Many of us invest in stock markets to gain better returns on their investments. Of course, there are several risks involved in equity market, but when you invest smart you will surely be the winner. Here I shall discuss the Dos and Don'ts in a Secondary Market.
Secondary Market
Secondary Market transactions are the transactions where an existing investor buys stocks from other at an existing market value or a price according to their agreement. These Markets or the Stock Exchanges are regulated by the regulatory authority. In India, our Secondary and Primary Markets are controlled by the Security and Exchange Board of India (SEBI).
Dos in Secondary Market
Before investing in stocks an investor should check the company's credentials, management, fundamentals and recent public announcements by them. Websites of the stock exchanges and companies, business newspapers and magazines will be the main sources of information.
You should transact only through the SEBI-recognized stock exchanges and deals should be made only through registered brokers or sub-brokers.
Make a contract note for each and every transaction and verify details in the contract note, immediately on receipt. If you have any objections, you should crosscheck the details of your trade with the details available on the website of exchanges.
Make sure that the broker's name, trade time, number, transaction price and brokerage are shown distinctly on the contract note made by you.
You should scrutinize both the transactions and the holding statements that you receive from your DP regularly.
You must handle the Delivery Instruction Slips (DIS) Book issued by the depositary participant carefully. Insist that the DIS numbers are pre-printed and your Client ID is pre-stamped on it.
You should immediately deliver the shares, depository slips in case of sale and should pay the amount in case of purchase within the prescribed time.
In case of disputes with your sub-broker on any issue, immediately report to main broker without delay.
Don'ts in Secondary Market
One should not involve or undertake off-market transactions and shouldn't deal with unregistered intermediaries.
Don't be a prey to any promises of unrealistic returns or guaranteed returns by any company.
Don't be influenced by others to buy fundamentally unpopular companies based on sudden spurts in trading volumes or low prices or favorable news in media.
Don't invest according to investment advice given on TV channels and websites. Also don't believe in rumours.
Don't get misled by companies that show false approvals from Government agencies.
Don't get carried away with advertisements about the financial performance of different companies.
In one word, invest according to your wish. Don't believe every fake news of any company, because their intention is to attract more number of investors(like Satyam Computers). Have a detailed idea and analysis on the market movements if you are involved in daily trading. Hope these instructions helped you.
