101Takka

Cheap or Expensive?

2010-08-24T11:04:00.002+05:30

First of all ... I feel great to come out of this 101Takka hiatus ... its been close to 3 years since we have had a post and it feels refreshing to be back ... we have had a recession in between ... so I can understand the lukewarm response to this blog ...

I speak to a lot of people about the stock market ... and its something I like to speak about ... and most of the questions revolve around ... "Which stock should I invest in?" ... or ... "I dont have money to buy an expensive stock like Infosys" ... well ... fair enough ... for a retail investor ... these things are an integral part of decision making when it comes to buying a stock ... but there is a way to identify if a stock is expensive or cheap ... and NO ... its not based on the market price of the stock ... its something else ... although it does not guarantee you returns ... but it works better than the market price logic ...

Its called the P/E ratio ... we first need to dig in to what P and E mean ...

P stands for market price of the stock whereas E stands for EPS ... damn ... now I need to explain EPS ...

EPS is Earning per share of the company ... any given company has N no of shares in the market available for trading ... and the company generates some revenue based on these N shares ... so EPS boils down to Earnings divided by no of shares of the company ... in simple words it means that the company earns an X amount for every share that it has available for trading ...

EPS is generaly declared by companies at the end of the financial year ... though some announce it at a quarterly basis too ... but experts rely on the yearly number and not the quarterly number ...

There is another aspect to EPS ... its called Guidance ... Guidance is an approximation by the company in which they calculate the EPS of the coming year based on prevalent market conditions and current revenue growth of the company ... its sometimes also called as Forward Earnings ...

But lets return to P/E ...

The global markets are judged by the P/E of the entire markets ... just like a company ... a stock market also has a P/E ... and most global markets currently have a P/E of between 15-20 ... the logic for calculating P/E of a stock market is quite complex as compared to P/E of a company ...

P/E of a market is considered as a benchmark to judge a company's price ... mostly it is considered that P/E of a company should be same as P/E of stock market ...

The Indian stock market is currently trading at 16-17 times FY10-11 earnings ... so its quite simple now ...

All companies whose P/E is around this 16-17 mark ... or even 20 ... are considered to be cheap or not too expensive ... whereas all companies whose P/E is above 20 ... are considered expensive ... the logic is simple ... there has to be some earnings to show for the share price of the company ... after all you want to invest in a company that has good earnings and not just a low market price ... right? Now lets take some examples ...

A fresher in the stock market would call State Bank of India as an expensive stock because its market price is 2830 ... whereas the same person may potentially say that Reliance Power is such a cheap stock ... because its market price is just Rs. 153 ... right? Wrong ...

Its exactly the opposite ... SBI is a much cheaper stock than Reliance Power ... why? Lets see ...

SBI has an EPS of Rs. 144 mentioned for FY10-11 ... if you divide its market price of 2830 by this EPS ... you get a P/E ratio of something close to 20 ... which is the median P/E of the market ... this is not exactly cheap ... but not at all expensive too ...

Reliance Power has an EPS of Rs 1.14 for FY10-11 ... so its P/E comes to 153/1.14=134 ... very very very very very expensive ... a P/E of 134 should itself make you run away from this stock ... it does not have the earnings to justify its stock price ...

So buy SBI instead of Reliance Power :)

There is another logic ... some companies declare Guidance for next year ... for example ... there is a new listing last week called SKS Microfinance ... supposed to be the only player in its segment ... it has an EPS of Rs. 26 for FY10-11 and its current price is 1180 ... which makes its P/E as 44 ... expensive ...

But ... if you look at the EPS guidance for FY11-12 ... it goes upto around Rs. 65-70 ... and the P/E then becomes ... 1180/70=~17 ... this is cheap ... plus the P/E of the market will get revised next year to around 19-20 ... which makes this stock a good long term bet ...

So this is some basic logic in deciding whether a stock is expensive or cheap ...

Any takers? :)

Cheers ... !!

Taking advantage of the market ... !!

2007-10-26T17:45:00.000+05:30

With all the brouhaha about P-Notes dominating proceedings at Dalal Street last week, the Bears were finally running all over the Bulls. The correction took the markets all the way from 19,100 to around 17,800. A good 2K correction.

