Indian Stock Market Trading Overview

Stock Exchange

Stocks (Shares, equity) are traded in stock exchange. India has two big stock exchanges (Bombay Stock Exchange - BSE and National Stock Exchange - NSE) and few small exchanges like Jaipur Stock Exchange etc. Click here to see the list of Stock Exchanges in India

Investor can trade stocks in any of the stock exchange in India.

Stock Broker

Investor requires a Stock Broker to buy and sell shares in stock exchanges (BSE, NSE etc.). Stock Broker are registered member of stock exchange.

Only stock brokers can directly buy and sell shares in Stock Market. An investor must contact a stock broker to trade stocks on behalf of him. Broker charge commissions (brokerages) for their service. Brokerage is usually a percent of total amount of trade and varies from broker to broker. In recent days the idea of flat fee share broker is picking up. In flat fee stock trading, a fixed amount is charged (i.e. Rs 20 per trade) irrespective to the size of the order.

Online Stock Trading

Traditionally stock trading is done through stock brokers, personally or through telephones. As number of people trading in stock market increase enormously in last few years, some issues like location constrains, busy phone lines, miss communication etc start growing in stock broker offices. Information technology (Stock Market Software) helps stock brokers in solving these problems with Online Stock Trading.

Online Stock Market Trading is an internet based stock trading facility. Investor can trade shares through a website without any manual intervention from Stock Broker.

In this case these Online Stock Trading companies are stock broker for the investor. They are registered with one or more Stock Exchanges. Mostly Online Trading Websites in India trades in BSE and NSE.

Brokers comparision:

Online Broker	Brokerage for Delivery	Brokerage for Intraday trading	MMC*
R K Global Shares & Securities brokerage charges	0.20% - 0.30%	0.02% - 0.03%	NIL
SBICAP Securities brokerage charges	0.50%	0.10%	NIL
Sharekhan brokerage charges	0.03% - 0.50%	0.03% - 0.10%	NIL
Motilal Oswal brokerage charges	0.30% - 0.50%	0.03% - 0.15%
5 paisa brokerage charges	0.25% - 0.85%	0.07%
Angel Broking brokerage charges	0.50%	0.02% - 0.03%
ICICI direct brokerage charges	0.75%	0.15%
Indiabulls brokerage charges	0.25% - 0.50%	0.05% - 0.10%
HDFC Securities brokerage charges	0.50%	0.15%
UTI Securities brokerage charges	0.80%	0.15%
Religare brokerage charges	0.20% - 0.30%	0.02% - 0.03%
Reliance Money brokerage charges	0.01%	0.01%	card system
Geogit brokerage charges	0.30%	0.03%
Indiainfoline brokerage charges	0.50%	0.10%	-
Compositedge brokerage charges	Rs 25 to 15 per order	Rs 25 to 15 per order	-

*MMC=Minimum monthly commitment.

Brokerage is usually negotiable: 

Several of you trying to choose an online broker and open an online trading account must have been frustrated trying to search for the exact brokerage charges charged by various online brokers. But the fact is the brokerage charged by the same broker varies and in several cases is negotiable. For example if you go and tell a brokerage house that you are going to deposit 2 lakh rupees and try to convince them you are going to trade heavily, they might consider reducing your brokerage. That is why in the above table you will find only a range for the brokerage charges in some cases. But that should be enough to get an idea.

Effective brokerage with taxes is more: 

In addition to the above brokerage charges you will have to pay STT (Securities Transaction Tax) at the rate or 0.02% of the total transaction amount. You will also be charged 12.5% Service Tax on the brokerage amount (and not on the transaction amount). For example, if your brokerage is 0.50% for delivery and you do a delivery transaction of Rs.100/- then the total brokerage you pay is 0.50 (brokerage) + 0.02 (stt) + 0.063 (service tax) = 0.58. Thus your effective brokerage (including all taxes) will be 0.58%. Similarly for brokerage on intraday transactions.