The Hindu Business Line : Tech Tools

Exchange Traded Funds are index funds whose units traded on the stock exchanges. These ETFs passively track specific indices, which could be broad market indices like Sensex or Nifty or sector indices like the Bankex.

The investment objective of these ETFs is to generate the same returns as the underlying index. The net asset value (NAV) of one unit of the ETF is a proportion of the underlying index — one tenth, one hundredth etc.

Typically, close-ended mutual funds that are listed on the exchange trade at a premium or a discount to the NAV. However, as ETFs have a pre-defined portfolio composition, they tend to trade at prices closer to their NAV. Essentially, every time an ETF falls below the underlying index, there is an arbitrage mechanism that ensures that the gap is filled.

ETFs are convenient vehicles for investors to trade, to invest or to arbitrage. Investors who want to take a call on the market and thus invest in Nifty basket can instead buy in to Nifty BeEs. They can do this intra-day, instead of buying into index funds at the closing NAV.

Sector positions can also be taken. Those who like the banking sector can buy the Bank BeEs. ETFs do not come with the carrying cost that is associated with Nifty future or Bank Nifty. The volatility associated with futures is also absent in the ETFs. So, they would be safer for retail investors, if they do not mind the lack of liquidity in these instruments.

The ETFs on NSE are S&P CNX UTI Notional Depository Receipts Scheme (SUNDER), Liquid Benchmark Exchange Traded Scheme (Liquid BeES), Junior Nifty BeES, Nifty BeES and Bank BeES. The ETF on BSE is SPIcE. A complete discussion on ETFs is available on the NSE website or on www.benchmarkfunds.com

The price movement and other performance of any scrip could be searched from various sites and a record thereof can be kept in your dairy for future reference/watch. Is there any such software available in the market, which can keep the desired record like that in one's dairy and can be consulted as and when needed? G.S. Sachdeva

Most of the software that are used for technical analysis have provisions for storing your favourite settings, which can be opened every time you access a stock. They also provide the facility for storing any markings, notes etc. that are made on a particular chart. Every time the chart is opened, it is possible to see what your impression was when you reviewed it the previous time.Most end of the day software also have the provision for running queries. For example, you can run a query on the BSE Midcap stocks to identify all the stocks that are trading above their 50 and 200 day moving averages or another query that filters all the stocks that have moved below their 200 day moving average.

Such queries can also be saved on the computer to re-run after a few days to generate a fresh set of stocks that fulfil the requisite criteria.

I trade in Nifty options and stock options. Please tell me the names of the books on options available in the local bookstores. Murugesan, Shahul

Few books by Indian authors that you can buy from your local bookstore on option strategies are, Futures and options: Introduction to Equity Derivatives by Mahajan,

Futures Markets Made Easy with 250 Questions and Answers by Sunil K. Parameswaran,

Trading futures and options with technical analysis by Mayur Shah and

How to make money trading derivatives by Ashwani Gujral.

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