But with the classification of P-Notes as FII being the cynosure of all eyes, SEBI was always going to sooth the sentiment. Afterall, it has been the FIIs that have been the primary factor in taking the markets to its dizzy heights. So a decision was made by SEBI that it will make a formal announcement on the P-Note issue on Thursday, October 25, 2007. But SEBI was also going to hold a informal discussion on Monday, October 22, 2007 with some key FIIs like Goldman Sachs, JP Morgan Chase and Kotak. On the same day, The UPA and the Left were going to discuss about the N-Deal.

From the onset, it was clear that both the discussions would be positive. The UPA didnt have any intention to go to the polls hence they were not going to force the Left to budge. SEBI's P-Note statements had set the cat amongst the pigeons a week ago and they were going to be more lenient this time around. So it was great opportunity to BUY ... with B, U and Y in capital. My intention was to buy some stocks on Friday and Monday and sell them on October 26, 2007, thats today.

On Friday, October 19, 2007 I bought 10 shares of ACC at 1031. It had fallen by 13% the previous day as Vikash might know. On Monday, I bought 10 shares of Reliance at 2403, 10 shares of Reliance Energy at 1348, 100 shares of Idea aty 136.70 and 100 shares of Reliance Petroleum at 168. The total investment was around 70K (approx).

On Monday evening, as expected, both discussions went well and it reflected on the markets on Tuesday as it registered a 800 point gain. The next 2 days saw smart gains too. Now SEBI was going to make an official announcement on Thursday evening. I got scared and didnt know how the markets would react since SEBI was also going to speak about Hedge funds. I thought I would play safe and sold everything on Thursday.

Reliance at 2656, Reliance Petroleum at 196, Idea at 148, ACC at 1085 and Reliance Energy at 1709. I gained 2500 in Reliance, 2700 in RPL, 1000 in Idea, 500 in ACC and a whopping 3500 in Reliance Energy. The total gain for the week stood at 10,200. Staggering. I lost out on some more profit coz SEBI's announcement about Hedge funds was also positive and markets gained another 500 points today. But I will live with it. Just to console myself, Idea lost 9% since yesterday but all others gained.

Im attaching the contract notes in ascending order of transactions.

Cheers ... !!

Make hay while the sun doesnt shine ... !!

2007-10-18T10:53:00.000+05:30

Yesterday was a turbulent day at the markets with SEBI enforcing kind of a ban on the P-Notes trading. I was in the gym when the markets opened 1400 points in the Red. While it was a relief to see the markets correct, it was a huge opportunity to Day trade. But to my horror, when I reached office, the market was locked in Lower Circuit and trading was suspended for an hour. The FM came out and consoled the sentiment by stating that P Notes can invest as FII's. Phew ...!! The market was always going to recover after that.

When the market reopened at 10:55 am, I bought 10 shares of Reliance Energy at 1598. It had plunged by 18%. This happened at around 11 am. I kept a sell order for Rs. 1700 and it was executed in less than 15 minutes (See the contract note for the timing). The market had recovered by around 700 points now. It fell again and was now down by 1100 points. I bought 10 shares of Bharti Airtel at 1009 and kept a sell order at Rs. 1050. It got executed an hour later. The markets had recovered almost 1000 points from the day's lows.

But think of it. Reliance Energy closed at more than Rs. 1750 and Bharti closed at more than Rs. 1080. Bur profit made is good enough even though I could have made more money.

Cheers ... !!

Some common perks ... !!

2007-09-18T15:11:00.000+05:30

Investing money in the stock market leads to the investor questioning .."Its OK if I make some money but what if I lose money. So it is better I keep my money in a bank, some policy or some FD. At least I wont loose money and I will get interest". Quite TRUE. But there are some perks associated with the stock market too.

For all perks, I will keep the base example of you having 100 shares of Infosys with you. Face Value of Infosys is Rs. 5.

Let me start by first explaining a must-know term.

FACE VALUE
It is actually known as the actual value of a share of a company. The market price of a company's share is inclusive of the face value plus a premium. You never get the shares of a company at its face value unless you are an employee of the company. Generally, the face values are either Rs.10, 5, 2 or 1 of any company.

Now come the actual perks

BONUS
This comes in the form of a ratio like x:y (x and y can be any number). It means that for y share(s) that you hold, you get x shares for free. If Infosys gives a bonus of 1:2, then you will get 50 shares for free. But the price reduces in the same ratio. Over here, the price will become (y/(x+y))*current price. So if the current price of Infosys is 1800, it will become around 1200. So your total worth is the same but you have more shares now. Bonus is generally given once every 3 years on an average by the company. Face value is not affected by a Bonus.

