Play with State Bank of IndiaHi folks!
Here is an idea that focuses on State Bank of India only. Adopting this method you will trade only State Bank of India stock / futures / options.
Here is how it works:
Capital:
Whatever capital you wish to deploy, you will open a Fixed Deposit (FD) in State Bank of India. Presently on 1 (one) year deposit the interest rate is 6.75%. Immediately after opening the FD, you will also open an Overdraft (OD) Account on the FD. The interest rate on OD is 1% over the FD rate and the limit is capped at 90% of FD amount. You can complete both processes online. So, if you open a Rs.100000 FD then the OD account will be opened with Rs.90000. This is the amount you will have to trade in the market.
It is important to note that OD interest is applied only when you withdraw money from the OD account. Otherwise you are not charged anything.
So, when you are waiting for a trade opportunity, the money is parked in FD earning you higher rate of interest than a Savings account. And when the time comes to open a trade, you will withdraw the required money from OD account and transfer it to your broker and then take the trade.
After closing the trade (either in profit or loss) you will immediately transfer the money back from the broker to the OD account and pay whatever interest is accrued for that period. Effectively you will make the OD account balance Zero. Thereby the OD interest is applied only for the number of days wherein you used the amount. And once again the FD will start accruing interest.
Advantage:
This approach ensures that you receive higher interest rate on your capital and amount is not unnecessarily parked with the broker while you are waiting for a trade. You also don't have to maintain the capital in Savings Account. Even if you already have FDs, with this approach you don't have to break them to deploy capital in market.
Hope some of you find this idea useful.
