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Complete control to buy and sell shares; market news, views, commentary, company information, stock tickers, charts, portfolio and money management tool - available just a couple of clicks away to anyone wanting to trade or invest without a broker.
Could investors ask for more?
Yet, despite all the data and research at their fingertips, they aren't heading in hordes to trade online.
There are about 50 online brokerages in India, the more prominent among them being Sharekhan, ICICIdirect, indiabulls.com, kotakstreet.com, motilaloswal.com, 5paisa.com and equitymaster.com. But online trading stands at barely 2 per cent of the share trading market today.
A poor scenario, when compared to 6 per cent in China and the rapid growth in Europe. However, online trading in other parts of Asia also have hurdles and growth is stagnating worldwide.
Low bandwidth can be blamed for the slow growth of online trading. Slow connections result in orders taking ages to be processed whereas your traditional broker can achieve all that more quickly. Every single second counts and delay of even a half a second in the execution of an order can result in a loss for the trader.
Internet browsers add to the problem. "Browsers were meant to display static data and text like news -- not streaming data like stock quotes," says Sharekhan's Jaideep Arora, executive director, (online business). Therefore, the page has to be refreshed manually over and over to display the latest quotes. It's true that browsers can be set to auto refresh a page every couple of seconds. But doing this over a slow connection doesn't help much.
The segmentation of the share trading market in India, as in most countries worldwide, consists largely of traders and dealers, along with a handful of investors. "The term 'investor' generally applies to people who trade around twenty times a year," says Arora. "Almost 70 per cent of the volumes traded on Sharekhan are rolling settlements and are 'squared off' with just 20-30 per cent resulting in actual delivery," he adds. [Definitions] This indicates that even out of the minuscule 2 per cent who deal online, a majority are traders.
Most Indian investors haven't really taken to handling investments online without the advice of a broker. Though financial information is available online many prefer to get stock tips from their brokers with whom they maintain a personal relationship.
Also, the market grapevine, an important factor, is missing from online trading. This is critical especially for day traders. "Traders usually thrive on gossip, speculation, tips and calls from each other," says Kishor Binwal, research analyst at Double Dot, a trading ring. Binwal, who has researched trading habits at several portals, adds, "Financial information that's available on the Net is accessible to everyone. But what really drives the market is the speculation."
Investors trading on the Internet are isolated from all the action and gossip that they would normally get through their brokers. For this reason, many online traders also keep in touch with 'offline' brokers.
Arora points out that there are chat rooms, phones and even online bulletin boards where investors and traders regularly post stock tips. However this practice isn't very prevalent in India.
Says Ravi Kuma of indiabulls.com, "Relationship is important to people who trade online. Thirty to forty per cent of our trades take place offline through phones and our relationship managers who advise investors and traders. Intra day traders are logged on to Yahoo! Messenger for tips and calls."
Sites like Yahoo! India offer tips. International boards like siliconinvestor.com, Yahoo! Finance board and investor chat rooms are also abuzz with tips. But not everything you read online can be trusted, as this BBC report cautions.
Other reasons that keep people away from online trading include age. Most traders are in their thirties and forties whereas a majority of Indian Internet users fall within the 18-24 age group.
All these limitations may not make much of a difference to long-term investors who trade infrequently. But they do deter active traders from going online.
And e-brokers are aware of this. Hence the launch of products and services like Sharekhan's Speedtrade. Speedtrade is an Internet-enabled trading client that you can install on a PC. It streams 'real time' quotes to your desktop, along with tick-by-tick charts, price and technical alerts, streaming orders and trade confirmations, all on one screen, so that you don't have to open several windows.
"It's almost like having a broker terminal at a fraction of the cost. Setting up a broker terminal involves a VSAT connection which could cost you anything from Rs 80,000 to Rs 100,000," says Arora.
He sees software-based direct access platforms like Speedtrade leading to a host of products being introduced for the active trader. Investsmart has already made a distinction between investors and traders, giving them separate accounts.
Day trading is now offered by a large number of players like icicitrade.com, indiabulls.com and mychartalert.com. And value added services like SPOT trading (offered by quite a few big players) and Buy Today Sell Tomorrow (BTST) offered by ICICITrade offer more flexibility to investors, in addition to just delivery.
Tie-ups with major banks like ICICI, Citibank and HDFC for online transfer of funds and depository accounts also make it easier for investors, though most online brokerages require you to set up a depository account with them or the banks they've tied up with. ICICI, for instance, offers investors and traders an 'e-invest' account, a three-in-one account that brings broking, trading and demat accounts (all to be opened with ICICI) 'under one roof', saving you a lot of paperwork.
A large number of online brokerages have backed up their operation with multi channel deliveries like phone trading for those who can't access the Web.
There's yet another option: Trading rings or café's like the Mumbai-based DoubleDot offer you the convenience of self-trading (only on the BSE) on a broker terminal, along with analyst advice, research and plenty of market buzz.
Increased PC penetration and more accessible broadband could increase the number of online investors. Until then, online trading portals are all set to woo active traders in a bid to increase their numbers!
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