DIVIDEND
This is the distribution of profit by the company (assuming the company is making a profit). Dividend is always per share on the Face Value and in terms of percentage. For example if Infosys gives a dividend on 80%, it means 80% of Rs.5 = Rs.4 per share. So you will get a cheque of 4*100 = Rs. 400. Good companies generally give a dividend twice a year.

SPLIT
This is similar to a Bonus with the exception of the impact on the Face Value. If a company splits in the ratio of x:y (here x is guaranteed to be less than y), the Face Value becomes ((x/y)*current Face Value). So if Infosys splits in the ratio of 2:5, then its Face Value will become Rs. 2. Now all dividends will be a percentage of Rs.2 per share. Splits also happen with the same frequency of a Bonus, though both generally do not happen at the same time. NIIT gave a Bonus and Split together last month. But such instances are quite rare.

IPO
This is the initial public offer of any company. The company fixes a price band and then the people apply for the shares. The company fixes a certain no of shares to be offered. But the applications may be more than the available shares. This is called Over subscription. In such a case the company gets listed at a price higher than its offer price. You also get less no of shares as compared to the no of shares you applied for. Under subscription is the exact opposite. The IPO price comprises of the Face Value + a premium. So if a company's price band is say Rs. 300- Rs. 350 and Face Value is Rs. 10, it means that the premium is Rs. 290-Rs.340

RIGHTS ISSUE
This will be useful only if you already hold the shares of the company giving the Rights Issue. This also comes with the ratio flavour x:y, It means that for every y shares of the company that you hold, you will get x shares at a discounted price (the discount is relative to the current market price). So if Infosys gives a Rights issue of 1:2 at Rs. 1400, it means that you will be granted 50 more shares at Rs.1400. You can choose to select or ignore the offer.

These are some of the most common perks. I will keep posting about other more complex terms later.

Cheers ... !!

Minimize your day trading risk ... !!

2007-09-18T12:22:00.000+05:30

Another example I wish to present is about how to minimize the risk of day trading. Though this post is limited to the normal Buy and Sell strategy (and not Short Sell), it can be quite handy.

Once you have made up your mind that you will buy a really beaten down stock on a given day (coz you feel it has fallen quite a bit and will recover around 2-5% during the day), then it is safer to avoid Margin Trading (or Day trading technically). You can instead perform a Normal Buy. This wont force you to sell on the same day if you run into a loss. Instead, you can avoid selling on the same day (only if you feel that you will end up with a loss). Mostly, stocks that fall badly on a given day recover at least 5% on the next day. You will be charged the normal brokerage of 0.5% if you sell on the next day but the jump in price compensates for the additional brokerage by a long way. In fact, you will end up with more profit as compared to selling on the same day.

As an example, I'm posting the contract note of a transaction carried out yesterday. Subex Azure is a quality top notch stock. It was down by around 18%. I bought 10 shares at 419. Remember, I didn't Margin trade. I just made a normal buy transaction. I kept an order of selling 5 shares at 430 and another 5 at 440. Both got executed. Seems like good profit right?

Well, Yes and No. Yes because earning Rs. 100 in a day without breaking a sweat seems fun. No because Subex rebounded very well today. It had gone up to 471 at one point. So if I had waited for another day, I could have earned 10*51 = Rs. 510. If you count the brokerage, I would have ended up with a gain of around Rs. 450.

On the other hand, if Subex would have gone down yesterday after I bought it, I wouldn't have been a soup. Because I didn't day trade. It was up to me when to sell it.

Cheers ... !!

Risk involved in Short Selling ... !!

2007-09-14T20:41:00.000+05:30

I was trying to get hold of an example that displays the risk involved in Short Selling (or day trading for that matter) because so far all the examples posted by Vikash and myself present a very rosy picture. I'm glad I finally hit upon bad luck while Short Selling, though the loss incurred is not too substantial.

In the morning, at around 11 am, Aftek was up by around 16%. It was up by 20% yesterday too. The market was also up by around 200 points. I thought I would short sell on Aftek. So I sold 50 shares at 86 and then kept a buy order for 84. That order was executed and it fetched me a profit of around Rs. 78. Quite handy. Now starts the fun.

