Online trading is on a bull run. The process of trading shares on the net is a rage in India with both retail and day traders buying and selling stocks through websites such as Sharekhan, Icicidirect, Kotak Securities and India Bulls. More and more people in India, especially young ones, are turning towards stocks for investment. But statistics says that out of its massive population, only less than 10% is involved in any kind of investment. The capital market investment population in India is less than 20 million.
There are several reasons for the rise of online trading. High speed execution, greater flexibility and control are the main advantages of online share trading. The brokerage charges are less in online trading compared to offline trading. That the customers can place orders even after trading hours is another advantage. Real time tracking of stock prices is also possible in online share trading.
However, this kind of trading does not act like a boon for those investors who are not familiar with terminologies like computer, internet, etc. Moreover, factors like high brokerage charges and unfavorable internet connectivity act as detrimental factors for online stock trading in India.
In-spite of the boom, online trading is small in India. Approximately 10% of the National Stock Exchange (NSE) traded volumes are online as compared to 2% in 2002. Further, the industry estimates that only 2% of the Bombay Stock Exchange (BSE) volumes are traded online. In comparison, 55% of the Korean stock market is online and 10% of the Japanese stock market is online.