:: SCORES ::

SEBI REDRESS COMPLAINTS SYSTEM

 

How to Approach SEBI with your Complaint 

(The market regulator has initiated a centralized online system for lodging and tracking complaints. Here's how to redress your grievances.)

1. File the Complaint

For registering a complaint, access http://scores.gov.in and click on the 'Complaint Registration' tab under 'Investor Corner'

2.  Enter your Details

(a) Enter your personal details and select a category among the following options

• Listed companies/registrar & travel agents
• Brokers/stock exchanges
• Depository participants/depository
• Mutual Funds
• Other entities
• Information to Sebi

(b) Enter specific details of the complaint in the specific category.

3. Supporting documents

Supporting documents up to 1 MB can be attached in the PDF format. In case the data to be loaded for each category is more than 1 MB, it can be sent by post to any of the Sebi offices.

4. Registration number

 

On filing the complaint, a unique registration number will be generated, which can be used for future correspondence. An e-mail acknowledging the complaint with the complaint registration number will also be sent to the e-mail ID entered in the complaint registration form.

Sending a reminder

If you want to send a reminder for the lodged complaint, click on 'Send Reminder' under 'Investor Corner' on the home page. Provide details like registration number, reminder details and the security code.

If you are not satisfied with the response

You can file a fresh complaint, send a mail to the officer entrusted with the complaint, take up the complaint with senior officers, or initiate legal proceedings against the entity.

Track your complaint

To check your complaint status, click on 'View Complaint Status' under 'Investor Corner' on the home page

• Provide the complaint registration number which was allotted at the time of registration
• Enter your password 
• In case of online complaints, your e-mail address is your password.
• In case of physical complaints, send to Sebi, enter the password send to you by Sebi in the acknowledgement letter.
• On verifying the correctness of registration number, password and security code, the current status of your complaint is displayed.

How complaint is processed?

The complaint is scrutinized by Sebi  to see if the subject falls under its purview. If it does, Sebi forwards it to the concerned entity with an advice to send a written reply to the investors and file an action-taken report within 30 days.

Your complaint may not be taken up if

• ...it is incomplete or not specific
• ...the allegation is not supported by documents
• ...you are simply offering suggestions or seeking guidance/explanation
• ...you want to seek explanation for non-trading or illiquidity of shares
• ...you are not satisfied with the trading price of shares
• ...it is about non-listing of shares of a private offer
• ...it concerns disputes arising from a private agreement with companies/intermediaries.

Points to Note

1. A complaint that has been taken up with the company concerned can be registered on SCORES if the investor is not satisfied with the response.
2. Unlisted companies and entities not registered with Sebi are not covered by SCORES.
3. An investor, who is not familiar with SCORES or has no access to the website, can lodge a complaint in the physical form by mail to any Sebi office. Such complaints are scanned and uploaded in SCORES for processing.
4. You can also call up Sebi's toll-free helpline service number for guidance

• 1800 266 7575   OR

• 1800 22 7575

          (The service is available in 14 languages)

Foreign Capital

In an attempt to increase overseas capital inflows and reduce the current account deficit due to higher imports, India has liberalised foreign investment in stock markets. Qualified foreign investors (QFIs) can now invest directly in Indian equities. Lets have an overview of such new feature introduction.

A QFI is an individual, an association or a group from a foreign country complaint with standards mandated by the Financial Action Task Force, an inter-government body that formulates policies to combat money laundering and terrorist financing. Foreign Institutional investors (FIIs) and foreign venture capital investments do not come under the QFI category.

An individual QFI can invest up to 5% of the paid-up capital of a listed company. Total investment by QFIs in a listed company cannot exceed 10% of its paid paid-up capital. Foreign investors will also be allowed to acquire equity shares by way of rights issue, bonus shares or equity shares on account of stock split, amalgamation, demerger or such corporate actions.

QFIs can invest only in listed Indian equities through depository participants (agents of depositories that provide accounts for holding securities in electronic format) registered with SEBI. Each investor will be allowed to open one trading account and one demat account with a depository participant but will not be allowed to open a dedicated bank account in India.

Depository participants will purchase equity at the instruction of QFIs within five working days. If a depository participant fails to execute the order within five working days, the funds would be repatriated back to the QFIs designated overseas bank. When QFIs sell their stock holding, the sale proceeds will also be repatriated to their designated banks within five working days. In addition, the depository participants wil ensure compliance with the "Know Your Customer" norms for QFIs. QFIs have already been allowed to invest in mutual funds.

The new scheme is expected to help increase the depth of the Indian market and in combating volatility beside increasing foreign inflows in the country.

Trading Terms

A growing number of small investors is buying and selling stocks online. However, before you attempt to do it yourself, here are a few terms you should familiarize yourself with.