During one of my market surveying sessions in the afternoon, I saw Info Edge (also known as Naukri.com) suddenly jump 14% to 1140. I kept a sell order for 10 shares at Rs. 1150. For 25 minutes, I continuously observed the price of this script. It was shuttling between 1135 and 1147 but it was not touching 1150. It was getting on my nerves. Then it slipped to 1128. I got frustrated and modified my order to sell at 1145. It went back to 1145 and 10 shares were sold at 1145. I placed a buy order for 1130 and thought I would relax. The very next Refresh took the script to 1178. A loss of Rs. 350 straightaway !! Call it bad luck, greed, over enthusiasm ... anything.

Losing 350 in a day is quite a bit. I thought I would be brave and sold another 10 shares at 1170 (coz it had now jumped around 18%). This is a quality top class A category stock and you seldom see a jump of more than 15% in such stocks. It started to decline thereafter. I promptly cancelled the previous buy order of 1130 and then kept a fresh buy order of 20 shares at 1155. It got executed just before the deadline of 3 pm.

Brave? Well, you could call it good luck. From a loss of Rs. 350 to a loss of around Rs.7. It feels even better to note that it was at 1164 at around 3 pm. It closed at around 1162. So it was good I didn't wait till end of day.

So a loss of Rs. 7 in Info Edge coupled with a gain of Rs. 78 in Aftek. Overall, I gained for the day. But I just wanted to emphasize that this is no different from gambling. People have lost their homes, their money, their life in gambling. So you have to be extremely cautious while day trading. You will do well to stick to normal trading. I cant express in words how much I was sweating at around 2:30 pm.

In hindsight, if you have around 1 lakh in your trading account and you consistently day trade on stocks that have been +/- 15%, then you will almost surely gain 7 out of 10 times (assuming your analysis is better than average and assuming that you dont gamble 1 lakh on a single transaction ... :))

Go through the contract note when you have time.

Cheers ... !!

Another short selling example ... !!

2007-09-14T10:38:00.000+05:30

I carried out a short sell transaction yesterday on KPIT Cummins. This will give you an idea about the risk involved in it. It was up 12% at around 12 noon. I sold 50 shares at 135.50 and I had placed a buy order at 131. But it was not retracing from 135. Finally I got bugged and bought 20 at 134 and 30 at 133. I earned a profit of Rs. 50 but when I saw its closing price, it was 142. This means that if I had waited till end of day, then I would have incurred a loss of 6.50 * 50 = around Rs. 300.

So the point is ... don't be too greedy. If you are making 1 or 2 %, be happy and buy yourself a pint. Happy trading.

Cheers ... !!

First stint with Short Sell

2007-09-13T10:51:00.002+05:30

Following Pratik's tips and que yesterday I successfully tried short selling for the first time. I have attached the contract note for the transaction here.

I first sold 20 scrips of Reliance capital at Rs. 1337.20 at 2:45 pm and I learned that this is the last time of day to place a fresh margin trading order. The trading amount was 26740 and for this transaction I had to hold funds of approx 6500 from my account. I am not sure about what is the rule for this. As it was the last time to place a fresh order I also placed a buy order for those 20 shares at 1310.

Also I learned that I could modify the margin orders up to 3 pm. As Reliance capital was on peak in the last trading session and was not coming below 1325 so I decided to modify the buy order to the price of 1320. But I couldn't do that because it was slightly over 3pm that time.

Third rule about margin trading is that If the pending buy/sell orders are not executed till 3pm (as mine was not executed) then the orders will be executed (squared off) by the system after 3pm as against the assumption we had that it will be done at the end of trading session. That is why my buy transaction time is 15:09 (3:09 pm).

Two more things I figured out of this exercise...
1) The Securities Transaction Tax (STT) is only applicable to the sell transaction in day trading /short sell.
2) The brokerage charged to me was a mere 0.055% as against the standard 0.1%.

Well to conclude I carried out the transaction of 26740 without having that much money in my account (but part of it was required), carried out the buy and sell on only 1% margin, and still I made a profit of Rs. 195.

So don't worry about your margins for day trading (thanks to low brokerage and bank support for capital) and happy trading guys.

Cheers!!

Day trading ... !!

2007-09-07T18:22:00.000+05:30

Hey guys,
To illustrate the use of day trading, I am attaching one of the transactions carried out in February. The market had fallen by around 500 points in the morning.

I saw the biggest loser in the A B and B1 category and found Mahindra Gesco which had fallen from 750 levels to 630 levels. I bought 70 shares of it at Rs. 573.80 which is equal to around 40K. It was a risk.

