Book value per equity and book value per share; its importance

 In accountancy 'book value' is the value of an asset as per balance sheet. It is also called carrying value or net asset value, which is equal to the original cost of the asset less any accumulated depreciation, amortization or impairment costs made against the asset.
 In share market traders use book value to determine the safety level of shares after the payment of all debts.
 Total Book value of an equity is the value that the equity worth after the repayment of all debts and liquidation of all assets.
 Total Book value of equity is calculated by the following formula,
 Total Book value of an equity= Book value of assets- Book value of liabilities

 Book value of all Common shares is calculated as
 Book Value of Equity- Book Value of Preferred Stocks

Book value per share is defined as the value, that share worth after repaying all debts and liquidating all its assets.
  Book value per Common share is calculated by using the following formula
 Book Value per Common Share = (Total stock holder's equity- Preferred Equity)/(Total Number of outstanding Shares)

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PAN Card; its importance and how to get a PAN card

Permanent Account Number (PAN) is an unique alphanumeric combination consists of ten characters (6 letters and four numbers) issued to all juristic entities identifiable under the Indian Income Tax Act 1961.It is almost equivalent to a national identification number. One can not open demat account with out PAN card.So it is necessary for trading in Stock Market.
 PAN is issued in the form of a laminated card, by the Income-tax department under the auspices of the Central Board for Direct Taxes (CBDT). One person can apply and obtain only for one PAN. Obtaining or possessing more than one Permanent Account Number is against the law.

 How to get a PAN card?
  You can get PAN card by applying at UTI website or NSDL website.
In order to apply for a PAN one must fill in one of the following forms.
If you are an Indian citizen, you have to submit your ‘Application for allotment of new PAN’ in Form 49A and if you are a foreign citizen you will have to submit your ‘Application for allotment of new PAN’ in Form 49AA.

Uses of PAN
It is used as an important Identity proof.PAN is Mandatory for financial transactions such as opening bank account, to file income tax returns and to purchase assets above specified limits.The primary aim of PAN is to bring a universal identification key factor for all financial transactions.It indirectly prevent tax evasion by keeping a track of monetary transactions of high net worth individuals.

Features
PAN is unique and permanent.Address change inside the country will not affect PAN.

The other areas where PANCARD is useful
 Earlier I have mentioned in this post PANCARD is must for trading in Stock markets.There are many other areas where Pan Card is mandatory or useful.
1. Pan card is necessary for filing Income tax return online (E-Filing).
2.Pan Card is useful for bank transactions.If you have a fixed deposit on a Bank that exceeds RS 50,000, a copy of PAN card needs to be given. If you are not submitting a copy of PAN card, the bank will deduct TDS of 20% or at the prevailing rate (whichever is higher).
3. It is useful in the purchase of real estate and vehicles.
4. In hotels, restaurants and travel agencies if your bill exceeds RS 25,000 you may have to produce a copy of PAN Card.
5. Jewellery Purchase- For Higher value jewellery purchasing Pan Card is essential.
For tele phone installation, Visa and other credit cards, and in some purchasing Pan card is necessary.
 To invest and file tax returns in India NRI's also need PAN Cards.

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Demat account, its importance and how to open

 Demat is the short form of dematerialization.It is defined as the movement from the use of physical certificate into an electronic form.In demat the securities are held electronically instead of physical possession of certificates.
 If you want to save money on a bank a savings account is must.You need to open a demat account to buy or sell stocks.Unlike savings account no minimum shares are required to maintain a DP account.But there is an annual account maintenance fee, which may vary on different DP's.
 Demat account is used to keep all kind of financial assets and instruments like stocks, debentures, bonds, debt and NSC in a dematerialized form.The demat number is quoted When a trade or transaction take place in electronic mode.
 If you have 1000 shares of JP Associates, 100 shares of Reliance Industries and 10 shares of MRF, all your shares are listed on your demat account.If you buy or sell shares they will be adjusted in your account.
The features of Demat system
 Demat system was started in India on 1996 with the introduction of Depository Act.After that the purchasing and transfer of shares become easier because electronic sharing eliminates problems like signature mismatch, postal delays, risk of forgery and certificate damage.
Benefits of demat account
1. It is the easiest way to hold securities
2.One can immediately transfer securities using demat account (Fast)
3.Unlike Physical format it does not require stamp duty for transactions
4.No need to keep papers shares.So it is safe.
5.Paper works are very rare.
6.Transaction cost is very low compared to physical shares.
7.One can sell even if he has only one share.
8.Address change is very easy.Needed only once for all shares in case of change in residence.
9.No need to report the transaction to company.It is done by DP.
10.Only a single demat account is needed to hold all investments.
11.Account holder can do transactions from anywhere.
The difference between the broker and DP
A broker is a member of Stock exchange. They can buy or sell shares either on their own behalf or on behalf of their clients.
DP just provides a safe place to hold the shares bought by the clients.
How to open a demat account-
You have to approach a DP (Depository Participant) to open demat account.Most banks, brokers and other financial institutions are depository participants.You can choose the DP you like.
Complete list of depository participants are available on NSDL and CDSL Websites.