A. DAY TRADING

These orders are used for buying and selling shares in the normal course of stock trading during the day.

A.1 DAY ORDER

This order is valid only for a day. If it is not executed by the end of the session, the order gets cancelled automatically.

Eg: Tata Steel is trading at 440/-. You place a day order for shares at 430/-. It will be executed only if the share price dips to 430/- during the day.

A.2 IMMEDIATE OR CANCEL

This is for buying or selling a share as soon as the order is placed. If there is no buyer or seller at the specified price, its gets cancelled. Sometimes IOC orders are executed partially.

Eg: An IOC order is placed for 100 shares of Reliance Industries at 12.05pm when the share price is 900/-. Only 25 shares are bought before the price rises to 905/-. The order for the balance 75 shares is cancelled.

A.3 MARKET ORDER

This order is executed immediately, irrespective of the share price. The buyer gets to know the price only after the order has been executed.

Eg: In the above example, if it was a market order for 100 shares of Reliance, the buyer would have got 25 shares at 900/- and the balance 75 at 905/-.

A.4 GOOD TILL CANCELLED

Unlike the day order, this remains valid for a specified number of days till it is cancelled by the trader. The validity period is specified by the exchanges.  GTC orders help investors buy at a specified price without having to monitor the share price closely.

B. STOP LOSS ORDERS

Stop Loss orders limit the loss of the investor by buying back or selling a share if the price moves contrary to expectations. He doesn't need to monitor the price.

 

B.1 MARKET PRICE PROTECTION

This limits the price as a percentage of the last traded price. It is useful while trading in volatile stocks

Eg: You place an order for shares at 100/-, but by the time it is received by the system, the price rises to 106/-. In a market order, you will get shares at 106/-, but if you opt for 2% MPP, the order will not be executed if the price rises above 102/-.

B.2 SL LIMIT ORDER (SELL)

The stop loss order can also be set if shares have been bought.

Eg: An investor buys 100 shares at 175/- and sets a stop loss at 173/- with a limit of 170/-. The shares will not be sold if the price falls below 170/-.

B.3 SL LIMIT ORDER (BUY)

A limit order specifies the price at which the shares are to be purchased (or sold) after the stop loss is triggered.

Eg: If the limit for Axis Bank was set at 1107/-, the order would be executed between 1105/- (the trigger price)  and 1107/- (the upper limit). If the price rises to 1110/-, the order will not be executed. Limit order gives the trader some control over the price, but the purpose is defeated if the price moves beyond the defined threshold.

B.4 STOP LOSS MARKET ORDER

The stop loss is activated when the share price reaches the trigger price and is executed at the prevailing market price. The investor has no control over the price at which the order is executed after it is triggered.

Eg: A trader short sells 100 shares of Axis Bank at 1100/- and sets the threshold price at 1105/-. When the price rises to 1105/-, the order is activated for immediate execution. However, if the price jumps to 1110 or more before it is executed, the order will be executed at 1110/-. Once the trigger is crossed, the trader has no control over the price.

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INDEX-BASED CIRCUITS

These are trading barriers set up by the exchanges to prevent excessive speculation and panic selling, the circuits are activated when the market moves by over 10% and trading halts across the equity and derivative markets throughout the country. The circuits are currently applicable to two benchmark indices -- BSE Sensex and S&P CNX Nifty.

10% rise or fall in benchmark index

Before 1 pm => Trading halts for one hour

After 1pm but before 2:30 pm => Trading halts for 30 mins.

After 2:30 pm => Trading doesn't halt

15% rise or fall in benchmark index

Before 1 pm => Trading halts for two hours

After 1pm but before 2:30 pm => Trading halts for one hour

After 2:30 pm => Trading halts for the day

20% rise or fall in benchmark index

Trading suspended for the rest of the day.

Market Correction

Investing in uncertain times

There is mayhem in the markets. Here's what small investors should do to cushion their portfolios against the downturn

There is no hard and fast definition of the term "Market Correction". A stock market correction is when the stock market declines 10% or less in a relatively short period of time. It's a natural part of the stock market cycle. Corrections are inevitable. When the stock market is going up, investors want to get in on the potential profits. This can lead to irrational exuberance. This can make stock prices go well above their underlying value.

A correction is different from a stock market crash, which is when stock prices plummet more than 10%, often in just one day. Unlike a correction, a stock market crash can cause a recession. How? Stocks are how corporations get cash to grow their businesses. If stock prices fall dramatically, corporations have less ability to grow. Businesses that don't grow will eventually lay off workers to stay solvent. As workers are laid off, they spend less. Lower demand means lower revenue. This means more layoffs. As the decline continues, the economy contracts and you have -- Voila! -- a recession.

