Holding cop and trading in stock market

This query is : Resolved

GAURAV JAIN (Querist)
Follow

03 February 2013 Hello,
i am a practising chartered accountant and
i want to trade in securities and mcx.
I want to know whether it is generally permitted or specific permission is required ? Whether i can do attest function or not?

CA. Brijesh Baranwal

CA. Brijesh Baranwal (Expert)
Follow

05 February 2013 In the above case, specific permission is required. Also, you can not do attest function in such case.

Message likes : 1 times

GAURAV JAIN

GAURAV JAIN (Querist)
Follow

21 May 2013 Thanks for your reply sir,..
Whether it is possible to enter as an investor in cash market. and all transactions are delivery based . time may be vary from minimum 10 days to max.

Upgrade to CAclubindia Pro. Subscribe Now!

Asha Kanta Sharma

Asha Kanta Sharma

(Expert)
Follow

28 July 2024 Yes, it is possible to enter the cash market as an investor and engage in delivery-based transactions. Here’s a detailed look into how you can do this and the relevant considerations:

### **1. **Understanding Cash Market Investments**

The cash market, also known as the spot market, involves buying and selling securities for immediate delivery and settlement. In the cash market, you can invest in stocks, bonds, and other securities with the delivery of the securities happening within the standard settlement period, usually T+2 days (trade date plus two business days).

### **2. **Entering the Cash Market**

#### **A. **Account Setup:**
- **Demat Account:**
- You need to open a Demat account to hold your securities in an electronic format. This account is maintained with a Depository Participant (DP).

- **Trading Account:**
- You need a trading account with a brokerage firm or a stockbroker to place buy and sell orders.

#### **B. **Investing in the Cash Market:**
- **Placing Orders:**
- You can place orders for delivery-based transactions where you buy or sell shares and the transaction is settled by delivering the securities or cash on the settlement date.

- **Delivery-based Transactions:**
- For delivery-based transactions, you need to ensure that you have sufficient funds to purchase the securities or sufficient securities to sell. The settlement involves transferring the securities to or from your Demat account and the corresponding cash amount to or from your bank account.

### **3. **Transaction Timing**

#### **A. **Minimum and Maximum Holding Period:**
- **Minimum Holding Period:**
- You can hold your securities for any period as long as you adhere to regulatory requirements. There is no minimum holding period for delivery-based transactions in the cash market.

- **Maximum Holding Period:**
- You can hold your investments as long as you want. There are no restrictions on the maximum holding period. The sale or transfer of securities will be based on your investment strategy and market conditions.

### **4. **Key Considerations**

#### **A. **Regulatory Compliance:**
- **SEBI Guidelines:**
- Ensure that you are compliant with the regulations set by the Securities and Exchange Board of India (SEBI) and the respective stock exchanges.

#### **B. **Tax Implications:**
- **Capital Gains Tax:**
- Be aware of the tax implications of your transactions. Long-term capital gains (LTCG) and short-term capital gains (STCG) tax rates apply depending on the holding period of the securities.

#### **C. **Risk Management:**
- **Diversification:**
- Diversify your investments to manage risk effectively.

- **Research:**
- Conduct thorough research before investing to understand the risks and opportunities in the securities you are interested in.

### **5. **Steps to Start Investing**

1. **Open a Demat and Trading Account:**
- Choose a brokerage firm and complete the account opening process.

2. **Deposit Funds:**
- Transfer funds to your trading account to facilitate purchases.

3. **Research and Invest:**
- Research potential investments and place orders for delivery-based transactions.

4. **Monitor Investments:**
- Regularly review and manage your investments based on your financial goals and market conditions.

### **Conclusion**

Entering the cash market as an investor and engaging in delivery-based transactions is straightforward. You need to set up a Demat and trading account, comply with regulatory requirements, and manage your investments effectively. Ensure you are aware of the tax implications and risks associated with your investments.

For personalized advice and detailed guidance, consider consulting with a financial advisor or investment professional.