on the future price movement of an asset such as a stock or a commodity without actually having to purchase the asset. There are two primary derivatives in the stock market that you can currently trade in – futures and options.
You can trade financial derivatives like futures and options on stock exchanges like the Bombay Stock Exchange and the National Stock Exchange.
Alternatively you can also trade derivatives on commodity exchanges such as Multi Commodity Exchange and National Commodity and Derivatives Exchange, among others.
Sweat equity shares are essentially equity shares that are given out to the directors and employees of a company for providing any value additions by way of intellectual property rights or know-hows to the organization. It is an equity investment for the directors or employees and can be sold only after a lock-in period of at least 3 years.
When you buy and sell shares of a company within the same trading day or session, it is called intraday trading or stock day trading. The starting time for intraday trading is 9.15AM and the intraday closing time is 3.30PM. That said, depending on your stock broker, any open intraday positions may get auto squared off before the closing time of 3.30PM as well.
Futures and options trading is the process of buying and selling futures contracts and options contracts on the stock market. Trading of options and future derivatives are highly risky and are best suited for expert traders.
You would first need to log into your trading portal using your user credentials to place an order. Once you’ve logged in, select the desired stock and place your order, which can either be a buy order or a sell order.
In equity trading, there are two primary types of orders that you can place – a market order or a limit order. A market order places your buy or sell order at the current prevailing market price of the stock, with the intention of executing the order as soon as possible. On the other hand, a limit order places your buy or sell order at a specific price of your choosing.
Private Equity is an equity investment that’s made in a company that’s not publicly traded on the stock exchanges.