Then the market recovered by lunch by around 300 points and Gesco went upto Rs. 600. I sold all the 70 that I had bought at Rs. 594 and got a profit of around Rs. 1500. Have a close look at the Brokerage column. The normal brokerage would have been 0.5 % of 40K = Rs. 200 but since i bought and sold on the same day they charged me only 1/5th of the brokerage or 0.1%.

Then the market again fell by 200 points just before lunch. I saw Ambuja fall from 123 to 112 which is a big percentage slump for an index stock. I bought 350 shares are 114.75 = again Rs. 40 K (the same 40 that i got back from Gesco :)). By the time Sabhtarsha and I came back from lunch, Ambuja had climbed to 120 levels and the markets had recovered again. I promptly sold all of Ambuja at around 120 and earned Rs. 1837 on Ambuja.

So in all I earned around 3400 from these 2.

Then I put all the money again in Nagarjuna Construction which had fallen 19 % from 190 levels to 150 levels. But this was at around 3 pm. So i didnt select day trading since i didnt know what would happen in 30 minutes (market closes at 3 30 pm). Thats y u will see the normal brokerage rate of 0.5 % for this transaction. I later went on to sell Nagarjuna at 212 some days later.

This may sound thrilling but you need some luck. There have been days when the market falls by 500 points but doesnt recover and goes onto fall by another 100 to 300 points.

On the flip side, the entirely opposite approach can be taken to Short Sell. Find a day when the market is up by around 500 points. Find the biggest gainer amongst popular category stocks and short sell. Dont be too greedy. A 3-5 % profit is good enough for a day. Remember - you will be charged just around 0.3 % for the entire buy and sell transaction for day trading, so a profit of 3-5 % is HUGE ...

Cheers ... !!

Short Selling and other trades ... !!

2007-09-07T12:59:00.000+05:30

As an introduction, there are different types of trades you can perform such as:
1). Normal trading
2). Day trading
3). Short Selling
4). Margin trading

Normal trading means that you can buy any stock on any day and sell it on any day you like.

Day trading means that you buy and sell on the same day. If you buy something and don't sell before the market closes, then the shares will be sold at the last price of the day. The brokerage charged for day trading is 1/5th of Normal trading. So its beneficial in terms of brokerage but risk involved is great.

Short selling is a variant of day trading with some interesting exceptions. You sell and then buy :). You don't need to have shares to sell first. I will give an example.
Lets say that the market is up by 500 points in the morning at 10 am and the highest gainer of the day is Infosys. It has gone up from say Rs. 1900 to Rs. 2000. A gain of Rs. 100. Consider you don't own any shares of Infosys on that day. Now suppose you feel that the price will go down by say Rs. 20, then you can sell say 100 shares at Rs. 2000 (you don't need money for this). Now lets say that it actually drops to Rs. 1980 as you had thought. You can now go ahead and buy those 100 shares at 1980. So your profit would be Rs.20 * 100 = Rs. 2000 via this weird trade. So its Sell and Buy rather than Buy and Sell for Short Selling. In the end, you don't have any stocks of Infosys :). The flip side is that if you sell at Rs. 2000 and say it goes to Rs. 2020, then you are stuck and cant escape because even if you don't buy it, it will be bought at the end of the day. When you sell first and then you go on to buy later (at a profit of course), it is called Short Covering. You can practice this via moneybhai.com as well.

Margin trading is also an interesting option though a lot more risky. NSE and BSE allows Margin trading on some select stocks. It means that your broker gives you some multiple of your trading amount to trade. For example, HDFC gives you 10 times of your trading amount to trade. So if i decide to trade with only Rs. 10000 (which is present in my savings/trading account with the broker), then HDFC gives me Rs. 1 lakh to trade. You have to return the borrowed money in a matter of 3 to 5 days with the interest. So if you are a punter and know that some stock is definitely going to perform, it is worth the risk.

Cheers ... !!

Bulls and bears

2007-09-06T14:19:00.000+05:30

As far as I know Bulls market means ... Good times in market. And Bears market means recession. Apart from the above understanding, is there anything more to mark these animals?

Sensex calculation explained ... !!

2007-09-04T14:44:00.000+05:30

Im responding to the question asked by Amit for the previous post.

The SENSEX is an index and not a stock exchange, contrary to popular belief. Now what is the difference between an exchange and an index?