If a correction is relatively benign, and a crash can cause a recession, how can you tell the difference? It's not easy. A correction can turn into a crash if the stock market declines more than 10%. Trying to decide if a correction is turning into a crash is known as timing the market. This is nearly impossible to do, since there are so many factors that can influence the direction the market goes in. However, the markets soon regain their confidence, reverse course and begin to head higher once again.
The worst thing to do right now is panic. Over-leveraged speculators and panic-stricken investors were the only ones who lost money in the 2008-09 crash. For the disciplined long term investor, the spectacular decline in the markets that saw the Sensex hitting a multi-year low was actually an opportunity. A bit of data crunching would reveal that there is virtually no risk if you invest in stocks for the very long term (5-7 years on an average).

Here are a few steps that can help cushion the impact of volatility and ensure that investors don't get carried away by the predictions of doomsayers.

Don't stop the SIPs
Don't even think about terminating your SIPs at this point. It's the worst thing you can do to your portfolio and would defeat the very purpose of the SIP. If you stop now, you are effectively turning down the chance to buy more at lower prices. It's a common mistake that can prevent your attempt at rupee-cost averaging. The impact cost of stopping a Ulip premium is higher than terminating an SIP, so many investors opt for the latter.  The investors should automate their investments so that there is no discretion in their reaction to the noise emanating from the stock market.

Stick to Blue Chips
It's now amply clear that the economy will take some time to regain momentum. Slower growth rates, high inflation and high interest rates are here to stay. When the economy was growing at 9%, the tide has lifted all boats and the mid-cap and small-cap companies flourished. Now, with economies projecting a GDP growth of 7-7.5%, only large companies will be able to clock good growth, while the mid-sized companies will barely manage to stay in the green. Smaller companies will have to struggle and could easily slip into losses in the situation worsens. It's the best to stick to large-cap stocks at this time instead of risky mid-caps and smalls-caps.

Diversify your bets
The infrastructure sector has been badly beaten down but analysts expect it to do well when the economy revives. It's a good time to start nibbling at some infrastructure stocks at these beaten down levels. Even so, don't put all your eggs in the infrastructure basket. Spread your bets and risks -  across a basket of Metals, IT, FMCG and Banking sectors stocks at such throw away prices..

Rupee-Cost Averaging
The markets are down to attractive levels but there is no knowing where the bottom is. It's best not to anchor yourself to an index -  say 4000 (Nifty) or 14000 (Sensex). To avoid buying high, don't invest lump-sum amounts, but do so in monthly installments. In this manner, you will be able to gain the advantage of the rupee-cost averaging that the SIPs offer.

Investor Type

Your investment style will not only determine how you behave during a market crisis, but also help you take the right decisions.

Uncertainty, which breeds fear of the unknown, hinders an investor's ability to make rational decisions. When the markets are buffeted by negative news from around the world and the general consensus is that the worst isn't over, investors become confused about the course of action they should take. The overload of information and analysis makes things tougher. Ultimately, how he behaves during a crisis will depend on the kind of investor he is. The investors who are financially weak may not be able to participate in every kind of market and should know when to keep out. So, risky markets are not for a person who is, say, rolling over his credit card dues, or is paying a large EMI for house that is yet to be delivered, or is worried about not earning or saving enough. The investors who have a limited corpus or significant liabilities, and senior citizens with a low risk appetite are better off not taking drastic measures in risky markets else they can loose much more than they can afford.

Strategic investors, on the other hand, focus on building long-term wealth. They are smug in the knowledge that 10 years on, the events that seem cataclysmic now will be pale into insignificance. They stick to an allocation pattern - say. 50% in equity, 30% in long-term debt, 10% in short-term debt, and 10% in gold -- and earn reasonable returns across market cycles. Sticking to one's allocation means continuing to invest in equity even as the market falls and keeping money aside in debt even if the equity market rises. A strategic investor does not care much for market cycles. Instead, he has faith in the power of  time to even out losses. For such an investor, panic-driven crashes in the market are opportunities to reduce the average cost and even out the expensive pricing of the preceding boom. The losses during the downside are taken in stride as an essential biter pill in order to be present in the market when it turns up. This breed does not use borrowed capital, and is not in a hurry.

Tactical investors are the ones who are tested the most during any uncertainty. This breed lies to predict how asset classes are likely to perform, and based on the macro picture that emerges, it tries to modify the portfolio to protect it from losses. For instance, a tactical investor would reduce his exposure to equity if he foresaw any risk to global flows. He would also increase the exposure to gold in an attempt to cash in on the clamour for a safe investment in turbulent times. In the face of an expected drop in a global demand, this group would reduce the exposure to commodities. or would avoid long-term debt if a jump in market and credit risk was on the cards. Obviously, not all calls can be accurate. Tactical investing needs expertise and skill in reading the market signals, as well as the ability to reallocate assets. The investors who see themselves falling short in either department should keep away.

