[DudeWithaFiat]

Originally Posted by rookieraj

The price of a share is decided by buyers and sellers.

This is invariably the answer I get on googling, but my question (as silly as it sounds) is which or rather who are those buyers who can decide the price of a share?

Say, I am a buyer and I want to buy 100 shares of TCS. I don't think I have an option to my share-broker and tell that them I will buy 100 shares of TCS if they can get me the shares for Rs.xxxx per share now. Or do I have that option?

Did you mean to say if I am buying a certain amount of shares or a certain percentage of the total shares I get to bargain? Or is the stockbroker who will do it on behalf of me if I'll ask my broker to get me that number/percentage of shares?

[rahulk2510]

Originally Posted by DudeWithaFiat

This is invariably the answer I get on googling, but my question (as silly as it sounds) is which or rather who are those buyers who can decide the price of a share?

Say, I am a buyer and I want to buy 100 shares of TCS. I don't think I have an option to my share-broker and tell that them I will buy 100 shares of TCS if they can get me the shares for Rs.xxxx per share now. Or do I have that option?

Did you mean to say if I am buying a certain amount of shares or a certain percentage of the total shares I get to bargain? Or is the stockbroker who will do it on behalf of me if I'll ask my broker to get me that number/percentage of shares?

To put it in very simple terms, a price is decided once there is a trade between a buyer and a seller. You can put any price you like in the trading terminal but that price is irrelevant unless there is a seller wanting to sell at that price. Once there is a match in the two, there is a trade and that's the price of the stock.

[alpha1]

Originally Posted by DudeWithaFiat

In the above case, the carrots' price kept changing based on the demand and supply for the carrot (just like the price of a share) . But here, we have a farmer and a buyer who decides the price of a kg of carrot. The prices are decided by these two individuals (or the companies those individuals represent). Likewise, when there is a huge rise in the demand for a particular stock, assuming that prices shoot up, who decides the new 'increased' price of that particular stock? The company whose stock it is? Some 'authorized' staff at the stock exchange?

Not really.
The price is not decided by only two individuals.
In your example, you are assuming that there is only one supplier of carrots.
Similarly you are assuming that there is only one buyer of carrots.

In real life there are multiple number of sellers and multiple number of buyers. All sellers wish to sell at maximum price. All buyers wish to buy at lowest price. All sellers wish to sell more at higher prices, and less at lower prices. All buyers wish to buy more at lower prices, and less at higher prices.

In your farmer example, the farmer is selling carrots at Rs 10 not because he wishes to, but because all the sellers around him are either selling at the same rate, or higher. He knows that he cannot sell for Rs 11, unless there is something really special about his carrots.

Similarly, the buyer has lots of options around, and he is not going to pay anything over what is already existing in the market.

Tomorrow, because of increase in population, or suddenly popularity of carrots (say something like: beta carotene or Vitamin A), or general rise in income, or as you said, calamity that caused less production - there will be a shortage.

In this shortage, Farmer A may wish to raise the price to Rs 18, but no one will buy from him, unless ALL farmers raise the price. Since there is a shortage of carrots, AND each and every buyer also wishes to buy it, an auction process takes place. Something quite similar to what happens in movies, but very subtle and usually non vocal without all show and fanfare. This causes a general rise in price. Till it reaches an equilibrium (because of rise in price, buyers wish to consume less).

If there is a surplus of carrots, or perhaps general decrease in incomes, or suddenly public is not interested in buying much (say carrots carry carrot flu virus). The sellers will want to dispose of the stock. So in order to make it lucrative to the buyer they lower the prices. Something similar to reverse auction. This happens till it reaches equilibrium (because of decrease in price, sellers wish to sell less).

Now the actual mechanism of auction or reverse auction in the mandi may be initiated by either side's quotation and may happen via negotiation. BUT the point is that it is entire market driven. It is never one to one person driven.

The exact same thing happens in stock market.
We have buy and sell orders lined up at various prices and quantities from seller's side as well as buyer's side. Check this out: http://www.nse-india.com/live_market...ag=0&itpFlag=0
And check out the table in the middle which says: ORDER BOOK
The role of the stock market exchange is to match the orders and close the deals. That is all.
It never decides at what price the deal must be closed.

Originally Posted by DudeWithaFiat

Say, I am a buyer and I want to buy 100 shares of TCS. I don't think I have an option to my share-broker and tell that them I will buy 100 shares of TCS if they can get me the shares for Rs.xxxx per share now. Or do I have that option?

Of course you have the option!! That's what all the prices and quantities are in the ORDER BOOK example given above!
There are people who wish to buy, and there are people who wish to sell.
The orders that you see on that page are for real made by real people.

[DudeWithaFiat]

Originally Posted by rahulk2510

You can put any price you like in the trading terminal but that price is irrelevant unless there is a seller wanting to sell at that price. Once there is a match in the two, there is a trade and that's the price of the stock.