The exchange is more like a market or office or a common place which has companies registered. The companies get registered with prior approval from SEBI. Some companies wish to get listed on only one exchange (BSE or NSE), while some are listed on both.
Index generally gives you an indication of the health of the stock exchange. Hence, only some pre defined number of companies make up an index. For example, SENSEX is comprised of 30 companies while NIFTY is comprised of 50 (rhymes with Fifty).

So which companies are included in an index. For this we need to understand what you mean by Market Capitalization or more commonly called Market-Cap. Market-Cap is simply the total no of shares of a company multiplied by the price of each share. Depending on this result, companies are classified as Large-Cap, Mid-Cap and Small Cap. Generally, an index is made up of Large-Cap companies whereas Mid-Cap and Small-Cap have their own respective indices as well but are relatively less known.

Now, the choice of the 30 companies in SENSEX is based on the Market-Cap. An endeavor is made to include companies from maximum possible sectors though it might not be achieved always. Sectors means stuff like Technology(Infy, Satyam), Oil and Gas(Reliance, RPL), Pharma(Ranbaxy, Cipla), Cement(ACC, Ambuja), Sugar(Bajaj Hindustan), Capital goods(L&T), FMCG(Dabur, Siemens), Power(Tata Power, NTPC), etc.

Once these companies are finalised, we take the next step. There is something called Free-Floating Market-Cap. Now what is this?

Out of all the shares of a company, only some of them are available for trading in the open market while the other have some reservations (like ESOPs, Director's quota, Govt holding,etc). The shares available for trading in open market are called Free Float Shares. The company has a report of who contains how many Free float shares which is given to the exchange. Based on this, a free float factor is calculated for each company. Now if you multiply the free float factor by the Market cap, you get the Free Floating Market Cap.

Now with Free floating market cap in hand, how to calculate the Sensex value?

You need to sum up the free floating market cap of all the companies in the Index. Then you need to make this number relative to the Sensex base which differs from time to time.

The following link would be very useful to understand the Sensex value logic.

Sensex Logic

Here is another excellent link to track all major Indian indices. You can click any index on the left hand side and know which companies make up that particular index.

All Indian Indices

Hope this helps ... Cheers ... !!

Pre-Requisites ... !!

2007-09-03T10:54:00.000+05:30

There are some things that you need to get in order to start trading.
1). Demat account
2). Tradings account
3). Savings account

So what are these accounts exactly?
A Demat account is similar to your Savings account with the exception in its content. A Savings account contains money while a Demat account contains shares of various companies. Of course you cannot remove shares from a Demat account from an ATM :)

A Tradings account is a means of communication between the brokerage house and the stock exchange. For some brokerage houses, it also acts like a Cash account where you deposit the money that you want to use for trading.

A Savings account is required for the sake of linking your Demat and Trading accounts. Some brokerage houses link your trading account to the Savings account (which is with some X bank) and your transactions result in debiting/crediting of that Savings account.

Now what is a Brokerage house ?
It is nothing but an entity that does all the transactions for you, whilst charging you for the same. Notable Brokerage houses are Sharekhan, India Infoline(5paisa.com), HDFC Securities, Angel Broking, ICICI Direct, Prabhudas Liladher, IndiaBulls, Motilal Oswal and Kotak Securities. All these differ from each other in the rate they charge for transactions. While some have extremely user friendly ways for transactions, some have very cheap rates. Choosing a good Broker is of paramount importance.

Now what are the rates ?
Typically, there are 3 types of rates levied on your transactions.
1). Brokerage
2). Service Tax
3). Securities Transaction Tax

Brokerage is generally 0.5 % of your transaction amount. Service Tax is 12.4 % of the Brokerage. Securities Transaction Tax is 0.1 % of your transaction. So in all, the rate levied is 0.7 % (approx) of your transaction. For example, if you buy 10 shares of Infosys at say 1900 per share, your transaction would be 10 * 1900 = Rs. 19000.
Brokerage would be 0.5% of 19000 = Rs. 85. Service tax would be 12.4 % of 85 = Rs. 10 (approx). Securities Transaction Tax would be 0.1% of 19000 = Rs. 19. So in all, you will be charged 19000 + 85 + 10 + 19 = 19114. If on the other hand you were to sell the 10 shares at 19000 you will get 19000 - 85 - 10 - 19 = Rs. 18886. So it very important to calculate you profit/loss by considering the taxes.

Hope this acts as a good starter ... !!

Cheers ... !!

Test Blog

2007-08-31T22:14:00.000+05:30

Trying to sync with the google grp as well ....