Some investors enjoy event-based trading. Here, the temptation to buy an asset that is moving up is high. This group uses available information, even if it's partial, for a quick take on an event before making a move, hoping to make money from the resulting volatility. Such investors should focus on the capital in hand and be willing to book losses if their call goes wrong. The amount they allocate to an asset after reading the signs should not be too large a component of their wealth, as it can wipe them off. 

There are bound to be problems if the investor's behaviour in uncertain times does not match his type. So a strategic investors gives in to panic and quits the market in haste; an event-based trader stakes a large chunk of his portfolio in what everyone is chasing but fails to exit in time; a tactical investor assumes that all his calls will hit the bull's eye and borrows funds to add to a position he holds, making a risky bet riskier;  a financially weak investors hopes to make good an earlier loss but ends up repeating his mistakes.

Hence, it is crucial to identify the type of investor you are, to think through your action plan and focus on your wealth before you act on the market information.

Rules of Intra-Trading

Follow these basic tenets to avoid losing your shirt in this high-risk arena

 Invest what you can afford to lose

Intra-day trading carries more risk than investing in stocks. Invest only the amount that you can afford to lose. An unexpected movement can wipe out your entire investment in a few minutes. In January 2009, the Satyam Computer script fell more than 80% from Rs.188 to Rs.31 in one day. If it is a leveraged position, you could lose more than you invested

Choose highly liquid shares

Day traders must square their positions at the end of the trading session. This is easy if you are trading in large-cap, index-based stocks, which are very liquid and get traded in large volumes every day. Don't dabble in mid-cap and small-cap shares, where the traded volumes are not very large. You could end up holding shares that have no buyers at the end of the day.

Trade only 2-3 scripts at a time

It's prudent to diversity your portfolio when you are investing in stocks, but when it comes to day trading, confine yourself to just 1-2 stocks. You can have up to 8-10 large-cap, index-based stocks on your watch list, but don't trade in more than 2-3 stocks at a time. Stock movements need to be tracked closely by the day trader and you won't be able to monitor more than 2-3 stocks at a time.

Research watch list thoroughly

Read up on the 8-10 stocks on your day trading watch list. You should know about all forthcoming corporate actions (stock splits, bonuses, dividends, result dates, mergers, etc) as well as technical levels of the stock. There are websites, such as http://www.khelostocks.com or http://www.pivotpointcalculator.com/ where you can feed in the price (high, low and closing) to know the resistance and support levels.

Fix entry price and target levels

Before you buy, fix your entry price and target level. The psychology of the buyer changes after he has bought a stock, which could interfere with his judgement and nudge him into selling too quickly even if the price moves up marginally. This might cost him the opportunity to fully gain from the upside. If you set yourself a price target and adhere to it, your psychological frame will not change.

Use stop losses to contain impact

A stop loss is a trigger for selling shares if the price moves beyond a specified limit. It helps the buyer limit his losses in case the share belies his expectations and moves down(or up). Suppose you buy 20 shares of Reliance at Rs.940 each and set a stop loss of Rs.920. If the share falls to Rs.920, your shares will be sold. In this manner, your losses will be curtailed even if the share drops to Rs.900. A stop loss takes the emotions out of the decision to sell.

Don't be an investor

Day trading and investing are like chalk and cheese. Both involve buying shares but factors considered are completely different. One takes into account technical data, while the other looks at its fundamentals. Don't try mixing the two. Often, if an intra-day bet goes wrong, the buyer does not book his loss, but takes delivery of the shares and then waits for the price to recover. This can be a costly mistake because the shares were bought with an ultra short-term horizon. They may not be worth investing in.

Book profits when targets are met

Greed and fear are the two biggest hurdles for the day trader. Just as he should not flinch from booking losses when the trade goes wrong, he should book his profits when the shares reach his target. If he feels that there is more upside to the stock, he should reset the stop loss. Suppose you invest at Rs.100 for a target of Rs.110 and set a stop loss of Rs.95. If the price goes up to Rs.110 but you are bullish, raise the stop loss to Rs.108. This will reserve some of the profit.

Don't fight with the market trend

Even the most sophisticated analysis cannot predict which way the market will move. All technical factors may be bullish but the market may decline. Technical factors only point to the likely movement of the market, they don't guarantee it. If the market movement is not as per your expectations, don't try and be a contrarian. You may end up losing more.

Small is beautiful

While stock investments can yield stupendous return, be content with small gains from intra-day trading. Day traders get a leverage of almost 3-4 times their investment, so even if your stocks go up by 3%, you would have earned 9-12% on your investment. In any case, it's rare for large-cap stocks to move by more that 5-6% in a day. Even if you get a return of 10-12% on your capital, it's not bad for a day's work.