Originally Posted by alpha1

Now the actual mechanism of auction or reverse auction in the mandi may be initiated by either side's quotation and may happen via negotiation. BUT the point is that it is entire market driven. It is never one to one person driven.

The exact same thing happens in stock market.
We have buy and sell orders lined up at various prices and quantities from seller's side as well as buyer's side. Check this out: http://www.nse-india.com/live_market...ag=0&itpFlag=0
And check out the table in the middle which says: ORDER BOOK
The role of the stock market exchange is to match the orders and close the deals. That is all.
It never decides at what price the deal must be closed.


Of course you have the option!! That's what all the prices and quantities are in the ORDER BOOK example given above!
There are people who wish to buy, and there are people who wish to sell.
The orders that you see on that page are for real made by real people.

I think I am getting it now. How I buy/sell now is to call up my broker and ask them buy/sell so and so shares for me after I look at their current price at various portals. So if I actively use the trading terminal, I can put a price of my own and buy it if a seller is available? Or I can tell my broker to buy the share of XXX company if someone is selling it for Rs.xx/- ? That way I am, as a buyer, taking part in pricing the share? Is my understanding correct?

[alpha1]

Originally Posted by DudeWithaFiat

1. How I buy/sell now is to call up my broker and ask them buy/sell so and so shares for me after I look at their current price at various portals.
2. So if I actively use the trading terminal, I can put a price of my own and buy it if a seller is available?
3. Or I can tell my broker to buy the share of XXX company if someone is selling it for Rs.xx/- ?
4. That way I am, as a buyer, taking part in pricing the share? Is my understanding correct?

1. Yes you can call your broker for such specific instructions.
2. Yes, if you open a trading account, you can do the same on your own at terminal.
3. Yes - these are known as limit orders.
4. Because you have only expressed an intent to buy or sell X qty @ Y price, it is not necessary that you may find a corresponding complimentary order (you sell, someone else buy or vice-versa).

Some else may be willing to buy at higher price than you (or sell at lower price than you). In such cases your order will not get executed ever.

Just now, I bought 100 CAIRN @ 190.50 for long-term.

[nowwhat?]

I am just wondering what the gurus and ordinary denizens here think about the outlook of India and its impact on the stock markets.

Right now, the stock market seems to have lost steam. Earnings season is upon us and the markets look mostly disappointed.

Personally I expect the markets to move sideways until after the monsoon and then perhaps move up, but I can't see any fireworks in FY15-16. Results wise, I only see major growth from FY16-17 on.

Overall I believe in the India story, but I think the structural reforms needed to spur growth will take time. Land Acquisition and GST may get passed in the monsoon session, but implementation especially for GST will be in FY16-17. The current RBI Governor whose term ends in September 2016 is not a believer of supply side economics and even a 1% drop until then seems generous.

Thoughts?

[Mr. Nobody]

anyone knows to to transfer shares from one account to another ? i have a demat account with hdfc thats linked to my hdfc savings. i have shares of a few companies that i'd like to transfer to a kotak securities account that i will get in my new company with my salary account. how is it done ?

[drk_411]

Originally Posted by Mr. Nobody

anyone knows to to transfer shares from one account to another ? i have a demat account with hdfc thats linked to my hdfc savings. i have shares of a few companies that i'd like to transfer to a kotak securities account that i will get in my new company with my salary account. how is it done ?

You must have been given a transfer booklet when you opened the a/c with hdfc. Otherwise you can request them now and then fill up a leaflet from that booklet and give it to them to get the transfer done. There are charges for the transfer, but not much.

[faustus77]

Originally Posted by Mr. Nobody

anyone knows to to transfer shares from one account to another ? i have a demat account with hdfc thats linked to my hdfc savings. i have shares of a few companies that i'd like to transfer to a kotak securities account that i will get in my new company with my salary account. how is it done ?

Hi.
If the transferee name/names are one and the same you will not have to pay the transfer charges. At least this was the directive by SEBI until a few years ago.
Pl recheck with HDFC and then fill in the transfer slip. Saves you some money
Regards

[binand]

Originally Posted by DudeWithaFiat

In the above case, the carrots' price kept changing based on the demand and supply for the carrot (just like the price of a share) . But here, we have a farmer and a buyer who decides the price of a kg of carrot.

The thing is, your hypothetical farmer determines the price of ONLY his carrot stock (not for everyone's) and has to be prepared to have unsold inventory if the price he decides is not acceptable to the market. Suppose carrots are selling elsewhere in the market at Rs. 10 a kg and your farmer decides to sell at Rs. 15 a kg, and if the supply of carrot in the market less your farmer's is sufficient to meet demand, he will not find a buyer. Similarly, if your hypothetical buyer comes in and offers Rs. 18 a kg, then the farmers whose input costs made it impractical for them to sell at prices less than Rs. 15 (maybe they have more mouths to feed; maybe they are coming from a lot further that their transportation expenses are higher; maybe their farms are difficult to cultivate requiring more labourers) will return to the market increasing supply. Then your hypothetical buyer will find that he has sufficient supply to buy at Rs. 15 a kg that offering Rs. 18 now sounds idiotic to him. Maybe if he continues to offer Rs. 18 a kg many farmers who had started cultivating cabbages might return to carrot farming seeing the higher returns.

