Complete Online Trading

Are you into online trading?

Then here is something that you must read:

Online Trading: Woes and Solutions

The article does cover many of the problems that online traders face. (Also see the comments at the bottom of the page).

I use Indiabulls’ “Power Indiabulls” for online trading and have rarely faced any problems in last 2 years. I have read a few complaints about Indiabulls - especially about RM’s trading in customers’ accounts without consent.

I interact with many traders and investors on daily basis. From the feedback that I have got, it seems Indiainfoline, followed by Indiabulls are the best suited platforms for online trading.

I also have an account with ICICIDirect.com.

ICICIDirect.com isn’t suitable for active traders. ICICIDirect.com is too slow and the charges are too high.

Reliance Money still has a lot of problems.

There are rarely any problems with the Indiabulls’ online trading problem, but I am still not satisfied with the offline service. Sometimes the RM is unreachable. Even when I am able to contact the RM, he doesn’t seem to have the complete knowledge about the regulations, procedures etc.

Also, due to the complaints that I have read online about RM’s trading without customer’s consent, I always keep a minimum margin with Indiabulls.

(It takes only 2 minutes to transfer money from your online banking account to your online trading account).

India’s largest provider of online trading services is now providing an online trading platform for derivatives for NRI’s in the Gulf (Middle-East Asia).

With a fully integrated online trading platform, ICICIDirect.com is safe and secure.

Besides the online trading facility, customers will also have an option to call and trade.

According to ICICIDirect.com, around 1.7 million customers are currently using its online trading platform.

Anup Bagchi, executive director at ICICI Securities adds that around 33% of the total population and 50% of the work force in UAE comprises of Indians. Bahrain has around 290,000 Indians. This means there is a large potential for ICICIDirect to expand its customer base in these regions.

Besides the online trading facility, ICICIDirect.com will also launch educational campaigns for NRI’s at various overseas locations with a special emphasis on F&O trading.

Derivatives can be used for speculation as well as risk-management. This online trading facility will be allow clients to hedge their positions in volatile markets.

The DLF IPO allotment status is now available.

Retail investors have got 100% allotment.

The DLF allotment status can be checked here.

The IPO still has a Rs 20 premium in grey market. However selling pressure may be seen on listing, as retail investors and HNIs try to get rid of the excess stock that they have got.

If retail investors don’t have the holding power, it is advisable to get out on listing and not wait for a better price.

DLF is expected to list next week.

Vishal Retail IPO Allotment is finally out.

Check it out at Intime Spectrum.

I didn’t get any for my two applications of 350 and 325 shares.

Cellular operator Spice Communications Ltd. has fixed the price band of its forthcoming IPO at Rs 41-46.

Spice Communications recently did a private placement of 24,837,889 shares at Rs 45 and raised Rs 112 crore (Rs 1.12 billion).

Post-IPO, the stake of both the promoters, B K Modi and Telekom Malaysia will come down by 10% each.

Currently Modi holds 51% of Spice Communications and rest 49% is with Telekom Malaysia.

Spice Communications is the second largest cellular operator in Punjab with around 1.91 million subscribers and the fifth largest cellular operator in Karnataka, with around 0.82 million subscribers.
The IPO size is expected to be around Rs 520 crore at the upper band of the IPO.

The worrying factor for the IPO is that the company has accumulated losses of over Rs 600 crore and doesn’t have the size to compete with the bigger players in the cellular market.

The Vishal Retail IPO got subscribed nearly 50 times in the retail segment.

So what is the probability of you getting an allotment?

Here is a table of probabilities of allotment for different number of shares applied for:

(Only 25 shares will be alloted per application).

Number Of Shares Applied For (Probability Of Getting 25 Shares)

350 (28%)
325 (26%)
300 (24%)
275 (22%)
250 (20%)
225 (18%)
200 (16%)
175 (14%)
150 (12%)
125 (10%)
100 (8%)
75 (6%)
50 (4%)
25 (2%)
The grey market premium is 300+ for Vishal Retail, so whoever gets an allotment, will soon double his money.

