After you have built a portfolio investment strategy on the basis of your risk-return profile and a time horizon, you have to implement it. Stock trading can be done through two ways, either offline broking or online broking.

Offline investing

Opening accounts

To begin trading, you must first find a broker to execute your trades. Of late, most transactions are carried out in the electronic form. For this, you have to open a ‘demat account’ with a depository who should be registered with the regulatory authority. A depository is an organization which holds securities of investors in the electronic form at the request of the investors through a registered depository participant. It also provides services related to transactions in securities. After opening the demat account you should open a trading account with your broker. The broker issues contract notes detailing purchase and sale transactions, bills containing the charges (stamp duty, brokerage, securities transaction tax and service tax) levied on the purchase and sale transactions. SEBI (Securities and Exchange Board of India) prescribes guidelines for the rate at which charges are levied, the frequency of issuing contract notes and also the format.

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Normally, a stock is bought after going through its fundamentals and its fair value is determined taking into account the investment horizon. So, a sale would be made when the stock approaches its fair value. However, deteriorating business fundamentals or negative earnings revision may also prompt an early exit from the stock. Continuous monitoring and reviewing would enable you to keep track that if the information or expectation does not yield the desired result then you could sell the stock. An investment made with a long-term perspective also needs to be reviewed to check for any unfavourable technical factors, political or economical instability affecting the rationale for holding the stock. On the other hand, improving business conditions, new products or a change in management that might help a company strengthen earnings may require you to increase the holding period for a particular stock. Thus, it might help you to make more returns by reviewing your selling decision.

Securities Transaction Tax (STT)

STT is levied on the value of certain transactions. These transactions include the purchase and sale of equity shares, purchase and sale of units of an equity oriented fund, sale of a unit of an equity oriented fund to the mutual fund and sale of a derivative. The rates applicable on different transactions differ depending on the type of security that is traded and whether the transaction is delivery based or not. Further, in some cases the seller is required to pay the tax and in other cases the buyer has to pay (see table below).

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Suzlon Energy is a fully integrated international wind power company and ranks as the world’s sixth leading supplier of wind turbines. For the quarter ended Dec 31, 2007 , consolidated sales increased 66% to Rs 3,169.76 crore. PAT before minority interest was lower by 17% at Rs 142.84 crore. Taxation zoomed 844% to Rs 87.32 crore. Net profit stood at Rs 151.69 crore, down 13%. The company’s order book stood at Rs 17,107 crore with domestic orders at Rs 2,404 crore and international orders amounting to Rs 14,703 crore. In terms of volumes, domestic orders amounted to 441 MW and international order to 2,916 MW aggregating to a total of 3,357 MW. The per MW realisation for domestic order registered a growth of 2.99% to Rs 5.45 crore and that for international orders by 5.61% to Rs 5.04 crore.

DNA Money India reports that the recent rise in market capitalization of Reliance Group (both Mukesh Ambani and Anil Ambani) stocks has caught the attention of SEBI. SEBI is investigating whether there was a market capitalization race between the two brothers.

I strongly believe that SEBI is right. It’s crystal clear that both the brothers are inflating their stock prices artificially. Otherwise the group stocks like AdLabs, Reliance Natural Resources, Reliance Industrial Infrastructure would never have climbed that much in months. That’s the reason why these stocks lost more than 50% of their market capital in two days (i.e January 21st and 22nd).

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If you have invested in the equity markets your investment needs to be continuously monitored. Even if you buy into equity with a long-term view, you still need to assess the performance of your portfolio on a regular basis. To assess the stock performance you need to monitor the performance of the company as well as the industry. You also need to keep in mind the economical, political and global factors affecting the firm. Therefore, take a closer look at the following factors while measuring the performance of stocks:

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