Different types of instruments and brokers

Stocks:

Stocks, also known as shares, represent ownership in a company. Companies issue shares to raise capital, and investors can buy these shares to become partial owners of the company. The value of a stock depends on the performance of the company and the demand for the stock in the market.

Examples: Infosys, Tata Motors, HDFC Bank.

Bonds:

Bonds are debt securities that represent a loan made by an investor to a company or government. The issuer of the bond promises to pay the investor a fixed interest rate and return the principal amount at the end of the bond’s term. Bonds are generally considered to be less risky than stocks.

Examples: Government of India bonds, HDFC Bank bonds, Reliance Industries bonds.

Mutual Funds:

A mutual fund is a type of investment vehicle that pools money from multiple investors to purchase a diversified portfolio of securities. The fund is managed by a professional fund manager, who invests the money in stocks, bonds, and other securities based on the fund’s investment objective.

Examples: HDFC Equity Fund, SBI Magnum Multi-Cap Fund, Aditya Birla Sun Life Frontline Equity Fund.

Exchange-Traded Funds (ETFs):

ETFs are similar to mutual funds in that they are a type of investment vehicle that pools money from multiple investors. However, unlike mutual funds, ETFs trade on an exchange like a stock. ETFs track a specific index, commodity, or basket of assets.

Examples: Nifty 50 ETF, Gold ETF, Bank Nifty ETF.

Options:

Options are derivative contracts that give the buyer the right, but not the obligation, to buy or sell an underlying asset at a specified price on or before a specified date. Options can be used to hedge against potential losses or to speculate on the future price movement of an asset.

Examples: Nifty 50 options, Bank Nifty options, Reliance Industries options.

Futures:

Futures are derivative contracts that require the buyer to purchase an underlying asset at a specified price on a specified date in the future. Futures can be used to hedge against potential losses or to speculate on the future price movement of an asset.

Examples: Nifty 50 futures, Bank Nifty futures, Crude Oil futures.

Types of Brokers in India:

Full-Service Brokers:

Full-service brokers offer a wide range of services, including investment advice, research reports, and portfolio management. They typically charge higher brokerage fees than discount brokers but provide more personalized services.

Examples: ICICI Direct, Kotak Securities, HDFC Securities.

Discount Brokers:

Discount brokers offer a no-frills trading platform and charge lower brokerage fees than full-service brokers. They typically do not provide investment advice or research reports.

Examples: Zerodha, Upstox, 5Paisa.

Online Brokers:

Online brokers offer a trading platform that allows investors to buy and sell securities online. They may be either full-service or discount brokers.

Examples: Angel Broking, Sharekhan, Edelweiss.

Traditional Brokers:

Traditional brokers are typically brick-and-mortar establishments that provide personalized services to investors. They may be either full-service or discount brokers.

Examples: Geojit Financial Services, Karvy Stock Broking, Motilal Oswal.

Direct Market Access (DMA) Brokers:

DMA brokers provide investors with direct access to the stock exchange, allowing them to place orders directly on the exchange without going through a broker. DMA brokers may be either full-service or discount brokers.

Examples: Interactive Brokers, Tradejini, Trade Smart Online.

Robo Advisors:

Robo advisors are automated investment platforms that use algorithms to create and manage a portfolio for investors. They typically charge lower fees than full-service brokers and provide investors with a low-cost way to invest in the stock market.

Examples: Groww, Kuvera, Scripbox.

Wealth Management Firms:

Wealth management firms offer personalized investment advice and portfolio management services to high-net-worth individuals. They typically charge higher fees than other types of brokers and require a minimum investment amount.

Examples: Citibank Wealth Management, Axis Bank Wealth Management, Deutsche Bank Wealth Management.

Portfolio Managers:

Portfolio managers manage investment portfolios on behalf of investors. They may be either individuals or companies and typically charge a percentage of the portfolio’s value as fees.

Examples: Aditya Birla Sun Life Portfolio Management Services, HDFC Portfolio Management Services, Motilal Oswal Portfolio Management Services.

Depository Participants:

Depository participants are authorized agents of the two depositories in India, National Securities Depository Limited (NSDL) and Central Depository Services Limited (CDSL). They provide services related to dematerialization of securities and settlement of trades in the stock market.

Examples: HDFC Bank Depository Services, ICICI Bank Depository Services, Kotak Mahindra Bank Depository Services.

Sub-Brokers:

Sub-brokers are agents of brokers who act as intermediaries between the broker and the investor. They help investors with account opening, placing orders, and other administrative tasks.

Examples: Karvy Stock Broking Sub-Brokers, Geojit Financial Services Sub-Brokers, Motilal Oswal Sub-Brokers.