DLF IPO Overview:

DLF is India’s biggest real estate developer.
DLF IPO is the biggest IPO ever in the Indian markets.
Price Band: Rs 500 - Rs 550.
Number of Shares to be offered: 17.5 crore shares (175 million shares)
Total IPO size – Rs 8750 – Rs 9625 crore (US$ 2.17 billion – 2.39 billion)

IPO offer is for 10.27% of company’s shares – thus market capitalization of the company Post IPO would be Rs 85200 crore – Rs 93720 crore.

Opens – June 11
Closes – June 14

A third of IPO proceeds will go to increasing land reserves.

Half of its land reserves are in NCR (National Capital Region – Delhi and surrounding areas) – this makes its fortunes highly dependant on real estate prices in NCR.

Many investment bankers including Citigroup believe that real estate prices may correct up to 40% in 2007-2008. DLF’s profits will take a big hit if this happens.

Currently the IPO has not excited the gray market much and is trading only at a premium of about Rs 40. This may change as the listing day comes closer.

The success of DLF IPO is also important for forthcoming IPOs of other real estate developers such as Omax (size Rs 1500 crore), HDIL (Rs 2500 crore) and IVR Prime (Rs 500 crore),

The biggest question is should you apply?

I would say “No”.
There is no use discussing eps and PE ratio for real estate stocks. The real estate market is highly volatile and no one can predict real estate prices one year down the line… especially in an over-heated market such as India.

I do not understand the land bank valuations of real estate companies and all analysts come up with different figures.

I am a big fan of Warren Buffet and I will follow his advice this time - “Do not invest in a business that you do not understand.”

DLF is India’s major real estate player and long term is surely good for it, but seeing the current real estate market and issue size of the IPO, I am staying out.

35% of the issue is reserved for retail category - that is around Rs 3000 crore worth of shares. Even if retail category gets Rs 10000 crore worth of applications, it will be subscribed just three times.

Even if DLF lists at a slight premium, if my judgement is right, the stock will be available at less the IPO price within next 12 months.

Reliance Money - An Anil Ambani group company is all set to change India’s financial trading scene.

I had an opportunity to talk with an executive from Reliance Money yesterday. Just looking at the their brochure, one gets the feeling that they mean serious business.

Reliance money is not only offering a comprehensive platform for trading and investing in all financial assets; the rates being offered were unimaginable till a few months back.

Reliance money has a simple system which works like the prepaid mobile.

For example paying an access fee of Rs 500 will get you trading access for two months for turnover upto Rs 90 lacs (intraday) + Rs 10 lacs (delivery).

This works out to be Rs 500 brokerage for Rs 1 crore turnover in day trading or
Rs 500 brokerage for Rs 10 lacs turnover in delivery trading.

That is 0.005% and 0.05% brokerage for day trading and delivery trading respectively.

Compare this with 0.05% and 0.25% being offered by India Infoline (5paisa.com)… Reliance Money is clearly the better choice.

Similarly Rs 1350 can get you 6 months of trading access upto Rs 3 crore (30 lacs delivery limit).
and Rs 2500 can get you 12 months of trading access upto Rs 6 crore (60 lacs delivery limit).
The brokerage plans are definitely designed for the medium and big traders. To trade, one has to pay access fee for at least two months. If one does utilize the turnover limits, the validity of the access fee will expire.

Small traders with turnover of only few lacs a month may still prefer to stay with other brokerage houses, which do not require a minimum commitment of brokerage per month.

However, the rate at which Reliance Money is growing its customer base, the future looks bleak for other brokerage houses in the country.

Check the Fortis HealthCare IPO allotment here.

Premium isn’t much in the gray market….only around Rs 10.

Long term investors can surely keep it as an investment. Healthcare is always a good sector to be in.

Fortis Healthcare Limited IPO has opened today and will close on Friday (April 20th)

The IPO isn’t generating much interest in the gray market and is barely getting Rs 5 - Rs 10 premium.

Healthcare is a capital intensive sector and Fortis’s expansion plans may affect it’s profitability in the short-to-medium term. However the stock will be a good long term bet.

Wait and watch is best approach for this IPO.

Investors should apply on the last day and if the IPO is not subscribed more than 2 times , then it would be better to do a “stop-payment” for the application checks.
Keep an eye on “comments” for updated gray market rates.