Essential documents required to open a demat account

Identity proof 
PAN CARD
Voters ID Card
Passport
Driver's license
ID card with photo of the applicant, issued by Central or State government and departments, statutory or regulatory authorities, public sector undertakings scheduled commercial banks, public financial institutions
Photo ID card issued by colleges affiliated to universities to their students, professional bodies such as ICAI, ICWAI, ICSI or Bar council to their members
Credit card or Debit cards
IT Returns/Electricity Bill/Land Phone Bill
Bank Pass Book

Address Proof
Ration Card
Passport
Voter ID Card
Driving licence
Bank Passbook
Electricity Bills (Verified copy only; not more than two months old)
Telephone Bills (Verified copy only; not more than two months old)
Verified copy of leave and license agreement
Verified copy of agreement for sale.
Identity card/ document with address (Issued by Central or State government, statutory or  regulatory bodies, public sector undertakings or scheduled banks
Identity card issued by public financial institutions or professional bodies like ICAI, ICWAI, Bar council etc to their members
Identity card issued by Colleges (affiliated to Universities) to students (Valid till the period of study)

Passport size photograph
Copy of PAN Card
You must have to produce original documents for verification at DP.

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Share trader, share trading and important types of stock trading

 The individuals or corporations who are engaging in the trading of securities is called 'stock trader' (share trader).The stock traders are mainly stock speculators.It is very acceptable to public, because the capital needed for stock trading is very less compared to stock market investing.They usually try to get profit from short-term price volatility.It is very risky as the market direction is unpredictable. On the other hand stock investors put money to buy securities which offer returns (such as interests, income or capital gains) for an extended period of time .It may be several months or years.The fundemendals of the stock is very important in investing.
 Buying or selling of shares in stock market (share market) is known as share trading (stock trading).
 There are two important types of share trading.Day trading and Delivery trading.

Day trading
Purchase and sale of the same scrip/indice on the same trading day is called day trading.It is also called as 'intra-day trading' and 'daylight trading'. All positions usually closed before the market close.That is One must sell stocks before 3.30,that he bought on the day and buy scrips that he sold on the day.Selling before buying is possible on delivery trading.But you must buy the scrip before market close.It depends on speculations.It is safe compared to short term trading, because there is no over night risk.Holding stocks which bought on intraday basis is some times risky.
 With the advantage of electronic trading and margin trading, day trading has become very popular among home traders.Stocks, Stock options, commodity futures, currencies, future contracts, equity index futures, and interest rate futures are some financial instruments available for intraday trading.
 The main risk factor of intraday trading is it can be either extremely profitable or extremely unprofitable.So it is important to keep stop loss on intraday trading.It is possible to make heavy profits on the day in day trading.So intraday traders are sometimes portrayed as 'gamblers' by investors.

Delivery trading
According to some analysts and traders, delivery trading is secure compared to day trading.Delivery means the legal transfer and receipt of ownership rights.You have to take the delivery of shares.There is a one plus two settlement (One trading day and two other days) for delivery trading.After getting scrips into your demat account you can sell them at any time.Normally it will take up to three days.You should have sufficient money to buy shares on delivery basis.Selling before buying is not possible on delivery trading.
 There are some advantages and disadvantages of Delivery Trading.The main advantage is that, the Loss of Fear of Money is very less compared to Intraday Trading. Even if the market price of your stock reduces, you can still wait for more days to get your expected price.Another advantage is that you can get dividend from your investments.The split of shares, amalgamations and bonus issues may also profitable to you.The disadvantage of Delivery Trading is the brokerage charges for Delivery Trading is high compared to day trading.Another disadvantage is that market crashes and some other factors may affect delivery trading.

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What does 'Share' and 'Share holder' mean in Stock market

What is share?
 For raising capital the companies divide its ownership into small parts and issuing to individuals or organizations.Each part is called a share.Shares of Corporations, mutual funds and Organizations are available.
 In financial markets, such as stock markets and commodities markets share is considered as an unit of account.The share holders of the company will get income from shares, which is known as 'dividend'.

Share Holder
 A share holder is a person or an institution who carries share in a company.Thus he is the owner of a part of that company.A person holding maximum shares in a company has maximum ownership.They will be the directors or Chairman in the company.
 A share holder is also known as 'stock holder' or a 'stake holder'. He can purchase the shares of public or private corporations.He has the right to sell his share any time.He is also eligible to nominate directors or vote for the directors nominated by the board.He will get all dividends declared by the company and also he can purchase new shares issued by the company at any time.
 A share holder purchases shares from an institution called Stock or commodity or currency market.The purchase process is going through a broker.
 One can buy shares from Primary market through initial public offerings (ipo) or bonds.They provides capital directly to the company.How ever the majority of share holders purchase shares from secondary market, in this case the share holder not directly providing capital to the company.

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