Emergence of Online Share Trading In India
The online share trading in India was first introduced by the NSE, since then the online share trading industry in the country has received a major boom in the year 2000 when a number of online trading companies banged into the market. But a majority of them failed primarily due to the lack of computer knowledge among common people and the market condition was made was due to the low rate of internet penetration. As a matter of fact online share trading companies can actually be classified in two different categories - non-banking trading companies and banking online trading companies. Presently online trading contributes are about 8% - 10% of the total market value but market experts consider it to have huge market potential and it is certainly growing at a pretty rapid rate. A recently undertaken study for determining the growth of the online share trading companies in India shows that, out of every 100 a staggering number of 77 investors now prefer to trade online. Times saving convenience, better protection against fraudulent and incompatible brokers is only two of the reasons that encourage investors to opt for online share trading in India. Though growing number of people now consider online trading as a secure platform for investment but there are still a few who feel it is not safe and also a bit complicated. With the growing number of people investing in shares and equities online a cut-throat competition has started among the online share trading companies in the country and many of them are now offering brokerage discounts along with zero balance accounts and lower margin money for encouraging more people to invest online. Rising education awareness, computer literacy and improved internet penetration holds huge potential for future growth of online share trading in India and the online trading companies are also coming up with attractive and innovative offers and packages with the aim of tapping the up market investors. As online share trading involves investment activity taking place over the internet and also doesn’t require any physical inclusion of a broker many investors finds it more comfortable deal with. In order to buy and sell shares online investors are only required registering with any online share trading portal of their choice and thus getting into an agreement with the firm. This will allow them to trade in various types of securities depending upon the specific terms and conditions of their agreement with the trading company. Another major advantage of online share trading with these companies is that their servers are always connected with the stock exchange and also designated banks all selling and purchasing processing is done in real time. Companies offering online share trading in India allow investors to link their bank accounts, Demat account and share brokerage account on a single interface. Since the introduction of online trading the offline model has certainly gone for a downfall and presently around 40% of NSE share trading is conducted online that is expected to go up to about 50% within the next 5 years or so.