Stock Market Basics
Detailed stock market guide for beginner investors
We all know that in the stock market language, having a share means you own the company. In such a situation, if a company has issued 100 shares and you have only one share, then it means that you have 1% stake in the company.
The big question is how to invest in shares and how to invest in the stock market? We also have to understand what the stock market is, how to invest in the stock market and how to buy shares in India. Let us take a look at the equity market and know how to buy shares in the Indian equity market.
What is stock market and is it different from stock market?
Share market is a common platform of buyers and sellers of shares. Before BOLT was introduced in 1995, people used to stand and transact in the trade ring.
Nowadays, all types of trades take place from a broker’s office or at computer terminals via the Internet. The stock market and the stock market are both names of the same platform.
Stock market basics
It is important to know what the stock market is and how it works before you start investing while doing the basics of the Indian stock market. It is a place where shares of various companies are traded.
There are two primary exchanges in India – National Stock Exchange (NSE) and Bombay Stock Exchange (BAC). Investment is the key to your safety and secure future.
However, it is not enough to invest in simple and old financial instruments to avoid the effects of inflation.
The stock market offers an attractive opportunity to buy and trade securities as a stock option to earn some additional income through your investments.
Broking companies gives every keen investor an opportunity to understand stock market fundamentals by providing information about the fundamentals of the stock market, how to trade, types of financial instruments and successful trading strategies.
Helps him to become a more sensible investor than a normal investor so that the investor gets better returns through investment.
What is the difference between primary markets and second markets?
When a company comes with an initial public offer (IPO), it is called the primary market. The general purpose of an IPO is to list stocks in the stock market.
Once the stock is listed then trading begins in the second market. Buying and selling shares is like buying and selling any other item.
How is the price of shares in the stock market decided and who determines them?
It is important for us to understand the basics of share trading that the market determines the price of shares. Generally, the value of the shares increases when the company is growing very fast or making very good profits or the company gets new orders.
As the demand for a share increases, more and more investors want to buy that share at higher prices. In this way the price of that share increases. Share prices are dependent on demand and supply.
What are stock indexes?
If you want to know the basics of the Indian stock market then it is important for you to know that companies list their shares on the Indian stock markets and some of these similar shares are grouped together to form an index.
Its classification can be based on company size, industry, market capitalization or other categories. The BSE Sensex consists of 30 stocks and the NSE consists of 50 stocks. Others include Banksex such as Sector Index, BSE Midcap or BSE Small Cap etc.
What is offline trading and what is online trading?
How to buy shares offline and online? Online trade means that shares can be bought or sold through the internet sitting comfortably in your office or in your home. Y
ou just need to log in to your trading account and you can buy and sell shares. To trade offline, you will have to go to the broker’s office or ask the broker to trade by telephone.
What is the role of a broker in the stock market?
A broker means that the broker helps you in the buying and selling of shares through trade. The broker usually helps buyers find sellers and sellers find buyers.
Most brokers recommend which stocks to buy, when to sell which stocks and how to invest initially in the stock market how to invest money.
They also help you to trade in the stock market. The broker is paid a fixed amount of brokerage for his services.
Can anyone buy and sell shares in the stock market?
Any person who agrees to obey all the conditions can buy and sell shares in the market. For this you need to open a trading account through a broker. Buying and selling of shares becomes possible after opening a trading account.
Is a trading account the same as a demat account?
There is a significant difference between the two. You buy and sell shares through a trading account. Shares are kept in demat account.
When you buy shares through your trading account, money is debited from your account and money gets deposited in your demat account. When you sell your shares, the opposite is true.
What does trading and investment mean?
Trading means buying short-term trades and selling shares, while investing means buying long-term shares. A trader normally tries to make money fast while the investor tries to buy a good stock in the stock market and waits for the stock price to rise.
What is rolling settlement?
Every order issued for the stock market needs to be settled. Under this practice, buyers receive their shares and sellers receive income on sales. Settlement is the process in which buyers buy their shares and sellers get their money.
Rolling settlement occurs when all types of transactions are settled at the end of the day. In other words, the buyer has to pay for his purchase and the seller transfers the shares sold in a day through the stock market to the buyer.
Stock markets adopt T + 2 methods of settlement, which means that transactions have to be completed in one day and this trade needs to be settled within an additional two working days other than the first day.
What is SEBI?
SEBI i.e. Securities and Exchange Board of India. Since there is a risk involved in investing in stock exchanges, a market regulator is required. SEBI is officially granted such rights and is given the responsibility to develop and regulate the markets.
Its basic objectives include protecting the interests of investors, developing the stock market and regulating its functioning.
Are equity markets and derivatives markets the same?
Both the equity market and derivative market are part of the overall stock market. The difference lies in traded products.
The equity market deals with shares and shares while the derivative market is tied to deals in futures and options (F&O). The F&O market is based on an underlying asset such as an equity share.
What is fundamental and technical analysis?
Fundamental analysis is done to understand the business of the company, its growth prospects, its profitability, its loan nature such as technical analysis is more focused on charts and patterns and trying to find past patterns to apply for the future.
Fundamentals are used more by investors while technical analysis is used more by traders.
How to invest in stock market in India with less money?
No minimum investment is necessary because you can also buy one share of a company. If you buy a stock with a market value of 100 rupees and in such a case you buy only one share, then you only have to invest 100 rupees. Of course, you will have to pay brokerage and constitutional fees in addition.
Why do we have to pay a statutory fee to a broker?
Statutory duties like GST, Stamp Duty and STT are levied by the Central or State Government. Brokers do not get their benefits. The broker collects these on his own behalf and submits them to the government concerned.
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