You basically miss a bunch of assumptions about free market price determination - that of efficient market hypothesis, that of infinite buyers and sellers, that the price thus determined is an equilibrium price and not the instantaneous price etc.

Originally Posted by DudeWithaFiat

Likewise, when there is a huge rise in the demand for a particular stock, assuming that prices shoot up, who decides the new 'increased' price of that particular stock? The company whose stock it is? Some 'authorized' staff at the stock exchange?

Stock prices are determined by the buyers and sellers. Exchange staff do not participate in that process. The only exception is when the stock sale is happening in the primary channel, in which case an army of merchant bankers and other MBA-types get to fix the price (and if that price is ridiculously high, we get "failed IPOs").

Originally Posted by DudeWithaFiat

Say, I am a buyer and I want to buy 100 shares of TCS. I don't think I have an option to my share-broker and tell that them I will buy 100 shares of TCS if they can get me the shares for Rs.xxxx per share now. Or do I have that option?

Yes, you have. Suppose a share is trading at Rs. 500 a share. You definitely can tell your broker that you need 100 shares of this company and you are willing to spend Rs. 510 to get them (you probably think the company is going to do very well in the future). Similarly another investor somewhere else in the country might take a bearish view on this company and tell his broker that maybe the stock has peaked, please sell my holding at Rs. 510 a share if you can get it. Both the brokers place these "bid" and "ask" on the exchange's trading platform; and the underlying software finds a price and quantity match and performs the trade for you (and once this happens, the ticker updates the price of this stock to Rs. 510). Even moving the shares from the seller's demat account to your's is handled by software nowadays.

[drk_411]

Originally Posted by faustus77

Hi.
If the transferee name/names are one and the same you will not have to pay the transfer charges. At least this was the directive by SEBI until a few years ago.
Pl recheck with HDFC and then fill in the transfer slip. Saves you some money
Regards

Just called my broker and double checked with him.

There are two procedures to transfer shares from one DP a/c to another.

1. You fill in the transfer slip. You are charged Rs 10 per scrip irrespective of the quantity of the scrip. For example if you transfer 10 shares of Reliance or 10000, you would have to pay only 10 rupees. Over and above this there is service tax which is 14% on the amount you pay for scrip ie if you transfer 10 shares of Reliance you would have to pay Rs. 10 as scrip charge and 14% of Rs. 10 ie Rs. 1.4. So the total would be Rs. 11.4.

If you transfer 10 different scrips then the charge would be Rs 100 + Rs. 14 ie Rs. 114.

2. There is another method, and that is if you close one DP a/c and open another, then you have to fill a/c closure and transfer form. This form is also available with your broker. In this case there are no charges whatsoever and you are allowed to transfer your holding lock,stock and barrel free of any charge.

So please check with your broker before you proceed.

[Mr. Nobody]

Originally Posted by drk_411

Just called my broker and double checked with him.

There are two procedures to transfer shares from one DP a/c to another.

1. You fill in the transfer slip. You are charged Rs 10 per scrip irrespective of the quantity of the scrip. For example if you transfer 10 shares of Reliance or 10000, you would have to pay only 10 rupees. Over and above this there is service tax which is 14% on the amount you pay for scrip ie if you transfer 10 shares of Reliance you would have to pay Rs. 10 as scrip charge and 14% of Rs. 10 ie Rs. 1.4. So the total would be Rs. 11.4.

If you transfer 10 different scrips then the charge would be Rs 100 + Rs. 14 ie Rs. 114.

2. There is another method, and that is if you close one DP a/c and open another, then you have to fill a/c closure and transfer form. This form is also available with your broker. In this case there are no charges whatsoever and you are allowed to transfer your holding lock,stock and barrel free of any charge.

So please check with your broker before you proceed.

thanks for the information , i trade with a HDFC securities account. Will do it soon.

[sudev]

Any suggestions for parking funds for one year. Objective is full safety at best return. Have made down payment to builder and have to pay 80% in a year on possession. Bank FD is the option I was perusing. But bank desk suggested debt funds.

Any suggestion on debt funds?

So while thinking I wanted to explore other possibilities. So guru's what are your suggestions?

[GrammarNazi]

At age 20, when I was being mentored by the Chairman of Bangalore branch of ICAI, he showed me his DEMAT account statement & explained how the share market almost worked by unfounded speculations by mostly uninformed & misinformed individuals, including many 'Reputed' asset management companies.

The only shares (~100 - 400 shares each of 22-24 companies ) he had were the ones he'd bought back in the 90's as a student just to learn how different public companies reported their accounts.

Rgds,

P.S. : Be careful even when you directly invest in companies. Don't let someone play with your money, atleast when the risk of losing it all could hold little to almost NO consequences for them.